Robert Nardelli, the former CEO of Home Depot attempted to transform the company’s culture from an entrepreneurial retail culture to a command and control bureaucratic culture and led to the downfall of the company. With no prior retail experience, Nardelli became the CEO of Home Depot and destroyed the impeccable reputation of the company’s customer service . Prior to examining the leadership style of Nardelli, it is essential to analyze what the leadership theories mean. The trait theory is one of the most interesting theories of leadership, which analyzes the personality attributes of a person. The theory provides a close look into how the leaders feel, think and function under various circumstances . Behavioral theory examines the behavioral patterns of leaders, such as their concern for task and people, and directive and participative leadership. On the other hand, situational and contingency theory evaluates a leader’s ability to work effectively in different situations.
Nardelli’s traits brought huge profits to the company, but eliminated the customer satisfaction experience. He employed the work culture of General Electric, which was his previous company. The work culture of GE was appropriate for its extensive operations and enormous size; however, in the case of Home Depot, which had a culture of entrepreneurship, Nardelli’s plans could not work out . While the employees at Home Depot were independent in terms of creativity and decision making. The difference between the two companies made Nardelli a failed CEO and led to the criticism of his leadership style. He employed a task oriented and autocratic leadership style. His tenure in Home Depot was inflexible and hard-handed in nature. He enforced aggressive plans and centralized control. He ignored several factors of the company, such as sense of humility, employees’ enthusiasm and interests of the stakeholders . He could not maintain a friendly relationship with the employees.
Nardelli took more concern in the goals and objectives of the company rather the interests of the employees. He invested huge capital on technology and always strived for numbers. He held the top managers accountable for meeting the targets. He replaced a major number of permanent employees with contractual workers who had less or no experience. During his tenure in Home Depot, though the company earned huge profits, it lost the reputation for the best customer experience sue to the inflexible leadership style employed by Nardelli . The sales of Home Depot grew in numbers; however, the shares declined, which called for an innovative leadership. Nardelli’s autocratic leadership style accelerated the efficiency of the hardware retailers, but damaged the morale of the employees. Under the leadership of Nardelli, Home Depot successfully cut the costs and improved its metrics in terms of finance. However, he failed to maintain a balance between the frontline workers and the customers, which destroyed the customer service .
Nardelli’s decision to install cameras in the stores as a measure to catch thieves misled the employees as a measure to spy on them. He did not provide appreciable incentives to the employees even when the company earned huge profits, which dissatisfied the employees and led to the reduction in the quality of customer service . Nardelli valued competition and motivated the employees by instilling fear rather cheer. He created ranking performance systems to fire the underperforming employees, which created warfare among them. With the long hours on conference calls from the headquarters, the managers failed to spend time training or managing the store. Nardelli demanded the managers to show obedience to the authority by following the orders unquestionably. Furthermore, Nardelli ignored the weekend-off policy and forced the managers to work the entire week. The dissatisfaction among the managers carried down to workforce on the floor. The demotivated employees failed to take proper care of the customers at the counters, which deteriorated customer satisfaction.
An increase in the computerized training programs demoralized the field trainers. Inexperienced part-time workers failed to produce expected results. Though Nardelli realized his leadership style did not work, he denied changing it. Moreover, he shifted away from retail business into construction business which reduced the employee incentives and stocks on the Wall Street . Nardelli viewed the employees as resource-objects and employed his friend Donovan from GE as the head of the HR department. Donovan’s job at Home Depot was to renovate the HR department ranging from staffing to training and benefits. He decided to place HR managers in the stores of Home Depot and selected 1500 new HR managers from 37000 applications . The new HR managers created havoc in the company as they took away the work of the store managers. The naïve HR managers with limited skills flooded the company with incompetent associates, who delivered a bad customer experience.
The failure of the HR department made Nardelli terminate Donovan and jump on the process of transforming the work culture of the company. Nardelli started recruiting junior military officers as his sub-ordinates and turned the atmosphere of Home Depot into an international border scenario. Transferring thoughts and people from the military became Nardelli's spanning move to remold Home Depot . Though Nardelli was well aware that the GE culture failed to prove results in Home Depot, pride forbade him to adapt the culture of Home Depot. Nardelli always aimed for flawless execution of his policies and expected the managers to maintain standards of perfection too. Even after experiencing failures of all kind, he filled himself with deception of power and success. His engagement in risky behavior forced him to take dangerous business decisions, which adamantly resulted in a disaster for the company, Home Depot .
Over time, Nardelli’s tyranny compelled him to destroy the culture of Home Depot with his orders, commands, rules and obedience. He could not tolerate flexibility and spontaneity in the company. Nardelli’s unethical behavior led to the filing of several law suits against Home Depot averring hostile environment in the workplace based on race and gender . He believed that the financial profits brought to the company through his new strategic plans would excuse his arrogant behavior. He ignored the fact that people are the asset of the organization and led to their demotivation. Nardelli’s authoritarian style of leadership led to a drastic decline in the satisfaction of both the employees as well as customers . The results would have been better if Nardelli motivated the employees in a positive way rather portraying his character of dictatorship. He could have succeeded in Home Depot as an inspirational and efficient leader had he promised to maintain the existing culture of Home Depot in terms of customer service and allowed the employees to take independent decisions for the benefits of the company. Finally, Nardelli had to leave Home Depot to the fate of its failure.
References
Grow, B., & McMillan, S. (2006). Home Depot: Last Among Shoppers. Bloomberg Business Week , 15-17.
Hellriegel, D., & Slocum, J. (2010). Organizational Behavior. Cengage Learning.
Shaw, W. (2007). Business Ethics. Cengage Learning.
