This is a regional news story that I thought GAF would find interesting. Market Basket is a family owned chain of grocery stores in New England. There has been a family feud brewing for decades, and about a month ago the former CEO Arthur T Demoulas was fired. Arthur Demoulas was a beloved CEO and his firing sparked protests at the Tewksbury headquarters for Market Basket. It's lead to shortages of perishable foods, and many locations are running out of stock. The first article by Boston.com is a synopsis of what has transpired so far, but if you want to get to the juicy details start reading at Why are employees protesting anyways until the end. The second article by the bostonglobe.com is just commentary on the current situation. It's a really fascinating situation of employees going against the board of directors. I hope the employees can win,but I'm pretty sure they aren't going to get what they want.
http://www.boston.com/business/news...-reach-deal/YHVqrKp65XS3DBzJd2PulI/story.html
Boston.com said:Market Basket employees’ ongoing movement to re-install former CEO Arthur T. Demoulas has gripped the Massachusetts business scene. Here’s a quick refresher of what‘s happened, and why.
What happened Monday?
After weeks of silence, Arthur T. Demoulas released a statement Monday night, asking that the company reinstate the workers fired over the weekend.
“In the final analysis, this is not about me. It is about the people who have proven their dedication over many years and should not have lost their jobs because of it. I urge that they be reinstated in the best interest of the company and our customers,” wrote Demoulas in the statement.
The statement came days into a remarkable worker revolt. Thousands of Market Basket employees, customers, and supporters rallied for the second time in four days, this time at one of the company’s Tewksbury stores. Monday’s rally drew an estimated 5,000, and saw protest organizers urge company stores to pick up the fight against existing leadership by shutting stores down. Organizers and employees also seemed to endorse a customer boycott, an idea that had been floated by politicians.
At least one store Monday wrote a letter to employees, urging them to boycott the store.
Market Basket’s board planned last week to hold a special meeting by telephone Monday to discuss employees’ demands, at which two employees would be invited to speak to the board. However, at least one of the employees invited has already been fired. It’s unclear if that meeting was or will be held. A spokesperson for Market Basket’s board did not respond to requests for comment to clarify that point.
What happened this weekend?
The upshot: Several management-level employees who have led the employee actions in support of Demoulas were fired Sunday. Market Basket confirmed the firings to Boston.com Sunday night.
Employees were fired after regular operations at many Market Basket stores were slowed by dwindling inventories on store shelves. Perishable items like produce and seafood, as well as other items, were noticeably thinning at stores across the region.
Why the thinning inventories?
At a separate rally in support of Demoulas Friday, which most employees who work at the company’s Tewksbury headquarters and in its warehouse attended by not working, employees said they would halt deliveries to stores until Demoulas was reinstated. Several Market Basket stores featured notes to customers on display apologizing for the lack of inventory, and explaining the reasons employees are protesting.
Market Basket apparently hired replacement drivers, but it is unclear how many deliveries were made over the weekend and how stores handled them.
And that amounts to a fireable offense?
Employees were told in a letter last week that any employee who does not do their normal job functions as a result of this movement would be canned. Neither side blinked, and now both have seen consequences.
Market Basket said in a statement that the fired employees’ “actions continued to harm the company, negatively impacted customers, and inhibited associates’ ability to perform their jobs.”
I heard something about politicians…
Yes. Seventeen state lawmakers signed a letter on Saturday calling for a boycott of Market Basket and expressing support for employees. The number of politicians to have signed that letter has since grown. Attorney General and candidate for governor Martha Coakley issued a statement Sunday calling employees’ actions “inspiring.” Likely Republican gubernatorial candidate Charlie Baker, as well as New Hampshire Senator Jean Shaheen, and New Hampshire Senate hopeful Scott Brown, who formerly represented Massachusetts, have all also offered support to employees.
Why are employees protesting, anyway?
OK, the long answer goes back decades. In the very short-term, Market Basket employees are extremely loyal to the former CEO, Demoulas, who was fired last month (but still remains a major shareholder) and replaced with Jim Gooch and Felicia Thornton. Two other executives were fired at the time, and seven more resigned the next day.
A couple weeks back, employees outright demanded Demoulas be reinstated as CEO. When they didn’t hear an answer by the middle of last week, they issued an ultimatum to the board, saying they needed an answer by 4:30 p.m. Thursday. When they received an answer saying some employees would get a chance to meet with the board in a meeting this week, they said that wasn’t good enough and organized Friday’s rally, which drew more than 2,500 employees and supporters.
Why the loyalty?
Employees at Market Basket receive very strong benefits, including participation in a profit sharing program. The company has historically also promoted from within, and it’s very normal for upper management to have worked for the company for several decades. Employees are worried that new leadership wants to operate the company in a way that stresses profits. (Market Basket is already profitable, and does billions of dollars in revenue with its 71 stores.) This could, theoretically, threaten those employees’ livelihood. Gooch and Thornton have said they intend to keep those benefits in place.
Employees also worry new leadership aims to sell the company; Thornton’s expertise historically has been in mergers and acquisitions. They say they are fighting for the preservation of the company. Moreover, they say it’s also about Demoulas himself, whom they hold in extremely high regard.
It is indeed unusual that management and rank-and-file employees would be participating in a movement together in support of an ousted executive, which might be one reason why employees have resisted the idea of unionizing.
Why was Demoulas fired?
Again, going way back here. But the board has held that Demoulas spends money unwisely—including through business deals that could be seen to be self-interested. (Monday’s rally was held at a Market Basket store that leases through a company owned by Demoulas’s brother-in-law.)
