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