Home Depot Organization Analysis - Case Study Example

Home Depot Organization Analysis 24/07/14 Home Depot is a company that was founded by Bernie Marcus and Arthur Blank in 1978(Home Depot, 2005). The company was first established in Atlanta, Georgia. Marcus and Blank embarked on an organization ideology of ‘do it your-self’ as a platform to attract the largest home owner market in the United States. However, the company has out grown its original market to neighboring countries such as Canada, Mexico and even China. Moreover, the company has more potential to expand it market share and has time and again had structural changes to affect this vision. Home Depot endeavor to be the retailer, employer and investment destination of home make over industry. Home Depot has organization governance as part of its culture founded on the values and commitment and principles that respect ethical obligations to its shareholders, customers, communities and employees in which it operates with. The company endears to impact people and the community at large to sustain it interests in the corporate world. The company has experienced different business strategies as outlined by its Chief Executive Officers who have been at the helm of the company leadership. The hiring of Robert Nardelli as a Chief Executive Officer brought a militaristic kind of leadership into the organization(Quain, 2004). Nardelli unlike his predecessor exercised authority over every operations in the company. He displaced the freewheeling business practice in the company. Moreover he changed the existing decentralized management by eliminating the executives to consolidate his influence. Nardelli management skills expanded the business but were accused of stagnation compared to the earlier growth trends. Therefore, Nardelli exercised simple structure over Home Depot. For this reason he was fired for bring anxiety among his top executions who were unease with his decisions(Quain, 2004). After the exit of Chief Executive Nardelli in January 2007, the Board of Directors replaced him with his Vice Chairman, Frank Blake. Both Blake and Nardelli have worked together for a long time in both Home Depot for seven years and also in GE Power Systems before joining Home Depot. The company is now subjected to a functional structure, but not exactly as what Nardelli commanded. Blake like Nardelli replaced the majority of a manager who he thought were out of touch with the customers. Moreover, he refreshed the management and employees and made them work without his control. Blake ensured that he eliminated the discomfort that the managers had with their former Chief Executive. Therefore, under the management of Nardelli the management of every department had to follow a strict guideline from him while Blake ensured that each head of depart was solely responsible for the decision and action in his department. This brought a tremendous change and an increase in the number of customers. Moreover, Blake introduced an ‘Inverted Pyramid’ with the employees and customers above the Chief Executive. He did this to try and bring the customer that the company lost under the management of Nardelli. Home Depot has ever since the exit of CEO Nardelli been advocating a differentiated strategy rather than cost leadership strategy. Blake when addressing Merrill Lynch argued that ‘the key to Home Depot strategy is quality customer service delivered by knowledgeable professionals’ to stress the organization strategy to sustain its customers(Home Depot, 2005). Home Depot has the best human resource in the American home innovators business. The company human resources are headed by Tim Crow as the Executive Vice President(Home Depot , 2013). Crow oversees the management of over 300,000 employees of Home Depot both in the U.S and in overseas countries where the company has established its services(Home Depot , 2013). Crow and the HR management keep evolving strategies that establishes the best class organization support to the company’s associates(Home Depot , 2013). Home Depot had since its inception applied a decentralized strategy in its human resources. However, after the founder of the company employed Nardelli thing change and the company started using military analogies in its relation to customer and also on how to carry out business. Nardelli endeared to make the company look like an army, and he was interested in hiring former soldiers as his employee rather than other civilian. In todays corporate world the military has endeared many management models and enterprises because of the loyalty and dedication that characterize it (Grow, Brady, & Amdt, 2006). For example, Don Ray was recruited by Nardelli. He served as a U.S Armys Elite for three years and on active duty in the military for over six year (Grow, Brady, & Amdt, 2006). He had managed crew members in the Gulf War and commanded a special force sent to Afghanistan after the September 11 attack (Grow, Brady, & Amdt, 2006). Today Ray command customers in a different setting from what he used to do. In 2002 Home Depot recruited 1,142 candidates to train them for its future leadership management. Moreover, among the recruit were 528 military officers (Grow, Brady, & Amdt, 2006). According to Nardelli, military officer has the best experience to face customers given that they have had an encounter facing their enemy in the battlefield. Nardelli argues that military officers are ‘pretty calm under fire (Grow, Brady, & Amdt, 2006). Nardelli understands that military discipline and maturity can be of benefit in an organization that gears up to make a profit while ensuring customer satisfactions. Moreover, Nardelli needed a management ready to take orders while working in a pleasurable environment while executing functions at high standard (Grow, Brady, & Amdt, 2006). Home Depot top managers knew the important of the workforce to the growth of the company. During the reign of Nardelli, the human resource manager has a big role in the running of the company. Nardelli had made his Vice Chairman Dennis Donovan, a powerful man and a close confidant. Moreover, Donovan enjoyed the strategic privileges that any HR manager would need effectively to deliver quality and proficient employees. In addition, Donovan was well compensated and earned the best Workforce Management in 2006 (Hollon, 2008). Home Depot has changed its human resource strategies since the departure of Nardelli and Donovan. The new management has cut the HR infrastructure by cutting its human personnel field officers by 50% April 2008 (Hollon, 2008). The Company is now embarking on establishing Human Resource service centre to address the challenges that it is experiencing in shortage of customers and declining prices. Therefore, through the service centre Home Depot will be able to address its customer through phone calls. Analysts argue that the changes in the