Blueprint for Culture Change Case Review – by Renni Rengganis

Company Profile

The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank. Along with investment banker Ken Langone and merchandising guru Pat Farrah, the founders’ vision of one-stop shopping for the do-it-yourselfer.

They opened the first two Home Depot stores, at around 60,000 square feet each on June 22, 1979, in Atlanta, Georgia.

From the start, associates were able to offer the best customer service in the industry, guiding customers through projects such as laying tile, changing a fill valve or handling a power tool, they also began offering clinics so customers could learn how to do it themselves.

The company grew to more than 1,100 big-box stores by the end of 2000; it reached the $40 billion revenue mark faster than any retailer in history.

Today, The Home Depot® is the world's largest home improvement specialty retailer, with more than 2,200 retail stores in the United States

Company Profile cont’d

The Home Depot ValuesTaking care of our people: The key to our success is treating people well. We do this by encouraging associates to speak up and take risks, by recognizing and rewarding good performance and by leading and developing people so they may grow.

Giving back to our communities: An important part of the fabric of The Home Depot is giving our time, talents, energy and resources to worthwhile causes in our communities and society.

Doing the right thing: We exercise good judgment by "doing the right thing" instead of just "doing things right." We strive to understand the impact of our decisions, and we accept responsibility for our actions.

Excellent customer service: Along with our quality products, service, price and selection, we must go the extra mile to give customers knowledgeable advice about merchandise and to help them use those products to their maximum benefit.

Creating shareholder value: The investors who provide the capital necessary to allow our company to grow need and expect a return on their investment. We are committed to providing it.

Building strong relationships: Strong relationships are built on trust, honesty and integrity. We listen and respond to the needs of customers, associates, communities and vendors, treating them as partners.

Entrepreneurial spirit: The Home Depot associates are encouraged to initiate creative and innovative ways of serving our customers and improving the business and to spread best practices throughout the company.

Respect for all people: In order to remain successful, our associates must work in an environment of mutual respect, free of discrimination and harassment where each associate is regarded as a part of The Home Depot team.

 

Case Background Over the past five years, Home Depot’s

performance has indeed been put on a stable footing.

Home Depot’s culture, set primarily by the charismatic Marcus (known universally among employees as Bernie), was itself a major factor in the company’s success. It was marked by an entrepreneurial high-spiritedness and a willingness to take risks; a passionate commitment to customers, colleagues, the company, and the community; and an aversion to anything that felt bureaucratic or hierarchical.

Case Problem Over the past five years, before 1990s Home Depot’s

performance has indeed been put on a stable footing. Low-value corporate paperwork, an important store safety

directive might disappear among the unread memos. Lack of strong career development programs was leading

Home Depot to run short of the talented store managers. Poor inventory turns, low margins, and weak cash flow.

Case solution and initiatives

Home Depot board had decided hire new CEO with the expertise to drive continued growth needed to be brought in to run what had become a giant business.

In 2000s come Bob Nardelli, as new CEO and Dennis Donovan as head of human resources, but no one wanted them because the promotions always come within.

Nardelli laid out a three-part strategy: Enhance the core by improving the profitability of current and

future stores in existing markets; Extend the business by offering related services such as tool rental

and home installation of Home Depot products; Expand the market, both geographically and by serving new kinds

of customers, such as big construction contractors.

Re-evaluate the merits of the current store environment

Making detailed performance

data transparent to all the relevant

parties

Collaborate autonomous of

functional, regional, and

store operations

Centralized some function

(ex: purchasing to leverage the buying

power.)

Case solution and initiatives

This new strategy would require a careful renovation ofHome Depot’s strong culture.

Change Process Resistance to the changes was fierce, particularly from managers:

Much of the top executive team left during Nardelli’s first year. But some saw merit in the approach and in fact tried to persuade distraught colleagues to give the new ideas a chance.

Tools for Culture Change called a company’s social architecture– that is, the collective ways in

which people work together across an organization to support the business model.

Also there is changed the human side of the equation: people’s behavior, beliefs, social interactions, and the nature of their decision making. This social element that allowed Home Depot to achieve – and, more important, to sustain – large-scale and complex cultural transformation.

A CULTURE CHANGE TOOLBOX

Data Tempelates Monday morning conference calls

Strategic Operating and Resources Planning

Employee task forces,

Disciplined Talent Reviews An array of leadership development programs,

Store manager learning forums Mapping of the HR process,

A CULTURE CHANGE TOOLBOX

Mechanism of Change

The mechanisms fell into several categories:

Metrics Describe what the culture values and make clear what people will be held accountable for

ProcessesChange how work is done and thus integrate the new culture into the organization

Programs Generate support for and provide the first demonstration of the

new culture’s effectiveness

Structures Provide a framework for the new culture to grow, often by

changing where and how decisions are made

Speed and SustainabilityForcing a change too quickly can backfire. Nardelli

Made change by starting with a single project, then move to consistently apply repeatable processes that sustain it.

Build accountability into such processes.Create interlocking dependencies between different parts

of the

organization so that they have a mutual interest in sustaining the change.

The Tide TurnsHome Depot culture today – with its focus on process, hard data, and accountability – is different from what it was five years ago. And there are concrete signs of its acceptance by employees.

Result Revenue climbed to around $80 billion in 2005, and

earnings per share have more than doubled since 2000.

Employee surveys, by Donovan’s department showed a rise of various aspects of job satisfaction from one point below the average score for all industries in 2002 to eight points above it in 2004.

Available data which measure includes engagement in the business, enjoyment of the employee’s existing role, support for the leadership, and confidence in the company’s future.

Increasingly behavior of people interacting with one another and making critical decisions in significantly different, that behavior was becoming a routine part of everyone’s daily work.

Did You Know ? (about Home Depot)

We are the world’s largest home improvement retailer.

We are the fourth largest retailer in the U.S.

We are the fifth largest retailer in the world.

In 2010, The Home Depot was ranked No. 29 on the Fortune 500 U.S. list.

More than 1 million children built their first toolbox at a Kids Workshops.

The Home Depot has the largest garden club in the world.

Since its formation in 2002, The Home Depot Foundation has granted more than $270 million to nonprofit organizations improving homes and lives in local communities. 

Since 2008, The Home Depot's Framing Hope Program has donated $100 million worth of product to over 1,400 local charitable partners to renovate and rebuild homes. 

In 2010, The Home Depot announced a goal of cutting energy use in our stores by another 5% by 2015, resulting in a reduction of 20% since 2004.Source :

Official website of Home Depot access fromhttps://corporate.homedepot.com/OurCompany/DidYouKnow/Pages/default.aspx