Home Depot Under Nardelli

I've read two articles now about the militaristic, controlling, anal-retentive Nardelli, one, more favorable from Business Week aptly called Tough as Nails (subscription only), the other from Fast Company titled Bob Nardelli is Watching. Nardelli, a former GE exec overlooked for the top spot in favor of Jeffrey Imelt, is changing almost everything about Home Depot. The bottom line seems to like it, the employees seem to not like it.

Nardelli finds himself in a tough spot: trying to fill the shoes of beloved former leaders who possessed easy-going leadership styles and diffuse management techniques allowing the stores to run like mini-kingdoms. When Nardelli took the post, the stock and the company was in decline. Something had to change, but just what?

Nardelli's big changes can be summed up here:

1. Measure everything
2. Centralize buying
3. Hold people accountable for numbers
4. Grow business overseas
5. Work 24/7 and everyone else should too
6. Get rid of "dead weight"

No doubt I'm missing something, and if Nardelli is as detail-oriented as his reputation suggests, perhaps he'll email me with the other objectives. Ha!

His critics say that he has created a "culture of fear" and indeed, in an era where decentralization is lauded, even encouraged, "flattening" the management levels, Nardelli embraces heirarchy and runs things like an obsessive Four-Star General. Is this a wrong move? Certainly decision-making without accountability is a prescription for lazy, apathetic underachievement. By moving decisions like buying and store design centrally, measuring the success is simpler because there are fewer moving parts. Of course, in retail, the ultimate measure is money. Is there more or less coming in?

The home improvement chain has lost lots of employees, no doubt, some good ones. But I'm consistantly stunned how many bad employees remain at huge companies like this. Entrenchment, cronyism and fear of lawsuits keeps many companies from rigorous employee assessment and removal if necessary. When a boss bucks this and actually fires, and fires a lot, of people, fear can spread. Of course, fear, in the Biblical sense, can also mean respect. So his firing lots of employees doesn't necessarily bother me.

The question is this: are the factors people are being held accountable for, factors they can actually control? Helplessness ensues when any person is held responsible for decisions they have no authority to do anything about. Since I don't know Nardelli's metrics, I can't know the answer to this. Long term, though, terror in the executive ranks, will cause harm and the information Nardelli loves so much will stop getting through no matter how detailed his survellience and reports. In the short term, the fear can bring some discipline and focus to formerly-complacent leaders.

Another factor in changing the Home Depot culture: Is the mission Nardelli creating compelling enough to get buy-in from the leaders or are the remaining leaders and new leaders "biding their time" to move on. A former Wal-Mart executive said he would never work for Home Depot for the same reason he was leaving Wal-Mart: the culture is so obsessive, home-life demands so disrespected, the hours so ridiculous, that the pay-off wasn't worth it--and he wasn't talking about money. The two companies actually swap a fair number of employees, employees from less stringent cultures have a tough time adapting to the rigors and some feel, excessiveness, of these companies.

Another executive who left Wal-Mart for a much higher-paying yet lower demanding job at another company, was appalled by the lack of discipline, failure to measure success and failures and general laziness of the new company. Both Wal-Mart and Home Depot have forced industry-wide change when it comes to cost-cutting, delivering value to customers and supply-chain efficiencies.

Bob probably says, "Good riddance" to those too "soft" to hang in under the macho environment he's created. Marathon work days and maniacal majoring in the minors (in retail, he'd retort, there are no minors) tend to breed its own complacency. People will stay at work until the boss leaves but get the same amount done because a person can only push hard for so long before pooping out. And, if standards are set unreasonably high or set on stupid metrics, people will give up because the purpose of the work is stupid.

While fiscal discipline and measuring what works and doesn't work should be part of everyone's business plan, it isn't the only way to right a company. The people working there are the company's biggest resource and sloganeering won't stop high quality defections. Nardelli knows the schtick on training costs and the costs of hiring and blah, blah, blah.... He's trading the high cost of new-hires for true-believers in his turnaround doctrine. Is this a good long-term leadership strategy?

While the Tough Guy makes for good movie characters, it is questionable that such one-dimensional people make great Executives over the long-haul. Me feels a Carly Fiorina in the making. Maybe not. But it seems to me that the aggressive, my-way-or-the-highway types count on their own view of the world to the exclusion of good input. Are the cut-throat personality types that help you rise to the top of today's American businesses the kind of personalities that succeed once at the top where vision coupled with diplomacy and rigorous discipline work together for success? I'm not sure.

Nardelli will get all the credit if he wins at Home Depot and he'll take all the blame if it fails--he would anyway, but in his case, few executives have such a tight grasp on their destinies as he.