Sunday, March 05, 2006

A Culture of Fear

While reading the March 6, 2006 issue of Business Week, I came across an extremely interesting article. “Renovating Home Depot: Skip the touchy-feely stuff. The big-box store is thriving under CEO Bob Nardelli’s military-style rule,” is the title and I think it speaks for itself. If you have the time and the cash ($4.95), I would urge each of you to go pick up this issue and read this article closely. This analysis of Home Depot’s management style and culture has many aspects in it that are closely related to concepts we need to understand, including: organizational climate, speaking truth to power and organizational identification.

In December 2000, Bob Nardelli was appointed CEO of Home Depot. His mission was to completely change the decentralized, entrepreneurial business that developed under founders Bernie Marcus and Arthur Blank. Nardelli implemented a workplace climate that was to “look and feel like an army.” The military became his management model. Nardelli began recruiting members of the military to work at Home Depots across the nation. Around 13% of Home Depot’s 345,000 employees have military experience, including Nardelli. His plan has been to import “ideas, people and platitudes from the military.” This is the way he planned to reshape the world’s third-largest retailer to become a centralized organization.

Nardelli believes in building a disciplined workplace—one that follows orders, can operate in high-pressure environments, and execute with high standards. He believes in a command-and control organization. I’m not sure about you, but this surely doesn’t sound like any organization I’ve ever worked in. Can a management style like this work? Granted, 13% of the workers are from the military but what about the other 87%? The new organizational climate has led to a double in profits and an average annual growth rate of 12%. These numbers are impressive but what about employee morale? The majority of workers aren’t militaristic. They didn’t know anything about military style and rules. Many of these workers have labeled the new Home Depot workplace as a “Culture of Fear.” How are employees supposed to identify with a culture that treats employees as troops and labels them the “Aprons”?

Some of these are ex-workers, who describe a demoralized staff and culture of fear among workers at Home Depot. In this type of environment I am sure that there is no Speaking Truth to Power. With such a chain of command style, employees would most likely live in fear of their superiors, especially the 87% who are not familiar with this militaristic style of management.

Nardelli started out at Home Depot with no previous retail experience. He had been employed at GE, where he also was known for heavy military recruiting. He has been described as relentless and demanding. He starts the workday at the crack of dawn and considers Saturdays and Sundays to be part of the work week. He even implements military literature for employees to motivate themselves to “out-think your enemy.”
Although Home Depot does have some stiff competition with Lowe’s, I’m not too sure if this is the correct mentality retail workers need to have in order to be successful employees.

Nardelli has created a culture where employees are constantly being watched and kept track of. Their work is quantified and they are expected to follow his rules with absolutely no deviation. Former managers have described the workplace as “a culture so paralyzed with fear that they didn’t worry about whether they would be terminated, but when.” Also, past employees said Home Depot was beginning to feel much “like a factory.” In a climate such as this, it is hard to believe that their profits have grown. Can anyone shed some light on why they think this type of workplace could be successful? Is a management style like this necessary and suitable to a workplace such as Home Depot?