HOME DEPOT CASE

Home Depot Case

Home Depot Case

Analyse the organisational culture of Home Depot around the time that Marcus stepped down and Blank became the CEO of Home Depot in 1997, and contrast this with the culture in the company around 2003, when the new CEO, Nardelli was three years into his change strategy in the company using one or more appropriate frameworks from the literature. Within your answer attempt to draw conclusions on whether the prevailing culture contributed to the problems that the company started experiencing in the late 1990's.

When Bernard Marcus stepped down as CEO in 1997, Home Depot had a distinctive culture, based on personal rapport and involvement he and co-founder Arthur Blank had with employees. Marcus and Blank are opposites in many ways. Marcus is gregarious and outgoing, whilst Blank is a detailed number man (Johnson 1998). The two both emphasised customer service, however, encouraging sales staff to help customers with their hardware problems instead of just trying to sell them a tool (Johnson 1998). To accomplish this, most sales people were plumbers, contractors, carpenters, or others with similar "handy" experience (Johnson 1998). Marcus and Blank believed this expert advice would help empower homeowners to do their own work, and subsequently would grow Home Depot's potential market, a strategy that proved successful (Johnson 1997).

Culturally Home Depot was described as a "laissez-faire" or "cowboy" culture from its founding through 2000 (Pascual 2001; Sellers 2002). Individual sales people were encouraged to make decisions, even if it meant making a mistake (Johnson 1998). Local managers made many of the decisions for their stores independently of the main office. Buying was similarly left up to individual regional managers, who each negotiated separate supply contracts, resulting in different terms from region to region and in some cases from store to store (Pascual 2001). "The co-founders used to boast that the chapter on merchandising in Home Depot's policy manual didn't have a single word in it" (Sellers 2002, 93). Almost all jobs above entry level were filled internally, causing a system of personal networks to dominate communication within the company (Stein 2000). This was further reinforced by senior management, who managed by regularly visiting stores to develop personal relationships with workers and check store operations (Stein 2000). Co-founders Marcus and Blank trained every manager personally (Sellers and Woods 1996). Employees were encouraged to buy stock, and offered it at a discount price, to give them personal investment in Home Depot's success (Sellers and Woods 1996).

By the time Blank succeeded Marcus as CEO in 1997, Home Depot was becoming too large for its informal culture. Blank tried to rectify this situation by adding an additional level of executives directly below himself and above the six division heads, a move questioned by many (Johnson 1998). He tried to maintain Home Depot's traditional culture, whilst formalising decision-making and communication systems, a plan that was unsuccessful. In his three years in charge, things went from bad to worse. By 2000, stock prices were down, net income and same ...