Keeping the People Report
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E-Letter Volume 30, Labor Day 2014
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Leigh Branham  

Time to Celebrate Workers…and the Leaders Who Bring Out Our Best

So, what has Labor Day come to mean—another three-day weekend, the outdoor grilling, the U.S. Open, the opportunity to look back on our summer vacations (if we took one) and re-set our lives for the onset of fall? What about the real meaning of the day?

Let’s face it, the term "Labor Day" is outdated and carries too many negative connotations—hard labor, laborious, labored—implying punishment, difficulty of undertaking, and cruel necessity. A name change is way past due. A new name should be chosen to reflect the reason it was declared a national holiday in the first place—I propose "Worker Appreciation Day." National and local news networks should direct their focus not to the status and progress of labor unions, but to the working heroes who give their best efforts every day and to the leaders who inspire them to do so.

Employee Loyalty in the News: The Market Basket Story

In case you haven’t noticed, YouTube has recently featured the saga of Arthur T. Demoulas, the CEO of the highly-successful Market Basket supermarket chain in New England.  Arthur T.’s estranged cousin and majority shareholder, Arthur S. Demoulas, convinced the board that Arthur T. had been too generous with employees and customers, despite the fact that Arthur T. had increased the number of  Market Basket grocery stores by 15, to 71, while annual sales topped $4 billion and the number of employees grew to more than 20,000.  Arthur T. had implemented a four percent across-the-board price cut for 2014 at a time when he felt customers needed it.  "We're in the people business first and the food business second," he said at the time.  "If we get the first part right, we're 80 percent there.  My goal is to have customers feeling better when they leave one of our stores than when they came in."  

In reaction, some board members threatened his job and litigation out of concern that this would cut into the company's profit.  The board eventually ousted and replaced Arthur T. along with other key executives on June 23rd.  In protest, employees (all non-union) of the private company refused to come to work and lost their jobs as a result.  Employees held rallies calling for his reinstatement and customers began boycotting the stores (video can be seen on YouTube). Social media was also active in their support of Arthur T., especially on Twitter and the "Save Market Basket" Facebook page. Thomas Kochan, an MIT management professor commented, "The show of support for a fallen CEO is unprecedented in modern American history."

Arthur T. has never asked for his job back, but has asked the board to hire back the employees who were fired for their loyalty.  Many of the chain’s stores now have empty shelves as trucks are blocked from delivery.  Reported losses have reached more than $10 million a day, according to industry analysts.  As of this writing, Arthur T., with the support of an investor group, has recently offered $1.5 billion to buy Market Basket.

The morale of this story is simple—CEOs who believes in "give-and-you-will-get-back" leadership philosophy (as opposed to "cost-cutting-is-the-name-of-the-game") inspire the fierce loyalty of their workers.

Other examples:

Mark Sebba, the CEO of the high fashion online retailer, Net-A-Porter, who recently retired after leading the company through 11 years of remarkable growth, and whose loyal employees planned an elaborate surprise send-off for him featuring a choir, samba dancers, mariachi band, acrobats, thousands of table-top dancers at offices around the world--http://www.dailymail.co.uk/news/article-2710690/Is-best-retirement-party-The-incredible-goodbye-staff-fashion-firm-Net-A-Porter-outgoing-CEO-thousands-dancing-workers-steel-drum-bands-gospel-choirs-world.html.

Graham Weston, CEO of fast-growing internet hosting company, Rackspace, who inspired the loyalty of his customer service staff by listening to their suggestions and transforming a "denial of service" model that maximized profits at the expense of the customer into an ethic of "fanatical" world class customer support (full story in Chapter 7 of Re-Engage).

Jim Sinegal, ex-CEO of Costco, who inspired the undying loyalty of workers and customers by refusing to give in to stockholders’ demands that he cut employee benefits and increase prices. He said, "Wall Street is in the business of making money between now and next Tuesday.  We’re in the business of building an organization, an institution that will be here 50 years from now."

Raymond Burse, president of Kentucky State University, who recently knocked $90,000 off his $350,000 salary  to give the university’s minimum wage workers a $3 bump to $10.25 an hour.

So, on this Labor Day, let us take a moment to reflect on what it is that inspires the best in all of us, and in turn leads to long-term success-true servant leadership.

Leigh Branham

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2nd Edition, The 7 Hidden Reasons Employees Leave

Updated based on new post-exit third-party surveys from more than 1,000 respondents

Re-Enage

The 7 Hidden Reasons Employees Leave:
How to Recognize the Subtle Signs and Act Before It's Too Late,

by Leigh Branham (AMACOM Books, 2012).

Re-Enage

Re-Engage: How America's Best Places to Work Inspire Extra Effort in Extraordinary Times,
by Leigh Branham and Mark Hirschfeld (McGraw-Hill, 2010).

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Keeping the People, Inc. helps organizations link employer-of-choice strategies with business strategies, conduct third-party post-exit interviews and surveys, conduct engagement surveys with current employees, and provides the management coaching and training needed to implement those strategies.

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Copyright, Keeping the People, Inc. 2014. Keeping the People Report is written and edited by Leigh Branham.