A Community Has The Right to Self-Determination

The Market Basket supermarket chain has refused the formal authority of its owners, and given its allegiance to the leader it trusts and prefers. When I say the “supermarket chain has refused”, I am referring not to the legal entity but to the community of workers that brought that legal identity to life. That community has done the right thing; what’s needed now is a governance structure that recognizes the community’s rights.

From BoingBoing.net on July 30th 2014, a summary by BoingBoing reader MiketheBard:
“[…] Market Basket, a New England supermarket chain that Consumer Reports named the 6th best in the country, has been all over the news in the Northeast for the last couple months.

After a long family feud, the majority stockholders fired their cousin, longtime CEO Arthur T DeMoulas. He had built the business on low prices, high wages, and ZERO company debt- All employees get profit sharing and a livable wage, and many have been with the company 20, 30, even 50 years.

Arthur T. was replaced with the former president of Radio Shack, with an evident goal of strip mining the wealth from the company–raising prices, cutting benefits, loading up with debt, and selling off real estate–in order to pay out higher stock dividends to the controlling shareholders.

The employees revolted. Top executives walked off the job and picketed in front of headquarters. Employees from managers to baggers are using their vacation time to protest outside stores. 68 out of 71 managers have pledged to quit unless Artie T is reinstated or allowed to purchase the remaining 51% of the family-owned company. Deliveries have stopped and twitter is full of photos of completely bare shelves. […]”

These employees are doing the right thing, and the majority stockholders are in the wrong. While I do not believe that the legal entity of a company is a person (contrary to current US law), I do believe that communities are like people and should be treated like people. To give external shareholders unilateral control over the life of a working community is wrong; it is not as bad as slavery, but it is wrong for the same reasons that slavery is wrong. Most corporate governance is geared toward injustice of this kind: giving a few the ability to control the many, to remove their means of livelihood, destroy their lives’ work, sever the relationships they have built, and squander their pensions.

A moral system of corporate governance must respect the right of a community to self-determination, aligned with a clear shared purpose. This does not mean that a community’s leaders should be powerless; on the contrary, those people a community chooses to lead it should be handed as much power as necessary to ensure business is done effectively. This power should be a delegation, however — it is held on behalf of the community. Self-determination also does not mean that shareholders, even external shareholders, are powerless. They should have a voice with exactly as much weight as any other stakeholder group (including employees) in the top-level governance of the corporate entity which provides legal structure to a working community.

When you are considering how this might apply to your own company, ask yourself this: “Do I want the power to destroy, or the power to create?” Current legal power gives majority owners the ability to destroy their companies, as we see in the Market Basket example, but the ability to create is fragile. It comes only with the enthusiastic engagement of employees (and customers, and investors, etc.). By adopting governance which constrains your power as a majority owner or chief executive, you force yourself to respect the voice of your working community. That respect buys engagement in a way that nothing else can. By giving up the unilateral power to destroy, you gain the power to create, working with the community you serve.

If you want to take practical steps to act on the ideas here, I suggest looking into Sociocracy. Although employee ownership (including worker co-operative structures) moves in the right direction, the best available model is the sociocratic one, in which multiple stakeholder groups have a voice in the governance of the company, and yet most decisions are made rapidly in the frontline teams where work is actually delivered. I see Sociocracy delivering on the promises made by employee ownership, providing effective particpatory management and governance to match the changes begun in an employee-ownership initiative.

I hope this is thought provoking in a useful way. What do you think?