Renovating Home Depot Narrative Essay Example
Renovating Home Depot Narrative Essay Example

Renovating Home Depot Narrative Essay Example

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  • Pages: 11 (2942 words)
  • Published: May 10, 2018
  • Type: Report
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According to Mr. Narrated, one of the crucial problems hindering sustainable growth in any business is the lack of appropriate structures and systems to support a strategic growth platform. He emphasized the importance of discipline and rigor when it comes to handling pressures from clients and maintaining high standards, regardless of the industry - be it manufacturing, retail or service. However, Mr. Narrated failed to acknowledge the specific strategies, competencies, and skill requirements unique to each industry. He planned various transformation initiatives that necessitated bold changes, which were implemented hastily due to competition.

While many of these changes were valid, some were not appropriate for driving change in Home Depot's existing culture. The communication of the changes was adequate but tended to be excessive. However, there was insufficient time spent on articulating the need for ch

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anges and influencing a mindset shift among executives and managers to transform Home Depot's culture while preserving its core strengths. This resulted in a strategic failure that led to declining employee morale and customer service levels.

One successful change that was implemented was the name of the company's structure - from a culture of high empowerment and execution based on past knowledge of 'What worked' to a more sustainable growth platform.

Home Depot lacked a long-term strategy, appropriate staffing, and necessary skills to execute such a strategy amidst changing circumstances and intense competition. It was suggested by Mr. Narrated that a centralized structure was imperative to focus key areas on an organization-wide level, given the urgency to turn the business around, significant culture change required, and lack of discipline and systemic understanding within the current organization. The command-and-contro

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structure involved Mr. Narrated making decisions and setting performance metrics, with military-style staff being trained to execute orders in stores. The practices included centralized procurement and technology innovations, such as self-checkout aisles and in-store web kiosks replacing human services, which increased margins. Since 2000, Narrated's leadership resulted in sales increasing from $46 billion to $81.5 billion, as well as a 3.5% margin increase and doubled profits. In an effort to ensure recruitment and training of desired staff, each store was assigned a human resource staff, replacing underperforming employees who could not meet higher performance standards. Although this structure delivered short-term results such as reduced costs, it caused discord among employees for years before executive and managerial dissent was overcome, though buy-in from all employees was still not achieved.

Mr. Narrated has successfully implemented crucial changes in the structure and systems of Name of the S: Systems. His strategy to expand the business involved bringing in clarity in expected outcomes by implementing four performance metrics - financial, operational, customer, and people skills. This enabled every employee to be aware of the company's goals and how their performance would be measured against them. The introduction of new technology such as self-checkout aisles and in-store web kiosks facilitated manual tasks, leading to more efficient use of human resources. In addition, Mr. Narrated's staffing strategy focused on talent acquisition and training that aligned with the required skillset for the business's expansion into new markets such as China and the service industry. This included training staff members to develop subordinate leaders. The power systems implemented were aimed at optimizing efficiencies, such as centralized purchasing, which necessitated strong processes and

technology support to consolidate, route, procure and distribute inventory.

Despite successful changes in Name of the S: Systems, there were unsuccessful attempts to change Name of the S: Shared Values. Home Depot had a decentralized retail culture that was entrepreneurial and prioritized industry knowledge, customer service, employee empowerment and collaboration.Mr. Narrated imposed a manufacturing culture on Home Depot which prioritized command control and performance, with operational efficiency and cost reduction as key metrics. This corporate approach required managers to comply with strategic decisions, leaving little room for entrepreneurialism or risk-taking. Many experienced senior employees were terminated and replaced with low wage part-timers to cut costs. Despite poor company performance, Mr. Narrated received a considerable bonus while promotions and trainings were planned centrally in Atlanta. Recruitment was also poorly managed by local HR staff who lacked retail experience. As a result, employees lacked a shared vision or understanding of the company's goals and strategy in relation to the retail and service industry, and instead only saw directives from higher-ups that they had to follow without question.Home Depot employees were subject to constant messages from WHQL in an attempt to revive the company's customer focus reputation. The retail industry requires a high level of customer focus, hands-on product knowledge, and entrepreneurship for effective sales. Centralized corporate functions and collaboration across stores are necessary for growth, margins, and consistent customer experience. Home Depot was known for its customer-centric approach, empowering managers to engage customers and boost sales with hands-on knowledge. But as the company grew rapidly, it needed structural optimization and standardization across stores for cost-cutting measures. When the new CEO, who lacked retail experience and was

focused on increasing business performance, took over, he applied the GE way of process, controls, and performance management to a sector where it had not been tested before.

Home Depot hired military personnel to implement a control-based strategy, who lacked selling skills, customer focus and home building expertise. These individuals followed WHQL's day-to-day instructions on product positioning, sales, profit targets, and standards without making any local decisions or taking risks that resulted in a loss of customer eccentricity. Consequently, 98% of executives were replaced by low wage part-timers who lacked relevant skills and training compared to experienced senior employees. Due to high turnover, skills and expertise could not be passed on to the new guard, resulting in Home Depot ranking last amongst major U.S. retailers on the University of Michigan's annual American Customer Satisfaction Index. This also ranked lower than Smart, which was much maligned. Question 2 analyzes Home Depot's new organizational structure under Mr. [name], using the "Do You Have a Well-Designed Organization?" reading for assessment. The structure is reviewed against five of the nine design tests discussed in the reading to determine how well it fares.

