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Home Depot Blueprint for Cultural Change Case Analysis

Essay by   •  November 13, 2017  •  Research Paper  •  3,042 Words (13 Pages)  •  1,838 Views

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Executive Summary

Robert Nardelli was the former Chief Executive Officer of General Electric before becoming the top executive of Home Depot wherein his army style of leadership was not liked by many. Whereas, Frank Blake was admired for his calm approach in leading the company. The organizational design of Home Depot under their respective tenure was a dissimilar one. Blake took advantage of technology to align the company’s centralized marketing strategy. Whereas, Nardelli made sure that under his management, Home Depot is to become an army-like environment. His type of decision making is based on running a business with a command and control type structure where he is the lone decision maker. Blake, on the other hand, decided that a major change was needed and put a stop to all expensive strategy of opening new stores. A simple SWOT analysis of Home Depot includes brand recognition, safety training of employees, and corporate and social responsibility as its strength. A decline in customers and consumer focus are their weaknesses. The U.S. economy declining can be attributed as the threats and global expansion as opportunity. Nardelli was able to locate merchandising functional work with store operations that enabled the company to centralize and distribute buying power and Blake granted store managers autonomy. Home Depot’s business rhythm was formal and systematic during Nardelli’s tenure as opposed to Blake’s informal approach. Nardelli has a “three-parts strategy”: to enhance the value by improving the current stores in existing markets, and to improve the profitability and to extend the business by offering related services such as home installation of the Home Depot products, and tool rentals as well; and to expand the market geographically and by serving new kind of the customers, as the big construction contractors (Charan, 2006).

Leadership

Robert Nardelli was a former executive at General Electric company before he was hired by Home Depot. Although he was an experienced leader at GE, he concentrated on overhauling Home Depot’s business process over focusing on the process and swept aside the elements that made the home improvement company special. When he joined Home Depot, he had his work cut out for him. He was in tremendous pressure to continue the growth of the company. Nardelli’s style of leadership can be described as someone who is task oriented, despotic, self-directed, and directive. His tenure at the Home Depot Company was marked with heavy-handedness and rigidity. He neglected the openly expression of affection and approval, enthusiasm, and sense of humility. He was obsessed with reaching goals, objectivity, accomplishments within the boundaries of the values of the company. He invested heavily in technology. He also wanted to virtually measure everything in the company and hold top managers strictly accountable for meeting the numbers (Charan, R., 2006).

Frank Blake was appointed Chief Executive Officer of Home Depot in 2007. He succeeded Bob Nardelli who was to resign over the controversy surrounding his money-spinning pay. Blake’s tenure is marked by his guidance through the Great Recession and its savage effect on the company. His leadership style is mellow and calmer. He was able to increase employee morale and customer’s satisfaction begun to increase. Blake was noted by business analyst as one with a good communication skill. Blake’s leadership style allows him to hear any warning signs and addressed it decisively. His leadership is that of genuine leadership with high degree of humility (Tobin, 2010).

Organization Design

Home Depot’s organization design and structure determines the pattern that the company uses in connecting with its target customers. It also serves as the framework that simplifies successful implementation of strategies for growth or expansion. The advantage of the Home Depot’s organization design is that it enables the maintenance of a centralized corporate control. Under Robert Nardelli’s leadership, this centralization was further strengthened. Despite the company’s geographical customizing, it offered a limited support for the autonomy of store managers. This was under the tutelage of Nardelli and under his tenure, he started to make the company look and feel like an army. Home Depot made investments to improve infrastructures and operations. As a result, the company was able to deliver strong and had a consistent growth.

The Home Depot’s highly diverse organization is highly committed and dedicated to its customers. These realization was further strengthened by Frank Blake’s leadership. Under his management, the company’s organization design has tremendously and successfully changed. The company has matched its strategic intentions, team members were primed in executing and delivering them. Blake has enabled the company’s structure, processes, and its people to support its most important outcomes and channel the company’s efforts in achieving them (Aronowitz, 2015). Blake has used technology in aligning the company’s centralized marketing strategy and revived to a local entrepreneurial emphasis. Home Depot’s organization design initiatives are now focused on helping to manage costs, reduce the errors, and more face to face with the loyal and returning customers.

Critical Thinking/Decision Making

Robert Nardelli has always believed in running a business with a command and control type of structure. His decision to create a business functional structure in which he is the lone decision maker as he monitored all activities while his staff served as the extension of management. These are the major decisions he made while he served as Home Depot’s CEO. In the year 2005, Home Depot had experienced deteriorating share price. With the autocratic management style of Nardelli, the employees were turned off and investors become angry. The board got rid of him after losing market shares, alienating the executives, downplaying customer service, refusing to cut his fat pay package, and his behaviors and replaced him with then Vice Chairman and Executive Vice President Frank Blake.

Frank Blake came as a sigh of relief for most of the employees and senior leadership. He brought in a calmer yet affirmative leadership. He made some major business decisions that would later benefit Home Depot Company. When he replaced Nardelli as the new CEO, the company was suffering from slow economy and low company morale brought about by his predecessor. One of his major decision included a stop on the expensive strategy of opening new stores. Instead, he focused primarily on squeezing greater profits at each location and had reassessed the company’s merchandise. Another major

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