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Chapter 17 They Can Do It! You Can Help!: A Look at Talent Practices at The Home Depot

Leslie W. Joyce

The Home Depot is the world's second largest retailer. With revenues in excess of $90 billion, it has the distinction of being the number one home improvement retailer in the world. Founded in 1979, The Home Depot has gained recognition as the fastest growing retailer to hit sales of $40 billion, $50 billion, $60 billion, and so on. At just 29 years old, The Home Depot is already an American icon, and the business is growing globally. The company began in the United States and grew into Canada, then Mexico, and most recently into China.

The Case for Talent Management

On average, The Home Depot places approximately 17,000 leaders into positions each year. This includes placements as first-line supervisors and continues all the way to placing executive vice presidents. Notably, more than 80 percent of leadership placements are internal promotions, and the vast majority of those placements are into key frontline management roles interfacing directly with customers every day. With a demand pipeline like that, The Home Depot has to take talent management very seriously. Vacancies at the supervisor, assistant manager, and store manager levels are particularly important since these individuals have the greatest impact on the engagement level of The Home Depot's nearly 300,000 associates and on the shopping experience of billons of customers.

In addition to placing a large number of leaders, The Home Depot hires a significant number of hourly retail associates every year. Due to geographic dispersion, seasonality, international expansion, attrition, and new store growth, The Home Depot must source and hire tens of thousands of retail associates each year. This is especially true as the company prepares for its busiest season, spring, when sourcing and hiring can be at a fever pitch.

It has created multiple and diverse channels of entry into the organization and developed dedicated programs that build leadership and functional skills. The company works hard to attract top talent and then commits to supporting that talent while they prepare for upcoming leadership roles. This intense focus is the result of many things. Top among them are:

· •Embedding the enduring importance of human capital to corporate success

· •Internalizing the importance of engaged associates in creating a superior customer experience

· •Experiencing unprecedented growth in challenging employment markets—our move to more rural stores with lower revenue volumes and other operational challenges

· •Acknowledging significant changes in workforce and consumer demographics

· •Understanding that talented associates tend to leave leaders, not companies, and therefore the competency and preparedness of leaders is paramount to ongoing success

This case study describes key talent channels that have been developed to meet the retail hiring needs and examines some of the leadership development programs that have been created to meet the leadership talent needs of the company. The information provided will be summary descriptions of actions and programs and not the design level of detail, to honor the proprietary and confidential nature of the talent processes.

Talent Channels

Early on, The Home Depot recognized that talent was the key competitive differentiator in a rapidly growing company that built its reputation and business case on knowledgeable associates, problem solving, and superior customer service. It would need a unique combination of service skills and product knowledge to meet and exceed the customers’ expectations. As the company grew, the pool of talent with those high-level capabilities got smaller as the company's demand for them grew. In addition, The Home Depot realized it would need very capable leaders to inspire and engage very capable talent.

To those ends, the company has created multiple talent channels, each with a specific purpose or designated for a specific talent segment. Talent channels—the ways in which people are attracted and recruited to a company—include traditional sources like print media and job boards, as well as more creative sources like hiring partnerships and strategic alliances. The lesson to be learned from The Home Depot is that the more channels you have, the more likely your organization can source and hire talented people. Examples of talent channels include print, radio, and TV media; job boards; recruiting firms, partnerships, and strategic alliances; on-campus recruiting; and career websites. The Home Depot has been creative and innovative in a number of places, specifically in using hiring partnerships to create focused channels to key talent segments. It is through partnerships that The Home Depot is able to:

· •Identify capabilities that are key to the success of the customer experience

· •Determine the most productive channels for each talent segment

· •Establish formal relationships with organizations or entities that serve as contact points to large numbers of candidates meeting the talent profile

On the leadership pipeline side, The Home Depot has many processes for managing and optimizing its leadership talent, including these key processes:

· •Dedicated leadership pipeline programs that bring external talent into the company and accelerate their readiness to lead

· •World-class development programs for High Potentials that invest in internal talent with the clear capability to lead at the executive level

· •A comprehensive, mandatory leadership curriculum that provides a road map for success in the first six months of a leader's job

· •Annual 360-degree assessments for all leaders at the manager level and above to provide timely feedback for improvement and to ensure alignment to the leadership expectations of the company

· •A semiannual enterprisewide talent review process that ensures that all talent is reviewed and attended to in a purposeful manner

This case study focuses on the leadership pipeline programs, since these programs have been an essential element in preparing new hires to lead effectively.

