The Most Unusual Strike This Year Shows Why It Pays To Treat Employees Well

A remarkable Labor Day tale: Workers loved their CEO so much that they walked off their jobs to save his.

BY JESSICA LEBER

Here’s one way to think about whether you’re treating your staff well: Ask yourself, would they stick their necks out for you?

This summer, CEO Arthur T. Demoulas got his rewards for being a good boss who paid his 25,000 employees well and treated them like they mattered.

Over the last two months, workers at every level of Market Basket, a New England grocery store chain, walked off their jobs and risked their employment--some going without pay, others picketing in front of stores--when the board of the family-run company ousted the beloved CEO in June. With everyone from warehouse stockers to store managers on strike, shelves at the 71 Market Basket locations were soon empty. Customers couldn’t shop there even if they wanted to (and many didn’t, siding with the workers in a boycott).

“We just witnessed something remarkable about the power of workers and customers, and the importance of being a benevolent CEO when too often big business trumps all,” wrote Boston Globe columnist Shirley Leung last week at the conclusion of the two-month long saga that captured the entire region’s attention.

In the end, the thousands of workers--who did not even have union protection--won their single demand: Their CEO got his job back. The backstory, unsurprisingly, is incredibly convoluted and involves a forty-year feud over control of the family business between two cousins. To make it more confusing, they have the same name.

Though he was far from flawless, CEO Arthur T., i.e. “good Arthur” was portrayed as a hero by the workers who rallied around him, largely because he favored sending more of the profits back to employees. He also had a personal touch: He knew long-time employees’ names, called them at home during times of tragedy, and donated money back to the community. His cousin, Arthur S., i.e. “bad Arthur,” wasn’t all bad, but he favored family shareholders more than workers and, through a long series of lawsuits, gained control of the majority of the company this year. He soon decided to fire his nemesis Arthur. But the protests succeeded last week when the board allowed good Arthur to buy out the bad Arthur’s 50.5% ownership for $1.5 billion and regain his position in charge of the Market Basket chain.

The Market Basket story may be remarkable. But the business theory is not. MIT Sloan School of Management professor Zeynep Ton calls it “the good jobs strategy” in her recent book. Conventional business thinking often says that companies should maximize profits by paying their workers as little as they can get away with. Many businesses today, especially in the low-wage service sector, do just that.

But as workers fight around the country for living wages, a growing number of companies are realizing that a different approach pays off. Companies that pay even their lowest-level employees fairly, often do win the kind of loyalty and “above-and-beyond” work ethic that was demonstrated in the Market Basket situation. This paradigm benefits more than just employees. With better service to customers and lower job turnover, it benefits the company’s bottom line as well, Ton argues.

"I hope Market Basket will encourage business leaders to reflect on what it means to run a good business. Delivering value to investors at the expense of employees and customers is one way. Delivering value to investors and customers while creating good jobs for employees is a much better way. Market Basket demonstrates that this better way is possible even in low-cost retail," Ton wrote to Co.Exist in an email.

It’s hard to say who is right in the long, complicated family feud over control of Market Basket. But it’s clear that Arthur T.’s strategy of being good to workers paid off for him in the end. Market Basket employees said it best in a public letter they wrote:

“We love our company. Together we have built one of the greatest business models in the country. A rare place where everybody wins: the associates get great benefits and excellent wages along with the promise that with hard work you will be promoted; the customers get the best customer service, the best values and the best selection and the best prices; the communities we serve see the creation of hundreds of jobs; the shareholders possess an asset which has been unstoppable in its growth.”