How Market Basket is Committing Corporate Suicide

Source: Thinkstock

Source: Thinkstock

Recently, president Obama has been touring the country discussing a wide array of issues, none more popular than income inequality and the recovering economy. Low-tier earners and the minimum wage are both popular topics within those subject areas, and companies like McDonald’s and Wal-Mart, two of the country’s largest employers, are sure to get sucked into the dialogue as well.

But within those discussions, a great example of the growing corporate menace taking hold of almost every facet of the U.S. economy is that of Market Basket, a small Massachusetts-based grocery chain that is currently at the center of an attention-grabbing walkout by its employees. At the center of the controversy is former CEO Arthur T. Demoulas, who was replaced amid a myriad of changes at the company, meant to increase profits.

What makes Market Basket so unique? And why would employees, non-union employees at that, actually walk out of their jobs to support their former boss? Well, Market Basket is an incredibly rare company, mostly due to how they conduct business. Its stores are famous for operating in a much different manner than stores like Wal-Mart, which is notorious for paying low wages, cutting hours as to avoid paying benefits, and quickly firing any employees who are brazen enough to think about any kind of organizing or unionization.

No, Market Basket does things differently. They pay their employees a living wage, and offer them a 15 percent profit sharing plan. It’s created an environment in which employees want to remain, and many of its workers have become career employees, climbing the ranks to six-figure salaries. On top of all of that, employees even earn yearly bonuses.

Sounds like the makings for a business disaster, right? Wrong. In fact, the company is quite profitable. As Esquire reports, Market Basket brought in $4.6 billion in revenue during 2013, and has grown to be the 127th biggest privately-owned company in America.

And perhaps most importantly, it can beat the heavyweights, even Wal-Mart, when it comes to prices.

Paul J. Richards/AFP/Getty Images

Paul J. Richards/AFP/Getty Images

By removing a well-liked, employee friendly executive just to increase the company’s bottom line is coming across as a very bad move by Market Basket’s board. Employees have walked out in protest, and as a result operations at the company’s stores have come to a standstill. A huge number of the general public has even jumped on board, refusing to return to the chain’s stores until Arthur T. Demoulas is reinstated.

In the midst of the protests, the new team heading up Market Basket has told employees that they would be fired if they don’t return to work, which has prompted a number of store managers to threaten to resign in response. The company’s new co-CEOs, Felicia Thornton and James Gooch, have said that employees need to return to work by August 4th, at which point new job applicants will be brought in to replace them, as reported by Boston.com.

Narratives such as this are all too common in the corporatocracy that has become the world of business in the United States. The exception, in this case, being that employees are usually not willing to stand up against the powers that be, and certainly not to vouch for an ousted CEO.

By removing Arthur T. Demoulas, the Market Basket board is chipping away at what made their company special. Few other businesses, especially in the United States, strive to lift all of their employees up, rather than focus on the bottom line. A good example of another company that has put its people before profits is Costco, who are well-known for paying their employees quite well, and providing ample opportunities for career advancement within the organization.

By building a unique company that breaks the mold of the traditional corporation, and finding a way to be profitable and beating the competition on price, Market Basket truly found the kind of success that other business only wish they could taste. However, the people in charge of the company have come to value higher profits in favor of setting a positive example of what American enterprise can create, which is a robust economy filled with happy, loyal workers.

By dismantling the system that has held true for so many years, Market Basket’s executive team may as well be committing corporate suicide, in a sense. Of course, if the employee’s demands for Demoulas’ reinstatement are actually met with action, there is still time for the company to save face, and regain the respect it once had.

Or, it can become like many other companies, valuing the bottom line over the general good.

Just another drop in the bucket.

More from Business Cheat Sheet: