Home Depot's Cultural Evolution - A comparison of the Company's Culture Under ITS Founders and BOB Nardelli
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
Startup Mode for 22 Years
An example of decentralization was the company's purchasing policy, where buyers from the company's nine regions met suppliers individually and established independent terms of purchase with them. It was later observed that suppliers often charged different rates from the different regions for the same products, leading to higher costs for Home Depot...
(When Home Depot's board first contacted Nardelli, it had offered to make him president, so that he could learn retailing for a few years. However, Nardelli would not settle for anything less than CEO.) As Home Depot was a company that prided itself on its culture, it was clear that it would not be easy to change it...
Success at a Price
Nardelli made a lot of effort to make the cultural transition at Home Depot as smooth as possible and to gain the acceptance of the employees. While his directness and numbers-oriented management shocked some employees, he tried to overcome the obstacles by adapting to the culture quickly and communicating changes to employees on a regular basis. Despite his efforts, Nardelli faced heavy criticism from some quarters for the changes he made at Home Depot...
Exhibit I: Home Depot - Annual Financials (2002-04)
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