In Monday morning news that had me scratching my groggy head, BusinessWeek reports that fired Home Depot Inc. (NYSE: HD) CEO -- and General Electric Co. (NYSE: GE) alum -- Bob Nardelli is in charge of fixing Chrysler. If someone can explain to me why this makes sense, I would like to hear it.
That's because during his tenure as CEO, Nardelli systematically destroyed Home Depot's greatest strengths -- its expert sales staff and ability to supply products that customers needed in the stores. Moreover, he has no experience in the automobile industry, which depends heavily for its success on developing cars that consumers want to buy at a price they can afford.
Nardelli is not the first manager from outside the auto industry to be parachuted in to save the day. Consider Alan Mullaly, who was passed over for CEO of Boeing Company (NYSE: BA) for another GE alum, James McNerney. Mullaly took over at Ford Motor Co. (NYSE: F) in September 2006.
Mullaly's performance at Ford has been mixed. According to AutoBlog, Mullaly came to Ford with some relevant experience. He turned around Boeing's Commercial Airplanes division and had "deep experience in customer satisfaction, manufacturing, supplier relations and labor relations, all of which have applications to the challenges of Ford." However, Ford's stock has since then declined 7% from $8.66 to $8.05. But it's also fair to give Mullaly some credit for a $750 million second-quarter profit, as AP reported.
But Nardelli has yet to demonstrate the kinds of skills that Ford touted when it hired Mullaly. In fact, the customer responsiveness that Nardelli destroyed at Home Depot is the very thing Chrysler needs to rebound. Granted Chrysler faces some rough cost cutting. And Nardelli demonstrated that he can do that at Home Depot.
But I wonder how labor unions who take big pay cuts will feel about giving back that money to an executive who walked out of his failed tenure at Home Depot with a $210 million severance package.
Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He owns GE shares and has no financial interest in the other securities mentioned in this post.
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Reader Comments (Page 1 of 1)
8-06-2007 @ 2:26PM
Tom said...
Ego maniac...Nardelli.
8-06-2007 @ 3:48PM
steve holben said...
Not just his lousy and arrogant performance, but the priceless loss of consumer goodwill that Home Depot lost additionally causes one to ask why Nardelli. I don't think the UAW is going to behave in as much of a Casper Milquetoast way to his way of doing things like the HD customers did who had some where else to go. Maybe he made a deal to loan them some money out of his HD shakedown.
8-06-2007 @ 8:50PM
E.P. said...
All I can say is good luck to all of the Chrysler employee's, let's see how many are on the unemployment line after he's done.
8-06-2007 @ 10:21PM
mike scarpetti said...
Best of luck to Chrysler! Being a 12 year veteran of Home Depot,I feel Mr. Nardelli destroyed MY company that I worked so hard for. All of the values which were the foundation of Home Depot were destroyed and it will take a long time to win our customers back.
8-06-2007 @ 10:40PM
Leon said...
I feel sorry for the Chrysler employees. HD used to be a great place to work. Now the employees are resentful of Nardelli's destroying the customer service that HD had been built upon by cutting staffing to way less than is required to serve customers well. I know, I was an associate. If you didn't have a history of being a military officer, you could not grow above a certain middle management level, unless of course you married one of Nardelli's family members. I'm sure he will have the same requirement at Chrysler. Thousands of HD managers left the company because they weren't former military officers. Thousands more associates left because everybody had to do the work of 2 or 3 people and explain to the customers in the stores why there were only 3 associates(not counting managers and cashiers) sometimes in the store to wait on customers. I was yelled at frequently and shouted at that they were going down the street to Lowe's even though they would pay more. It come down to service which requires more associates in the stores!
8-07-2007 @ 1:58PM
Jon said...
Had a Dodge Conversion Van, need to buy again-No Way will I buy another Chrysler product if Nardelli benefits in any way. I will let my money do the talking for me and I'm sure others feel the same way.
8-07-2007 @ 2:38PM
Ed said...
My wife is a manager at HD and drives a PT Cruiser, and now is looking for some other car to drive since BIG BOB is at the wheel at Chrysler, the 08 Hummer is her car of choice.
8-07-2007 @ 9:25PM
Joe said...
Unbelievable! I agree with the previous posts. As a current HD associate, Nardelli put the screws to us and a great company. But, if anyone knows where i can get a job where I can fail miserably and get a 210 million severance package please let me know!
8-08-2007 @ 12:36AM
w.b. knight said...
Nardelli, almost single-handedly destroyed HD. He is arrogant, self-centered and unapproachable. Everything Chrysler does not need. Chrysler needs a Bob Lutz type car guy with some warmth.
8-08-2007 @ 5:38PM
R S BLAGUS said...
WHERE IS LEE IOCOCA WHEN WE NEED HIM?
8-09-2007 @ 2:23PM
James Lovingood said...
There are many excellant "middle" managers in General Electric. Very, very few of those make it to the execitive level. Most seem to have the personality & demeanor as described for Bob Nardelli ; (I did not know him),but it certainly is typical. These type are extremely productive for the "short term" but they leave a bad taste and are overall bad for the company...... Some were born that way. If not then Jack would raise them that way.
I am embarressed for my company GENERAL ELECTRIC
8-09-2007 @ 5:36PM
xxxxxx said...
It is just unbelieveable that a company that is in trouble hired Nardelli after he destroyed HD. HD was a good company and started by two people who wanted to serve the public with integerity, honesty and enthusiasm. Now HD is down the tubes. What is he going to do for Chrysler
8-13-2007 @ 11:20AM
Steven Fry said...
Well, this certainly signals the end for Chrysler. I watched with shock as this nut dismantled customer service at Home Depot. The difference in Home Depot after his departure is beginning to show, but it is a process that will take time. Chrysler doesn't have the time to recover if he is allowed to "work his magic". Oh well, Chrysler didn't have much of a chance anyway if the decision makers are capable of such a stupid decision.
8-14-2007 @ 8:04AM
Michele said...
As an associate as Home Depot, we were so thrilled when Nardelli left the company and now feel we can bring the company back to a much higher standard store by store now that Nardelli is gone. All of us in the our store have vowed to never buy any Chrysler product and encourage friends, families and acquaintances to stay away from Chrysler as well.
8-16-2007 @ 1:51PM
Marilyn Whaley said...
Unbelievable, who are those who hired him, they should be fired now, before they get paid when the company goes out of business! Shame on them, what are they thinking? Obviously they are not thinking, and don't deserve to be in the position to makes these decisions. So much for my Jeep.