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January 03, 2007
General Bob ships out
CEO Bob Nardelli is out at Home Depot.
During his six-year stint as CEO, the company's stock price rose a total of about 1 percent. That's what you get for decimating a great company's entrepreneurial, problem-solving culture and replacing it with a militaristic, just-follow-orders culture.
Businessweek tried to prop Nardelli up in a fawning cover story last year, despite its rather keen observation that Nardelli had never won over employees and probably never would. In the Nardelli world, correlations like happy employees equal happy customers was too touchy-feely. Inspiration wasn't measurable or militarily precise, even though Nardelli never served in the armed forces. His vision of military precision was largely out of synch with what most on-the-ground soldiers actually experience: a lot of improvising in the face of unforeseen circumstances. Executives can talk about military-like precision until their heads explode, but it doesn't mean jack to employees who are treated like mindless grunts. Unhappy employees are guaranteed to create unhappy customers.
Indeed, Nardelli was done in by ridding the company of a huge roster of veteran full-timers and replacing them with battalions of part timers -- all in the name of saving money, but the company certainly didn't save money with Nardelli's royal pay package: estimated to be $330 million over six years. Nardelli's royal compensation attracted the ire of institutional investor-activists like Ralph Whitworth, who'd spent the last six months campaigning against Nardelli, saying Nardelli's baron-like paychecks and emphasis on new businesses was killing the company's core operations.
Arthur Blank was probably thinking he got a good deal by snagging Nardelli from GE when Jeffrey Immelt beat him out for GE's top job. So while Immelt melds GE into a more customer-focused organization by adopting measurements like Fred Reichheld's very customer-evangelism focused Net Promoter system, Nardelli was busy being the Donald Rumsfeld of retail.
Don't cry for Nardelli, though. He's getting $210 million to leave behind the mess he created.
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» 210,000,000 reasons to get fired from Business of Marketing and Branding
Firstly, let me state I am a great believer in our capitalist system. Its the best system around as long as it is moderated to control the worst excesses.
Did I say control the worst excesses? How about this: the CEO of Home Depot in the US, Ro... [Read More]
As one of the Home Depot workers who felt the pain of being "mislead" by Bob Nardelli, I'm happy to see him go. Now we can get back to customer service, not the ghost town of retail.
There is no reason why a customer should have to walk into a company that earns billions and not have a sales assoicate to help them.
Amen to that, Maddison. Home Depot transitioned from a culture meant to help customers a help yourself culture.
Ben, another great post. I added to your thoughts with a post of my own at the journal.
http://theexperiencejournal.com/xjournal/2007/01/nardelli-reign-ends.html
I am so glad that Nardelli is gone. He made my possible career impossible after a tenure of 5 years. I know that alot of my old co-workers feel the same. Home Depot did start out w/great values, pay, management, etc., maybe over time this can be re-gained.
Isn't this the second person in the last month to fail like this? Can't remember the other but it was another case of a B2B expert going into consumer retail - like one player switching from baseball to football. A lot of people can make the transition but to be the Leader/Go to player in both scenarios just does not happen!
BTW; interesting to read in the WSJ that Welch/GE is behind the big payout to Nardelli. Welch told GE to pay the 3 candidates for his job huge options; paraphrasing "you'll only have to pay out on 1; after the announcement is made the other 2 will leave and the new companies will have to compensate them for the "lost" options". At the present, it looks like Boeing won and HomeDepot lost; only more time will tell....