human resource are guided by short term goal rather than the long-term impact. Home Depot has over the two year moved from being the highest paying for its HR managers to a phone based HR structures. Politics Home Depot operations have been characterized by politics of division and exclusion. The way the company is run is determined by political decisions made by the Board of Directors. For example, the hiring of Robert Nardelli as the CEO was an influence of Marcus and Blank, as a result, of Nardelli successful leadership in GE Power Systems as the CEO. Therefore, the directors have to make a decision out of their observation of how well company are doing in their management. Moreover, as soon as Nardelli was confirmed as the CEO he had to establish an environment at which he can have an influence in the company. He recruited his own Vice Chairman in the former organization and replaced majority of senior managers will people who had had been in the army before. Nardelli did this to ensure that he command the organization structure without being question of his motive or encountering objections in the top management which he viewed as a determinant of a bad organizational strategy. Home Depot performed well under Nardelli, but his style of leadership created discomfort among his associates. The customer has lost quite a number of its old customers but has expanded its market base to more other States in the U.S and also in the neighboring countries. Nardelli use of military office and militaristic management did not go well with some directors and management team. He was thus replaced to ease tension and embrace an alternative style of leadership that could attract more investors to the company. According to the principles of management employee-centered management is much better than production centered management. Managers who support their subordinate rather than supervise ensures that employees achieve their goal and that of the organization effectively and without any friction and antagonism. Home Depot Board of Directors appointed Nardelli Vice Chairman to turn around the company from the changes that were introduced by Nardelli over his six years tenure. As a result of Nardelli, management Home Depot oversee the growth of competing business such as Lowes growing from a smaller company to a bigger organization that threatened the Home Depot of its share of the market. Blake has revolutionized Home Depot, and the company is improving its shareholders. Moreover, he has given Home Depot stores a leeway to choose and select products that fit specific customers and market thus moving from a centralized purchasing model introduced by Nardelli. Blake has increased Home Depot social responsibility compared to Nardelli. The company now involve children and home owners to practice do it yourself program. This was not the case before Blake took over the leadership of the company. Moreover, Blake has introduced program that target low-income earners, the less privileged and people affected by natural disasters by providing them with better affordable houses. The company also involves the youth more in its operation than it used to do before. Therefore, all decisions made are in essence politically motivated to reshape the company image and management to ensure maximization of profit and social responsibility. Symbolic Since the incorporation if Home Depot the company has been doing business under the banner of ‘orange’ culture (Bolman & Deal, 2008). The stores managers run their respective store using a ‘tribal knowledge’ while the employees are hired on their expertise to satisfy customers expectations. Nardelli hiring also brought a different culture to Home Depot, that of military expertise. Soon as he was made the Chief Executive, Nardelli introduced ‘a heavy dose of command-and –control management, discipline, and metrics’(Bolman & Deal, 2008, p. 3). The images of the company was turned around as it started functioning like and army taking order from a commander and implementing what the boss desired rather than individual decision making. This effect created a deep and a lasting culture in Home Depot even with the exit of Nardelli as the CEO. The company goals and vision have been to ensure that all customers are satisfied with the services of the customer and to handle every decision and criticism in a manner that does not affect shareholders and other interested investors in doubt of the capability of Home Depot. Marcus and Blank have preached to its employees to “make love to all customers” of Home Depot. Nardelli demise in Home Depot came after he ignored the organization culture that put customers respect before anything else(Garcia, 2012). He compromised the company reputation among its shareholders by being the first CEO to hold the shortest shareholders are meeting lasting for only 30 minutes(Gallos, 2008). The decision of the Board to push him out even with a severance package of $201 million demonstrates how important an organization frame is important to a company(Gallos, 2008). Organization frame is important measures that help an organization deal adequately with it suppliers, competitors and customers(Scott Snell, 2013). The success and failure of any organization are anchored on how best it has established its organization structure, politics, human resource and it symbols. Home Depot has an attractive image among American as it has helped many people renovate or establish new homes. Through their initiative, they carry out their function, not as business organization which is after profit, but an organization extending its hand to the less privileged. Moreover, Home Depot devote on teamwork among its employees and also to its customers. It involves every partner in its initiative thus making an ‘orange’ culture more prominent than Lowes and other competitors. References Bolman, L., & Deal, T. (2008). The Power of Reframing . Sanfransisco: Jossey Bass. Gallos, J. V. (2008). Business Leadership: A Jossey-Bass Reader. San Francisco: Jossey-Bass. Grow, B., Brady, D., & Amdt, M. (2006, March 6). Renovating Home Depot. Retrieved July 23, 2014, from Business Weak: http://www.businessweek.com/stories/2006-03-05/renovating-home-depot. Hollon, J. (2008, April 9). Tossing HR under the Table at Home Depot. Retrieved July 23, 2014, from workforce.com: www.workforce.com/articles/tossing-hr-under-the-at-home-depot. Home Depot . (2013). Tim Crow. Retrieved from homedepot.com: https://corporate.homedepot.com/OurCompany/Leadership/Pages/Bios/TimCrow.aspx Home Depot. (2005). News Release. Retrieved from homedepot.com: http://ir.homedepot.com/phoenix.zhtml?c=63646&p=irol-newsArticle&ID=1268411&highlight= Quain, J. R. (2004). Retail Renovation . Retrieved from nyse.com: http://www1.nyse.com/pdfs/HomeDepot1204.pdf Scott Snell, G. B. (2013). Managing Human Resources. Boulevard: Cengage Learning . Read More