Business Ethics -- Robert Nardelli Business Ethics: Robert Nardelli and Home Depot

Robert Nardelli became CEO of The Home Depot in 2000, despite the fact that he had no retail experience (Grow, 2008). He had previously been in management at General Electric, and he brought the Six Sigma style he had used there over to the home improvement retailer with plans to overhaul the company and completely change the culture of it (Terhune, 2007). He was successful in doing so. During his time as CEO of The Home Depot, he overhauled the entire company and greatly changed the entrepreneurial culture on which it had been built (Grow, 2008). At the time he took over, management was decentralized -- and he changed that by consolidating division executives and eliminating many of them (Weber, 2007). His leadership theory and style were clearly very different from what The Home Depot had when he arrived, but it was believed that he could do great things for the company, which was struggling a bit at the time and losing ground to competitors.

Nardelli's leadership style was not deeply interested in trait theory, or in studying people's personalities in the company (Grow, 2008). Instead, he came in with behavioral theory in mind, and was only interested in what was observed outwardly (Lublin, Zimmerman, & Terhune, 2007). Because of that desire to focus only on what he saw and not on the rich inner workings of the company and the people who made up that company, Nardelli started making changes and adjustments almost right away. There was little focus on a thoughtful approach...

Nardelli's rigid plan for the company shunned both situational and contingency theories that would have been helpful to him, as there are no "best" ways to lead a company and every situation requires careful thought and the proper direction to consider when it comes to leadership.
Nardelli ultimately improved Home Depot in some ways and damaged it in others, which ultimately led to him abruptly leaving the company in 2007 (Grow, 2008). Over five years, from 2000 to 2005, Nardelli was able to increase profits and the bottom line for the home improvement company, which would make it sound as though he was doing a good job. However, stock prices for the company essentially stayed flat throughout that time period, while competitor Lowes saw its stock double (Weber, 2007). Naturally, that upset The Home Depot's investors, who were not making any money and who saw a manager who could improve the bottom line but was not capable of doing anything else. There were also mounting concerns about his actual style of management, since he was considered by to blunt, autocratic, and highly critical (Mui, 2007). Nardelli was a true transactional leader, and his plan for The Home Depot was so formulaic that it did not work as intended because management and leadership are not "one size fits all" issues.

Nardelli may have been successful at GE, but different companies and different situations call for different styles of leadership and different ways to…