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Home Depot’s Bumpy Road to Equality

Home Depot is the largest home products firm selling home repair products and equipment for the “do-it-yourselfer.” Founded 20 years ago, it now boasts 100,000 employees and more than 900 warehouse stores nationwide. The company’s strategy for growth has focused mostly on one task: build more stores. In fact, an unwritten goal of Home Depot executives was to position a store within 30 minutes of every customer in the United States. They’ve almost made it. In addition, Home Depot has tried hard to implement a strategy of providing superior service to its customers.

The company has prided itself on hiring people who are knowledgeable about home repair and who can

teach customers how to do home repairs on their own. This strategy, along with blanketing the country with stores, has led to the firm’s substantial advantage over competitors, including the now-defunct Home Quarters (HQ) and still-standing Lowe’s. But Home Depot has run into some legal problems. During the company’s growth, a statistical anomaly has emerged. About 70% of the merchandise

employees (those directly involved in selling lumber, electrical supplies, hardware, and so forth) are men, whereas about 70% of operations employees (cashiers, accountants, back office staff, and so forth) are women. Because of this difference, several years ago a lawsuit was filed on behalf of 17,000 current and former employees as well as up to 200,000 rejected applicants. Home Depot explained the disparity by noting that most female job applicants have experience as cashiers, so they are placed in cashier positions; most male applicants express an interest in or aptitude for home repair work such as carpentry or plumbing. However, attorneys argued that Home Depot was reinforcing gender stereotyping by hiring in this manner.

More recently, five former Home Depot employees sued the company, charging that it had discriminated against African American workers at two stores in southeast Florida. The five alleged that they were paid less than white workers, passed over for promotion, and given critical performance reviews based on race. “The company takes exception to the charges and believes they are without merit,” said Home Depot spokesman Jerry Shields. The company has faced other racial discrimination suits as well, including one filed by the Michigan Department of Civil Rights.

To avoid such lawsuits in the future, Home Depot could resort to hiring and promoting by quota, ensuring an equal distribution of employees across all job categories—something that the company has wanted to avoid because it believes such action would undermine its competitive advantage. However, the company has taken steps to broaden and strengthen its own nondiscrimination policy by adding sexual orientation to the written policy. In addition, company president and CEO Bob Nardelli announced in the fall of 2001 that Home Depot would take special steps to protect benefits for its more than 500 employees who serve in the Army reserves and had been activated.

“We will make up any difference between their Home Depot pay and their military pay if it’s lower,” said

Nardelli. “When they come home [from duty], their jobs and their orange aprons are waiting for them.”

In settling the gender discrimination suit the company agreed to pay $65 million to women who had been steered to cashiers’ jobs and had been denied promotions. In addition, the company promised that every applicant would get a “fair shot.” Home Depot’s solution to this has been to leverage technology to make better hiring decisions that ensure the company is able to maximize diversity.

Home Depot instituted its Job Preference Program, an automated hiring and promotion system, across its 900 stores at a cost of $10 million. It has set up kiosks where potential applicants can log on to a computer, complete an application, and undergo a set of prescreening tests. This process weeds out unqualified applicants. Then the system prints out test scores along with structured interview questions and examples of good and bad answers for the managers interviewing those who make it through the prescreening. In addition, the Home Depot system is used for promotions. Employees are asked to constantly update their skills and career aspirations so they can be considered for promotions at nearby stores.

The system has been an unarguable success. Managers love it because they are able to get high-quality applicants without having to sift through mounds of résumés. In addition, the system seems to have accomplished its main purpose. The number of female managers has increased 30% and the number of minority managers by 28% since the introduction of the system. In fact, David Borgen, the co-counsel for the plaintiffs in the original lawsuit, states, “No one can say it can’t be done anymore, because Home Depot is doing it bigger and better than anyone I know.”

Questions

1. Do you believe Home Depot was correct in that it was not discriminating, but simply filling positions consistent with those who applied for them? Explain why

2. Given your reading of this chapter, what laws are relevant to this case?

3. Has the new automated hiring and promotion system helped to reduce possible discrimination at Home Depot? Provide reasoning for your answer.