Under Renovation

“Soon-to-retire Depot co-founder Bernie Marcus has videotaped his jokes so that his voice can still set the tone at company meetings.”



The Home Depot president and CEO Robert Nardelli had been on the job only three days when he flew to Orlando for co-founder Bernie Marcus' last company road show. This is a company that believes messages are best delivered face-to-face, and he was here to see Marcus — the master at leading Depot meetings — in action.

With Marcus' impending retirement and the recent retirement of co-founder Arthur M. Blank, who left the company on May 30, you might think that the company's road shows — where top execs meet with managers all year long, all over the country — would be threatened. But Nardelli, the former number two executive at General Electric under Jack Welch, and the first outsider to ever take the helm at the $45 billion retailer, knows that getting in front of its managers and employees is as much a part of this company's culture as its bright orange aprons and carpentry clinics.

Road Show Culture

The Home Depot's road shows aren't about PR. They're focused on teaching, on getting a reinforcement of the basics from a company founder, and on solving real problems. The road shows will continue in the Nardelli era, but he has passed their leadership to merchandising executive Pat Farrah, another founder of the company.

Road shows start over dinner, during which division heads collect written questions from the store managers in attendance. That night, they make long lists of questions, sorted by category, that will be asked the next day. The all-day meetings begin with strategic messages from the executives on hand, about things like new programs or products. But mostly they're Q&A sessions.

“We want to reach out to our people and create an atmosphere that encourages them to speak their mind about all topics, no matter how contentious they are or how difficult they are to address,” says Farrah. “We want to know what our people are thinking, and we want them to share ideas and come up with creative ideas that we might be able to use as best practices in our business all around the country.”

It is inevitable at these meetings that a problem will be brought up by the audience that somebody on the dais has not heard about before. And it is also inevitable that a dozen store managers will chime in with “Yes, this is definitely an issue.”

When it happens, the senior manager in charge of the topic takes notes and will usually leave the dais to go solve the problem. The managers get to see the parent company listening and responding — and they eat it up.

In the early days of the company, road shows were conducted for 30 to 50 people at a time, a luxury that was affordable when the company was much smaller. Today's versions are put on by regional divisions for as many as 400 people. The locations are chosen based on driving distances and on wherever the company has the greatest concentration of people.

Executive Vice President of Operations Larry Mercer admits that these meetings are getting harder to hold as the company grows. But he also says that they are important for exactly that reason. “The most important thing is to give our managers a vision of the future, to be sure they also have a vision of the present and that they are not living in the past.”

Talking about the Old Days …

Marcus' legendary road shows always began with him telling a humorous story, a skill he honed years ago as a stand-up comic-hypnotist in the Catskills. To keep his spirit a part of these meetings, Farrah has persuaded Marcus to videotape three sets of jokes so that his voice can still set the tone.

Marcus considered a road show a failure if the audience didn't ask a lot of questions. He always started the show by declaring blanket immunity for any question, any opinion, no matter how inflammatory. It didn't matter.

He would say, “When you go home to your spouse or your significant other, what do you talk about around the kitchen table at dinner? Do you say, ‘Boy, we are doing something so stupid I can't believe it?’ If you have something in your craw, we want you to get it out.”

“If someone wants to jump up and say, ‘You guys are doing things wrong,’ we encourage them to do it,” Farrah says. “I am their advocate, just as Bernie was.”

“This company can be brutally honest,” adds Mercer. “We say what's on our minds. … We expect dialogue from both sides. It is not someone talking to himself or talking to a room as much as it is rhetoric around the room, of opinions, of directions. At the end of these meetings, we leave the room with a game plan. Somebody has called the play and we agreed to it, and all the dialogue that went into that is positive and healthy.”

Marcus was always blunt in his assessment of a road show's effectiveness. If participation was thin, or if management wasn't challenged enough, it troubled him because he saw that as an indication of a problem within the division.

“A quiet audience at a road show is always an indication that maybe we ought to be looking a few layers down at what is going on in the organization,” agrees Vice President of Internal Communications Rob Hallam, “because they [the associates] aren't comfortable speaking their minds.”

Breakfast with Bob

The changes that are occurring at The Home Depot are making its meetings more responsive and inclusive. As an example, Hallam refers to a recent series of managers' meetings, originally planned for August, that Nardelli pushed up to March in six cities — 17 meetings in 14 days. The reason? “We have so many great ideas in this company, we need to turn them into best practices rapidly,” says Hallam.

Another example is the “Breakfast with …” series, another Home Depot tradition. Previously hosted by Marcus or Blank or both, these meetings are staged on location in a Depot store in the early morning for associates before the store opens to the public. The breakfast gatherings are meant to celebrate the people working in the stores and their community interaction. Nardelli is already planning to double the number of breakfasts he holds.

Another change is the “Town Hall” meeting concept, which is being rolled out companywide. These gatherings of 10 to 15 associates will be held regularly in every store, and every associate is expected to participate in at least one gathering a year.

