Market Basket According to the HR Bartender: What Does Employee Engagement Look Like? This.

Today’s guest post is contributed by our board member, Sharlyn Lauby.  Sharlyn is the president of the ITM Group, a training company focused on developing programs to retain and engage talent in the workplace.  She also writes the very popular HR Bartender blog.

If you haven’t been paying attention to the drama going on at Market Basket, you should. It’s a living, breathing case study about employee engagement and its impact on the business.

Market Basket is a chain of 71 supermarkets located in the Northeast U.S. According to Wikipedia, their primary competitors are Whole Foods and Trader Joe’s. They were founded by the Demoulas family, who still owns the company today. Market Basket employs approximately 25,000 people and annual revenue is around $4B.

Being a family-owned business, Market Basket has seen its squabbles over the years. But it’s the latest one that has put them in the national news. Here’s a quick rundown of the saga to date:

June 23                The board of directors ousted company president Arthur T. Demoulas (aka Artie T.)

July 12                  A Market Basket store starts stuffing shoppers’ bags with a “we need your help” flyer to raise customer support for Artie T.

July 15                  Executives in the corporate office “demand” that Artie T. be reinstated.

July 18                  Thousands of employees rally outside of Market Basket HQ for Artie T.’s reinstatement.

July 20                  New Market Basket leadership team fires 8 employees who were coordinating the rally.

July 21                  Another rally with greater turnout. Warehouse workers stop making deliveries to stores.

July 25                  Another rally. This time 100,000 signatures are collected to reinstate Artie T.

August 4               Employees start refusing to come to work.

And the fight’s not over. The Massachusetts Attorney General has started an employee hotline, part-time employees have seen their hours cut, and Market Basket sales are down 90%. Think about it. In 2006, Arthur T. Demoulas was named the 8th wealthiest Bostonian with a net worth of $1.6B. His employees are willing to lose their jobs in order to keep him as their boss.

When I read the news about Market Basket, it’s a classic case study. Here’s a company that built its reputation on giving customers great value and employees good jobs. It sounds so simple but the reality is … it’s hard. It’s difficult to build and maintain a world-class workforce. And Market Basket doesn’t appear to be one of those companies that went out and bragged about it. They just did the work and made customers – and employees – happy.

It wasn’t until Artie T. was fired that most of us even heard of Market Basket.

Organizations all over the globe could and should use what’s happening at Market Basket as a teachable moment. There are three big takeaways so far:

  1. A “good jobs strategy” creates engagement. If you haven’t read the book, “The Good Jobs Strategy” by Zeynep Ton, it’s worth the read. Ton makes the case that companies that rely upon a low-cost strategy are not confined to creating jobs with bad pay and no benefits. In fact, Ton suggests that “good jobs” are ones that create operational excellence, where customers benefit from low prices and employees are ensured good pay. Companies that employ this strategy, like Market Basket, see higher profits and greater customer satisfaction.
  2. Engaged employees will stand up for what they believe in. I can’t help but think the situation at Market Basket isn’t about Artie T. It’s about what Artie T. stood for and created – the Market Basket culture. Part of a company’s success is directly attributable to their culture. Employees become invested in the culture and are willing to fight for it. They are also willing to leave when the culture changes to something that appears less desirable.
  3. Engagement extends to customers. In the timeline, I mentioned a petition with 100,000 signatures. Since Market Basket only has 25,000 employees, it goes without saying that many of those signatures came from customers. That means the Market Basket corporate culture wasn’t only felt and embraced by employees. It was embraced by customers. I saw a tweet from a customer saying they drove twice the distance and spent twice the money to buy groceries because they are boycotting Market Basket.

We talk about employee engagement all the time and the importance of having an engaged workforce. Sometimes, that can be difficult to define and visualize. Market Basket is an example of a company that had successfully designed good jobs, created an inclusive culture, and reaped the benefits of it with customers.

No doubt about it – Market Basket is currently experiencing a public relations crisis. But we can all learn from the culture that Artie T. and his management team created. We can also learn from what’s happening right now regarding the strength of employee engagement. And lastly, we can learn by watching how they emerge and rebuild from this situation.

5 thoughts on “Market Basket According to the HR Bartender: What Does Employee Engagement Look Like? This.

  1. Sharlyn,

    While it’s clear Market Basket has got into trouble; I fear that many in the investor world will say “Oops, we should have be more sly in undermining the high-involvement culture” instead of saying “The research shows clearly that high-involvement cultures are high performing; we are getting great ROI on taking care of employees, let’s not blow it.”

    In other words it’s not just a PR screw up; it’s (I suspect) in large part a lack of understanding about how human capital creates value. I suspect the investors thought the CEO was throwing away profits by investing in engagement…as long as they still see things that way we are going to have problems.

  2. Hi David. I agree – some organizations will view this as a lack of cleverness versus a testimonial for engagement. In my opinion, those companies don’t have engagement in their vocabulary – yet. It’s not until their revenue plummets 90% that they might say, “Hey what’s that engagement thing everyone is talking about? Will it help us get our profits back?”

  3. And the irony of all irony is that a non-union business, in a highly unionized industry and geography, may end up being unionized by the board’s action. After all, the employees are certainly engaged in concerted activity.

    So, while the board may have hoped to increase revenue by replacing the CEO and his management team, they may have set the company on a path of expensive work rules, lost flexibility, lost engagement and increased labor costs.

    My prediction? The former CEO will regain his company. As the company stands now, who else would want it?

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