The CEO's Influence on Culture: The Market Basket Story

Guest Contributorby Lizz Pellet | Posted | Culture

The CEO\'s Influence on Culture: The Market Basket Story

Leaders create cultures. This should be a well-known fact here in the 21st century. Theorists like Edgar Schine and Marvin Weisbord have been touting this point since 1992. Business executives agree that culture can be a significant advantage.

Leaders like Colleen Barrett, president of Southwest Airlines, Howard Schultz, founder of Starbucks, and Tony Hsieh, CEO of Zappos! They’ve all been talking about how their organization’s culture has directly supported the success of their companies for years. All very recognizable brands, all very recognized leaders in their industries.

But most recently, in the quiet town of Tewksbury, Massachusetts, population 28,961, one of the most sensational stories about leaders and culture has unfolded. This story shows how leaders who care about and cultivate their culture directly affect productivity and profit.

This story is as power and control, win/lose and ego-driven as it gets and dominated the New England press for six weeks this summer. The Associated Press reported that this grocery store chain lost over $10 million dollars in the six weeks it took for this leadership power struggle to play out.

Here’s what happened…

A revolt against the Market Basket leadership powerplay

Market Basket is a grocery store chain with 71 locations throughout New England. Arthur T. Demoulas, the company CEO and beloved leader of the organization, was fired by his rival cousin, Arthur S. Demoulas in July. This is not a typo – two cousins, both named Arthur Demoulas, and while these leaders are so similar in name, they are miles apart in leadership and fostering culture.

Arthur T. is a hands-on leader that knew employees’ names, walked through the warehouses and cared deeply about the people that worked in his stores. Arthur S. was a hands-off leader who, along with other family members, held the majority stake in the business. He pushed to remove Arthur T. from as CEO and in doing so, infuriated employees, suppliers and customers.

The employees literally revolted and walked off the job. Suppliers who were so loyal to Arthur T. stopped delivering fresh produce. Dedicated customers found themselves in a predicament. They didn’t want to shop at a competitor but they didn’t want to be seen as supporting the ousting of Arthur T. In fact, many customers rallied and picketed with the employees to bring Arthur T. back.

Picket lines, empty shelves and no customers sent a strong message. However the most visceral message to the Board and Arthur S. was that these customers did go shopping at competitors to get fresh produce and meat. But then they made an extra trip back to Market Basket so they could tape their competitors’ grocery store receipts to the store’s window in a show of solidarity.

Everyone may not agree to this mutinous approach that led to the resolution of the Market Basket fiasco. However, it worked. The employees welcomed back their beloved CEO on August 29th, just six weeks after the drama began. Arthur T.’s return comes at a price, something along the lines of $1.4 billion in stock price that he had to pay to buy out the rest of the family and be reinstated.

What the Market Basket story tells us about corporate culture

What happened with the employees at Market Basket is in stark contrast to what many feel is happening in business today. We’re seeing a pervasive shift in employment trends, some call it a culture of quitting.

According to the March, 2014 U.S. Department of Labor’s Job Openings and Labor Turnover Survey

"Quits in the private sector declined during the recession, starting at 2.7 million in December 2007 and reaching a low of 1.5 million in September 2009. Since then the number of quits has increased by 52 percent, to 2.3 million in March 2014."

The rise of 52% in the number of people or 2.3 million who have quit their job since 2009 is a staggering statistic. So what’s up? Why are so many people leaving their jobs? It can’t just be about the money.

Over the years job satisfaction is becoming an increasing impetus in making the decision to stay at a company or leave for a better opportunity. There are many factors that play into job satisfaction and there isn’t one set of values that everyone agrees on that could be pointed to as a gold standard.

But many employee satisfaction triggers are found in:

  • Purposeful and emotionally involved work
  • Management style
  • Company Culture
  • Ethics and values
  • Corporate social responsibility
  • Job security
  • Support and training
  • Appreciation and recognition
  • Company loyalty to its employees
  • Support with personal issues
  • Coworkers
  • Location
  • Opportunity for promotion and advancement
  • Wages and benefits

Of course, supporting employee satisfaction and cultivating a culture where people want to work, isn't about organizations satisfying the needs of everyone. It was US President Abraham Lincoln who told us you can't please all the people all of the time.

However, a strong corporate culture, reinforced by a transparent, authentic leader who demonstrates true commitment to the business and its people can make a significant impact on employee satisfaction. This point is made evident in the work of Arthur T.

Yes, businesses are always about trying to improve productivity and turn a profit. One of the most effective ways to do that is by creating some real engagement for people. To not just manage your people, but to truly lead.

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