The Market Advantage Test evaluates if the design of a company directs enough management attention to their sources of competitive advantage in each market. For instance, Home Depot's edge was their focus on customers, knowledge of home building and entrepreneurial culture, which played a crucial role in retail stores. However, the centralized command and control system implemented by Mr. Narrated was unsuitable for retail market operations as it hindered store managers from innovating or tailoring services to customers. The WHQL made decisions without input from stores,

leaving them with no opportunity to customize services for their own customers. To pass the Market Advantage Test, the company's design should thoroughly assess functions requiring centralization or localization. Moreover, for markets such as China and the professional contractor service sector, an overly centralized model might not allow sufficient managerial attention. The division of responsibility could also be ambiguous since the WHQL focused on three vastly different market segments without unit-level responsibility. While the org design produced positive business outcomes, it failed to achieve the Market Advantage Test. On the other hand, The People Test assesses whether a design reflects employees' strengths, weaknesses, and motivations.During a period of high growth, Home Depot recognized the need for discipline and systems to increase operational efficiency and reduce costs. The organization's executives and managers had acquired knowledge through their tenure, enabling them to understand the industry and customers and provide excellent service. However, when Mr. Narrated assumed leadership, he prioritized hard business results over fair assessment and did not focus on coaching or developing executives and managers. Instead, he implemented a disciplined culture where associates executed flawlessly, but dissent was discouraged. Mr. Narrated believed that a military-style culture, command-and-control structure, standardized processes, and performance measures would improve the business. However, he did not value the knowledge of executives and managers. The new culture led to 98% of old-timers leaving for other jobs. Part-timers and new recruits could not gain knowledge of retail operations or customer needs. The new system standardized customer experience through centralized functions/decision-making but lacked the customer focus that Home Depot had become known for. The new design did not leverage the strengths of store managers

in managing customer relationships.As the organization grew, procurement and performance management functions centralized to address gaps in cost reduction and alignment with business goals. However, a command and control design was not favored by long-time employees and high turnover affected service levels. The new centralized design established four performance metrics and provided weekly sales and profit targets for managers to increase accountability. Despite clear communication on expectations, stores did not have autonomy to determine how targets were to be achieved. Instruction was given without room for questioning, creating a lack of collaboration and flexibility in adapting to change.The WHQL's centralized and commanding design allowed them to make decisions and implement changes, but it did not authorize the store managers and executives to think for themselves and make alterations that were pertinent to their specific context or customer needs. Consequently, they were obligated to follow the directions given by the WHQL. Under Mr. Narrated's leadership, knowledgeable staff was replaced with military personnel to ensure that the management team was not questioned, but instead blindly followed orders.

The failure to have expertise in retail and knowledge of Home Depot's business, as well as the lack of empowerment for innovation and improvisation at the store level, resulted in an unadaptable and non-entrepreneurial environment that cannot sustain Home Depot for the future. The Parenting Advantage Test was not fulfilled as the WHQL only added value through centralized procurement and standardized performance metrics, such as in-store web kiosks and self-checkout isles, which increased efficiency and reduced costs.

All instructions came solely from Mr. Marinade's office, without utilizing the executives' and managers' proximity to the customers to create and maintain a

customer-focused environment.Analytics were utilized to inform the store design and product placement at WHQL, which could have been accessed by executives and managers for more informed decision-making. The lack of role identification and responsibility allocation for WHQL and individual stores hindered growth and new market strategy and impeded talent development, especially at higher levels. In regards to the Home Depot article, analyze the motivation levels of store managers under Mr..Narrated's system using the Job Characteristics Model (JACM), Equity Theory, and Broom's Expectancy Theory. Specifically, assess the impact of skill variety, task identity, and task significance on the meaningfulness of work in the centralized design strategy implemented by Mr..Narrated.The main focus was to standardize activities, centralize functions, and decision-making in order to bring in operational efficiencies. However, this may have resulted in repetitive work and minimal communication on the rationale of strategy and session making. At Home Depot, the communication strategy generally does not give employees an understanding or appreciation of how their tasks contribute to overall business and customers. Instead, employees may view their tasks as only mechanical activities to be completed. There are also limited opportunities for employees to learn new skills in an environment that prioritizes operational efficiency and standardization. This could negatively impact the sense of pride in one's job and diminish the role of store managers. The "what" and "how" of Home Depot's strategy and procedures were meticulously laid out by Mr. Narrated down to the finest details of store design. This left little room for store managers to make changes or innovate and they were solely accountable for following instructions. Slogans, tips, guidelines, and warnings were enforced to ensure compliance

