Home Depot Founder Arthur Blank: This Is the Most Important Question You Can Ask Your Employees
Arthur M. Blank, co-founder of The Home Depot, was introduced to the startup life as a kid. His father launched a mail-order pharmacy business out of the one-bedroom apartment the family of four shared in the Sunnyside section of Queens, New York. Four years later, darkness set in when Blank’s father died suddenly. His mother picked up the pieces of both the family and the family business. She plowed ahead and became a successful entrepreneur, ultimately selling the company.
“My mother used to say, ‘make decisions for the right reason and live with the consequences,'” Blank tells Inc. That’s why, for instance, he decided to delay the reopening of the Mountain Sky Guest Ranch, a dude ranch he owns in Montana, even though it typically runs at more than 90 percent occupancy and guests were yearning to return. “We knew that if we opened we would bring disease into the community,” he says. “We decided we couldn’t do that.”
Mom’s advice was a life lesson that served him well at Home Depot and in his subsequent investments. Those include the NFL’s Atlanta Falcons, Major League Soccer’s Atlanta United, Mercedes Benz Stadium, and PGA Tour Superstores. In his new book Good Company, Blank focuses less on the nuts and bolts of running a business and more on behaviors that help build a lasting culture that will forever empower employees to make the right decisions for the right reasons. That’s one of the reasons Home Depot thrives today, long after he left active management. “Every time you reinforce the culture you reinforce the fabric of the company,” he says.
As he recounts in Good Company, that’s a fabric that can withstand even a soul-crushing CEO, which is what Home Depot got when it hired former GE executive Robert Nardelli to run the show, against Blank’s advice. Nardelli would later conspire to oust Blank from the Home Depot board before eventually getting the boot himself. But the culture was strong enough to rekindle itself, not to mention the stock price.
As Good Company explains, this wasn’t the first time Blank got canned. He started Home Depot 1978 after he and co-founder Bernie Marcus were cashiered from their jobs at a long-forgotten home center chain called Handy Dan owned by a long-forgotten conglomerate named Daylin. The business was run by one of Wall Street’s first celebrity vulture investors, Sandy Sigoloff, who treated most employees as cost inputs to be minimized. Blank and Marcus built the exact opposite: an early model “big box” retail store with low prices, but also one that was service-focused, nourished employees, and cherished customers.
At HD, as Blank refers to the company, he and Marcus didn’t accept the standard retail ops model that favored part-timers over full-timers and accepted high turnover as a cost of doing business. They spent heavily on training and retaining the kind of people Blank says, “who understand our vision and are willing to support it.” That means it’s the company’s obligation to provide them with the training and opportunities they need for future development.
Here are some other highlights from Good Company for building a concrete-reinforced culture:
Create tension, but not friction.
Blank and Marcus would post negative press clippings prominently in HD’s Atlanta headquarters. The idea was not to chide the staff about the company’s shortcomings, but to get them to discuss openly and fearlessly whatever problems needed to be addressed.
When hiring, think long-term.
Don’t make the mistake of hiring someone to fulfill current requirements. If you’re planning on growing, you need people who can grow into bigger jobs.
Put on the apron.
Blank has taken most of the HD culture with him to his new ventures, most famously, the concept of “putting on the apron.” This is the practice, demanded of all managers, of getting the employee perspective by donning the orange Home Depot apron anytime they ventured into a store. Blank and Marcus practiced it, particularly in the early years, often positioning themselves in the front of the store, greeting incoming customers, and interrogating outgoing ones–particularly those leaving empty-handed.
Trust the customer.
You can even call them trustomers. At the Falcons, Blank asked fans how he could better serve them. First answer: win. (Well, he did get to the Super Bowl; didn’t end well). Second: stop gouging us for food and beverage. Blank charged executives at Mercedes Benz stadium with the task of figuring out how to cut prices by 50 percent. They did. Sales increased by 120 percent. Result: happy customers and happy accountants.
Lead with humility.
“You have to have an inner sense of humility. True humility, through believing that the people you are serving and the associates who work for you really have more knowledge than you do. It’s where the unbridled truths are going to be told,” he told me.
Ask one important question.
Ultimately, Blank says, you can judge the value of your culture by asking your associates “Is this organization worthy of your life?” Because it’s a question they will be asking themselves, particularly younger employers–the ones with the most growth potential. “If the answer is yes,” says Blank, “it’s an indication that the company’s culture is thriving, and that employees feel confident in making the best decisions for both the customers and company.”
Any number of companies have created mythical corporate cultures over the decades–Ford, Sears, IBM, Hewlett Packard, Time-Life, Apple, Mars, Google–and Blank makes a great case for Home Depot. More importantly, he warns, companies that don’t try to build such resilient, values-focused organizations won’t have much of a future. “Companies that are compromising their values are ones that associates are going to see through,” he says. “And customers too.”