MBA TERM PAPERS CUSTOM ESSAY WRITING SERVICES Management and Organizational Behavior

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MBA TERM PAPERS CUSTOM ESSAY WRITING SERVICES Task 1: Scenario The Home Depot, Inc. (Home Depot), that claims to be the world's largest home improvement specialty retailer (Home Depot, n.d.), has been observed to have run into serious trouble ensuing from lousy service in a response to which its newly appointed CEO, Frank Blake, had said we've already taken steps to cure many of the ills (MSN Money, 2007). Blake has acknowledged the fact that customers are our company's lifeblood and the sole reason we have been able to build such a successful company is because of your support (MSN Money, 2007) and had apologized for letting them down. The steps taken by Home Depot to bring about positive changes were largely in connection with human resource practices as well as operations. The company focused on the areas of staffing and recruitment in order to hire skilled master trades-people which in turn would help its customers receive the kind of service and expertise that made The Home Depot great (MSN Money, 2007). Blake has also boiled down the essence of all the change management initiatives of Home Depot to a consumer-centric objective and had said we're making it clear to all our associates that nothing is more important than you, the customer (MSN Money, 2007). It has further been observed that the company had introduced other significant changes as well, the most drastic of them being the reduction of its HR department by as much as 50 percent, thereby conveying the message that tough times call for tough measures (Starner, 2008). Although such a high volume of layoff may be attributed to cost-cutting initiatives, the companys spokesperson, Ron DeFeo, has revealed that the plan really is to fund more customer-facing jobs (Starner, 2008), thereby conveying the same message as that of Blake. While sharing her views on Home Depot, Billie Blair (President and CEO-Leading and Learning, Inc.) had opined that putting HR people in stores does a disservice to HR; they are out of touch and in a situation where they can't work together with other HR

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MBA TERM PAPERS CUSTOM ESSAY WRITING SERVICES professionals (Starner, 2008). With reference to the fact that a turnover nightmare for the HR people in stores had ensued at Home Depot following the adoption of an amateurish strategy by its ex-CEO Bob Nardelli, DeFeo has further said that now, they are pulling back to a more typical, centralized HR function, they are trying to regroup (Starner, 2008). Mary Key (HeadLeadership Practice, Institute for Corporate Productivity) has said because of the downturn in the market and the mismanagement of the company, job cuts may be inevitable; I don't necessarily see the restructuring as a bad thing, especially if top-performing HR staff will be part of the district teams, and she has also inquired whether Blake has a winning strategy that takes the troubled retailer to a better place (Starner, 2008). In the light of these aspects, the current essay will aim at analyzing the scenario from the perspectives of leadership approaches, change management strategies, power and politics issues, conflict management process, and the role of organizational culture and design. Substantial efforts will be put in to evaluate the effectiveness of the change management initiatives. Finally, possible future culture and design will also be discussed.

Task 2: Analysis

Leadership Approaches
Back in 2006, it was reported about Home Depot that the big-box store is thriving under CEO Bob Nardellis military-style rule, and it was also observed that Chief Executive Robert L. Nardelli is putting his stamp on what was long a decentralized, entrepreneurial business under founders Bernie Marcus and Arthur Blank (Bloomberg, 2006). This fact finds support in the words of Paley (2007), who observed that Nardellis approach was to build a disciplined corps that would be predisposed to taking orders, could operate in high-pressure environments, and

