The Home Depot Company - Assistant Store Manager's View - Term Paper Example

The Home Depot Company: Interview Results and Corporate Research ABSTRACT The Home Depot is a multi-national retailer that provides home goods and contracting raw materials for a variety of diverse consumers. The organization is centralized at the executive level, however there is flexibility for empowerment as the in-store environment is more decentralized with a focus on relationship development, teamwork and career development as part of human capital growth. The Home Depot is a complex organization with the need for many different employee and financial control systems with much demand stemming from centralized headquarter leadership about improving performance. This paper describes the current organizational environment at The Home Depot and describes the role of an Assistant Store Manager as a leader within this large corporation. The Home Depot Company: Interview Results and Corporate Research Introduction This paper explores The Home Depot in relation to its organizational principles, social responsibility, management planning, human resources function, leadership philosophy and general operating conditions. The Home Depot maintains many internal functions that can be benchmarked for best practice in many of these organizational categories, on the basis of sound leadership that continues to make this a world-class retailer. This company maintains high standards in relation to managing subordinate workers which is reflected in The Home Depot’s reputation with customers and in the ability to enact controls using more liberal leadership practices that empower workers. The results of an interview with an Assistant Store Manager, Dave Hillis, are provided, using closed-ended questions as the research template. Dave is the operations and merchandising manager responsible for handling tool rental services, in-store human resources, and cost control leadership. Purpose, Mission and Management Challenges The Home Depot prides itself in being a world-class service provider, thus its main purpose is to satisfy customers. The business provides home goods merchandise and also raw materials, such as lumber, electrical systems, lighting and even outdoor maintenance tools for a diverse customer segment. It is a highly competitive company that devotes considerable resources, both financial and labor-related, to improving employee relationships. The mission of the business is clear: “The Board of Directors (the "Board") of The Home Depot, Inc. (the "Company") is committed to maximizing long term shareholder value while supporting management in the business and operations of the Company, observing the highest ethical standards and adhering to the laws of the jurisdictions within which the Company operates” (The Home Depot, 2011, p.1). The Home Depot works consistently to improve relationships with investors that contribute to capital procurement while also satisfying stakeholder expectations for ethics and corporate social responsibility. The ASM of Home Depot considers maintaining employee motivation as the most difficult management challenge, considering the diversity of employees and their very different socio-cultural backgrounds (Personal Interview, 2011). The organization recently underwent transformation from a decentralized organization to one with tighter controls associated with performance expectations from managers and employees. This transition that removed some of the employee and manager empowerment have made resistance to change more prevalent that impacts productivity and performance. The Financial Condition and Worker Capital The Home Depot is currently one of the largest retailers in the world, boasting net earnings of $3.3 billion in 2010 (Home Depot, 2011). Sales increased 2.8 percent in the same year from 2009 (Home Depot, 2011). The business maintains excellent credit worthiness and continues to experience growth in stock value as a result of investor confidence and successful international marketing strategies. The very positive financial condition of The Home Depot provides excellent opportunities for management leadership. Having access to higher volumes of capital allows for more innovative training and development packages that continue to bring the company better competitive edge. When resources are required to make the organizational environment more appealing to employees, such as offering superior benefits packages, this improves the ability to motivate workers to perform to service standards. A quality cash flow simply gives managers the ability to provide first-class delivery of human resources-based strategies that improve employee loyalty and commitment to meeting the mission and service goals. The manager at The Home Depot agreed completely that workers are intellectual capital and that they are the single-most important element to meeting service goals. The Home Depot attempts to give employees a voice in decision-making when appropriate, using regular surveys to spotlight employee perceptions of change needs or generally how to improve the business model (Home Depot, 2011). “Regular surveys can reduce gaps between what managers think employees feel and what they really need” (Robbins & Judge, 2008, p.88). By taking routine feedback from employees, the business is able to develop better training, team culture and assist in career development packages so that only top talent is promoted to management