The Demoulas family fight over Market Basket, the New England supermarket chain they own, has been a spectacle.
Arthur T. Demoulas was ousted in June as the grocer’s chief executive officer by a group led by his cousin Arthur S. Demoulas. The Arthur S. side has demanded much higher dividends and wants real estate owned by the company to be transferred directly to the family. They would rather take a lot more money now than reinvest it in the enterprise. Arthur T. is greedy, too, but not so openly. He’s done some dubious self-interested stuff involving the transfer of company assets. Still, he’s more of a reinvestment guy than is Arthur S.
The drama’s centerpiece has been many employees’ love of Arthur T. The older ones seem to love him the most, in part because of a profit-sharing fund for employees that could get some employees more than $1 million each when they retire. They worry that the Arthur S. side may have other plans for that money.
Arthur T. has paid his people pretty well — for a low-wage industry — e.g., cashiers start at $12 an hour, $4 above the Massachusetts minimum wage. And there are such nice things as Christmas bonuses. But it was Arthur T.’s frequent cozy encounters with his workers that really did the PR trick. He’d go to funerals of members of employees’ families, call employees with problems to see how they were doing, introduce employees to his wife and, all in all, be a highly visible and friendly presence.
He certainly understands the value of being known as a kindly boss — in energizing his work force to be more productive, reducing the costs of worker turnover (in training, etc.) and building customer loyalty. Patrons like to see familiar faces in stores, which is obviously more likely with low employee turnover. A little niceness goes a long way in hard-nosed American capitalism. Witness the big PR impact of a corporate monetary contribution to a popular charity, although cynics might note that the contribution is usually a very small percentage of the CEO' s pay.
Since Arthur T. was ousted, many employees have gone on strike and staged demonstrations to demand that he be rehired. Many have risked being fired. All of this has lost the company many millions of dollars in sales.
“We are a family and they messed with our dad [Arthur T.],” Charlene Kalivas, who has worked for Market Basket for 18 years, told Bloomberg News. Rosa Pereira, a Market Basket deli manager, told the same outlet how at an opening of a new company store, Arthur T. said to her: “Congratulations on our new store. He didn’t say ‘my store’; he said ‘our store.”’ (Of course, the “our” legally means the shareholders, not the employees.)
Family-owned-and-run businesses can have some big strengths. Some studies suggest that they perform better and last longer on average than nonfamily companies, in part because family companies’ leaders worry less about maximizing short-term profits and more about building the company for the long term. A public company CEO is apt to only hold his job for several years and tends to be heavily rewarded for making quick profits.
Still, even closely held companies such as Market Basket are not “families.” They are teams and — in the end — the majority owners and senior execs will almost always make their calculations based on economic self-interest — maximizing profit, share price and senior executive pay. Obviously, the owners’ and senior execs’ personalities and whether they’re likely to bump into employees on a day-to-day basis can play some supporting roles in the drama. Owners and executives who live far away understandably care less about inflicting pain on employees than do ones close by.
Workers who entrust their lives to corporate entities make a big mistake. Out of self-respect and to make a living, employees should do their jobs as best they can while realizing that companies are self-interest machines. And bear in mind some advice a new boss gave me a long time ago: “As soon as you have a new job, you’d better start looking for the next one.” We all want someone to take care of us. In the end, that someone must be us. Executives come and go, companies are bought and sold. (Another chain will probably buy Market Basket and lay off thousands to pay off the debt to buy it.)
There may be some comfort in knowing that for those who have 401(k)s and/or old-fashioned pensions, the cold, hard calculation now more dominant in American capitalism than at any time perhaps since the 1920s has expanded their retirement funds even as globalization, automation (automatic checkout machines may ultimately wipe out even most Market Basket cashier jobs) and information technology continue to hollow out the American middle class.
American public policy heavily favors capital over earned income. Those who fully realize the implications of that have done much better than people working long hours at low wages in part because a very rich boss smiles and asks after their families.
Robert Whitcomb, who oversees New England Diary (newenglanddiary.com), is a Providence-based writer, editor and business consultant, a former finance editor of the International Herald Tribune and a former editor at The Wall Street Journal.
