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Dr. Bob Vega

BUS 5304

Business Ethics

Case #1

Winter, 06

Home Depot's Customer Service Case Study

Home Depot is an American based home improvement and construction products

retailer. Home Depot also offers home improvement and construction services to its

consumers. With its headquarters in Cobb County, Georgia, the company employs more

than three hundred, forty-five thousand people and operates two thousand, forty-two Big

Big-box stores across the world, including all fifty states, the District of Columbia, Puerto

Rico, the Virgin Islands, Guam, Canada, Mexico and China (Wikipedia.org, 2009). Home

Depot is the largest home improvement retailer in the United States and is the second

largest retailer in the United States, behind Wal-Mart (Wikipedia.org, 2009). The

company employs more over three hundred forty thousand people in the United States

alone (Business Week, 2009). However, even Home Depot is feeling stress of the

economic crisis they announced on January 26, 2009, that they plan to layoff over 7,000

employees employed with their Home Depot (Expo) operation (Retailindustry.about.com,

2009).

The values in which Home Depot guides their actions are: taking care of people,

giving back to our communities, doing the right thing, excellent customer service,

creating shareholder value, building strong relationships, entrepreneurial sprit, and

respect for all people (Corporate.homedepot.com, 2009).

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Many people in recent times do not believe in the values set forth by the

company. Under the Home Depot customer service statement, it reads, "Along with our

quality products, service, price and selection, we must go the extra mile to give customers

knowledgeable advice about merchandise and to help them use those products to their

maximum benefit" (Corporate.homedepot.com, 2009). For a company to be based on

excellent customer service, it just doesn't meet the consumers' standards. The standards of

service should be there when shopping for home improvement. It is one thing to not have

customer service available in clothing store, but for a home improvement and

construction store it is unacceptable. This frustration on the retailer’s commitment to

customer service was even voiced in May 2008 to Home Depot Chief Executive Frank

Blake. Blake was grilled by investors who also shop in his companies’ stores. For

instance, several shareholders spoke at the Atlanta-based company’s annual meeting

about the fact that some employees don’t seem well-trained in the store’s products, and

they also criticized the performance of people who do home installations for the

company. “One shareholder said he couldn’t get the attention of Home Depot workers.

‘They don’t see you or they don’t want to see you,’ he said.” (Msnbc.msn.com, 2008)

Home Depot has shown that they are committed to giving back to the community

with their philanthropic efforts. They have given back to the community by donating

their time, money, labor, and supplies. Their chairtable contributions alone have

exceeded $200 million. In 2002, the Home Depot Foundation was established. The

foundation supports many community projects, including Habitat for Humanity; City of

Hope Cancer Center, a California-based cancer-treatment center; and KaBOOM!, a

playground-construction organization. In 2007, the Home Depot Foundation committed

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to investing $400 million in grants over the next 10 years, which will result in the

development of 100,000 affordable, healthy homes for working families, and the planting

and preservation of more than three million community trees in urban areas.

(Homedepotfoundation.org, 2009)

Although Home Depot’s Philanthropic efforts appear to appear to be sincere;

home depot continues to suffer in customer and employee relations. This, combined with

the economic downturn, may continue to have a recidivist effect from the vision and

mission that was formed by its founders.

Discussion Questions

1. Rank the relative power of Home Depot’s various stakeholders. Defend why you have ranked the first three as most important.

Ferrell, Fraedrich, & Ferrell (2008) define primary stakeholders as “those whose

continued association is absolutely necessary to the firm’s survival. These included employees, customers, investors, and shareholders, as well as governments and communities that provide necessary infrastructure.” (p. 32). All of Home Depot’s stakeholders listed on their website would qualify as primary stakeholders: (1) Associates; (2) Customers; (3) Communities; (4) Vendors & Suppliers; and finally, (5) Shareholders.

As primary stakeholders, they all have the same relative power. When this power gets out of balance, it can have a significant negative impact on the organization. Ranking of the first three:

(1) Employees. As badly treated as Home Depot’s employees have been over

the years, they have ceased power through litigation. For example, in August 2004, as a result of an approved settlement, the U.S. District Judge in Colorado ordered Home Depot to pay $5.5 million to current and former employees, as well as significant injunctive relief. “The EEOC lawsuit alleges that in Home Depots’ Colorado stores, there was a hostile work environment based on gender, race, and national origin, and that the company retaliated against employees who complained about discrimination.” During this particular time, I would have rated these employee stakeholders as the number one relative power. (EEOC.GOV, 2004)

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(2) In May 2008, angry investors voiced to Chief Executive Frank Blake about poor customer service; although there were no major battles won during this meeting, the stockholder’s relative power increased significantly. (msnbc.msn.com, 2008) For, this I would have rated the stockholders number two in relative power.