positions. The manager believed that worker intellectual capital gives the company competitive advantage (Personal Interview, 2011). Ethical Practices It was described that ethical standards are the foundation of the company’s mission. When asked about the ethical challenges, the manager described ongoing problems with work/life balance regarding employees (Personal Interview, 2011). Many workers have dual-income families and thus needs often arise associated with family that conflict with worker schedules. The Home Depot management team must balance issues that arise in the household with employee schedules while maintaining focus on meeting business goals, but also establishing that the business cares about family issues when they arise. The manager has requested that The Home Depot provide low-cost daycare services to parents as part of its ethical focus and it is currently being considered by higher executive leadership (Personal Interview, 2011). The Internet describes ethical behaviors related to the external environment. The business works with international forces to improve sustainable forestry and also has developed a procurement model that provides customers with eco-friendly products (The Home Depot, 2011). For instance, the Home Depot has invested considerable capital into advertising that promotes the value of substituting traditional light bulbs with more energy efficient lighting options in an effort to improve its stance on environmentalism (NAAHQ, 2009). This effort, combined with other environmental issues, makes The Home Depot a leader in ethical business practices. The Home Depot is renowned for its corporate social responsibility. In 2011, the company teamed up with U.S. Veterans networks, donating $10 million to veteran-related causes and volunteerism (The Home Depot, 2011). The organization also works with Habitat for Humanity and a program called Retool Your School which provides supplies and support for black university students (The Home Depot, 2011). The business promotes volunteerism from managers and employees, trying to make them more interactive with its corporate social responsibility efforts. The Multi-National Enterprise The Home Depot is an MNE, maintaining retail facilities in the U.S., The United Kingdom, China and Japan. The business is largely centralized, thus decision-making about operations stems from U.S. headquarters and then is disseminated across international boundaries. The business has a single model of business, including facility layout and design as well as maintaining an internationally-based supply chain model that is consistent in all multi-national operating environments. The manager indicated that many people are trained in their home country to act as short-term expatriates when the business decides to launch a new international retail center (Personal Interview, 2011). There is a great deal of HR emphasis on using home country talent to help lead foreign divisions until they are ready to manage their own operations. Executive involvement remains centralized in the U.S. Management Planning The manager indicated that the majority of involvement in planning is related to local advertising, job design and training (Personal Interview, 2011). The manager creates direct mailing literature for delivery to local customers when there are upcoming sales or special events that cater to the community, such as do-it-yourself home improvement seminars. This planning function accomplishes higher sales revenue and also helps to position the company in the local community as a leader in service philosophy. Job design and training is accomplished by setting goals and objectives for improving employee visibility as decision-makers, giving them the tools that help in career development to become Home Depot managers on their career path. The manager conducts regular audits of jobs and employee appraisals, using these feedbacks and auditing results to improve job description and also develop more effective human capital (Personal Interview, 2011). The manager utilizes a SWOT Analysis template delivered by corporate headquarters that is conducted twice yearly to identify strengths and weaknesses so as to develop contingency plans or set new objectives (Personal Interview, 2011). The manager wishes they could receive more autonomy in relation to the creation of training materials, believing that the training provided by headquarters is not sufficient for meeting real-time needs (Personal Interview, 2011). If the business were to give more opportunity for training development that is customized for meeting local customer and diverse employee needs, the manager believes there would be more positive training outcomes that impact the real-world sales environment (Personal Interview, 2011). The frequency of internal auditing is also a planning concern, believing that certain audits of the organization make unnecessary redundant management activity that could be better served with more strategic thinking. Porter’s Five Forces and Technology Porter’s Five Forces deal with environmental risks to the business. These are threats of substitutes, threat of new entrants, supplier power, customer buying power and competitive rivalry (Fitzsimmons & Fitzsimmons, 2011). Fortunately for The Home Depot, they operate in an oligopoly where there is much less competition due to the high costs associated with new market entry, these being entry barriers. There is virtually no risk of new