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MBA TERM PAPERS CUSTOM ESSAY WRITING SERVICES could execute strategies with high standards (Paley, 2007, pp.151). Nardelli was of the notion that the development of such a rigid structure was essential for the evolution of Home Depot, and correct he was because his spirited methods coupled with his leadership style rekindled stellar financial performance during his tenure (Paley, 2007, pp.151), with sales and profits increasing by 76 percent and 200 percent respectively between 2001-2005. Much of the financial success that Nardelli had brought about at Home Depot was expected from him owing to the facts that he had successfully led GE Power Systems and was subsequently regarded as a top prospect to succeed Jack Welch to run GE (Griffith, Morwick & Offstein, 2009, pp.77). Nardelli was also gifted with a strong financial acumen that was augmented by his dedicated towards operations. Quite naturally, at the onset, Nardelli appeared to be a good fit (Griffith et al., 2009, pp.77) to Bernie Marcus as well as Arthur Blank. However, it has been observed that Nardelli clearly had the skills to do the job (a PJ fit) and was committed to grow the retail giant (a PS fit), but most seem to overlook the obvious difference in his leadership style and the organizational culture (a PO mismatch) (Griffith et al., 2009, pp.78). Owing to the fact that Nardelli's leadership style was largely autocratic and was centered on command-and-control, it just didnt match with Home Depots decentralized, entrepreneurial style in which store managers were expected to act independently, and as a result Nardelli quickly alienated both employees and customers (Griffith et al., 2009, pp.78). In 2006, Home Depot shares plummeted by six percent. Moreover, the company whose business philosophy was to make love to the customer (Griffith et al., 2009, pp.78) scored low on customer satisfaction and employee turnover also increased. Nardelli succumbed to the rising pressure and finally stepped down. In order to bring about changes, Frank Blake another GE-veteran was taken on board in 2007 as the new CEO of Home Depot, and it was soon observed that instead of a retail chain where employees were becoming

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MBA TERM PAPERS CUSTOM ESSAY WRITING SERVICES complacent and bored, he wanted a company full of enterprising people who thrive on challenge, responsibility and recognition and in order to manifest this objective, he slowly began building a cadre of talented people, from top to bottom, and instituting a no-bull performance culture that gives people challenging goals and generous rewards for achieving them (Daft, Kendrick & Vershinina, 2008, pp.580). By virtue of believing in achievement-oriented leadership, Blake has introduced numerous changes in the forms of talent assessments, improvised approaches in terms of hiring and performance management system (PMS), etc. and leadership development programs. That he is highly customer-oriented is evident from the fact that Blake can monitor stores in real time via computer, and he spends one week a quarter as a mystery shopper, popping in unannounced to as many as ten stores a day (Daft et al., 2008, pp.580). As has been testified by Jack Welch, the real ability of Blake is to motivate lots of people around a mission, excite them about it, and makes it happen and the same has helped Home Depot increase sales from $45.7 billion to about $80 billion within five years, increase earnings per share by 20 percent annually and giving the retailer an edge in new segments such as the $410 billion professional construction market (Daft et al., 2008, pp.580).

Change Management Strategies

Home Depot plays within a highly competitive sector wherein the global market space is shared by notable behemoths such as Wal-Mart, and hence the company is necessitated to respond proactively to any situation that calls for the implementation of a change. It has been observed that executives at Home Depot do a postmortem after each catastrophic event to learn how to better prepare for the next one (Daft & Marcic, 2008, pp.170); however, when Nardelli was brought in as a change agent, it became evident that those who are part of a strong, proud culture, even when facing difficulties, may downplay the crisis, be overly confident they can

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MBA TERM PAPERS CUSTOM ESSAY WRITING SERVICES prevail, and have difficulty accepting the outsider as the appropriate agent of change (Herold & Fedor, 2008, pp.58) and the situation was worsened largely due to Nardellis autocratic leadership. Moreover, the $245 million pay packet that Nardelli received during his five-year term at Home Depot did not match with the bleak performance of the company as during his tenure the companys stock price slid 12 percent, while the stock price of its most important rival, Lowes, increased 173 percent (Hitt, Ireland & Hoskisson, 2008, pp.288). In order to bridge the gap between the salary and performance of change agents, Home Depot pegged the compensation package of Frank Blake, in terms of his salary as well as long-term incentives, at a figure that is much less than his predecessor (Hitt et al., 2008, pp.288), in realization of the fact that although incentive compensation plans may increase the value of a firm in line with shareholder expectations, such plans are subject to managerial manipulation (Hitt et al., 2008, pp.289). Under the guidance of Nardelli, Home Depot had deviated from its fundamental strategy that was intensely customer-oriented. After being inducted as the new CEO of the company, Blake has applied Ted Levitts fundamental business rule that says the purpose of business is to get and keep a customer and it has been said that he has a chance to reestablish Home Depots position as a leader in customer loyalty and achieve the marketplace and economic success that a customer-centric strategy can deliver (Noel, Delta Organization & Leadership LLC & Dotlich, 2007, pp.102).

