"You can’t s*** on your employees"


Business Week: Out At Home Depot

As more details about the former Home Depot “leader” and his “leadership” come out, it's a sad case study of bad leadership (written about earlier, at risk of being accused of Shadenfreude). Why am I obsessed with this case? It's such a horrifically bad train wreck of a bad management story, it's too hard to pass up. Well more than that…. remember the name Bob Nardelli and read the end of the post for my warning.

While Business Week defends him for getting good results (the company doubled in revenue during his tenure), the board could no longer overlook his boorish behavior.

Nardelli's “numbers were quite good,” says Matthew J. Fassler, an analyst at Goldman Sachs Group Inc. (GS ) But “the fact is that this retail organization never really embraced his leadership style.”

That seems like the understatement of the year. Many people there outright hated him. So, something DOES matter more than the numbers?

One of Nardelli's favorite sayings is: “Facts are friendly.” He seemed less concerned about people being friendly. Some saw this as a strength.

Nardelli believe in numbers, except when it didn't suit him. From the earlier Business Week article, in response to a survey that showed Home Depot had horrible customer service:

Nardelli angrily disputes the survey. “It's a sham,” he says, jabbing his finger in the air for emphasis.

Another number Nardelli didn't like was Home Depot's share price. In this Business Week podcast, the reporter for the story says that Nardelli complained that the stock price was the one metric that he (the CEO) didn't have control over. Wait a minute…. I thought that when stock prices went up, that the CEO was to be rewarded generously (obscenely, even). So, it's to the CEO's credit when the price goes up, but not the CEO's fault when the stock doesn't go up? Interesting, huh?

Here's another quote from an analyst that stood out at me:

“Bob Nardelli is a smart man, but he doesn't need to be in a high-profile business like retail,” says a former top Home Depot executive. “He needs to be in manufacturing, a business that does not have such consumer attention.”

Anyone care to comment on that? That manufacturing doesn't require “customer attention?” Maybe not the same way as in retail, but still…. that's sort of an insult to manufacturing folks, isn't it?

So employees are thrilled, reports say, that Nardelli is gone:

It's amazing the reaction of people on my floor. People are openly ecstatic. High-fiving,” said an Atlanta store operations manager only hours after the Jan. 3 announcement. “There's a group talking about going to happy hour at noon.”

This quote about Nardelli is the one that motivated the headline:

“You can't s–t on your employees and deliver” results.

That pretty much sums it up. I'm not saying he was fired for having a bad attitude toward employees. He had a bad attitude toward shareholders and that's what finally caught up to him. The Business Week reporter said that Nardelli was described by Jack Welch as being the best operational manager he had ever seen (when Nardelli was at GE and was passed up for the top job in favor of Jeff Immelt).

Furthermore, he was described as being a “brilliant manager” with a “tin ear” toward employees. So I guess you can be brilliant at “managing the numbers” but being horrible at dealing with employees and you can be called a “star executive” by Business Week? Yikes. I figure to be a “brilliant manager,” you should be at least good at dealing with people (yet alone leading them). Remember, this guy is a product of the GE leadership development system, which should tell you about how successful GE might be with their “lean” push. Lean minus “respect for people” equals what?

Business Week (in the podcast) said that Nardelli stepped into the entrepreneurial Home Depot culture and discovered employees “making independent decisions” which was “anathema” to Nardelli's “Bob Knows Best” leadership style.

Another detail in the podcast was that Nardelli stood in front of a group of company executives and screamed “you don't know how to run an f***-ing company!” Even if that was true, that's not a great way to inspire action (though some of the Japanese lean consultants love to scream insults at people, that's the style of most lean leaders). From that point, many long-time Home Depot executives started bailing, and Nardelli replaced them with so many GE folks that they started calling the company “Home GEpot.”

So is GE together bad? No, of course not. What's bad is jumping into a company that's been successful and thinking that you, single handedly, have to impose your personality on the company. We see this a lot in manufacturing (or other types of organizations) where a new leader has to jump in “make their mark” regardless how well things might have been running before. At Toyota, new managers and CEO's are brought into “the system” that works pretty well (the Toyota Production System) and they aren't expected to radically overhaul the plant or company strategy because they are new, as Nardelli thought he had to do at Home Depot.

So you'd think that, with his $210 Million retirement package, that Nardelli would relax and slip away. Maybe not:

Corporate America hasn't seen the last of Bob Nardelli, however. According to people familiar with the situation, while store workers were celebrating, the former CEO was already fielding calls from private equity firms interested in his formidable operational talents. The bright side for Nardelli in the world of privately owned corporations, of course, is that he won't have to deal with any annual meetings or shareholder questions.

So somebody is going to hire him to “s***” all over the employees of some private company? If Nardelli is hired to run a company, even your humble simple little manufacturing company, you better run like hell. Run faster than if “Neutron Jack” was coming or if “Chainsaw Al” was coming out of hiding. What does it take to be discredited in the business world, anyway??

Wanted: Stubborn, autocratic, tin eared jerk wanted to turn around company. No references required.

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Mark Graban
Mark Graban is an internationally-recognized consultant, author, and professional speaker, and podcaster with experience in healthcare, manufacturing, and startups. Mark's new book is The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation. He is also the author of Measures of Success: React Less, Lead Better, Improve More, the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, and the anthology Practicing Lean. Mark is also a Senior Advisor to the technology company KaiNexus.



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