Organization Behavior-Home Depot

Bob Nardelli, a detail-obsessed, diamond-cut precise manager , was hired as CEO of Home Depot in 2000. Nardelli, a believer in the Six Sigma management strategy since his tenure at GE, sought to improve the quality of process outputs by identifying and removing causes of errorii. Nardelli exhibited job-centered leader behavior, paying close attention to the work of subordinates and focusing on performanceiii. The Leadership Grid considers Nardelli an Authority-Compliance manager, efficient in operations, but less concerned with employees.iii Nardelli was a low-LPC leader who was more concerned with tasks associated with his management and less concerned with interpersonal relations.iii The style of leadership attributed to Nardelli was exemplified with his direction to reduce full-time jobs at Home Depot and replace them with more part-time positionsi. Nardelli's low-consideration behavior was viewed by many as being imperialistic or dictatorialiv.

Under the control of Bob Nardelli, Home Depot experienced a huge cultural shift compared to previous years. Nardelli had an affection for the military and how it operates, a mentality he brought to Home Depot. Nardelli moved away from the entrepreneurial spirit of the company's founders, instead creating a command-and-control climate. Store managers were no longer allowed to make strategic decisions; everything was a top down approach. This took attention away from customers and placed it on the bottom line. Nardelli made Home Depot a factory and not a customer service business.i The strategies were successful, with operational efficiencies fixed and sales increasing from $41 to 80 billion in only five years. However, the fragile balance between making money and taking care of the customer had been disrupted.i Bob Nardelli's management style - blunt, critical, and autocratic--also rankled employees.vi He hired many senior management positions from outside of the company ranks which helped lead to high turnover amongst the executives.

Nardelli's task-oriented leadership works when a company is in turn-around mode, and is tolerated when financial performance is strong, but once the protection of strong performance erodes, the executive may wish he had used other means of exercising poweriv. According to Contingency Leadership, "The appropriate style of leadership is contingent on the characteristics of the situation the leader faces."v Transitioning leadership styles is found to improve each executive's decision-making effectiveness.viii Unfortunately, transformational leadership was not an inherent or learned skill of Nardelli's. His lack of situational awareness made him blind to the cultural shift he had brought upon his company. Although he helped Home Depot grow as a company, his dictator leadership style and lack of employee-centered leader behavior ultimately led to his demise.

Given the problems generated within Home Depot as a result of Bob Nardelli's insufficient leadership, his replacement must be an experienced leader who can deliver results. The replacement will possess proven skills in empowering lower-level employees, developing talent from within, and encouraging participation and inclusion of all employees. The best fit for Mr. Nardelli's successor is Robert Stevens, current Chairman of the Board and CEO of Lockheed Martin Inc. Stevens has proven to be an extremely talented and effective