Creating Successful Hiring Partnerships

The Home Depot hires large numbers of associates each year. Because these associates are the heart of the customer experience, it is imperative that they are knowledgeable and service oriented. They must also be plentiful, and that is where the challenge comes in. In 2001, The Home Depot was opening a new store about every 24 hours, and on average, a new store requires 150 to 200 new associates at grand opening.

The workforce planning process made it clear that reliable, sustainable pipelines of qualified candidates needed to be created. The company had learned a few things well: (1) older workers were proving more dependable and more service oriented than younger workers; (2) new associates with military backgrounds assimilated quickly, brought broad skill sets, and progressed more quickly than others; and (3) stores were struggling with reflecting and effectively serving the growing Hispanic customer base. These realizations led to a key decision: to establish hiring partnerships with organizations whose members or clients fit this talent profile, and through these partnerships establish The Home Depot as a preferred employer, one that members and clients considered first, above other options. These partnerships were targeted at two primary areas:

· •Governmental organizations like the Department of Labor, whose local community-based outreach programs, workforce development organizations, and job training centers are a great source of local talent, and the Department of Defense, known for creating diverse, skilled workforces from which thousands of highly capable, vital people retire every year

· •Nonprofit organizations, like the AARP (American Association of Retired Persons), whose members represent capable workforces that might be looking for flexible but meaningful work during retirement and community-based workforce advancement organizations, like the National Council of La Raza (NCLR) and the Hispanic Association of Colleges and Universities (HACU) whose constituents reflect members of the Hispanic community who may be underrepresented in other organizations and whose mission is to create opportunity for their constituents

These partnerships allow The Home Depot to reach out to the communities in which we operate, and provide the company with a broad range of qualified candidates with diverse backgrounds.

The Home Depot's first partnership, with the Department of Labor, was established in 2002. The primary purpose of this partnership was to identify The Home Depot as a key employer and expand the company's reach and approach to recruiting talent from a local to a national level. The second major partnership was the exclusive relationship created between The Home Depot and the AARP. The primary purpose of this partnership was to gain access to the millions of members of AARP, to make them aware of the incredible opportunities available at The Home Depot, and to underscore how valuable their skills and life experiences were in our high service environment. It was with this relationship that The Home Depot really began to develop its employment brand and articulate the value it placed on experience and the kind of environment that associates could expect to find when working for The Home Depot.

Next came Operation Career Front. At The Home Depot, we feel our support of the military sets the standard for corporate America. It is our belief that we must honor our military heroes where it matters most, not only in our thoughts and prayers, but also in our business practices, human resource policies, corporate giving, and volunteer efforts. In 2003, The Home Depot hired 10,000 veterans.

In September 2004, The Home Depot formed a joint hiring initiative with the U.S. Departments of Defense, Labor, and Veterans Affairs to provide career opportunities for America's military who are interested in transferring their unique skills, knowledge, and abilities into a successful second career. This partnership gave The Home Depot unprecedented access to thousands of members of the military as they began preparing for civilian employment when their military enlistments ended. This talent pool is rich in skills key to home improvement: areas like plumbing, electrical, building materials, and maintenance. It also was a great source of leadership talent, as we discuss below. In 2004 the company hired more than 16,000 former military personnel and far exceeded that number in 2005, having hired more than 13,000 by the end of September that year—a successful partnership by any measure.

In 2004, The Home Depot became a corporate partner with the Hispanic Association on Corporate Responsibility (HACR) and immediately began exploring ways to develop unique programming with its coalition partners. In February 2005, The Home Depot formed a hiring partnership with four of the country's leading Hispanic organizations: ASPIRA Association, Hispanic Association of Colleges and Universities (HACU), National Council of La Raza (NCLR), and SER–Jobs for Progress National. The Home Depot works with these organizations and their strong network of local offices and contacts to recruit candidates for full-time and part-time positions across the country. This was the first time ASPIRA, HACU, NCLR, and SER worked with a corporate partner on one hiring initiative.

The Hispanic partnership was a key element in the company's diversity strategy and a clear commitment to ensuring the company made progress in its ability to meet the needs of the growing Hispanic customer population and reflect the diversity of the communities in which it operates. By working closely with the chief diversity officer, the staffing team led the creation of the Hispanic Advisory Board. This board comprised a number of senior leaders of leading Hispanic community organizations who agreed to work together with The Home Depot to establish relationships that would open The Home Depot up as a viable and valued employer in the Hispanic community. The board came together annually at the company's Atlanta headquarters to attend the Hispanic Summit to identify and discuss issues key to accelerating progress and building deeper partnerships.

So a clear business-focused talent acquisition strategy is a key starting point. From there it is a matter of determining where the talent is and how to get unique, exclusive, and visible access to that talent by creating new access channels before your competitors do.

