What the Market Basket deal says about American workers
Imagine high-level executives, store managers, clerks, and warehouse workers standing outside their stores side by side for a month demanding their CEO be reinstated and the business model that made the company thrive be maintained. And imagine their customer base cheering them while they had to shop elsewhere at considerable inconvenience and expense.
That is exactly what happened this summer at Market Basket, a highly successful New England family-owned grocery chain with 71 stores and 25,000 employees. On Wednesday night, Arthur T. Demoulas struck a triumphant deal to buy his warring cousins’ share of the family grocery empire, ending a six-week standoff between thousands of employees and management.
Though not everyone may have heard of this story, it is indeed the biggest labor story of the year. And if it emboldens others to speak out for similar workplace causes, it may turn out to be the most important workplace event to come along so far in this century.
This broad-based revolt (aka strike) defied all traditional doctrines in labor-management relations, labor law, and corporate governance. It was the outgrowth of a longstanding feud within the Demoulas family owners whose warring cousins (Arthur T. and Arthur S.) vied for control of the business.
For years, Arthur T. had led Market Basket to high profits with a business model that provided consumers with low prices and good quality service by building a highly productive, well paid, and loyal workforce. But when Arthur S. gained control in June, he fired Arthur T., replaced him with new co-CEOs of his choosing, and began pursuing options to increase the flow of cash to family owners.
Employees demanded Arthur T. be reinstated and the business model they built together be restored. They organized rallies that attracted as many as 10,000 workers customers, and community supporters. They used a “Save Market Basket” Facebook page to spread their message and maintain solidarity across the ranks. At one point 68 of the 71 store managers signed a statement saying they would not work for anyone but Arthur T. Customers offered countless testimonials to the low prices and good service they were missing and documented the increased costs they incurred in shopping elsewhere by pasting their sales receipts on the windows of their local stores.
Unlike so many recent labor battles, this one ended happily. After weeks of negotiations, with a strong push for agreement by Massachusetts Gov. Deval Patrick and New Hampshire Gov. Maggie Hassan, the board of directors agreed to sell the company to Arthur T. and allow him to lead employees back to work and customers back to their beloved stores.
While these dynamics alone make for an interesting story, there are larger lessons to learn from this case that will be debated in boardrooms, business school classes, labor union halls, social media, and hopefully public policy circles as well.
The broad base of community support for these courageous employees suggests that many could relate to the causes they fought for—a boss who cares for and treats employees with respect, a business model they can be proud of and use to build bonds with customers, and a fair distribution of the profits they help generate. The social media conversations the case sparked suggest many others are looking for their own ways to speak out and perhaps mobilize against unfairness, inequality, and greedy bosses or owners and to support leaders who buck these trends.
Business executives should take note that American workers, indeed the American public, are fed up with owners and shareholders who try to maximize their short-term gains at the expense of employees and customers. Executives are now on notice that in today’s transparent world questions of business strategies and governance are no longer off limits to employees.
Labor union leaders can take heart in the solidarity observed across this broad coalition and ask how they might build and support similar employee-manager-consumer coalitions seeking a fair share of profits and economic growth.
Policy makers should use this case to review our outmoded labor law that provided no established avenues for these employees to channel their concerns and left the supervisory and managerial employees completely vulnerable to being fired for standing up for what they believed. It is time to recognize that the old manager-labor divide no longer makes sense and the ossified doctrines of a labor law passed in 1935 need a comprehensive update.
Business schools better revise their curriculums to catch up with the workforce. These employees did more to teach everyone about how to run a business that works for owners, employees, customers, and community than any B-school case yet written. It is time to build this knowledge into economics, finance, strategy, operations, and human resource courses so that these skills become part of the standard toolkit of the next generation of business leaders.
So, thank you Market Basket for providing the best labor lesson of this century to date. Let’s hope others will provide more of the same.
Thomas A. Kochan is the George M. Bunker Professor at the MIT Sloan School of Management and Co-Director of the Institute for Work and Employment Research.