Oh, that General Electric(NYSE: GE) executive training! GE alumnus and current CEO of Home Depot(NYSE: HD) Bob Nardelli explains reports of poor customer service at the company's stores by saying, "Service is related directly to morale, and morale in our company is directly related to stock price... When the market fell, (store associates) fell."
Seeing as Home Depot stock is down more than 30% on the year, you'd expect that its store associates would be mighty surly these days. Intrigued, I decided to do some investigating myself. Please note that all facts have been changed in the hopes of making this story more interesting.
I went to my local Home Depot, in Fairfax, Va., to look around. You noticed it right away -- the place was nearly devoid of sales staff. Those present had bleary eyes and seemed distracted. And, yes, even surly.
I asked for help with some paint. Apparently that was the wrong thing to ask the guy who was manning the paint desk. "Paint?! Oh, yeah, great. Our stock is down 64 cents today, and you want paint? I'll bet you want one of those happy pastel colors, huh? Your room? What about my stock options?!"
"Wow, it's worse than I thought," I thought. In a room just off the sales floor, I caught a glimpse of some Home Depot sales folks. Must've been fifteen of 'em. Some had been crying. They were all staring at a television screen that I couldn't see, but I assume CNBC was on. Suddenly the room erupted in cheer. "Up 11 cents! Hallelujah!" one exclaimed. And, although I can't confirm this, I swear another said, "Oh, fabulous day!" They quickly went back to the sales floor, breathing sighs of relief.
I noticed that one guy, whom I'll call Edwin (because, well, that was the name on his smock), had been cheerfully going about his business while his co-workers mourned. I asked him about Nardelli's comments.
"Do you think that your co-workers' performance declines whenever your stock price goes down?"
"No, we are generally very busy during sales," answered Edwin, cryptically.
"That's not what I'm asking. When Home Depot's stock price goes down, do you notice a change?"
"Yes, I understand what you are asking," said Edwin, helpfully. "It depends on what we have in stock, you see? Some items are expensive and some are not. When the expensive stock here goes on sale, it is very difficult. Many questions. Sometimes I even have to go out to install it for people."
He smiled.
"No, I'm talking about your shares. What happens then?"
"But, sir, we only sell things here. We don't share them. You have to buy them."
Edwin looked at me like I was insane. I wasn't inclined to disagree. I asked him where the brass cleaner was, and made my exit.
As I left, a pallor returned over Home Depot. An analyst had just downgraded the company. Little does he know he's talking about a company that has buildings full of seriously depressed people with easy access to power tools.
Bill Mann owns none of the companies mentioned in this article.
