8/02/2014

Employees Go On Strike To Get 'Their' CEO Back

Other than a few blurbs in the Washington Post, I doubt this news has made it out of New England.

One of the regional supermarket chains, Market Basket, had a change of CEO after the board of directors fired long time CEO Arthur T. DeMoulas. One wouldn't think such a thing would be making any kind of news as companies hire and fire CEO's all the time, right? So what made this one different?

Thousands of Market Basket employees protested, with many going on strike in an effort to bring back someone they considered to be 'their' CEO.

There had been a battle brewing between the two branches of the family that owns the supermarket chain, and the branch that felt they either weren't making enough money or weren't being respected finally wrested control away from the other branch and fired the CEO who had been running the company for a couple of decades.

The argument can be made that it doesn't really matter who runs the company as long as it makes a profit. But what if the reason the company has been making a profit and growing while many of its competitors were either stagnant or, in some cases, were closing some stores because they weren't making a profit, was because of that CEO? The fellow in question, the aforementioned Arthur T. Demoulas had built a corporate culture that saw loyal employees, loyal customers, low prices, better pay and benefits than their competitors, and rising profits. The average tenure for its employees was 17 years. The average tenure for a store manager is over 30 years. How many supermarket chains have that kind of employee retention? Starting pay for grocery clerks is $12/hr and full-time cashiers can make $40,000 a year. No other supermarket chains have that kind of pay scale, profit sharing, or benefits of Market basket. The prices for the products they sell are regularly 10% to 20% below those of their competitors, but the company still pulls in between $400 and $700 million in profits each year.

The new co-CEO's have fired a number of protesting employees, some whom are suing the company because they have not received wages or other benefits owed. The Attorney General Offices of both New Hampshire and Massachussets have warned the board and CEO's of Market Basket that they must abide by employment laws and that they are monitoring the situation to ensure compliance with the law.

The shift in loyalties by the board of directors is seen as but the first step many, including knowledgeable business analysts, say is a shift towards pushing profits at all costs at the expense of its employees and the long held values of the company.

While some may say this change is nothing more than smart business and that the board has every right to do what it has done, it has remained cloistered away and no spokesmen have appeared before the cameras, instead using press releases as if that's all that were required to address the concerns of the employees.

Regardless, more than a few analysts have stated they believe that if the board of directors for Market Basket does not reverse its direction and allows fired CEO and President Arther T. Demoulas to return, irreparable harm will be done to both the company's reputation and its bottom line. It seems it may be bound for decline, and in the end, failure, all in the name of more profit. Too bad it will see less, and then none, if it keeps to its course.