and goal attainment. Recruitment and trainings were managed by HER managers in each store who followed the guidance of Mr. Narrated and his staff at WHQL. Store managers had no autonomy to design or implement mechanisms for achieving goals or motivating employees.The executives and store managers were aware of the financial, operational, customer, and people goals, but they did not have the authority to determine the best methods of achieving them. All procedures were centralized, which was not conducive for a retail atmosphere where customer focus and innovation are crucial. Customized service is a human function that requires knowledge of customer preferences and quick decision-making. However, the store managers were limited in their actions and responsibilities, which hindered their ability to achieve the laid-out expectations regarding financial, operational, customer, and people skills. Sales and profit targets were measurable, but there was a lack of clarity on how to define and control outcomes. Store managers knew if they had met weekly targets, but there were no clear rewards or opportunities to exceed performance. The culture of fear was pervasive due to knowledge of the consequences of missing targets. The feedback was readily available to store managers regarding expectations and failures.Despite setting high performance standards, the Home Depot lacked the necessary empowerment to drive innovation and meaningful goal-setting. This led to store managers struggling to achieve their goals within a constrained environment, and ultimately resulted in demoralization. While the company's success was attributed to customer focus, entrepreneurial spirit, and industry expertise of store executives and managers, the new environment proved too challenging for many of them. Predictably, turnover rates increased while customer satisfaction levels deteriorated. Unfortunately, the

new org design failed to prioritize enabling procedures and systems for scaling operations and sustaining customer focus in high-growth scenarios, instead creating a stifling atmosphere for experienced leaders. Consequently, the organization's long-term strategy and results were negatively impacted. According to Adam's Equity Theory, it is important for organizations to maintain a fair balance between employee inputs and outputs to ensure motivation and a productive relationship with employees. Reference: http://www.Harcourt.Be/en/employee-motivation-theories/Hickman- old ham-job-characteristics-model.HP (ii) Equity Theory.The theory is based on the belief that if employees perceive that their inputs outweigh their outputs, they can become demotivated in both their job and their employer. This can result in various responses such as reduced effort, disgruntlement, and even disruptive or discontinuous service. Equity theory also highlights the employee's comparisons with their peers and executives, both internal and external. Evaluating Home Depot's leadership under Mr. Marinade, inputs such as effort, loyalty, hard work, commitment, skill, ability, adaptability, flexibility, tolerance, determination, enthusiasm, trust in superiors, and support of colleagues were considered. However, without a clear reason for transformation, executives and managers were expected to be flexible and adapt to changes without the establishment of trust with their superiors. To cope with cultural changes at Home Depot such as low empowerment with high-performance standards driven by weekly sales and profit targets required high levels of enthusiasm and morale but provided limited opportunities to develop and utilize skills and abilities.The store managers were expected to work harder, even sacrificing personal time by working on weekends. Despite previously being a fun place to work, a culture of fear has replaced the previous atmosphere, affecting the financial and non-financial rewards of Recognition, Reputation, Responsibility, Sense

of Achievement, Praise, Stimulus, Sense of Advancement/Growth, and Job Security. Executives and higher-paid managers were replaced with inexperienced part-timers, without consideration of performance or opportunity. Employees were not recognized for their skills in customer service or entrepreneurship, leading to a pervasive culture of fear and tension in which managers were uncertain about when they would be let go. This culture did not encourage innovation or experimentation for the betterment of the business.The priority was executing instructions over customer service and business growth. Employees were required to do more without seeing significant returns, potentially leading to decreased motivation levels. The company also brought in low wage workers without increasing wages for existing employees, further affecting motivation and potentially impacting customer service. In a retail business, human capital is crucial to success, particularly in relation to customer service and employee motivation. Store managers may perceive unfairness in the system if executives receive bonuses not tied to performance. Home Depot had a high turnover of executives and managers that had previously led to successful customer service levels. The Equity theory could have predicted store managers' motivation levels. (Sources: http://www.Middleton.Com/pages/article/Newell_96.Tm, http://www.Harcourt.Be/en/employee-motivation-theories/Stacey-Adams- equity-theory.)The Broom's Expectancy Theory by HP (iii) identifies three crucial factors that determine an individual's motivation, which include the belief that efforts will be recognized during performance assessment, the notion that superior performance will offer better rewards, and the attractiveness of the rewards. Unfortunately, Home Depot's employees were uncertain about whether their valiant efforts and commitment to customer service excellence would be acknowledged in the new performance management system. This created fear among employees who worried about being fired if they didn't meet the high-performance standards set by

the company. The company also failed to define what constituted superior performance or empower its employees to innovate and excel at their jobs. All this indicates that Home Depot was not designed to inspire intrinsic employee motivation, nor did it attempt to understand employees' preferred outcomes or performance assessments. Rewards appeared unfair, as with Mr. Narrated, who received a guaranteed bonus despite a decline in stock price. Broom's theory would have successfully predicted the low motivation levels of Home Depot employees. In contrast, Coleman's article "Leadership that Gets Results" outlines six leadership styles and their appropriate usage in various situations.Please identify two leadership styles exhibited by Mr. Narrated and justify your choice with evidence from the case in two sentences for each leadership style, also evaluating their suitability for the situation in two sentences.

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