Reference no: EM131358447

Home Depot's New Military-Style Structure

How has Bob Nardelli changed his organization's structure?

When Home Depot, the home improvement retailer, was introduced in 1979, the founders chose a decentralized organization structure that allowed store managers considerable freedom to order and stock the kinds of products local and regional customers wanted.  This approach worked well until Home Depot's huge profits attracted competition; Lowe's improved their approach to customer service, store layout, and introduced a standardized range of products.  When Home Depot lost their lead in the industry, they hired Bob Nardelli as CEO.  Mr. Nardelli was a former top manager at GE and had a military background as well.  He proceeded to create a more military-style, centralized organization structure that created uniform, standardized operating procedures.  At the same time, he increased the number of new, innovative products to attract customers.  A more sophisticated organization-wide IT system now provides a store-by-store performance comparison.  This new "mechanistic style" of organizing has increased efficiency.  By 2005 more than 17,000 ex-military officers had been recruited to work in its 16,000 stores.  While profits are up, sales are not, and Lowe's is still catching up.

Question:  How did Home Depot's new organization structure impact the way employees behave?