(3) The positive personal empowerment generated by those who have

received Home Depot’s philanthropic benefits such as those who have received a home for the first time would be rated number one in my opinion.

2. Evaluate Home Depot’s philanthropic activities as a link to its overall corporate

strategy.

All of Home Depot’s philanthropic activities are too numerous to mention. Giving back to the community through philanthropy is one of their eight core values that Home Depot delivers on the most. “Through an extensive community relations program, we reach out to the communities where our associates live and work with philanthropic and volunteer support. Programs bring together volunteerism, do-it-yourself expertise, product donations and monetary grants to meet critical needs and build affordable communities.”

3. How do you think Home Depot has handled ethical issues such as gender

discrimination and other human resources issues over the last ten years?

As stated above, in August 2004, as a result of an approved settlement, the U.S. District Judge in Colorado ordered Home Depot to pay $5.5 million to current and former employees, as well as significant injunctive relief. Like many other large corporations, when there is a settlement, there is no admission of wrong doing. Home Depot has had a long history of not dealing with it issues of gender discrimination. As a recent blogger best put it, if Home Depot was serious about handling their long standing gender decimation issues, it would: (1) stop systematically sexually harassing and discriminating against women, especially in their merchandising organization; (2) submit gender and race employment information as promised in 2002 to the shareholders (owners) of the company; (3) comply with federal and state regulations on contraception coverage, wage discrimination and civil rights issues (especially since they are federal contractors two times over); (4) stop encouraging and allowing claims of discrimination, harassment, retaliation to go uninvestigated or unchecked; and (5) hold the perpetrators of these actions accountable to their moral turpitude contract clauses and their largely ignored Code of Ethics and HR SOPs.

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Cited Works

2009 Retail Industry Job Cuts: Top U.S. Retailer Employee Layoffs, Retailing

Unemployment Statistics, Workforce Reduction Numbers. (2009, January 26). Retrieved February 1, 2009, from http://retailindustry.about.com/od/statisticsresearch/a/retaillayoffs.htm

Home Depot to Pay $5.5 Million to Resolve Class Discrimination Lawsuit in Colorado.

(2004, August 25). Retrieved February 1, 2009, from http://www.eeoc.gov/press/8-25-04.html.

Ferrell, O.C., Fraedrich, J., & L. Ferrell (2008). Business ethics: Ethical decision-making

and cases. 7th edition, Houghton Mifflin Co: New York. Renovating Home Depot. (2006, March 6). Retrieved February 1, 2009, from

http://www.businessweek.com/magazine/content/06_10/b3974001.htm. Corporate Governance: Business Code of Conduct and Ethics. (2008, Jan. 7). Retrieved

December 9, 2008, from http://ir.homedepot.com/governance/ethics.cfm. Home Depot's customer service criticized - Retail - msnbc.com. (2008, May 22).

Retrieved February 1, 2009, from http://www.msnbc.msn.com/id/24778001/ Home Depot Foundation. (2009, January 1). Retrieved February 1, 2009, from

http://www.homedepotfoundation.org/ The Home Depot - Wikipedia, the free encyclopaedia. (2009, February 1). Retrieved

February 1, 2009, from http://en.wikipedia.org/wiki/The_Home_Depot. Welcome to The Home Depot, Inc. Corporate Web Site. (2006, February 1). Retrieved

February 1, 2009, from http://corporate.homedepot.com/wps/portal. Home Depot Foundation. (2009, January 1). Retrieved February 1, 2009, from

http://www.homedepotfoundation.org/. Home Depot's customer service criticized - Retail - msnbc.com. (2008, May 22).

Retrieved February 1, 2009, from http://www.msnbc.msn.com/id/24778001/. The Home Depot - Wikipedia, the free encyclopaedia. (2009, February 1). Retrieved

February 1, 2009, from http://en.wikipedia.org/wiki/The_Home_Depot. Welcome to The Home Depot, Inc. Corporate Web Site. (2006, January 1). Retrieved

February 1, 2009, from http://corporate.homedepot.com/wps/portal/Values.