Home Depot Culture Analysis

Founded in 1978 by Bernie Marcus and Aurthur Blank, The Home Depot Inc. has grown to become the world’s largest home improvement specialty retailer . Two key factors that contributed to its rapid initial growth was its sales strategy of low prices and a “stack it high and watch it fly” philosophy as well as a strong and pervasive organizational culture.

Home Depot’s organizational culture, which is a set of shared beliefs, values and assumptions that exist in the organization helped build a solid foundation of what was expected out of employees . It also provided a strong consensus of what the organization stood for and how it would succeed.

More often than not, founders are a crucial in the formation of a strong organizational culture

This key edge allowed Home Depot to stand apart from its competitors by creating extra value for its clientele, resulting in a large and loyal following. With their strong culture, Home Depot profited financially. They reached the $40 million revenue mark faster than any retailer in history, eventually growing to become the world’s largest home improvement retailer today. Till date, both co-founders agree that the key to Home Depot’s initial financial success was its customer-orientated culture, which its competitors found difficult to replicate

Instead of segmented purchasing through regional managers, all purchasing decisions were shifted to Atlanta, Home Depot’s headquarters. He also changed the managerial decision making process to be based on performance data rather than “gut-feelings”. Companywide analytics and improved information systems were implemented to support this new approach. In addition, GE engineering processes such as six sigma was used to create strict KPIs to allow management to track performance of stores. Failure to meet KPIs resulted in termination of managers or employees, creating a climate of fear.

The resultant change from these new strategies was pronounced, especially on the organizational culture. Home Depot’s customer centric and entrepreneurial retail culture that made it such a success was replaced with command and control bureaucratic philosophy. This was reinforced with the shift from flat, organic organizational structure to one that was tall and mechanistic. Lastly, to synergize with the new command and control setup, Nardelli started to import both ideas as well as people from the army into Home Depot, resulting in a military-like, bureaucratic