Renovating Home Depot Essay Example

added to each store to recruit and train staff that met higher performance standards. Although this structure delivered short-term results, it created employee disharmony and encountered resistance from executives and managers that took years to overcome. Even then, not all employees bought into the changes.

The Systems Mr. Narrated implemented have brought successful changes to the Home Depot business. He has ensured clarity in expected outcomes through four performance metrics: financial, operational, customer satisfaction, and employee skills. Every employee understands what Home Depot aims to achieve and what metrics will be used to measure their performance. Moreover, investments in technology, such as self-checkout aisles and in-store web kiosks, have freed up human resources for more important tasks. The staffing strategy has shifted towards training and talent acquisition in line with the required skills for handling pressure, quick thinking, efficient execution, and competition strategies. The company has also expanded into the services industry and new markets such as China while training people to develop leadership skills. Power systems have been put in place to increase efficiency and fund the new business. However, Mr. Narrated's attempt to change the company's Shared Values has not been successful. Home Depot's decentralized and entrepreneurial retail culture emphasizing industry knowledge, customer service, employee empowerment, and collaboration has been shifted towards a command-and-control performance-focused approach.

The Home Depot's operational efficiency and cost reduction were measured for performance evaluation. Corporate decisions were enforced with the expectation that managers would comply. As a result, a manufacturing culture was established without regard for retail or Home Depot's existing culture. This culture, imposed by Mr. Narrated, enforced strict compliance and penalized entrepreneurship and risk-taking. Many experienced senior

personnel were terminated, and low-wage part-timers replaced them to cut costs. Although employee wages did not increase, Mr. Narrated received a significant bonus despite the failing stock. Promotion and training, managed from Atlanta, were not understood or shared by employees who lacked a clear vision of the tactical and strategic goals. Furthermore, the employees felt a lack of understanding on how the company would achieve these objectives while functioning in the current culture or alongside the service industry. They merely obeyed the directives and decisions from the WHQL. The constant flood of tips and warnings sent from WHQL in an attempt to re-establish customer focus was met with ridicule by employees. The recruitment of local HER had no experience in retail management.

The retail industry requires a high level of customer focus, practical knowledge of core products, and strong entrepreneurship to effectively engage customers and improve sales. To achieve high growth, centralized corporate functions and collaboration are necessary to maintain consistent standards and increase margins. Home Depot was praised for its customer-centric approach, knowledgeable sales staff, and empowerment of sales and store managers to improve sales.

To optimize costs and standardize operations across stores, Home Depot needed a structured approach. However, when Mr. Narrated assumed the role of CEO, he lacked retail experience and did not take the time to understand Home Depot's culture. His focus was solely on increasing business performance, based on his experience with GE. While successful in the manufacturing sector, the GE approach had not been tested in retail.

To implement a command and control method at Home Depot, Mr. Narrated hired military personnel who were accustomed

to managing challenging situations, did not question management decisions, and effectively rallied together against common enemies.The individuals in charge lacked selling expertise, customer focus, and home building knowledge. They followed instructions from WHQL regarding product positioning, sales, profit targets, and adhering to standards, resulting in a loss of customer eccentricity. About 98% of executives were replaced by low-wage part-time workers. These part-timers lacked the relevant skills and training necessary to build expertise, which senior employees had gained from decades of experience. Due to the high turnover rate, skills and expertise could not be transferred to the new staff. Home Depot ranked last among major U.S. retailers in the University of Michigan annual American Customer Satisfaction Index, even below Smart.

Question 2. Organizational Structure.
Using the reading "Do you have a well-designed organization?", evaluate Home Depot's new organizational structure under Mr. based on five of the nine design tests discussed in the reading.

Market Advantage Test: Does the new structure direct adequate management attention to sources of competitive advantage in each market?Home Depot stood out in the retail market due to its customer focus, knowledge of home building, and entrepreneurial culture. However, the centralized command and control structure implemented by Mr. Narrated did not enable store managers to innovate or customize services for customers. The WHQL made all decisions, with stores simply executing them, despite the need for localization in some areas. Mr. Narrated's desire to expand into the service market for professional contractors and China posed a challenge for the overly centralized design in terms of providing sufficient management attention. Although the org design yielded some positive business results, it failed the market advantage test

and did not reflect the strengths, weaknesses, and motivations of Home Depot's people. Nonetheless, during a high growth phase, Home Depot required discipline and systems to enhance operational efficiencies, reduce costs, and achieve scalability.Home Depot's executives and managers had accumulated valuable knowledge during their tenure which enabled them to comprehend the industry, understand customers, and deliver exceptional customer service. However, when Mr. Narrated assumed leadership, he concentrated solely on business results and neglected to conduct a fair assessment of system and structure gaps or offer executive and managerial coaching or development. His solution to issues was enforcing a disciplined culture without allowing associates to question his decisions, inspired by his prior military experience. He disregarded the value of executive and managerial knowledge, leading to a new culture that resulted in 98% of old-timers leaving for other jobs and part-timers/new recruits not gaining knowledge of retail operations or customer needs. This standardization caused the customer experience to lack its original Home Depot focus, while the new design did not utilize store managers' strengths in customer relationship management. Although procurement and denaturized performance management centralized functions filled cost reduction and goal alignment gaps as the organization grew, it negatively impacted the customer experience's reputation.The old-fashioned design of command and control was strongly favored and turnover heavily impacted service levels. To determine if the design supported effective controls, the Accountability Test was put into place. The new centralized design provided employees with clear performance metrics, including financial, operational, customer, and people skills, as well as weekly sales and profit targets for managers. Although the communication regarding expected goals was adequate, stores were not granted autonomy in achieving those

