MAKING A NEW CULTURE

Home Depot stores used to be known for customer service. A host of friendly employees would help customers navigate a huge inventory, find exactly what they needed, and even provide detailed instruction. Those days seem long gone, though. Under the leadership of the former CEO, the company shifted its focus away from customer service to reducing inventory and cutting costs. Stores that once had an employee in nearly every aisle are now being manned by just a handful, even during the busiest times. Customers who were used to getting helpful, personal attention can no longer find even a cashier, much less someone that can answer their questions on how to use a reciprocating saw.

Marvin Ellison, promoted executive vice president for U.S. stores, saw the disastrous results of Home Depots lack of attention to customers. In the last three months of 2009, the company lost $54 million. To make matters worse, the companys reputation took tremendous hits. For many years, it routinely ranked near the bottom of the University of Michigans American Customer Satisfaction Index, which measures consumers evaluations of all major retailers. Even after Home Depot recovered in these rankings slightly, it still lagged far behind competitors like Lowes and Ace. He had to listen to countless stories of how consumers would drive an extra 30 minutes, even an hour, to avoid going to Home Depot.

To turn things around, Marvin Ellison has committed to a new company visiona culture that is dedicated to meeting three goalsclean warehouses, stocked shelves, and top customer services. He wants employees to set aside a portion of their shift to do nothing else but take care of customers. He wants to revise evaluations so that employees performance is reviewed primarily on the basis of customer service. He wants to give financial incentives to employees who provide great service. He wants to reduce the number of messages that stores and employees get from headquarters so that they can focus on customers. In short, he wants to restore Home Depots reputation for providing the very best in customer service.

Ellison has appointed you to a management team in charge of setting up a training and evaluating program that will get the entire company focused on his vision of customer service. You and your team face the difficult task of changing the entire companys culture so that the entire organization is focused on the customer. How will you do it?

1. What are the problems at the core of this case?

2. Recall from the text book that there are three levels of organizational culture. What kinds of changes would you make to address each level?

3. How could an analysis of the companys external environment help in establishing a new customer-based culture?

4. What kind of training and evaluation program would you institute to change Home Depots culture? Defend your suggestion using business logic.