Thursday, August 20, 2015

Responsible Leadership at Market Basket

Guest post from Daniel Korschun:

If your CEO got fired tomorrow, would anyone notice? Last year, the board of directors at one of New England’s largest supermarket chains fired CEO Arthur T. Demoulas.
Instead of going about their business as usual, as people at other companies would do, 25,000 employees at Market Basket (they call themselves associates) protested in the streets for six weeks to get Demoulas back. Incredibly, they were joined by almost two million customers, who sustained a boycott over that same period. Even vendors contributed to this protest. With 90% of sales gone almost overnight, the company was basically shut down.

The crisis ended when Demoulas the board agreed to his offer to purchase the 50.5% of the company that had been owned by a rival faction in his family. Protesters celebrated in the streets and in the aisles; they had won their battle to keep their beloved CEO and save their company from a sale to a holding company.
What was it that led to such fierce loyalty to a CEO? In my book (co-authored with Grant Welker), which chronicles the history of the company and the unprecedented protest, we lay out some of the management principles that he follows. He relies on many of the tenets of what might be called responsible leadership.

Create a sense of family: Many companies say they create a sense of family, but it is hard to imagine a company that does it better than Market Basket. Associates work very hard, and a lot is expected of them. But the company also looks after them. It starts with generous wages and profit sharing. However, there is a sense of caring that goes well beyond these monetary rewards. Arthur T. himself has been known to attend funeral services when an associate loses a loved one. In these times of personal crisis, someone at the company often steps in. This personal touch, combined with the pay and good work conditions creates a caring environment where associates feel appreciated and even loved.

Encourage questions: Associates at Market Basket say that no matter what level or function in the company, they feel that if they have a question it will be answered. Some of them add, “you may not get the answer you were hoping to hear, but you’ll always get an answer.” The associate takes this as a sign of respect, and in turn give the most respect to managers who adhere to this sort of openness. Some managers at other companies seem to equate allowing questions usurping power; Market Basket managers tend to encourage questions within a strong chain of command.
Give work meaning: So many associates we’ve spoken to at Market Basket tell us that their job description may not be glamorous, but that they are contributing to something very important. They see themselves as helping people, often low-income families or elderly get food on the table at a price they can afford. Arthur T. and other members of the executive teams remind associates constantly that everyone is needed in order to achieve that goal. These executives say something along the lines of, “the person bagging groceries is just as important, maybe more important, when it comes to making sure that customers leave the store with what they need.”

Arthur T. Demoulas and his management team have been extraordinarily successful in growing the business. They are also unsurpassed when it comes to employee’s remaining loyal; they almost never jump ship. We saw that loyalty in full effect during the protest last year. Part of the secret is a commitment to responsible leadership, where leaders try to create a dignified place to work, where associates feel valued and respected, and where they feel that they are contributing to something larger than themselves.

Daniel Korschun is an Associate Professor of Marketing at Drexel University’s LeBow College of Business and a fellow of both the Center for Corporate Reputation Management and the Center for Corporate Governance at LeBow.
Dr. Korschun works with companies to develop innovative Corporate Social Responsibility (CSR) practices that generate value for both the company and society. Some of these innovative practices are profiled in his first book, Leveraging Corporate Responsibility: The Stakeholder Route to Business and Social Value (co-authored with C.B. Bhattacharya and Sankar Sen, Cambridge University Press).
His latest book, We Are Market Basket (co-authored with Grant Welker, AMACOM), tells the true story of a grassroots movement to reinstate a beloved CEO and save a $4.5 billion supermarket chain.

Find Dr. Korschun @danielkorschun or on LinkedIn.

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