The Home Depot places nearly 17,000 leaders into positions each year. Most of those are internal placements of talented people already employed by The Home Depot. One important source of highly regarded internal talent is through established leadership pipeline programs.

Creating Successful Leadership Pipeline Programs

For the purpose of this chapter, leadership pipeline programs are defined as those development programs designed specifically to hire and develop new external talent, who, on program completion, are placed in a leadership role with the company. Pipeline programs differ from other leadership development programs in that participants in pipeline programs are typically newly and externally hired individuals, who are targeted to fill upcoming and anticipated vacant entry-level to midlevel leadership positions in a couple of years.

The Home Depot has committed to leadership pipeline programs as an effective channel for developing high-potential talent into new leaders. In support of that commitment, they have developed and sustained multiple programs that hire new or soon-to-be graduates from the country's top colleges and universities into multiyear development programs that prepare these highly capable young people to take and succeed in what is often their first leadership role.

In addition, The Home Depot has taken what is a successful formula for early-career entrants and applied it to those who may be successful midcareer professionals looking to make a change in profession. In this instance, the targeted talent pools are successful professionals with many years of experience and demonstrated leadership proficiency who come to the company as a proven professional but without the requisite retail industry experience.

Two of the most successful and longest-running pipeline programs are the Internal Audit Leadership Program (ILP), which is focused on new career entrants, and the Store Leadership Program (SLP), which is focused on successful midcareer professionals looking to make a change. These two programs have important commonalities:

· •Multi-hurdle, intense selection processes

· •Cross-disciplinary rotational assignments of a duration sufficient to make a contribution to the business unit

· •Centralized classroom learning as a cohort

· •Unprecedented access to senior business leaders through multiple forums

These elements are widely regarded as the key success factors of The Home Depot's pipeline programs.

Internal Audit Leadership Program

This is an early-career entrant program, targeted at high-performing college graduates with degrees in accounting, process improvement and engineering, business administration, and consulting. They may come to the program with two to four years of work experience. The intent is to build internal business consultants capable of leading projects focused on optimizing business processes and ensuring compliance.

On completion of an extremely rigorous selection process, which includes well-defined program qualifications, interviews, and an assessment center that measures competencies core to leading at The Home Depot, participants are selected to enter the two-year program. They progress through the program as a cohort and graduate together at the same time. Key elements of the highly structured program are (1) rotational assignments in four critical business functions, which include operations, finance, IT, merchandising, operations, supply chain, and so on; (2) hands-on leadership experience in field operations, (3) high-visibility, team-based projects; and (4) presentation of results and recommendations to the executive leadership team.

Successful completion of the program results in placement into manager-level business consulting roles in the internal audit function as well as other areas of the business as needed. This program, which began around 2001, is one of the longest-running pipeline programs at The Home Depot It has an impressive placement rate in excess of 90 percent, and many of its graduates continue to progress through levels of increasing responsibility while maintaining their connection to the program that brought them to The Home Depot.

The Store Leadership Program

The Store Leadership Program (SLP) places individuals who are dynamic and driven with a strong foundation of strategic and technical skills on the fast track to coveted store manager positions. Candidates typically have up to ten years of previous work experience and a demonstrated record of leadership and business acumen.

Since the inception of the program in 2002, the company has enrolled almost 1,300 individuals, many of them former junior military officers or U.S. Military Academy graduates. Data suggest that after completing the program, graduates are as successful in their store manager roles as others with many more years of experience with the company.

The SLP program is a two-year rotational program. As with ILP, a rigorous assessment center is the foundation for selection into the program, and thousands apply for approximately 100 available positions. There are three primary rotations: operations, merchandising, and assistant store manager. In addition, there are centralized learning forums placed strategically at key points in the program to reinforce the on-the-job learning that occurs, as well as to stretch participants’ thinking in areas of leadership and strategy. On graduation, participants are deemed “store manager ready” and await assignment to their new store. There are comprehensive processes in place to continue to support new graduates through their first year in the role.

SLP has been a successful program with consistent placement percentages and an impressive promotion acceleration profile for participants. It has also been a great learning experience for how to move new leaders into an existing leadership population and how to build a programmed experience that really builds work skills that can be immediately applied.

Lessons Learned

The lessons learned from innovating are often the most powerful. Here are some of the valuable lessons The Home Depot has learned so far about the important areas of talent channels and pipeline programs. These lessons focus on the elements that can differentiate you from other employers.

Talent Channels

· 1. The more channels, the better. Think critically about where the key talent segments are and find ways to get to them. The more channels you have and the more comprehensive your strategy, then the more likely talent continues to flow toward you, even in tight markets.