Power and Politics Issues

Bebchuk and Fried (n.d.) have observed that flawed compensation arrangements have been widespread, persistent and systematic, and they have stemmed from defects in the underlying governance structure that enable executives to exert considerable influence over their boards (CQ Researcher, 2009, pp.35). They have also opined that executives have had substantial

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MBA TERM PAPERS CUSTOM ESSAY WRITING SERVICES influence over their own pay; compensation arrangements have often deviated from arms-length contracting because directors have been influenced by management, sympathetic to executives, insufficiently motivated to bargain over compensation or simply ineffectual in overseeing compensation (CQ Researcher, 2009, pp.35). Quite obviously, power and politics play an important role in deciding the compensation of CEOs, albeit in certain cases, as that of Nardelli, the outcomes often backfire by virtue of being below-par. Smith (n.d.) observes that Nardelli, being one of the high-performing blue eyed boys of GE, had negotiated a pretty slick deal (CQ Researcher, 2009, pp.35) with the retail giant Home Depot, although he failed to deliver sustainable results. It is quite interesting to note that when shareholders sought to block the former CEOs huge exit paythe companys lawyers said the severance package had been set by Nardellis employment agreement (CQ Researcher, 2009, pp.35). However, Blake has set a rare example by accepting $8.9 million as his compensation, an amount that is less than a quarter of Nardellis $39.7 million paycheck, thereby defying the popular notion that it is not easy or cheap to find a replacement for an ousted executive (CQ Researcher, 2009, pp.35). As far as the organizational context is concerned, it is a well known fact that it is easy for big companies to find a variety of ways to act both large and small (Daft, 2007, pp.326) and Home Depot is not an exception. Being a renowned retail behemoth, the company, along with its peers, can use the advantage of size in areas such as advertising, purchasing, and raising capital; however, they also give each individual store the autonomy needed to serve customers as if it were a small, hometown shop (Daft, 2007, pp.326) and it has also been observed that these companies are gaining so much clout that they can almost dictate contracts, telling manufacturers what to make, how to make it, and how much to charge for it (Daft, 2007, pp.157).

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Conflict Management Process

With reference to Nardellis leadership style, Businessweek (2006) had observed that the regimented atmosphere and military themesmaybe tough to stomach for skilled workers used to a more free spirited atmosphere (Kinicki & Kreitner, 2009, pp.387). It has been observed that change rarely occurs by increasing driving forces alone, however, because the restraining forces often adjust to counterbalance the driving forces and McShane et al. (2008) have further opined that the harder corporate leaders push for change, the more strongly the restraining forces push back and in turn threatens the change effort by producing tension and conflict within the organization (McShane, Glinow & Sharma, 2008, pp.526). Home Depot is predominantly a decentralized organization and hence the process aimed at bringing about positive changes to it was likely hampered to some extent By Nardellis strategy of forcefully pushing the change through without sufficiently addressing the sources of resistance to that change (McShane et al., 2008, pp.526). However, it has been found that the new CEO of Home Depot, Frank Blake, who has made it a point to devote his time as a mystery shopper (Daft et al., 2008, pp.580), has also clarified to the employees that his real motive is not to find any fault in them but to identify ways to improve the operations so that customer satisfaction is enhanced. Quite obviously, such a stance has helped in building the confidence of employees and motivating them to a great extent. It has also helped Blake minimize the chances of employee grievance as well as organizational conflict, thereby enhancing their performance.

