Carol Tome Of Home Depot: Going Out On Top
Carol Tome is retiring as CFO of Home Depot this month, and apropos of reading an “exit interview” with her in the Wall Street Journal, it seemed appropriate to give her a round of applause from RSR as part of her victory lap.
Ms. Tome took over as CFO of Home Depot in 2001, after joining the company in 1995. She took over early in the tenure of the now infamous Bob Nardelli, when sales were slowing and, frankly, the smaller but ubiquitous DIY retailer Lowe’s was cleaning Home Depot’s clock.
I strongly recommend reading the WSJ piece as Ms. Tome describes, with far more grace than I might’ve mustered, what it was like to work at Home Depot during the Nardelli era. Shoppers will likely find this a familiar refrain from the days when the “Six Sigma Principles” were being adopted by Jack Welch acolyte Nardelli:
“…There was a cultural revolution happening in the company in that we had turned what is really a unique management construct, the inverted pyramid, where we’re at the bottom of the pyramid supporting our associates who take care of our customers. We had turned that pyramid around and our associates were at the bottom of the pyramid.”
I still remember buying tools at a Home Depot during that era. The cashier in the tool area (they had one at the time), could scarcely sit still. When we asked her what was wrong she said, “I really have to go to the bathroom, but there’s no one to give me a break to go do it.” I was repulsed and saddened. That’s what happens when you forget there are people on the other side of those spreadsheets you’re using to decide total in-store payroll vs. robots on a shop floor. Robots and machines don’t need bathroom breaks. Six Sigma indeed.
Once Mr. Nardelli had left the building, Ms. Tome worked with new CEO Frank Blake to reinvigorate the business, get back to core operations, and make the chain far more woman-shopper and employee friendly. Unfortunately, all this involved also navigating the company through the Great Recession and its driver, the housing crisis. The timing was awful but they made the hard decisions and kept moving forward.
Most inspiring in the WSJ piece was Ms. Tome talking about participating in closing down Home Depot’s failed “Expo” business. Expo was meant to be a higher end home improvement store, but for a variety of reasons (including a pretty awful assortment), it just didn’t take off.
She talked about how painful it was to sit with a worker in Florida who had just lost his job, and how she vowed then to stop focusing on square footage expansion and instead work on getting the square footage she already had more productive and efficient, along with putting the emphasis back on Home Depot’s employees. God, how I wish other business leaders would get that simple message: Just because the Street seems to applaud square footage growth, it doesn’t mean it’s good for your business. Over-expansion has killed many retailers, along with asset-based loans and general over-leverage. A good CFO will hold the line and remember the retailer’s core…not presume that its markets are infinite. I mean on one level, the following sentence is not rocket science, yet how many retailers really hear and believe it:
“...The market was getting saturated, so you could show, hey, opening up stores in markets where we are already present actually is dilutive...”
How many retailers have diluted themselves into a rash of store closings, and then more closings, and then a few more after that? Don’t you wish those retailers had a CFO like Ms. Tome, who could argue against those excess openings?
I can still recall the first really successful quarter after Mr. Blake’s ascendancy. The first thing he wrote in his statement was a thank you to the company’s workforce. Way to go. He built a great team on the ground and always acknowledged them first. Ms. Tome was a big part of that.
I know I’ve heard Ms. Tome speak somewhere…probably at the Global Retailing Conference at the University of Arizona (which remains my favorite event in retail), and I was completely impressed. She considers herself first and foremost a business person and a CFO second. When I heard her speak, I thought the same. Here’s a CFO that truly understands the business – for real.
If you knew me back when I was a CIO, you’d know I had one rule: never take a job where the CIO reports to the CFO; it’s not healthy for the business and will likely make for an unpleasant work experience. For me, it was CEO or President direct report or nothing. I will say, I would have worked for a CFO like Ms. Tome, and honestly, that’s VERY high praise from this former practitioner.
Ms. Tome was passed over for the CEO role when Frank Blake retired. She took it like a good soldier, stayed on and Home Depot is still doing well. But I would have loved to see it with her at the helm.
All this is by way of saying “Great job, Ms. Tome.” Take that well-deserved victory lap, and thanks from some retail watchers for doing the work the way it should be done!