Photo by Scott Olson/Getty Images
Far too often, CEOs and senior leaders use the following line in their public comments: "Our employees are our most important asset." With regularity, the words are mere lip service. They are as meaningful as gas is to an electric vehicle.
Something happened on February 21 when those words turned into demonstrable action. During The Home Depot fourth quarter 2022 earnings conference call, several memorable lines were issued by Ted Decker, Chairman, President, and Chief Executive Officer:
"The investments in our associates, stores, digital platforms, supply chain, technology and other strategic initiatives have strengthened our business and enabled us to grow share and deliver exceptional shareholder value over the long term.
The most important investment we can make is in our people, which is why we are announcing that we are increasing annualized compensation by approximately $1 billion for our frontline hourly associates.
We believe this investment will position us favorably in the market, allowing us not only to attract the most qualified talent but also retain the exceptional associate base that is already in place."
Decker indicated that his entire fleet of Home Depot "orange blooded associates" in the U.S. and Canada were not only the company's most important assets, but that it was taking measures to treat them as such going forward. In sum, regardless of whether the team member was a new hire or a tenured employee, every single hourly associate would receive a wage increase in 2023.
How Much and Why?
Decker told analysts that The Home Depot would raise the hourly pay of team members in both countries to at least $15 per hour. "At least" is the key phrase. As Decker pointed out, "There'll be no market under $15 for a starting rate. And starting rates go much higher than that, depending on the market."
He went on to state that with this investment across all employees, including tenured ones, when compression is factored in, the average wage of its associates will be well above $15 per hour.
During the call, Ann-Marie Campbell, Executive Vice President of U.S. Stores and International Operations at The Home Depot, seemingly went all in and doubled downed on Decker's points:
"We know that our associates are a key differentiator, and they are essential in helping us sustain the customer experience we strive for. We know that the key to an engaged and committed workforce is investing in the person, taking an interest in them and in their development."
Additional Investments
Not only is the company investing $1 billion in top-up wages, but it has also made several investments in its career development and employee experience initiatives.
First, the company began 2023 by realigning its in-store leadership structure, creating more positions that focus specifically on customer service experience. This move has increased the number of managers at the company and on the floor at any given time.
Campbell indicated that the move frees up time for other leaders to help associates with their careers, skills development, and general training. She said, "The net result of all this is both an improved customer and associate experience, while also creating new career paths for our associates."
Second, the company is arming every associate on the floor with an HD phone with "enhanced communication features, tools, and training capabilities." The new HD phone that all associates will carry provides real-time access to tools and applications. An app powered by machine learning even directs associates to key store bays where on-shelf availability is low.
Said Campbell, "The HD phone empowers our associates to provide a best-in-class customer experience, increase operational efficiency, and generally makes an associate job much easier."
The company also announced a 10% increase in its quarterly dividend to $2.09 per share, corresponding to an annual payout of $8.36 per share. In addition, the company returned nearly $6.5 billion to its shareholders in the form of share buybacks in 2022.
It's nice to see a company not solely announce dividend increases and share buybacks but highlight the critical importance of its employees and what it's doing to invest in them going forward.
"That's why we call it an investment," said Decker in a follow-up answer to an analyst's question. Indeed, it is.
_______
Pre-order my next book publishing in October, Work-Life Bloom: How to Nurture a Team That Flourishes, (You won’t want to miss digging in.)