Role of Organizational Culture and Design

Brunner et al. (2009) has observed that Home Depot decided to save money by eliminating the more costly area experts in order to manifest cost-cutting and increase profitability; however, instead of saving money, the company went into a tail spin that not only lost a significant

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MBA TERM PAPERS CUSTOM ESSAY WRITING SERVICES portion of its customer base, but also cost the company its supporting investors (Brunner, Emery & Hall, 2009, pp.148). In this context, it may be rightly said that the loss of authenticity does not always come from money issues, but it often does, and the public can smell and sense deception along with broken promises (Brunner et al., 2009, pp.191). After taking charge as the new CEO of Home Depot, Frank Blake has been observed to have drastic measures to elevate the company to its lost ground, by shifting focus on the customers and improvising the operations to achieve higher levels of customer satisfaction. It can be easily observed that the GE-veteran, who was also highly recommended by the legendary Jack Welch, is markedly different from his predecessor, and on becoming Home Depots CEO, he recognized the importance of moving away from the imperial leadership style (Lawler, 2008, pp.210) of Bob Nardelli. Moreover, Nardelli stressed upon the institutionalization of Six Sigma by virtue of believing in the tenet that facts are friendly (Mills, Dye & Mills, 2008, pp.114) and had justified his stance through soaring profits. However, after replacing Nardelli, Blake has curtailed some of the Six Sigma activities and given store managers more leeway to make their own decisions (Mills et al., 2008, pp.114), thereby guiding the organization towards a decentralized structure that it used to follow prior to Nardellis regime. Tom Davenport (n.d.) supports this strategy by saying that process management is a good thing but it always has to be leavened a bit with a focus on innovation and customer relationships (Mills et al., 2008, pp.114).

Task 3: Conclusion The research that was undertaken while giving form to this essay has been helpful in revealing a lot about the troubled phase that Home Depot went through despite being a highly successful

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MBA TERM PAPERS CUSTOM ESSAY WRITING SERVICES player in its sector. It has been observed that the company ran into problems after appointing Bob Nardelli as its CEO. The problems had primarily arisen out of organizational factors such as leadership approaches, change management strategies, power and politics issues, conflict management process and the role of organizational culture and design. It has been found that Nardelli was a complete mismatch with respect to the retail giant Home Depot because the leadership tenets that he could easily apply at GE were of no use whatsoever at the former because Home Depot has a highly decentralized as well as entrepreneurial structure and Nardelli preferred a military-style. Although Home Depot was benefitted during Nardellis tenure due to his financial acumen, things went berserk when the autocratic leadership gave rise to dissatisfaction among the employees as well as customers and Home Depot started scoring low on customer satisfaction. Low profitability also added to the worries of the company and finally Nardelli had stepped down, albeit after being paid a hefty exit pay. Following the severance of Nardelli, Frank Blake was taken on board as the new CEO, his primary role being that of a change agent. Having prior experiences at GE as well as Home Depot, Blake was well aware of crisis management. He has been observed to have a thorough idea about the organizational culture at Home Depot and after taking charge he has shifted the focus back to customers and has also brought about drastic changes such as reduction of Six Sigma activities. Although, Frank Blake as the new CEO faces the monumental task of making the home improvement giant profitable again and restructuring to repair the damaged aspects of the corporation, it has been rightly forecasted that with Blake in command, Home Depot has a good chance of leveraging its core competencies in the retail market and becoming an excellent corporation for customers and shareholders (Hitt et al., 2008, pp.161).

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MBA TERM PAPERS CUSTOM ESSAY WRITING SERVICES 9. Hitt, A. M., Ireland, D. R. & Hoskisson, E. R. 2008. STRATEGIC MANAGEMENT: COMPETITIVENESS AND GLOBALIZATION: CONCEPTS & CASES. 8th ed. Cengage Learning. 10. Home Depot. No Date. THE HOME DEPOT. [Online]. Available at:

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MBA TERM PAPERS CUSTOM ESSAY WRITING SERVICES 17. Paley, N. 2007. MASTERING THE RULES OF COMPETITIVE STRATEGY: A RESOURCE GUIDE FOR MANAGERS. CRC Press. 18. Starner, T. April 9, 2008. RESTRUCTURING HR. Human Resource Executive Online. [Online]. Available at: http://www.hreonline.com/HRE/story.jsp?storyId=86331808

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