September 1, 2014
There once was a time when HR used to have a big, front-and-center seat at the table at Home Depot. That was back during the imperious reign of CEO Bob Nardelli, when senior vice president for human resources Dennis Donovan not only had a seat at the table, but was a close confidant and part of Nardelli’s inner circle. Donovan certainly had that strategic role that all HR people say they want, and in fact, he had such a key role and was so highly compensated that he was actually made Workforce Management’s list as the highest paid HR executive for 2006. But that was then, this is now, and Donovan and Nardelli are long gone. It’s not really surprising that Home Depot, a company that has really been struggling, is cutting more staff. What is a shock was the wholesale gutting of the HR infrastructure by cutting 50 percent of the company’s 2,200 person human resources field staff last week. The move is designed to put more workers on the sales floor, which is ironic because floor staff was whacked so severely during the Nardelli/Donovan regime that you couldn’t find anybody to help you or answer your questions. The old, people-oriented culture of Home Depot was dramatically changed during their time together, and it’s pretty clear to me that the company has struggled, in large part, because of that decision. So, I applaud the company’s new “Aprons on the Floor” program that should help customer service, but I wonder: is it a good tradeoff if you get more “Aprons on the Floor,” but lose your HR support throughout the company? As part of the cutbacks, Home Depot is creating a HR service center near Atlanta that will handle most of the company’s human resource needs by phone. Stores won’t have a dedicated HR manager but instead, “district teams” will be established that will divide three HR people among a small group of six to 10 stores. What does it say about a company that it goes from having the highest paid HR executive in the U.S. to a phone-based human resources support structure in two years’ time? Analysts like this move--one told Workforce Management that the old HR structure “was way overdone and not typical for retail operations like Home Depot”--but analysts are always fond of short-term cost-cutting and are less concerned with the long-term impact. I’m not sure if this move to minimize HR and maximize help on the floor will work any more than the old strategy did, but it will be interesting to watch, because it’s a real-time case study on the value HR brings to an organization. If Home Depot can make this work, it may push other companies to re-examine the value of their own HR departments. And when that happens, HR can kiss that seat at the table goodbye.