According to Robbins and Coulter (2005), effective managers all over the world acknowledge the role that strategic management plays in their organization’s performance. Moreover, Drucker (2004) said that the gauge of an effective manager or executive is the ability to get the right things done. This typically entails doing what other individuals have ignored in addition to avoiding what is unproductive. Imagination, intelligence, and knowledge might all be wasted in an executive job without the attained habits of mind that form them into results.
I believe that Bob Nardelli is exhibiting these characteristics and management style of an effective manager as he leads Home Depot to become continually successful in its operations. As he triumphed over various problems in managing the company and a s a result oh his managerial strategy, Home Depot is now has now increased sales by 60 percent and earnings per share by 105 percent (Business Week Online, 2006).
During his first day as CEO at Home Depot in the year 2000, the company has various problems to deal with, some of which, were as follows: it lacked the necessary infrastructure to send even a companywide electronic mail, Home Depot stores were already run-down and was being known as a store with poor customer service, the stores’ shipments were logged using pencil and clipboard, and Home Depot stores did not have automated inventory systems (Sellers, 2001). Being a visionary leader that he is, Nardelli believed that better processes must lead to better quality ad higher profits for Home Depot.
He employed strategic management in planning to improve the company. As asserted by Robbins and Coulter (2005), the prevailing belief in management theory and society on the whole is that managers are completely responsible or accountable for an organization’s success or failure. However, Nardelli demonstrated that aside from the fact that much of an organization’s success or failure is because of external forces outside of the manager’s control, the manager has a big responsibility in making decisions for the success of the organization.
A major component of Nardelli’s far-reaching move to reform Home Depot, which is considered to be the world’s third-largest retailer, into a more centralized company, include importing people, ideas, and platitudes from the military (Business Week Online, 2006). This might be an unwelcome concept in management circles; however, Nardelli couldn’t care less. He believes that it is a vital aspect of his strategy to lead in a cumbersome 2,048-store chain and get ready for its next leg of growth (Business Week Online, 2006).
In an uncertain and dynamic environment, real world organizations employ strategic decision-making when making decisions offers managers with a comprehensive and systematic means for taking into consideration the external environment, concentrating on an organization’s strength, reducing weaknesses, and recognizing opportunities in which an organization can have a competitive edge (Shafritz & Hyde, 2004).
As maintained by Holstein (2004), the Nardelli decision-making model might help create a pattern for other CEOs who have been extremely frustrated and disillusioned by their lack of success in harnessing technology. In transforming Home Depot to what it is now, Nardelli increased information technology spending by almost 20 percent (Sellers, 2001). Then in year 2003 Nardelli spent a total of $400 million on inventory shipping and tracking systems (Sellers, 2001). Aside from these, Nardelli also spent around $250 million refurbishing Home Depot stores (Pellet, 2001).
This included the installation of self-checkout systems in 800 stores to lessen customer lines and ease up salespeople. This also included the establishment of two-way cordless scanners, which enabled products to be price-scanned in the shopping cart, in this manner shortening lines. Being an effective manager, he also paid attention to motivating the organization’s workers. Armstrong (2002) said that in providing rewards to employees, supervisors and managers should identify what rewards will succeed for specific employees at any given time.
Even though supervisors and managers might not be able to have power over certain rewards like benefits or wages, they have the liberty to give out rewards like recognition and praise. In Home Depot, Nardelli instituted innovations in providing rewards and in human resource management. First, he substituted 157 different employee evaluation forms with two (Pellet, 2001). In addition, coworkers, above and beneath them, rated aalaried personnel from the CEO down and salaries were derived from the scores.
Then during a period when Home Depot was planning to hire approximately 100,000 new employees, Nardelli did not automatically fire those employees with poor scores (Pellet, 2001). Nardelli first requested for the advice of others and informed underperformers precisely what they were doing wrong. This way, Nardelli showed that it is important for a manager to vigorously seek opposing opinions and inquire regarding the basis for those opinions before selecting a course of action is being stressed, instead of acting on the basis of tacit or pre-arranged agreement.
Necessarily, this needs constantly listening with real curiosity so as to promote development of different opinions and supporting rationales, instead of merely setting forth suggestions and working to make agreement around them (Drucker, 2004). Furthermore, Nardelli seemed to follow step two in Peter Drucker’s model (204) that executives require both themselves and their staff or subordinates what they contribute presently to the organization and what they could contribute to the organization in the future.
In Home Depot, Nardelli asserted that in spite of whether a person’s belief of what he/she now contributes, or could contribute, equals his/her manager’s belief, emphasizing and bringing out the importance of everybody’s role as a contributor is necessary to the organization’s general effectiveness. In initiating change in Home Depot, Nardelli showed that everybody in the organization makes decisions; nevertheless, decision-making is specifically vital in a manager’s job.
I think that he followed what Robbins and Coulter (2005) said that decision-making is part of all four managerial functions – planning, organizing, leading, controlling, and that decision-making is synonymous with managing. Holstein (2004) has written that when Nardelli joined Home Depot, the challenge of improving the company’s supply chain and logistics became apparent because the company is way behind other stores in these areas. Hence, he established a model called “full truckload to the store,” which means that the more you brought, the more it would oblige you to sell, since you get kind of jammed (Holstein, 2004).
In terms of information technology, at Home Depot, Nardelli has established a system of checks and balances (Sellers, 2001). The manner is which Nardelli is managing the technological transformation is attracting attention and interest from other executives and managers. Sellers (2001) said that Nardelli has borrowed from the CE playbook to establish a system of checks and balances on how technology is managed, and Nardelli has likewise incorporated technology decisions deeply into his business strategy in runring and managing Home Depot.
Furthermore, Nardelli likewise employed building deeper relationships with fewer vendors. As stated earlier, the Nardelli decision-making model might possibly help create a pattern for other CEOs who have been exceedingly frustrated and disillusioned by their lack of success in utilizing technology. In conclusion, in transforming Home Depot to become the earning company that it is now, I believe that Nardelli demonstrated that leadership is the capability to influence people or groups toward the accomplishment of goals.
As a process, Nardelli showed that leadership forms the goals of an organization or group, inspires behavior toward the attainment of those goals, and helps characterize organizational or group culture; hence, it is fundamentally a process of influence. # References Armstrong, M. (2002). Employee Reward (3rd Edition), CIPD: London. Drucker, Peter. “What Makes an Effective Executive,” Harvard Business Review, Vol. 82, No. 6, June 2004. Holstein, W. (2004). “The Depot goes digital: how CEO Bob Nardelli is managing a $2 billion technology transformation,” The Chief Executive.
Pellet, J. (2001). “Mr. Fix-It Steps In,” Chief Executive. “Renovating Home Depot. ” (2006). Business Week Online. Robbins, S. , & M. Coulter. (2005). Management, (8th ed. ). Prentice Hall. Sellers, P. (2001). “Exit the Builder, Enter the Repairman: Home Depot’s Arthur Blank Is Out. New CEO Bob Nardelli Is In. His Job: To Tackle the Company’s Renovation after Two Decades of Nonstop Expansion,” Fortune. Shafritz, J. M. & A. Hyde. (2004). Classics of Public Administration, 5th ed. Belmont , CA : Wadsworth/Thompson