· 2. Clear branding is the key to acceptance. It is important to have a clear, differentiated message on what it means to work for your organization and how it differs from your competitors.

· 3. Partnerships are key differentiators. Partnerships can unlock enormous pools of qualified talent while lending immediate credibility to the employer. Creating the partnerships first, before others see the opportunity, provides competitive advantage.

· 4. Success starts when the associate is hired. The Home Depot has learned that the extent to which an associate is prepared, with knowledge and skill, to do their job is a key predictor of associate retention. Therefore, the resources expended to source and hire great talent are supported by the company's commitment to associate development. Once hired into The Home Depot, associates are provided with a comprehensive orientation and onboarding process and a learning curriculum built specifically for their particular role.

Lessons Learned—Pipeline Programs

· 1. Get buy-in on the business need for the program. It is critically important that leaders at all levels of the organization believe in and can articulate the business need that the program fulfills. These are large investments, often in employees with very little tenure, which can create resentment among existing employees.

· 2. Do not make the participants too special. Program participants are often afforded experiences that are not, or were not, available to incumbents. These include things as small as different work spaces, upgraded computers, and the ability to travel, to larger things, like access to coaches and mentors, exclusive learning opportunities and events, and exposure to senior executives. The more that program participants are treated as “special,” the greater the likelihood of resentment among peers as they move into the new roles on program completion. And these are the peers whose support and assistance they will need to succeed. Also, it is important for program participants to experience a “real workplace” with real challenges, constraints, and barriers that must be overcome or else, at program completion, they will enter a workplace they have never experienced.

· 3. Listen and respond to naysayers. Pipeline programs are often big investments with high hopes and even higher visibility. This can make it difficult to hear constructive criticism and intervene early and appropriately for fear that changes may be seen as failures of design or commitment. Hear what people are saying, and listen objectively. Respond in a way that adds to the credibility of the program.

· 4. Give the programs time to work. By nature, pipeline programs are long-term investments. The impact horizon of a program does not even begin until the conclusion of the first cohort of participants, at which time there may be multiple cohorts in play, so setting realistic expectations for return on investment and overall business impact is critical.

· 5. Invest in the talent you already have. This may be the most valuable lesson learned. New programs and new talent are always exciting, and participants in programs are easy to focus on; however, to do this at the exclusion of existing internal talent is a potentially fatal mistake. Make certain that high-quality development opportunities are available for existing talent just as they are for program participants. Do not create a culture of “haves” and “have nots.” Remember that leadership program participants will eventually be coworkers with incumbents, and those incumbents may hold the keys to their success.

The Home Depot's approach to talent management has significant strengths:

· 1.It ensures rich pipelines of leaders at all levels of the company.

· 2.It ensures that talent is guided, challenged, and supported.

· 3.It allows great talent to try a variety of roles and functions before making a career choice, resulting in a higher likelihood of true engagement with that career choice.

· 4.It encourages early intervention when issues arise around performance or organization fit.

· 5.It provides an opportunity for key leaders in the company to preview talent before making a commitment to hire. This allows a stronger connection to the new employee and greater certainty about the person's interests, abilities, and success.

As with all processes in organizations that are the size and scope of The Home Depot, there are challenges as well. Among them are funding, staffing, and managing the programs themselves and the ability to ensure placement of program participants:

· •Funding. Two choices typically exist in terms of funding pipeline programs: Do you fund it centrally or do you distribute costs to the business functions that participate in the program or receive program graduates? With the decision to centrally fund the pipeline programs, which I believe is an essential element of success, come the benefits of ensuring adequate funding and program quality year after year, controlling costs throughout the program, allocating cost properly to the highest-valued activities, and making decisions quickly. These benefits are accompanied by the challenges of a single, large, centralized budget that makes it a very simple cost-reduction target in times of cost control.

· •Decentralizing the budget. In my opinion this puts the program at risk from many sources, the first of which is the individual unit operator's choice of whether to invest at all, which makes consistent budgeting from year to year a challenge.

· •Staffing and managing the programs. Programs of this size and complexity take infrastructure to succeed. Programs must be managed, activities and assignments arranged, and learning events designed and executed. Participants must have consistent oversight and mentorship to navigate the organization and a consistent contact point for support and intervention in the event of ongoing struggles. Shortchanging infrastructure will lead to program degradation and participant disengagement.

Conclusion

The Home Depot is committed to a superior customer experience and understands the essential role of talented staff and extraordinary leaders in making that commitment an everyday reality. Significant strides have been made to take advantage of the riches available through all the talent sources available. Many of these efforts have worked out beautifully, and some have been valuable lessons in what to do differently. In learning, there is always progress.