Much of the story stems from resentment between Demoulas and his similarly-named cousin Arthur S. Demoulas. The two Arthurs hate each other, partially as a result of Arthur T.’s side having stripped control of the company away from Arthur S.’s many years ago. Several years ago, after a wild run through the legal system, the courts said they agreed with that allegation and helped restore Arthur S.’s stake in the company.
Arthur S. gained control of the board of directors last year by swaying a shareholding family member to his side. The board then tried to fire Arthur T., but employee action delayed that move. The board next acted to take hundreds of millions of dollars out of cash reserves and deliver it to shareholders, to Arthur T.’s objections, before firing him on June 23.
link to the story
BostonGlobe said:The stores are running out of groceries, loyal customers are promising to shop the competition, and a group of longtime employees who were summarily fired by management are being made into martyrs by thousands of protesters.
Could it get any worse for Market Basket?
What began as a family feud spread into an insurrection among employees and has since quickly escalated from a public relations nightmare into an outright business crisis for the Demoulas Super Markets Inc. chain.
Specialists in crisis management and business practices say they are astonished by how the executives who control the grocery empire have managed the situation.
“It’s just unbelievable to me to see this happening,” said Richard Nicolazzo, managing partner of a Boston communications firm, Nicolazzo & Associates. “Management, in my view, has been completely flat-footed in its response.”
Nicolazzo said Market Basket executives were too heavy-handed in dealing with employees upset about the firing of their longtime boss, Arthur T. Demoulas, by swiftly dismissing workers who organized the protests and appearing insensitive to their concerns.
Now those steps are coming back to haunt the chain’s bosses, Nicolazzo said: More than 13,000 people have signed an online petition calling for a boycott of the supermarket chain, thousands more have shown their support on a Facebook page created by the protesters, and pictures of empty shelves at Market Basket stores around the region are ricocheting around social media sites.
“How long can they continue to have Market Basket shelves that are empty?” he said. “How long are those customers going to stay loyal? How long can you continue this standoff?
Demoulas executives did not respond to requests for comment on how they have handled the crisis.
One major issue identified by Nicolazzo and others is that the current management has not been visible to the public, whereas the rank-and-file employees are well known to shoppers of their stores and have been willing to put their faces and names to the protest.
Neither Arthur S. Demoulas, who gained control of the company’s board and ousted his cousin in June, nor the executives Demoulas picked to replace him, have appeared in public. Moreover, specialists said the few public statements from the company may have backfired with customers.
For example, the two new cochief executives, Felicia Thornton and Jim Gooch, apologized to customers for the controversy in a full-page advertisement that ran in Saturday’s Globe, but also criticized the protesting employees, who for many customers are the only faces of the company they know.
Gary Chaison, a professor of industrial relations at Clark University in Worcester, said management then made the situation even worse by firing some of those employees.
“Discharging workers who are supporting this action who have long seniority and clean work records, it’s going to look terrible for them,” Chaison said. “They’re creating their own martyrs.”
Indeed, among those who attended the large rally organized by employees Monday morning in Tewskbury was Market Basket customer Paula Komola. The 50-year-old Haverhill woman approached Dean Joyce, a warehouse supervisor who was among the eight fired by the company over the weekend.
“You don’t know me. I’m a customer. I’m here because of you,” Komola said to Joyce. “You are not alone.”
Stephen A. Greyser, a professor at Harvard Business School, said that so long as Market Basket management alienates their employees, they risk alienating customers, too.
“The erosion of customer loyalty can happen pretty quickly,” Greyser said. “I would suspect that most customers don’t believe the new CEOs know a lot about what actually happens in stores.”
John Carroll, assistant professor of mass communication at Boston University, said the Demoulas executives have had only “manufactured communication with the public” and urgently need to have Arthur S. Demoulas or other executives speak in public to “put a human face on management.”
“What they need is someone the public can latch on to as authentic and credible, and right now, they don’t have any of that going for them,” Carroll said.
There are at least two schools of thought as to what Market Basket could do next.
Daniel Korschun, a marketing professor at Drexel University who attended the rally to gather material for a case study, said the directors should even consider reinstating Arthur T. Demoulas.
Short of that, the executives should make a major effort to run the company exactly as Arthur T. would.
“Their very clear objective is going to be to prove to these various stakeholders that they’re not planning on shaking things up. And that will take a lot of time,” said Korschun. “We’re talking about months, not days, in a PR campaign.”
Or, management could just hit reset and pretend everything is back to normal, said Chaison, the Clark University business professor.
“Reinstate the discharged workers. That’s what I would do. Then all of a sudden you may seem like the good guy,” he said. “It makes it appear as though you’ve made amends, when you actually haven’t.”
http://www.bostonglobe.com/business...t-nightmare/Yi7ilbgSsyrsf3Y4rOBmMK/story.html
Rally Pictures said:
Pictures of Empty Shelves said:
http://www.boston.com/business/news...-reach-deal/YHVqrKp65XS3DBzJd2PulI/story.html
The shareholders of Market Basket have agreed to a deal that will see former CEO Arthur T. Demoulas and his family take complete ownership of the grocery chain, according to a source familiar with negotiations. The deal has been fully executed by both sides, according to the source.
Arthur T. and his family, which previously owned 49.5 percent of the company, reportedly offered more than $1.5 billion for the 50.5 percent owned by rival family members, including Arthur S. Demoulas. The Boston Globe has reported that more than $500 million of that figure will come in the form of financing from a private equity firm.
The agreement was arrived at Wednesday after weeks of negotiations that appeared to be nearing their end in the last week. Arthur T. announced his and his family’s bid to buy the chain in late July, a month after he was fired by the company’s board.
The deal likely spells the end of the summer’s standoff over the chain’s future. It also serves as the latest, if not final, bookend in the decades-old saga between the rival shareholder factions.