The goal is for managers to spend the whole time listening to employees' concerns and issues and then follow through with solutions.

The company is also reversing a trend of the last decade to bring senior executives together primarily on a regional basis, and will hold more meetings in Atlanta, where the company is headquartered.

“There are just certain things you can do face-to-face that you are not going to do via broadcasts or via the intranet,” Hallam says. “As big a believer as I am in technology, we need to get people back in a room and have that proximity.”

HDTV Lives On

The Home Depot's satellite network, HDTV, was first initiated in 1989 by Hallam, then an outside consultant.

“This company can be brutally honest. We say what's on our minds.”
Larry Mercer, executive vice president of operations



“The great thing about video is that we can much better communicate our culture; it can be extremely timely because of the broadcasts,” he says. “One of HDTV's key roles, because of the satellite network, is the ability to pull off broadcasts on a quick turnaround.”

For example, the company decided on a Thursday that it would broadcast a program introducing Dennis M. Donovan as the new executive vice president of human resources to the entire human resources organization — in just two business days. The satellite broadcast went out to the entire HDTV network of more than 1,200 sites.

HDTV — via live broadcast or on tape — also gives employees the chance to meet Home Depot personalities they wouldn't meet otherwise. It's an opportunity to meet Marcus and Blank, even after they have literally left the building. The hope is for every future employee to understand who the company's founders were — and the fundamentals that they believed in.

Perhaps this is one of The Home Depot's greatest challenges. As Hallam put it, “The culture of Home Depot is going to change dramatically in the next two years, and everybody knows it… . “Our culture has changed, but our values have not.”




Bob Andelman is co-author of Built From Scratch: How a Couple of Guys Grew The Home Depot From Nothing to $30 Billion (1999, Crown Business).

Happy 20th Anniversary! ay!

When a company of The Home Depot's size — 1,200 stores, 230,000 associates (that's Depot-speak for employees), annual sales of $45 billion — celebrates its 20th anniversary, you can bet the event will be big.

Really big.

As big as the entire management structure of the company (including spouses and significant others) being flown into The Home Depot's Atlanta hometown for the first time in five years for a four-day meeting last August — 4,300 people in all. As big as packing the floor of the Georgia Dome for the kickoff. As big as NASCAR's Tony Stewart roaring onto the field behind the wheel of his Depot-sponsored race car. As big as entertainment provided by comedian Rita Rudner, who tailored jokes about the home improvement giant, and two members of The Eagles, Glenn Frey and Joe Walsh.

“This is an incredible company with an infectious spirit,” says Don Kobayashi, a senior producer with Jack Morton Worldwide, the event producer. “We've never been a part of anything like this meeting.”

What made the 20th anniversary most spectacular was that The Home Depot management historically takes its meetings on the road, rather than shuttling associates into its Store Support Center (Depot-speak for corporate headquarters) in Atlanta. “Bernie & Arthur Road Shows,” named for co-founders Bernie Marcus and Arthur Blank, were always the company's best-known format for internal communications. But Blank retired earlier this year and Marcus followed in May.

“It turned out to be their last big hurrah,” says Mike Jacobs, manager of creative meeting services, who spent two years organizing the celebration. “The last night, Bernie and Arthur sat side-by-side onstage, reflecting, un-scripted. They thanked everyone who made their dream come true.”

Caution: Senior Execs in Training

If the woman behind the register at your local Home Depot is having trouble ringing up your purchase, it might be because she's not really a cashier at all. No senior manager at The Home Depot takes his or her job without first working in the stores — sometimes for as long as a month.

Dennis Carey, new executive vice president and chief financial officer, worked in a Philadelphia store. “I know when I first met Dennis, I didn't see him again for at least a month,” says Larry Mercer, executive vice president of operations.

This year marked the first time The Home Depot was open on Easter Sunday. It was, executives admit, not one of management's most popular dictates, but at least the company's senior management was there to experience it.

“I impressed on everybody that if we were going to ask these folks to work on Easter, we'd better be out there ourselves and let them know that we are with them,” Depot co-founder Pat Farrah says. “So everybody in the entire officer group went to stores on that Sunday. I went up to Baltimore and spent the whole day wearing an apron and chasing carts in the parking lot.”

A few days earlier, on Good Friday, Farrah flew to Dayton, Ohio, on the corporate jet. Jim Cannon, the company's top pilot and vice president of The Home Depot's 35-person flight department, told him, “I'll be flying you to Baltimore on Sunday. Can I join you in the stores?”

“I got a chill up my spine,” Farrah recalls. “I said, ‘Jim, absolutely; you just made my day.’ That's what makes us different from any other retailer. People can buy the same merchandise, they can put it in the racking and copy every single thing we do, from our advertising to our pricing to our signing to anything they want to, but the bottom line is they can't snitch the steamroller that is our culture.”