Bernie Marcus On How To Hire Right

We could not have started Home Depot without the right people—Arthur Blank, Ken Langone, Ron Brill, Rip Fleming, Pat Farrah and dozens of others. Everyone had their strengths. Arthur was meticulous and ran things like a clock. Ron, Ken and Rip brought additional expertise and energy. I’m an idea guy who loves to roam around and kick up dust. And I found a great merchandiser in Pat Farrah. Pat was flat-out crazy and yet still the best retailer I’ve ever seen. He was terrible at operations, but he knew what customers wanted. Before we hired him, I heard a story that he once hung Christmas trees upside down, just to try something fresh.

The heart and soul of Home Depot was, and still is, the associates. One of the most important parts of our do-it-yourself culture at Home Depot was finding the right people. We wanted people with experience in the building trades—so we hired carpenters to work in lumber and master gardeners in the garden department. We tried to make sure each store had at least one licensed electrician and plumber. They were often older and became mentors to the other associates. I started calling them “Bernie’s Boys,” and we actually began a hiring program for those over 60 who might be a good fit for our stores. Hell, we were nearing our 60s, and thought we were a pretty good fit! This was in an era when older workers struggled to get a job. Their experience allowed them to share what they knew with fellow associates as well as provide practical advice to customers.

We also did not hire somebody into management just because they had an MBA and rarely brought in store managers from outside. We tried to keep to a 70/30 percent rule—where most of our managers were promoted from within because they knew the culture. But we also wanted some outside talent because we knew we didn’t know everything.

Ron Brill used to say, “Payroll is not an expense, it’s an investment.” Our associates were compensated well for their expertise and were promoted from within. We offered salaried associates stock options and gave hourly associates a chance to participate in the stock purchase plan. Ron believed that we should always pay above minimum wage. He regularly checked payroll, and if a manager was trying to scrimp somewhere, they got a call from Ron. Payroll was controlled at the store level, so managers had a lot of flexibility. Arthur and I decided early on not to take stock options but instead give them to the associates, an unusual move for top leadership. We believed that this approach gave everyone the opportunity to have a vested interest in the business so they could focus on cultivating customers and building lifelong relationships.

Training Should Never End

If strategic hiring was the first step, our bread and butter was training. Most CEOs give up training employees once their company has become successful. Not us. We believed that if new hires learned from the founders, they would fully understand our values. Every new manager and assistant manager completed an eight-week training session, with at least one week in Atlanta. The sessions in Atlanta were taught by the company leadership—Dick Sullivan led the sessions on advertising; Ron Brill taught finance. On Friday, they did the morning with Arthur and closed out the week with me. New associates took classes on the company’s history and the basics of good customer service and they trained on the job. Then they shadowed a department manager, learning how to order, stock, and sell and did ongoing product training. The most important thing we taught was how to help the customer be successful on their do-it-yourself project. We taught the difference between asking: “What can I help you find?” versus “What project are you working on, and what tools do you need?” The first question might help them get a hacksaw. They’d buy it, go home, and quickly realize it was not the right tool for the job. Who would they blame? Home Depot.

We believed that everyone at Home Depot should have experience working in the stores, including lawyers, accountants, marketing executives and human resources people. They unloaded trucks, worked in the parking lots, helped with inventory and worked as cashiers for three to six weeks. I once had a lawyer complain, and I finally asked, “How can you handle our lawsuits if you don’t know how our business operates?”

We used to insist that buyers and suppliers conduct their business in the stores, so they could see what customers wanted. We even invited our vendors to come to the store, grab an orange apron, and work with customers in the department where we sold their product. We also required that board members visit 12 stores every quarter to stay in touch with what was happening.

Ken Langone loved that—and he relished telling a story about finding rats in a store. After asking some questions, he found out that the rats had been a problem for a few months, but that’s not what bothered him. The problem was that the bureaucracy kept the associates from fixing it. Ken made one call, while the manager had been trying to reach the district manager and headquarters to solve the problem for three months. So, at the board meeting, Ken told the story and reminded us, “Bureaucracy is like weeding a garden. Just when you’re done, you better go back and start again.” That is why I used to spend about 40 percent of my time walking through our stores, so I could cut through any red tape. I learned more on these visits than I did in any boardroom.

Try a CEO Road Show

I loved doing “road shows”—visiting various stores and leading impromptu on-site classes for associates. I’d spend a whole day at a store building the kind of bonds that you never could establish from behind a desk. Arthur and I also did quarterly Sunday telecasts called “Breakfast with Bernie and Arthur”—part comedy routine, part training session—that could be seen in the stores. “Issues and Answers” sessions were a place for employees to make suggestions on improving the company. We wanted the associates to know that we were part of the team and that they could pick up the phone and call us anytime. We were Bernie and Arthur, never Mr. Marcus and Mr. Blank.

To this day, I think the time we spent training and traveling to stores was the key to our success. That gave us the opportunity to talk directly to our associates—from the newest to the most seasoned—and invest in them. The training was constant and those who embraced it were rewarded with good salaries and benefits and plenty of room to move up in the company. That might explain how, when we opened new stores, 7,000 people would apply for 150 jobs. If you were just looking for a job, we might not have been right for you. But if you were looking for a career, sign right here.

Less than 10 percent of our associates were part-time, and many invested in the company. If you had a thousand shares of Home Depot stock when we went public in 1981, it would have been worth about $12,000. By 1993, that stock was worth $2.5 million. No surprise that there are thousands of Home Depot millionaires, many of whom started working for us right out of high school. Tom Taylor started as a parking lot attendant in 1983 and worked his way up to executive vice president for merchandising and marketing.

I learned from working at Two Guys, Odell, Daylin, and Handy Dan that if you treat people well, they feel their work matters. And if you make them feel like they own a piece of the company, even better. Respect breeds respect. If they hate you or the company, they work against you. Same thing with customers. Nobody has to shop at your stores. You have to wake up every morning and wonder, “Who will destroy me today if I don’t keep my eyes open?” That’s why I spent most of my time in the stores and not holed up in some executive office.

We also capped our own compensation. Once the company became successful, we could have taken huge salaries like a lot of CEOs do today—$20, $30 or $50 million—but we told the board that we wanted to cap it at $2 million and not take stock options. People always tell me that we could have been the wealthiest men in America. But I argue that this decision helped shape the Home Depot culture; without sharing the company’s success with our associates, it never would have become the same company. And don’t worry about us—we did just fine. Our job was to make our associates’ jobs easier and serve customers, and the optics of taking a huge salary worked against everything we believed in.

Excerpted with permission from Kick Up Some Dust: Lessons on Thinking Big, Giving Back and Doing it Yourself (William Morrow, Oct. 18, 2022).