Market Basket: Leadership Over Ownership

Analysts have never seen anything quite like it: a labor dispute at Market Basket, a local grocery store chain with over 70+ locations in the Northeast US, which involves executives, managers, cashiers, bag-boys, and customers standing together to protest the firing of former CEO Arthur T. Demoulas. Demoulas was beloved by his employees, and it is believed that his ousting was rooted in a very public decades-old family feud involving Arthur S. Demoulas, his cousin and recently installed Chairman of the Board. Most all of the 25,000 employees in the organization have voiced their allegiance to Arthur T., who they still believe is the true leader of the company.

In addition to the 2,500 protesters who showed up at the Market Basket headquarters in Tewksbury, MA over the past week, warehouse workers walked out on the job last Friday, leaving many store shelves barren within a few days and putting more pressure on the board members, who will now meet this Friday to address whether or not to reinstate Arthur T. along with eight other highly respected associates who were let go in the same stroke—a mind-boggling 280 years of experience combined—in what some are referring to as a hostile takeover.

Arthur T. Demoulas built his fervent loyalty mostly by being a good guy and a consistent leader—he ran Market Basket with a people-first philosophy, offering some of the best benefits in the industry to his workers and regularly visiting the 70+ locations just to chat up whoever was on shift that day. He was also a well-recognized leader in the community, and his simple business model of low prices/high wages helped many stay fed through the recession. Arthur T. saw his workforce as family, even attending his colleagues’ weddings and funerals, and providing support whenever he could.

But Arthur T.’s reputation isn’t the only thing at stake. “It goes beyond loyalty,” one employee pointed out in a New York Times interview. “We’re worried about the direction of the company, our jobs, our profit-sharing.” Market Basket’s new co-chief executives Felicia Thornton and James F. Gooch have been playing a brinksmanship game since the dispute arose, notably taking out an ad in last Saturday’s Boston Globe that sought to shift the blame for barren shelves to the employees, and telling them in a later statement that they would “permanently replace” anyone who walked off the job.

So far their warnings have gone relatively unheeded, and Arthur T. turned the tables today when news broke that he was offering to buy out the board’s remaining share of the company in order to assume control of the company again, something the current Market Basket executives will also have to consider when they meet this Friday in the shadow of the protesters’ final rally in Tewksbury.

It’s rare when a leader can inspire so much loyalty throughout the ranks of a company, and that’s what fascinates management and labor theorists, many of whom have shown up in Tewksbury simply to observe. “It’s this spontaneous, informal organization of people who have come together to protest the shift in management and strategy that’s so unusual,” a professor of work and employment research at M.I.T. told the Times.

It’s clear that true leadership goes beyond making a good profit margin. What’s unusual to us is a dynamic CEO who was able to connect on a personal level with 25,000 employees and inspire such a grassroots uprising, in a time when nationwide trust in CEOs is lagging. However, the formula for being an inspiring leader is quite simple: As Arthur T. Demoulas himself was fond of saying during his tenure, “We’re in the people business first, and the food business second. If we get the first part right, we’re 80% there.”