Constant Challenges, No Certainties for New CEOs at Market Basket

Help wanted: Two chief executives to replace one cult hero at regional grocery chain. Will be scorned by employees loyal to former boss, and may be fired within weeks. Successful candidates will share ridicule and uncertainty.

That might as well have been the ad James Gooch and Felicia Thornton responded to when they applied to become co-CEOs of Market Basket — and now their situation is becoming more precarious.

As the Demoulas family supermarket spectacle drags through a fourth week, Gooch and Thornton, who were appointed in June, are trying to return Market Basket’s 71 stores to normal operations while ownership of the company hangs in limbo, shelves are bare, and thousands of workers continue their crusade to bring back the ousted president, Arthur T. Demoulas.

It’s gotten so bad that Gooch’s mother has received nasty phone calls from Arthur T. supporters, according to a company spokesman.

Even some of those who refuse to work for the new leaders are starting to feel pangs of sympathy for them.

“Yeah, of course I do,” said food delivery driver Roger Smith, a 12-year company veteran who plans to remain on strike unless Arthur T. Demoulas is reinstated. “They were just hired to do a job, just like we were.”

At the top of Gooch and Thornton’s unenviable to-do list is overseeing a job fair to recruit potential replacement workers. Any new hires would fill gaps left by Market Basket employees who quit or get fired. After two days of interviewing internal candidates, Wednesday marks the first time the company will consider outside applicants — a move that could further antagonize its deeply insular workforce.

Gooch and Thornton still have to figure out how to enforce a deadline they set for employees to get back on the job. While most full-time workers have continued to report for duty — protesting on their own time — hundreds of others have been staying away from the stores and ignored Monday’s deadline to return. Some are showing up for work, but openly encouraging customers to boycott Market Basket.

Meanwhile, Gooch and Thornton’s positions appear just as unstable. Market Basket’s board of directors is mulling offers to purchase the majority shares controlled by Arthur S. Demoulas, Arthur T.’s cousin and rival. At any moment, the board could pull the trigger on a sale that almost certainly would mean pink slips for the executive tandem.

But for all of the drawbacks, the top gig at Market Basket does have perks — probably millions of them.

Two store-level managers who attended question-and-answer sessions with Gooch and Thornton shortly after the leadership change said they were open about having guaranteed contracts that will pay them for three years, no matter how long they survive. Chief executives at a company the size of Market Basket would typically command annual salaries of between $1 million and $3 million, said Clark Waterfall, managing director of BSG Team Ventures, an executive search firm in Boston.

Through a spokeswoman, Gooch and Thornton declined to comment on their compensation packages. They also turned down a request for interviews.

Waterfall said that given the chaos, many high-level job candidates wouldn’t want to run Market Basket. But for certain people, he said, the challenge might be appealing.

“There’s not really a downside if you’re an executive in transition,” Waterfall said. “It’s such a mess already that if things go south, are you really going to be blamed? And if you somehow right the ship, there’s a lot of upside.”

Gooch and Thornton definitely fit the mold of executives in transition.

Gooch stepped down under board pressure as chief executive of Radio Shack in 2012 after failing to turn around the troubled electronics retailer.

Thornton cited personal reasons when she resigned in 2011 as chief executive of Knowledge Universe, a Portland, Ore., company that runs classroom and online courses from pre-K to graduate school.

Their co-CEO arrangement is unusual, said Andy Zelleke, professor of business administration at Harvard Business School. But it’s not unprecedented. In the grocery business, Whole Foods Market Inc. operates under two chief executives, and BlackBerry had two for almost 20 years before longtime partners Jim Balsillie and Mike Lazaridis left in 2012.

Market Basket workers tend to focus on the job cuts that both CEOs oversaw in their previous jobs. Thornton served as chief financial officer of supermarket operator Albertson’s between 2001 and 2006, a period when the grocery chain closed 165 stores and laid off about 20 percent of its managerial and administrative staff.

Gooch also led downsizing efforts at Radio Shack.

Those track records alarmed Market Basket employees from the start, and early interactions with the executives did little to put them at ease. Managers who met Gooch and Thorton described them as distant.

One galvanizing moment occurred last month when the CEOs fired eight high-ranking employees who led pro-Arthur T. demonstrations. Despite their decades of service, the workers were not called into an office or even dismissed over the phone — termination letters and no-trespassing orders were delivered by courier to their homes on a weekend.

Such actions, seen as cold-blooded, make it easy for Market Basket employees to demonize Gooch and Thornton, said Erik Gregory, who directs the organizational and leadership psychology program at the Massachusetts School of Professional Psychology.

“It’s the ‘othering’ effect, where we can marginalize people we don’t really know and attach our fears to them,” Gregory said. “The courier delivery validated those fears.”

A dozen people who worked with Gooch or Thornton at other companies declined to comment or did not respond to interview requests.

Their reign at Market Basket may end up being brief, but it’s been packed with enough drama for an entire career.

For instance, they spent their fourth day on the job at Indian Ridge Country Club in Andover — not to network on the golf course, but to quell a panic caused by the Market Basket board. The company owns the country club, and its staff is partial to Arthur T. Demoulas. Board members allied with Arthur S. marched into the clubhouse — accompanied by a police escort — intent on firing the club’s managers. In the end, the managers stayed and the board apologized.

Then there was a seemingly innocuous public statement by Gooch and Thornton that referred to store staffers as “employees” instead of their preferred moniker, “associates.” The semantic faux pas caused an uproar among Market Basket workers. They said it proved the CEOs did not understand the chain’s culture.

John Garon, a front-end manager at the Burlington Market Basket, said Gooch and Thornton were doomed from the start — because neither one is named Arthur T.

“They’re not part of the Market Basket family,” Garon said. “Would we have been welcoming to anyone? No, but that’s not the point."

www.bostonglobe.com/business/2014/08/05/constant-challenges-certainties-for-new-ceos-market-basket/TLtsq6IQ7sUMMW3abHO1VJ/story.html

• Tags:
• In the News