targets. Though the executives and managers were given execution instructions, there was no perceived empowerment at the store level, which hindered collaboration. The Flexibility Test determined whether designs facilitated new strategies and changes. The centralized command and control design empowered the WHQL to make decisions and implement changes.The store managers and executives were not given the authority to make changes relevant to their customers and contexts, despite being closer to them. Instead, they had to follow instructions from WHQL without question. To prevent management decisions from being challenged, Mr. Narrated replaced knowledgeable staff with military personnel. This lack of empowerment and expertise at the store level fails the Parenting Advantage Test, as it does not support an entrepreneurial or adaptive environment for the future of Home Depot. However, centralization of procurement and development of standardized performance metrics and in-store technology did add value at WHQL level. All execution instructions were given by Mr. Marinade's office, overlooking the potential for customer-focused improvements by executives and managers.Analytics were utilized to inform decisions about store design and product placement at WHQL, with the expectation that executives and managers would leverage this data for more informed decision-making based on store and customer preferences. However, the organization's design did not clearly outline the roles and responsibilities for WHQL or individual stores to sustain growth and drive new market strategy, which hindered talent development for executives and managers. With regards to the Home Depot, an assessment of the Job Characteristics Model, Equity Theory, and Broom's Expectancy Theory can predict the motivation levels of store managers under Mr. Narrated's system. Specifically, under the centralized design implemented by Mr. Narrated, the Job Characteristics

Model would predict that the meaningfulness of work for store managers would be impacted by skill variety, task identity, and task significance. Equity Theory would suggest that store managers will be motivated when they perceive their rewards to be fair in relation to their efforts. Finally, Broom's Expectancy Theory predicts that store managers will be motivated when they believe that their efforts will lead to a desired outcome or reward.The main objective was to establish consistency in tasks, consolidate decision-making activities, and attain greater operational efficiency. However, due to a lack of communication on the rationale behind strategy and decision-making processes, job tasks may have been viewed as merely mechanical activities without contributing to the overall business or customers' satisfaction. This may result in limited opportunities for skill development, negatively affecting job satisfaction and demotivating store managers. Mr. Narrated was responsible for defining the store design, procedures, and guidelines in detail, leaving no room for innovation or changes by store managers. The Human Resources (HR) managers at each store were directed by Mr. Narrated's team at WHQL for recruitment and training. Slogans, tips, guidelines, and warnings were cascaded down to ensure compliance with goals. Store managers had no autonomy to design mechanisms or motivate employees to achieve goals. At Home Depot, the communication strategy did not equip employees with an understanding of how their tasks impacted the business's success or how they could contribute to customer satisfaction.Despite having clearly identified financial, operational, customer, and people goals shared with executives and store managers, they were not empowered to determine the best procedures to reach them. This centralization of practices was detrimental to retail environments where innovation

and customer focus were crucial. Customized service and understanding customer preferences require human-centered approaches. Consequently, store managers were constrained in their responsibilities and actions when attempting to increase customer satisfaction and fulfill these goals. The outcomes were easily measurable through sales and profit targets, but managers lacked the means to define and control them. While managers knew whether they had reached weekly targets due to clear performance measurements, there was little clarity on rewards or opportunities for exceeding performance targets. This led to a culture of fear, as the consequences of failing to meet targets were clear, and feedback on performance was available but often negative.The organization lacked the ability to enhance performance through innovation or setting meaningful goals, despite setting high performance standards. This created a demoralizing environment for store managers where achieving goals seemed impossible in a constrained environment. Although Home Depot's success was attributed to customer focus, entrepreneurship, and industry expertise of executives and managers, many could not adapt to the new environment, leading to high turnover and decreased customer satisfaction levels as predicted by JACM characteristics. The new organizational design failed to enable scalable operations and sustain customer focus for high growth scenarios, impacting the organization's long-term strategy and results. Additionally, the design undermined the strengths of customer focus and entrepreneurship by creating a controlling environment for seasoned executives and managers. Adams' Equity Theory stresses the importance of balancing inputs and outputs for employee motivation and positive organization relationships.

Reference: http://www.Harcourt.Be/en/employee-motivation-theories/Hickman- old ham-job-characteristics-model.HP (ii)

The theory posits that if employees perceive their inputs to be greater than the outputs, both in terms of their job and their employer, they will

become demotivated. This can lead to various responses, such as reduced effort, becoming disgruntled, and even disruption or discontinuity of service with the employer. The extent of demotivation is directly related to how much disparity the employee perceives between their inputs and outputs.