“Leaders can no longer trust in power; instead they rely on the power of trust. “ - Charles Green, Forbes Magazine
In a small corner of New England in the United States, a huge workplace revolution is taking place. And it is being talked about over the water cooler and dinner tables as the hottest “reality show” of the summer. (A welcome relief from the Bachelorette…just sayin’.)
Market Basket, a privately held and family-owned grocery chain with estimated annual sales of $3.2 billion, is embroiled in the eruption of a long-running family feud that has lasted for decades. In the latest episode on June 23, Arthur S. Demoulas led the company’s board to oust the current CEO, his estranged cousin Arthur T. Demoulas, and replace him with two consultants. His firing continued the battle of two namesake cousins struggling to control an empire of 71 supermarkets in Maine, New Hampshire and Massachusetts. When eight middle managers, some of whom had been with Market Basket for 30 years, protested the change, the company fired them for “attempting to create a worker rebellion.”
In the days that followed many of the company’s 25,000 workers refused to report to work, a clear sign of worker solidarity against company bosses they distrust. Butchers, baggers, cashiers, and clerks came from all over New England to rallies at the chain’s headquarters, carrying signs and shouting in megaphones and risking their jobs. Warehouse employees stopped working, stores stopped accepting deliveries, and local legislators, local media, and employees encouraged customers to boycott the stores using the power of social media. Customers not only complied, but joined in the protests.
In result, over the past month, sales have dropped by as much as 75%, stock has been depleted as drivers refuse to deliver, stores have been forced to temporarily close, and the company is experiencing drastic losses. Workers and customers have promised to continue this “rebellion” until the former CEO is reinstated.
Why the Intense Loyalty to Arthur T?
Sure, Market Basket has better-than-industry norms for compensation and benefits but the employees at the rallies are not talking about compensation and benefits, and that is why business schools all over the country are watching closely. Posters of fired Arthur T. DeMoulas have appeared in store windows with the slogan “Believe!” scrawled on them. One employee had “In A.T.D. We Trust!” sprayed onto his car.
Clearly, Arthur T. DeMoulas was a CEO who was pro-employee and pro-customer. Making money was only one reason for running his business. DeMoulas was both a friend and a father-figure to many employees. He gave employees battling cancer or having serious family problems time off with pay, and when somebody was in crisis, he was there for them, literally. He attended their funerals. Entire families work there. They trusted him.
Trust Correlates with Employee Engagement and Drives Business Results
There can be no doubt that trust in leadership has a massive impact on workplace culture and business results. Take Market Basket…despite its reputation for low prices and high wages, Demoulas’ operating margins — 7.2 percent in 2012, were higher than most supermarket chains, under Arthur T’s leadership
Research shows that employees who have high levels of trust in their leaders tend to have greater loyalty and higher business performance than those with less trust. For example, one study linked companies’ trust levels directly to their price/earnings ratios. (Andy Atkins, Fast Company, August 7, 2012)
Some leaders are able to build a solid foundation of trust among their employees and experience the payoff of a loyal, engaged team that delivers results. Work units in the top 25% of Gallup’s Q12 Client Database have significantly higher productivity, profitability, and customer ratings, less turnover and absenteeism, and fewer safety incidents than those in the bottom 25%. Further, Gallup’s research also shows that companies with engaged workforces have higher earnings per share (EPS) and seem to have recovered from the recession at a faster rate. (“The State of the Global Workplace,” Gallup Consulting, 2013)
Who Will Get the Final Rose?
Trust sets the foundation for high performance by creating an environment in which employees are willing to take risks, learn continuously, support and motivate each other and strive to meet challenging business goals. Put simply, leaders build trust and trust leads to engagement, which drives business performance.
Leaders have an opportunity to close the “trust gap” and enhance engagement and results by building trust and avoiding the behaviors that erode trust. So…. whoever is going to run Market Basket–the two consultants, the former CEO Arthur T, or a new owner—will want to focus on building trust. If it is Arthur T, then he has a great start!