entrants which gives them more market control. The manager indicated that in this market environment, suppliers are dependent on Home Depot’s success (as well as that of Lowe’s or Ace Hardware), therefore they are able to exert pressure on suppliers related to pricing in the supply chain (Personal Interview, 2011). Since there are many suppliers to choose from and only a handful of competitors, The Home Depot leverages its buying power on a variety of home goods products. Fortunately, also, the customer segments that support Home Depot revenue growth do not have much buying power in the market since their options for home goods products is limited, especially for contractors seeking raw materials for construction. There is minimal risk of defection to competition since only a few suppliers of many products that Home Depot carries exists in this industry. Competitive rivalry exists in this market, usually related to pricing promotions from major competitors (Personal Interview, 2011). The business conducts regular environmental scans and audits of the competitive environment to identify pricing differences, leading to their price match guarantee as a means to improve its market position (Personal Interview, 2011). There is minimal risk of substitute products, considering that, according to the ASM, “a toilet is a toilet, a sink is a sink” (Personal Interview, 2011). The organization uses technology throughout much of its operations. Technology is utilized for training purposes, including video-conferencing tools and software for skills development related to foundational computer software package proficiency, typing ability, and other general administrative competencies (Personal Interview, 2011). The business also has a BRP system, which is business resource planning, that helps reduce costs associated with procurement and plan better inventory practices for efficiency and space utilization. The inventory system uses RFID, radio frequency tags, to make the process of inventory control more cost effective and efficient (Personal Interview, 2011). Manager Decision-Making and Jobs Development Most often, the manager’s decision-making is reactive, rather than proactive. Even though the Assistant Store Manager is involved in many planning activities, the structure of customer-based feedback drives internal improvements mostly. The business has invested considerable labor and capital into customer surveys that are taken very seriously by the management and executive team (Personal Interview, 2011). On every receipt there is the option to fill out Internet-based surveys about their total experience with Home Depot and also leave opinion about specific staff members or events. When this occurs, information about how to make changes or implement disciplinary action is disseminated from corporate headquarters, spotlighting service failures. Many changes occur as a result of these feedback research tools, in far greater proportion that through anticipating events and creating potential contingencies in the event of service failures or weaknesses. Job analysis, job descriptions and job specifications are conducted both centrally and within the store unit (Personal Interview, 2011). Headquarters determines the pay scale associated with core competencies in each manager or employee role, while managers are given some flexibility in changing job descriptions based on real-time market situations or internal needs for scheduling or lean labor requirements (Personal Interview, 2011). Job analysis is conducted by centralized auditing staff from executive human resources that is largely done behind the scenes from the in-store management team. However, managers are empowered to offer suggestions on changing job specifications or descriptions after conducting needs analyses that are then delivered to corporate headquarters (Personal Interview, 2011). The Organizational Structure and Delegation of Authority Figure 1 illustrates the organizational structure of The Home Depot, illustrating its very centralized management system. Figure 1: Home Depot Organizational Chart Source: http://www.cogmap.com/chart/home-depot This is, as already indicated, a centralized hierarchy. All U.S. Store managers report to Marvin Ellison with a vertical flow to the junior roles of mid-tier management in-store. Though the business is now becoming more centralized, the in-store environment differs from executive leadership structuring. Managers are free to delegate authority to employees who have exhibited strong leadership skills and accomplished successful scores on training packages (Personal Interview, 2011). The manager finds that more motivation, higher performance and cooperation exists when employees are able to become decision-makers about their individual or group job roles. The Human Resources Function and Compensation There is considerable emphasis on human resources at the Home Depot as one of its core values. The structuring of HR stems from corporate headquarters, but is given flexibility for managing by assistant and store managers (Personal Interview, 2011). The business maintains a 360 degree feedback system that includes feedback from line managers, peers and even customers in order to provide a less-biased and more accurate employee assessment when it comes to performance and compensation (Personal Interview, 2011). The main goal of human resources, related to core values, is to establish a sense of personal belonging with the