Late Thursday night, in our first coast-to-coast byline, Aleksandra Sagan in Vancouver and Catherine McIntyre in Halifax confirmed that MEC was laying off about 80 head-office employees ahead of its controversial takeover by American private equity firm Kingswood Capital Management.
The new owners, who have committed to keeping all but one MEC store open, told The Logic they “can’t speak to layoffs as we don’t own the company.”
It’s a carefully crafted statement that absolves Kingswood of the responsibility for those employees at the soon-to-be-former co-operative, some with decades of experience, who won’t receive a penny in severance.
For those of you following this saga closely, you’ll rightly consider that throughout the bankruptcy process we never did hear from MEC’s 1,143 active employees (along with the additional 197 on leave and 176 on temporary layoffs).
Why was that?
Last month, Kevin Harding, head of the Save MEC grassroots campaign to delay the sale process, alleged in a Facebook post that the co-op was scouring social media for employees who commented about it in any way that was not positive. He even went so far as to discourage MEC employees from joining the Save MEC Facebook group.
And while its role was never clearly defined, legal disclosures suggest that Navigator, the crisis-management PR firm, was hired to manage the fallout from the sale. You may know Navigator for its representation of Sidewalk Labs and, for a brief time, disgraced ex-CBC host Jian Ghomeshi. As Canadaland’s Jonathan Goldsbie shared from a client deck reportedly written by Navigator this week, the company’s issue-management playbook includes “[establishing] comprehensive mainstream and social media monitoring.”
None of these actions on their own suggest anything nefarious. But if MEC’s employees were indeed intimidated into silence, it may ultimately end up being a very expensive mistake.
Employees are playing an increasingly important role in how their companies are shaped and what values they deem important. In tech, Facebook and Google have both faced employee backlash in recent years over how their companies have handled election manipulation and fake news, workplace sexual harassment and the use of technology in warfare. Just last week, the CEO of crypto firm Coinbase offered a severance package to any employees wanting to debate causes or political candidates.
As CEOs consider how best to approach human capital, they’d be wise to study the tale of Market Basket, a New England-area private supermarket chain whose 21,000 non-unionized employees across 71 supermarkets rose up for six weeks in the summer of 2014 for an unusual cause: to save the job of their CEO.
After the company’s board of directors voted to fire CEO and part owner Arthur T. Demoulas, employees led by upper and middle management walked off the job, strangling the company’s supply chain. Store employees held company-wide rallies that drew thousands and customers took their business elsewhere, at the behest of the employees. Even some vendors cut off their business.
The company’s embattled executives fired the protest’s organizers, but that only resulted in more protests. All told, during the boycott, business dropped by more than 90 per cent, and Market Basket lost more than US$400 million. The eight organizers of the protest who were terminated were reinstated six weeks later.
A resolution was finally reached when Demoulas reached a deal to buy out the other owner’s share of the company. (That the other owner was Demoulas’ cousin, also named Arthur, added intrigue to the story).
I was at a Market Basket in Somerville, Mass. the day the company returned to business as usual, and the scene was festive, with employees and customers high-fiving each other and hooting and hollering in the aisles while carving cold cuts and sorting milk.
What was it that led Market Basket’s employees to rise up on behalf of the company’s CEO?
“Arthur T.,” as he was affectionately known, gave generous salaries and benefits to his employees. Managers and supervisors could earn six figures as they rose to higher positions, experienced cashiers made more than US$40,000 annually and full-time clerks’ wages were US$12 per hour—well above the state minimum hourly wage of US$8.
Market Basket also matched 15 per cent of each worker’s pay and added it to their retirement plans; some longtime workers retired with more than US$1 million in savings.
In short, Arthur T. treated his employees fairly and paid them well.
It did all this for its employees while remaining one of the lowest-cost grocery chains in the United States. Market Basket is not Whole Foods: it serves the everyday customer who, in turn, is represented in its staff.
Employees proudly wear name tags showing their years of service; the company has also served as a launching pad for newcomers learning to speak English.
It’s common to meet a cashier who’s worked at the company for decades, or for multiple generations of a single family to have worked there.
And in case there’s any doubt, Arthur T.’s generosity also made him insanely wealthy: he’s one of the 50 richest people in Massachusetts, with a net worth in 2018 of US$675 million.
By treating his employees well, Arthur T. built one hell of a business. There’s a lesson in there for MEC’s new owners, and for all of us who want to balance profit and purpose.
As for Navigator, the firm recently launched a corporate social responsibility initiative called the Canadian Centre for the Purpose of the Corporation.
In announcing the launch, Navigator founder and executive chairman Jaime Watt said, “Employees, customers, investors, governments, and communities are asking business to do more. This Centre will support business leaders, who want to heed the call and do well by doing good, in meeting these expectations.”
I couldn’t agree more.