Home Depot Problem
In 2007, Robert Nardelli, the former Chairman and CEO of Home Depot, was ousted from his position by the Board of Directors, following accusations of receiving a huge amount of salary, lack of performance as well as his centralized, blunt and domineering leadership style that destroyed his relationship with almost everyone in the company (Grow, 2007). In order to understand why Home Depot resolved Nardelli's problem by asking him to resign, it is first important to know what actually was his problem.
As mentioned above, Nardelli adopted a centralized management system that saw him eliminate and consolidate division executives. He was also a very practical person who preferred to personally assess everything that occurred in the organization, an act, which was not taken kindly by the company’s managers who previously had the independence of working without close supervision (Grow, 2007). In addition, he was very arrogant, blunt, controlling and stubborn to everybody who crossed his path from customers, employees, managers, investors, to shareholders, something that made people in the company to resent him (Grow, 2007). Basically, Nardelli’s problem had less to do with his huge pay, and more to do with his poor communication and relationship with people in the company.
According to Gold, Thorpe and Mumford (2010), effective leadership necessitates a manager or CEO to know how to communicate with every element in his or her organization. Effective communication skills are keys to good leadership. By ousting Nardelli, the Board of Home Depot gave him an opportunity to reflect on his life both in and outside Home Depot and change the way he related and treated other people in general. Maintaining good relationship with people is not limited to workplaces alone; all aspects of life require us to relate well with other people. Perhaps, when Nardelli resigned, he was able to realize the fact that he did not treat the employees and other stakeholders of Home Depot well and decided to change. Picture a new Robert Nardelli with a better understanding on how to relate with people; imagine what a great CEO he would make? Therefore, resigning offered him an opportunity to correct his mistakes and become a better person.
The Group and Communication Dynamics, Leading to Home Depot's Decision
Group dynamics refer to how people interact, when they are in a group either by choice or under unplanned situations, and how the interactions influence their behavior and thoughts (Gold, Thorpe & Mumford, 2010). With regard to Home Depot, several group dynamics may have led to the ousting of Robert Nardelli, for instance, group interactions among shareholders, customers, managers as well as employees. Following the way he treated the shareholders at the company’s annual general meeting by refusing to answer their questions and timing their speech to exactly a minute, it is obvious that the shareholders must have been infuriated by his actions. Due to the resentment, they felt for Nardelli, it is possible that in their interaction after the meeting, they decided to report Nardelli’s misconduct to the Board of Directors, which contributed to his ousting.
In addition, the harsh and blunt style, in which he treated and communicated with the managers, forcing some of them to resign, may have influenced them in their interaction groups to portray Nardelli in a bad image to the Board, leading to his ousting. Also, his adoption of a cost-cutting strategy that saw him significantly reduce the number of permanent employees led to job losses for numerous workers and resulted in shortage of employees to serve customers (Clothier, 2007). That did not go well with most of the employees and customers, creating a rift between him and them. Due to this, both employees and customers may have plotted for his removal in their discussions by complaining to the Board, regarding how he treated them badly. Since customers are the priority of any business, their complaints are taken seriously by the Board and that might have been a key consideration in the Board’s decision to force Nardelli out of office.
Communication dynamics, on the other hand, refers to the various communication styles that people use to reach out to different groups of people (Gold, Thorpe & Mumford, 2010). With regard to Home Depot, there are various groups of people such as customers, shareholders, and employees etc. that require different communication approaches. As noted above, Nardelli’s communication style was blunt and arrogant and that applied to everybody in the company (Clothier, 2007). He failed to realize that different groups of people in the company required different communication dynamics. Eventually, the Board heard about his arrogance, rudeness and bluntness and he was fired.
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