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Description: Zeynep Ton examines the case of Market Basket, its high-road business practices, and the worker protests that brought about the reinstatement of beloved CEO, Arthur T. Demoulas.
Instructor: Zeynep Ton
Over the course of six weeks in the summer of 2014, Market Basket employees, joined by their customers, protested against the firing of their beloved CEO. They risked their jobs, their livelihoods, and they brought the business to a halt.
At a time when we see so much division between the CEOs who represent the top 1% and the workers, who represent by the bottom 99%, this level of support for a CEO got the attention of the entire country.
Arthur Demoulas, he stands for valuing people. He always says we are in the people business first, grocery business second. And when the ownership changed, you started asking the questions, what's going to happen with our benefits? What's going to happen with our pay? And when you start taking away that factor of focusing on people, the entire business model starts to fall apart.
The workers were fighting for a business model that works for everyone-- for them, for their customers, and for their shareholders. We saw a number of critical business lessons that emerged from Market Basket. Let me share with you three related lessons.
The first lesson is around creating customer and employee loyalty in a pretty unlikely setting. Local supermarkets are not necessarily known for treating their employees or customers well. They are known for offering bad jobs with poverty level wages, unpredictable schedules, and very few opportunities for success and growth.
They're also known to frustrate their customers. The Market Basket case shows us that it doesn't have to be that way.
Here's a company that really puts a focus on building those relationships. It's easy to say treat a customer as you would like to be treated. It's a lot different to say that you would treat your customers the way you would treat your family or your friends. Because there's a lot a loyalty there.
The second lesson that emerged from Market Basket is the importance of employees and what they do for efficient, low-cost operations. You see, Market Basket pays its employees decent wages. It offers them generous benefits. It treats them with respect and dignity. Market Basket designs the jobs in a way that allows their employees to be more motivated, that allows them to be more productive, and that allows them to contribute more to the success of their company.
It's not just working for the paycheck; it's working for what you're getting out of the job. Getting that feeling that you're providing something of value that they appreciate, and appreciating somebody else. That's a huge motivator for me. And carrying that through the company to bring value to the company. Who wouldn't want to work for that?
If you go to a Market Basket store, you're going to see a lot of employees around. A lot more than what you see at a local supermarket . Why is that?
Well, Market Basket does that so that its employees can do their jobs without making errors. So that they're not rushed. So that they can treat their customers well, help them out when necessary. So that they have enough time to engage in continuous improvement, come up with suggestions to reduce cost and increase customer service and sales.
Appropriate staffing levels is just one of the job design decisions that motivate employees, make their jobs better, so make them happier, that lead to happy customers, because they receive better service. And that also lead to happier investors because now the costs are lower, sales are higher, and profits are higher.
And that brings me to the third decision related to Market Basket, which is even in a low-cost supermarket setting, it is not only possible but highly profitable to create a business model that creates value for customers, employees, and investors at the same time.
There's a lot of focus on people. You have 8 owners and shareholders, and then you have 25,000 employees. And then you have the further impact of vendors and customers. That's a huge base. Now you're talking millions of people. And here's a company that really puts a focus on everyone who's involved with our company.
Now, you might wonder, is Market Basket an exception? Is it unique?
Well, certainly, what Market Basket employees did was pretty extraordinary. But Market Basket's business model is hardly special. In fact, in my own research, I've studied four other low-cost retailers that do exactly the same, ranging from Costco to QuikTrip, a convenience store chain with gas stations, that has been in Fortune's 100 best companies to work for 12 years in a row and that is extremely profitable.
If good jobs are possible at a setting like QuikTrip, they are possible everywhere. We just need more companies to follow the good job strategy. And everyone can do their part.
You are customers. You can walk with your feet. You can decide the shop or dine at places that offer good jobs. For those of you who are employees, managers, or even investors in organizations, then you could be advocates for a good job strategy.
Finally, I want to leave you with one last thought. At some point in your career, chances are you'll be a manager. You might manage just a few people or hundreds of people. Remember this, the types of decisions that you make are not just business decisions. They affect the lives of people, so make those decisions wisely.