Some of you may be familiar with the recently concluded saga of family intrigue at the Market Basket supermarket chain, whose 71 stores are concentrated in the northeastern USA. I’ve attached a commentary on this case by my friend and colleague, Joe Astrachan, of Kennesaw State University near Atlanta. Joe ran the Family Business EMBA program at KSU and is well versed in Boyd’s concepts of strategy.
Although he is addressing members of the Cox Family Enterprise Center in this commentary, I think you’ll find ideas here that will apply to any business or, for that matter, to any organization.
Comments from Dr. Joe Astrachan on “Market Basket cited in US jobs report” in the Boston Globe
Dr. Astrachan is the Wells Fargo Eminent Scholar Chair of Family Business at the Cox Family Enterprise Center, Kennesaw State University, Kennesaw, Georgia
Reprinted here with his kind permission.
A recent article in the Boston Globe (Market Basket Cited in US Jobs Report, September 5, 2014, by Jack Newsham), highlights the importance of family business to society and should be a source of pride for family business owners and operators.For those who have not followed the Market Basket story, it is a too oft told tale of business owning families – one side without control complaining the side with control misused it for, as we scholars say, private benefits. The other side enjoyed a booming business and a loyal workforce—a CEO who by all accounts is a living representation of Jim Collin’s vaunted level 5 leadership. [CR note: Jim Collins’ book Good to Great was required reading in the EMBA program because of its compatibility with Boyd’s philosophy. Chapter 2 of the book addresses”Level 5 leadership,” which might be considered as an updating of the ideal illustrated in Chapter 17 of the Tao te Ching: The Master doesn’t talk; he acts. When his work is done, the people say, “Amazing! We did it all by ourselves.” Mitchell trans.]
But, as is often the case, all did not go smoothly. Control switched sides after a legal battle, the CEO was fired, and the company put on the chopping block for sale—then the unthinkable happened: The employees walked off the job and the company quickly lost its value, vendors cut ties, customers disappeared and the loyalty to family demonstrated its strength.
Long story short, the two sides recently reached agreement, the former CEO returned, employees returned, suppliers returned and so have the customers (“As Market Basket Restocks,” Arthur T. Speaks, September, 2014, by Rupa Shenoy, WGBH News). When you manage with strong stewardship values and understand the importance of self sacrifice, the speed and force of a motivated community is awe inspiring.
So, what does this all have to do with recent disappointing jobs report? The Boston Globe noted that the supermarket sector normally adds jobs every month and the past month it lost 17,000 jobs. Furthermore, on the low side, Market Basket accounted for at least 1,500 of those employees out of work. With 71 stores in the Northeast, Market Basket is no small operation. One can easily imagine that the number of positions this family business could add in a year is substantial. Think of our inspirational local family business, Chick fil-A, with over 1,800 locations, which probably accounts for some 50,000 employees (and they have the lowest turnover in the Quick Service Restaurant segments—employees like family business).
Our oft cited research has long made it known that family businesses, on average, add more jobs than any other sector, employ more people, and account for the largest share of the GDP (“Family Businesses’ Contribution to the U.S. Economy: A Closer Look,” by J. Astrachan and M.C. Shanker, September 2003, Family Business Review). Others have shown that they operate with less debt, are reluctant to lay people off, and are more embedded and helpful to the communities in which they operate than non-family owned companies. [CR note: Please contact the Cox Center for more data on the contributions of family businesses to the world economy.]
Yet even though there are countless examples and a trove of statistics about the importance of family business to our society and economy, public policy still puts them at a disadvantage: from estate and other taxes to regulations designed for large companies. This needs to change. In addition, I fear that many family business owners do not fully appreciate the gift they have and the responsibilities they must undertake in business ownership. Being knowledgeable is essential and it is in many ways a moral imperative (think of all the employees, customers and other stakeholders that depend on your business!). Likewise, focusing on improving the owning family’s communication and conflict resolution abilities—really making an investment in that—is a major task.
So here’s my to-do list for family business owners:
- educate yourself and your family as to what it means to be a good owner,
- learn how to be a better family and make it happen (communication is key), and
- contact legislators and argue on behalf of this important sector: Family Businesses.
To learn more about Dr. Astrachan and the Center, please visit coles.kennesaw.edu/cfec.
Since the time of writing this comment an iconic family business leader, S. Truett Cathy, family and community focused humble founder of Chick-fil-A, has passed. His selfless acts and kind and forgiving nature demonstrate the truest definition of stewardship. So powerful was his simple message that I can say his children, grandchildren and great grandchildren, as well as all Chick-fil-A associates, have fully incorporated the belief of going the extra mile to serve others, and that service is its own reward. There are many other lessons to be drawn from the Cathy family story and I encourage you all to read on-line and find their books. This family is a much-needed antidote to the rampant selfishness, sense of entitlement, and indulgent attitudes that afflict our nation.