employees. The business operates its human resources efforts on the premise of Maslow’s Hierarchy of Needs. In this model, once an individual achieves personal recognition from peers and the management culture, they can develop more self-confidence, prestige and satisfaction (Gambrel & Cianci, 2003). The Home Depot attempts to build self-esteem by creating a collectivist culture and generally make employees feel like valued members of a larger team. The business also promotes training as unique and non-transferrable to other organizations as a means to improve motivation and also reduce turnover (Personal Interview, 2011). According to Bambacas & Bordia (2009), when an organization is able to make training appear non-transferrable, it creates the employee perception that it is now too costly to leave to seek other employment and thus mediates commitment-based relationships with the firm (Bambacas & Bordia). Between centralized HR leaders and in-store management, training is always being adapted, when possible, to include elements of exclusivity and then promoting this among the employee population. In relation to management compensation, the ASM recognizes that his compensation packages are higher-than-industry-average and appeared to be quite satisfied with the many different perks provided by the company. The manager receives stock options, has currently amassed four weeks of vacation time for his years of service, and also receives repayment for educational expenditures related to degree learning (Personal Interview, 2011). Compensation is a motivational and retention tool that exceeds other companies in this industry. Even the compensation levels for lower-level subordinate roles are higher-than-industry-average to boost retention rates and improve loyalty and commitment to The Home Depot. Leadership Style and Employee Motivation Home Depot promotes transformational leadership style as its primary philosophy (Personal Interview, 2011). Research identifies that transformational management style promotes harmony, good works and charity (Bass & Steidlmeier, 1999). These are the foundational core values of the company and thus managers are regularly promoted to extend these values to employees using charismatic attitude and modeling behaviors associated with personal accountability and ethics. The ASM uses these transformational philosophies as one motivational tool by always accepting accountability for management mistakes or service failures in the hopes of gaining role model status (Personal Interview, 2011). Further, communication is a key dimension of gaining employee support for meeting goals. According to Duening & Ivancevich (2006) when clear goals are illustrated to employees there is more likelihood that employees will actually pay attention to factors that impact organizational performance. Therefore, knowledge management and routine knowledge transfer improve relationships and give employees a clear sense of purpose regarding their value and role in the organization. Employees are also motivated by special events, such as Cashier Olympics that give prizes for achieving specific organizational goals (Personal Interview, 2011). There are many different special events that occur during the year, such as holiday parties, that improve socialization associated with Home Depot’s core principles (Personal Interview, 2011). Establishing very close-knit peer relationships and interventions between employees and managers boosts commitment to productivity and efficiency goals. The quality of communication within the organization is superior since the in-store environment, unlike executive level function, is very decentralized at the social level. Managers interact with and attempt to empower decision-making from employees regularly, thus they are included in management meetings and brainstorming sessions about how to improve the organizational environment or job roles (Personal Interview, 2011). Work Teams and Groups As established, The Home Depot promotes teamwork as a foundational value. The manager allows employees to conduct some of the internal audits and then attend meetings to discuss their findings. They are also given opportunities in an informal environment to critique the performance of their peers in a candid and also productive manner, supervised by the ASM and his other management colleagues (Personal Interview, 2011). Group function is vital to providing excellent service based on facility design and the ability to meet a diverse set of customer needs related to special services that require more than one individual to perform. These informal sessions improve relationships, show management commitment to satisfying employees, and also give them new perspectives on weaknesses to help them develop more efficient practices. Management Involvement in Ops, Production and Finance The manager is heavily involved in operations, from localized advertising planning to the physical process of inventory control and purchasing. The manager maintains the credentials to purchase materials that are used in administrative and sales purposes, thus letting him explore some of the Home Depot’s cost leverage with suppliers (Personal Interview, 2011). There is, however, little in terms of production at the company based on its service structure, other than generalized customer service activity. However, the manager is deeply involved in financial control processes, constantly working with profit and loss