Carol Tome, CFO, Home Depot was interviewed in the August 31, 2009 issue of Fortune Magazine. Click here to see the interview live.
The housing sector has been hit hard for the past four years, and Home Depot has seen an aggressive expansion by Lowe’s, a smaller but formidable competitor.
The article details not just an overall strategy for Home Depot, but also tactics that fit within the strategy. Home Depot monitors productivity and efficiency, and incents store managers on revenue growth and cost management, as well as on non-financial measures. Home Depot has a long way to go; and it is by no means guaranteed to be successful. One thing is certain, though. Home Depot needs to differentiate itself from its competitors.
Although Home Depot currently owns more stores and thus has greater convenience, Tome concedes that might erode over time if Lowe’s continues on their path of opening stores while Home Depot rationalizes square footage growth. Tome states that Home Depot has a larger assortment of tools than its competitor. But Tome does not see these items as truly creating a point of differentiation. Instead, Tome states:
“So then what is the point of difference inside the store? It is really that belly-to-belly experience between the associates and the customer. The customers who are shopping us today are saying they see a difference. Our challenge is to invite back those customers who may not love us because we’ve disappointed them. We need to invite them back so they can experience that point of difference.
We have great prices, and we should always win on product. But what is the stickiness? The stickiness has got to be about the human experience.”
Hospitals are the ultimate “personal touch” in the human experience. How do leading edge hospitals create a point of difference in their market? One approach is similar to that taken by Tome at Home Depot.
St. Joseph Hospital in Bellingham, Washington, a PeaceHealth facility created a model for their housekeeping department. Housekeepers have among the most number of patient contacts. And, like the Home Depot staff constantly wandering the aisles, they are very visible and directly impact the client experience.
Cindy Kline, the VP for Human Resources at St. Joseph Hospital in Bellingham, Washington, a PeaceHealth facility, described how their support staff is involved in the hospital: “Every housekeeper in this hospital understands how they contribute directly to the hospital’s overall mission and vision.” Employees are encouraged to “round” with key constituents such as nurses to understand what is working well and what can improve. Successes are recognized with “thank you “ notes from management, and employees are trained to support patient care by using empathetic language when working with patients.
The results: POSITIVE! Here are two examples:
- Patient satisfaction. Although statistically we can’t make direct correlation between the housekeeping program and the scores, 80% of St. Joseph’s patients would definitely recommend the hospital (compared to a national average of 68%/state average of 70%). And 99% say that they definitely or probably would recommend the facility – a very impressive performance. (Source: Federal FY 2008, http://www.hospitalcompare.hhs.gov)
- Low turnover. St. Joseph’s turnover of housekeepers is at to 4.5%, and 60 housekeepers have established career paths that led them to other positions within the hospital. Studies have shown that the lower the staff turnover, the higher the clinical and financial outcomes of the hospital.
St. Joseph Hospital in Bellingham, WA is certainly a great example of creating a “belly-to-belly experience” with its clients – using its housekeepers as its front line ambassadors.
