On October 22, 2006, I posted an entry outlining five CEOs that must go. On 1/3/2007, #1 on that dubious list took a dive–Bob Nardelli from Home Depot. Reports say he “resigned,” but that’s being kind–it was a forced resignation, and Bob had been under tremendous heat thanks in part to his antics on investor conference calls and his insistence to devalue customer service at the store level. The guy was downright horrible when all was said and done.
He came in as an outsider from GE who self-admittedly didn’t understand retail. It puzzles me as to why he was given a shot to begin with, but he didn’t help himself by being so arrogant and defiant. Early on in his tenure, Bob reduced inventories and staff counts to levels that alienated customers and employees. Several talented employees walked, and Lowe’s chipped away at the customer base quite effectively as a result.
Have you shopped at a Home Depot lately then visited a Lowe’s on the same day? The experience is night and day–the people at Home Depot act as if they can’t wait to get you out of there while the Lowe’s people seem genuinely eager to help you complete your home improvement projects correctly. Home Depot’s slogan is “you can do it, we can help,” but the knee jerk reaction one might have when hearing that is “you can help, but you won’t.” For my money, I’d pay more at Lowe’s just to avoid dealing with certain malcontents at Home Depot. Don’t get me wrong, there are some very helpful people still working at Home Depot, but you have to work pretty hard to find them now whereas they used to be sprinkled generously throughout.
So much for GE making a mistake (in Nardelli’s eyes) by not turning over the keys to the top post when Jack Welch retired. They said “thanks, but no thanks.” Home Depot should have said the same thing, but they are now on the hook for a $210 million package to make Nardelli go away that includes $20 million in severance. Don’t feel bad for him as he obviously isn’t going to be hurting. How many positions throw exorbitant amounts of money at you to make you go away when you do a bad job? The only positions I know of are within sports and CEOs.
Here’s my overall take-away and hopefully thought provoking tidbit out of all this: The “resignation” of Bob Nardelli further underscores the leadership void we have in this country at some of our larger corporations. According to an August 2006 Corporate Library Survey, 52.7% of CEOs today are on the job for less than five years. On one hand, five years isn’t long enough to change a company’s ultimate course, but five years is way too long if you have the wrong person at the helm. There are a lot of wrong people guiding companies today that will play out in less than the next five years so that alarming 52.7% can be viewed as an “error rate” of sorts. Let’s focus on reducing that error rate shall we.