statements, lean procurement demands, loss prevention and many other issues related to cost (Personal Interview, 2011). The Assistant Store Manager must conduct regular audits that determine where loss is occurring and then explore new systems to prevent these losses (whether from theft or employee misuse of services). Weekly, the business conducts conference calls in which managers must present their findings associated with cost control, thus reporting to executive leadership as a means of ensuring their productivity. The managers are provided with templates for auditing certain financial scenarios and then must present the data in formal management meetings (Personal Interview, 2011). The ASM also works in merchandising and tool rental services as part of operations, areas that are also linked to financial controls. Merchandising considers the physical layout of advertising materials during promotions and ensuring a clean environment that satisfies customers. Facilities management in merchandising is a significant part of operations for this particular job role where in-store marketing literature is constantly being swapped out for new promotions. The manager must engage employees to ensure that outdated sales material is removed and, for cost reasons and control, remove promotions from the electronic database to ensure pricing is accurate for customers. The business, according to the ASM, experiences considerable problems with cost control in areas of return policy. It is policy that with a receipt, customers can receive full credit or cash return for their merchandise or a fair exchange (Personal Interview, 2011). However, employees continue to enforce these policies and have been giving returns to customers without proper sales documentation rather than contacting the manager to intervene during questionable return scenarios that might involve theft. The manager was finally forced to develop a disciplinary system, a three-strikes-you’re-out philosophy, in order to control losses associated with customer returns on improperly-documented sales exchanges. In one situation, a customer returned $15,000 worth of contractor-based merchandise without a receipt and it was later discovered that these products had been stolen from another Home Depot store just a few weeks earlier (Personal Interview, 2011). This situation led to much more stringent auditing practices for cost control, improved training in this area, and formalized disciplinary actions related to return policy. Conclusion It is clear that the job role of ASM is a complex one, involving operations, finance, human resources, planning and ensuring an ethical stance. Employees are impacted by transformational leadership style which, in turn, assists in modeling behaviors of commitment, accountability and motivation to achieve performance expectations. The manager works in an environment where employees are genuinely valued and empowered, even though more adjustments to centralizing control is currently driving the business philosophy as performance improvements are being recognized by central headquarters. Despite the centralized nature of the company, the manager has a very active role in many aspects of management and also as it pertains to working with the external environment in terms of marketing and customer service. The ASM is a very active and visible force at The Home Depot and definitely understands the real-world issues that arise in a large multi-national business and how to effectively balance responsibility with positive socialization. Fortunately, this manager works in a business that has received many accolades for its best practices in HR, service and employee relations, giving him an edge with the fortune of managing on a template foundation associated with transformational leadership style. References Bass, B. & Steidlmeier, P. (1999). “Ethics, Character and Authentic Transformational Leadership Behavior”, Leadership Quarterly 10(2), p.188. Bambacas, Mary & Bordia, Prashant. (2009). “Predicting Different Commitment Components: The relative effects of how career development HRM practices are perceived”, Journal of Management and Organization, 15(2), pp.224-241. Duening, Thomas N. & Ivancevich, John N. (2006) Managing Organizations, 2nd ed. Cincinatti: Atomic Dog Publishing. Fitzsimmons, James A. & Fitzsimmons, Mona J. (2011). Service Management: Operations, Strategy, Information Technology, 7th ed. McGraw-Hill Irwin. Gambrel, Patrick A. & Cianci, Rebecca. (2003) “Maslow’s Hierarchy of Needs: Does it Apply in a Collectivist Culture”, Journal of Applied Management and Entrepreneurship 8(2), pp.143-165. NAAHQ. (2009). “Advantages of Going Green”, National Apartment Association. Retrieved November 11, 2011 from http://www.naahq.org/green/about/pages/advantages.aspx Personal Interview. “Dave Hillis – ASM Home Depot”. Conducted November 13, 2011. Robbins, S.P. & Judge, T.A. (2008) Organizational Behavior, 14th ed. Pearson Prentice Hall. The Home Depot. (2011). “Annual Report 2010: More Saving, More Doing” Retrieved November 11, 2011 from http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDIxMjY5fENoaWxkSUQ9NDM0OTI1fFR5cGU9MQ==&t=1 The Home Depot. (2011). “Corporate Governance Guidelines”. Retrieved November 12, 2011 from http://ir.homedepot.com/phoenix.zhtml?c=63646&p=irol-govGuidelines The Home Depot. (2011). “The Home Depot, Inc. News Releases” Retrieved November 12, 2011 from https://corporate.homedepot.com/wps/portal/ Read More