The Rise and Fall Of Home Depot CEO "Big Bob" Nardelli

They call him the most-overpaid CEO in history, which may or may not be true but either way it isn’t very flattering. During Big Bob’s tenure, Home Depot’s stock lost 8% of its value and the store gained a reputation for crappy customer service and long lines leading to registers staffed with unhelpful people. Why? Big Bob wasn’t concerned with the business he was in, and it showed in his management philosophy:
What was Nardelli’s strategy?

It was a concept he called “The three Es.”

* Enhancing the core.
* Extending the business.
* Expanding the market.

Conspicuously missing from Home Depot’s strategy? Customer Service. Big Bob cut higher-paid more knowledgeable workers in favor of part-time help. He tried to start a building supply business. Together, Home Depot and Lowe’s have only 18% of the market share, yet Big Bob was putting the stores on hold to look for greener pastures. What was he thinking? It hardly matters. He’s got a $210 million exit package, and you don’t. —MEGHANN MARCO

Out of Focus: The Rise and Fall of Robert Nardelli [Ad Week]

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  1. IC18 says:

    His practice though was the other three E’s
    *Extort the Core
    *Expend the Business
    *Expanding the Wallet

  2. timmus says:

    I think the real question is HOW did he get to be in charge of this company? And what is it that allowed the “king’s new clothes” culture to persist?

  3. timmus says:

    ack… Emperor’s new clothes

  4. davere says:

    I don’t know how things are anywhere else. But here in Orlando I used to just go to Home Depot for my house needs. No reason why, it was automatic, it’s just as far from me as Lowe’s.

    Then one day I was driving by Lowe’s and I decided to stop and see if they had some things I needed. I was surprised by the friendliness of the employees and their knowledge. I ended up spending $300 and I’ve been returning ever since.

  5. dgandy says:

    I used to love Home Depot…then it became a headache finding help, and when I did there were 15 other people waiting for the same salesperson.

    Then I went to Lowes, where they have the little “Get Help” buttons on the wall that page the sales person to you (instead of you wandering the store looking for them). I haven’t been back to home depot.

    That’s just one example of how they’ve let things slide while Lowes has sneakily snuck past them.

  6. catnapped says:

    C’mon everyone…he was just worrying about what was really important–HIMSELF!

  7. mantari says:

    I think it is misplaced focus that is causing these problems. Focus on cutting costs. Focus on pleasing the shareholders with good numbers. They’re not focusing on the customer and their experience.

    Sure, you directly save some money by getting rid of ‘expensive employees’. The result is that you’ve indirectly lost sales and goodwill (business reputation) in the same stroke.

    I’m actually wanting to hear stories of businesses that have gone the other way. They’ve put too much focus on the customer. My guess is that those would be Internet based businesses, and not brick-and-mortar?

  8. mopar_man says:

    I wish I could fuck over a business so badly and end up richer than I could ever imagine. I bet he’s laughing all the way to the bank.

    There’s a couple of mom & pop hardware lumber stores here that do well with a Home Depot in town. In fact, I think I see more cars in the parking lots of those places than I do in the Home Depot lot. Customer service is the difference, as mentioned. Home Depot has nobody working there. I’m sure they’re somewhere but you won’t find them on the floor. The other places have people to help you and they actually KNOW what they’re doing. I know where I lived in Canada, a Rona opened up and all the knowledgeable employees left HD. HD lost a lot of business and what did they do? Open up another location on the other side of the city.

  9. animeredith says:

    I think my Dad is the only Home Depot employee who embodies the values of the old HD. He’s been the Tool Rental manager for a couple of years while he’s trying to get his own contractor business started up again. He works freakin’ HARD, despite beng 65 and too old and too smart for a company that watches his co-workers slack off or just not come in without saying a word. They won’t give him a worthwhile raise for his loyalty and faithfulness, just the minimum few cents here and there that every other incompetent boob there also makes if they stay long enough.

    In short, HD treats even their great employees like crap. I won’t even get into how pissed my Dad was when he saw his raise, then watched the CEO sail away with his 120 million.

  10. Squeezer99 says:

    when i’m at home depot and lowes, i can almost never find any help, and when i am able to find it, the person either says its not their department, or they just plain don’t know how to help me. and when i go to get something that should be in stock, the space on the shelf for it is always sold out.

  11. kingdom2000 says:

    All this nonsense indicates further proof on why it pays to be incompetent if you make it to the big wig level. $210 million for not doing his job. Only for CEO’s and the top level executives. Any other level and they couldn’t show you the door fast enough and severance package? please.

    This is why american companies are hurting against foreign competition. They blame high wages, but its the expensive executives with their huge wages and even larger bonuses that hurt companies. The money spent on these execs would probably in most cases cover the money “saved” when people are fired or jobs pushed overseas.

    Personally I think alot of decisions are made by not asking “what is best for the company” but “what gets me my huge bonus for the year.”. Fire a few thousand people gets you a $10 million dollar bonus, what would you do?

    CEO compensation needs a huge overhaul. It should be simple…what ever you reward the line employees you reward the CEOs. So if employees don’t get bonuses, neither does the CEO. If bonus is 10% of salary, then so is the CEO’s. If employees can get fired for gross incompetence without severence…so can the CEO.

  12. Sonnymooks says:

    This guy managed to do the impossible.

    1)Fail the customer.
    2)Fail the shareholder.
    3)Fail the employees.

    Good going Bob.

  13. asherchang says:

    well that sucks.

  14. Jiminy Christmas says:

    HD’s biggest screwup was trying to revamp themselves as contractor suppliers. At the same time, they went gangbusters into installation services. Guess what, HD? If you’re doing installations that means you are asking your potentially lucrative contractor customers to shop at a direct competitor. No wonder the contractors never showed up as planned!

    True story: I was once talking to a contractor whose client saw some cabinets they liked at Home Depot, so contractor and client go to the store to look at the cabinets. There in the cabinet display, with the contractor right there, the HD salesman pitched HD’s installation services to the client. Even worse for the contractor, the client actually went for it.

    So, in this instance HD managed to sell a few grand worth of cabinets and a customer saved a few hundred dollars on installation. Good for the customer, aside from their shabby behavior, incredibly stupid for HD. For that one cabinet sale they forever lost the business of a contractor who spends $300,000/year on building materials. Via word of mouth, HD probably lost 3x-4x that from other contractors who will never set foot in the place just on principle.