DEMOULAUS MARKET BASKET 4/17/16 London School of Business Finance Professor Dr. Alex Edmans in ‘The Social Responsibility of Business’ states that corporate social responsibility is consistent with maximizing long-term profitability. Based on 30 years of “Best Companies” research for multi-year horizons, sustainability outperformed market, industry and benchmark characteristics. Investing in employee satisfaction demonstrated a greater 2% to 3% increase in stock price return in the third 3rd to 8th year, surpassing the managerial myopia of financial engineering, eliminating investment, research+development or ‘pump and dump’ stock price manipulation. Financial Times columnist Andrew Hill feels that companies should think about what values are reflected in their pay policy, because excessive CEO pay is the biggest obstacle to restoring trust in business. Dr. Edmans feels CEO pay should be linked to de facto good or bad long-term company performance. In Dr. Edmans’ “Best Company” research, employee satisfaction positively correlated with corporate performance, proving in order to reward shareholders long-term you have to please workers and customers. Employee satisfaction is associated with long-horizon returns, positively correlating with increasing long-term shareholder value. In a gilded age of robber barons manipulating capital for short-term earning reports, therefore, ignoring the noise of superficial market analysis, which undervalues these intangibles, even when independently and publicly verified like Great Places to Work Institute 100 “Best Companies to Work For”. For example, “Best Companies to Work For” measures camaraderie/pride, credibility, fairness and respect. “Best companies” have superior customer satisfaction and superior long-term returns. Employees are your greatest assets, because employees drive the desired results. The Intrinsic motivation of employee satisfaction drives retention and productivity. Investing in improving human capital increases long-term value creation. Good leadership and happy employees makes happy customers, which in the long run is reflected in the share price. Intrinsic long-term incentives matter; the perspective of horizons are important, good brands take a long time to build; long-term profitability is a by-product of good corporate social responsibility. In 2008, Arthur T. DeMoulas was named President & CEO of Demoulas Supermarkets, Inc.. During his tenure sales grew from $3Billion to $4Billion and the number of employees increased from 14,000 to 25,000, while competitors abandoned the region and lost market share. Arthur T. DeMoulas’ personality is compared to the George Bailey character in the Frank Capra movie “It’s A Wonderful Life” for his common touch approach of remembering employees names, birthdays, anniversaries, children, family illnesses and the funerals of relatives. June 23, 2014 when board room politics sought to remove President & CEO Arthur T. DeMoulas was able to purchase the remaining 50.5% shares of Market Basket, Inc. Author of THE LOYALTY FACTOR Diane Durkin, founder and president of the Loyalty Factor training company, which enhances employee and customer brand loyalty leads companies into new profitable markets. August 28, 2014 Diane Durkin wrote in her blog ‘Loyalty Wins’ Last night around 11:30PM the announcement that has been six weeks in the making came over the airwaves: Arthur T purchases 50.5% of A shares to regain control of Market Basket!!! For six weeks employees and customers of Market Basket have boycotted their beloved store, forcing the majority shareholders to sell to their rival. The employee display of LOYALTY included so much personal sacrifice. The workers put themselves in position to their jobs, their livelihood and their financial stability. The customers, trusting in the leadership of the employees,, voluntarily found new places to shop and willingly paid higher prices. Together, customers and employees pulled off the unthinkable and their loyalty made history. Knowing how they had been treated by a single man; Arthur T. Demoulas, for the last 12 years, employees orchestrated a brilliant walk off and boycott to get him back. Their loyalty for one man and the business he built was the inspiration for millions. Without the help of customers, who are as loyal as they come, this mission would have been impossible. Today I’m unbelievably thrilled at the outcome that was very uncertain for so many weeks. It is a textbook display of the power of treating your employees kindly, empowering them to believe in the mission of the organization and the respect and trust you earn in return. This morning at a press conference Artie T said it best, “As I stand here, there is very little that I can ever add to your brilliant work, your extraordinary display of loyalty and the power of your enduring human spirit over the last six weeks… you displayed to everyone your unwavering dedication and desire to protect the culture of your company.” “We have demonstrated here at Market Basket everyone is special. We have demonstrated that no one person is better than another.” “And may we always remember this past summer, first as a time where our collective values of loyalty courage and kindness for one another really prevailed and in that process we just happened to save our company.” Forever and ever Market Basket culture will now be a concept that every other organization will seek to adopt! The world could learn a lot from Artie T. and the organization he built! Well done! Diane Durkin Motivational Keynote Speaker at Loyalty Factor Beyond the noise, business schools are just beginning to study these business growth concepts. ________________________________________________________________ “Employees are a resource and not a cost” Peter Drucker