A Centralized Structure Transforms. Home Depot

In 1979 Bernie Marcus and Arthur Black opened their first Home Depot store in Atlanta, GA. The mission of Home Depot was to create a superstore for home improvement that would offer customers a variety of products at a low price that other hardware stores would not be able to match. Managers were able to order and stock products that meet the needs of their local and regional customers. Jones (as cited by Pearson, 2013) states “when the authority to make important decisions about organizational resources and to initiate new projects is delegated to managers at all levels in the hierarchy, authority is highly decentralized” (p 126). The decentralized organizational structured worked well for Home Depot until the early 2000s when Home Depot started to attract new competition such as Lowe’s. Lowe’s believed that they could create a better organizational structure in which they could standardize their products along with a system that all their managers and employees could utilize and encouraged excellent customer service from their employees. Lowe’s became an intense competitor for Home Depot.
Organizational Change The founders of Home Depot realized that they needed to make a change so their company could remain competitive and relevant to their customers and they hired Robert Nardelli as their new CEO. Robert Nardelli started his position as the new CEO for Home Depot in December 2000. Nardelli was taking over a company that was successful in the past but their financial and operational issues were hindering continued growth in the future for Home Depot. Change was needed to better motivate and coordinate employees along with improving performance. The first changes Nardelli made were: creating a bonus system based on performance to motivate managers and employees; streamline and centralize purchasing activities; increased the number of new and innovative products; and also created an organization wide it program that provides store by

References: Busch, Jason (2008) A Return to Decentralized Sourcing- At Home Depot and Beyond, Retrieved from http://spendmatters.com/2008/10/16/a-return-to-decentralized-sourcing-at-home-depot-and-beyond/ Charan, Ram. (2006) Home Depot’s Blueprint for Culture Change, Retrieved from http://hbr.org/2006/04/home-depots-blueprint-for-culture-change/ar/1 Home Depot: Last Among Shoppers (2008), Retrieved from http://www.businessweek.com/stories/2006-06-18/home-depot-last-among-shoppers Out at Home Depot (2007), Retrieved from http://www.nbcnews.com/id/16469224/ns/business-us_business/t/out-home-depot#.Ub0InPm1Hw8