Over the past 3 years as President and CEO of ABC Technologies, I have had the great pleasure of working with Dennis Donovan in his role as Advisor to our Board of Directors, the Compensation Committee and to my Senior Leadership team.  Dennis has been a hands-on partner in the business while helping me and my team through many business, people and process related challenges we faced during our transition from a family-owned business to a public company capable enterprise.  In more than 35 years in the automotive industry, and working for companies such as General Motors, Delphi, Ford, Visteon and others, I have run across few business leaders with such an extensive background, diverse experiences and  proven toolbox of solutions.  Dennis is not only a world class Human Resources Professional; he is also a savvy business leader who has faced and overcome some of the most complex business issues in the global marketplace.  If you need advice or direction on a critical business issue that is impacting your business, it is almost a certainty that Dennis not only understands your issue, but has already taken on a similar challenge in his career, has a detailed thought process to step through the minefields around the issue and can offer sage advice on potential pitfalls to watch for during implementation.  While I have been extremely impressed with his overall business and HR professionalism, it is his compassion, empathy and interpersonal dynamics that set him apart from others.  My only regret is that our paths had not crossed earlier in my career, for I could have been a better leader from it.

It is not often that you meet someone who dramatically impacts your career and challenges you to be a better leader. Dennis Donovan is someone who has done just that, for me. I first worked for Dennis at Raytheon Company. As the CHRO, Dennis was charged to create a new culture, upgrade talent, and install consistency in HR operations. This was my first exposure to a true HR professional. Dennis was respected as a business leader who happened to be responsible for Human Resources. He challenged the status quo, implemented programs and processes that are still in place; even though many years have passed. As I reflect on my time working for Dennis, he was intensely focused on achievement and pushed me to be thorough in my preparation, to know the business, to think systemically, and to have an opinion. For every initiative, process and project, he had a vision of success and was relentless in leading the team to achieve it. Everything Dennis touches represents excellence.

As President and CEO of Blue Bird Corporation, it has been my pleasure to have known Dennis Donovan for more than eleven years, beginning with his role as member of our Board of Directors and Compensation Committee. With annual sales of over $1 billion, Blue Bird is a publicly-listed company trading on Nasdaq since 2015, specializing in the design, manufacture and distribution of school buses, with its headquarters located in Macon, Georgia. While Dennis has extensive experience in Human Resources that covers every aspect of the function, he has unique overall operational and business skills that helped us through a transformational turnaround. In addition to offering guidance on upgrading and professionalizing Blue Bird’s personnel-management processes, he provided important feedback to me on our plans to restructure our organization and plant footprint, while minimizing the risks of such actions. His advice was instrumental in improving ongoing profitability and ensuring a seamless transition to becoming a publicly-listed company. Dennis went well beyond his role as Board and Compensation Committee member – independently visiting our facilities multiple times a year to meet and help mentor our senior leadership team. Dennis can always be counted on when needed and intuitively knows the degree to which he should be involved in helping a company address its issues and improve its capabilities.

I am grateful to have had the opportunity to learn from and be inspired by Dennis Donovan. Dennis is an adept business leader with exceptional skills in the areas of people, process, metrics and growth strategies. He not only has a strategic mindset, but also the ability to quickly grasp the complexities and challenges of a business and to translate that understanding into a realistic action plan to effect positive change. Dennis strikes the right balance between coaching, mentoring and challenging and he has helped me, and my executive team, grow as a cohesive unit. He has also helped me to personally elevate my leadership capability, credibility and results. I recommend Dennis highly to any organization or executive who is looking to become a better version of themselves.

Elie Azar, Managing Director of White Wolf, commented, “we’re very pleased to have BAI as an Advisor and look forward to partnering with Dennis in his role with White Wolf. I first met Dennis when he was Vice Chairman of Cerberus Operations and Advisory Company, LLC – Cerberus Capital Management, L.P. His background, experience and achievements are certainly impressive and widely recognized. Dennis is credited with being a savvy global business executive with broad based business knowledge, multifunctional expertise and great leadership, which have driven significant results throughout his career.”

“I’m really excited and proud to be working with Elie and the team at White Wolf Capital. I’ve been impressed with their solutions-oriented and flexible investment approach as long term investors that structure investments with that objective in clear focus. White Wolf’s disciplined approach to be operationally-focused value investors that accelerate growth and achieve scale through their buy & build strategy is directionally astute and effectively executed. And, their creative and flexible financing solutions to support their private credit strategy – along with an adjacent private funds strategy, are certainly key differentiators for investors. This is a great team, I look forward to contributing to the achievement of White Wolf’s strategic and operating objectives,” said Dennis Donovan, President & CEO of Beacon Advisors International, LLC.

About Beacon Advisors International, LLC
Beacon Advisors International, LLC is an advisory and consulting firm focused on achieving strategic and operating objectives to improve performance and create value through acquisitions, change management, process improvements, human capital, restructurings, organizational effectiveness, operational platforms, transformations, executive management and asset monetization. Recent engagements include Reydel Automotive, Monomoy Capital Partners, Sparton Corporation, Staple Street Capital, Cyanco, Brookline Capital Markets and ABC Technologies. For more information, please visit: www.beaconadvisorsllc.com

About Dennis Donovan
Dennis Donovan is the President and CEO of Beacon Advisors International, LLC. Representing BAI, he is also an Executive Board Member at Staple Street Capital. Dennis was formerly Vice Chairman, Senior Advisor and Executive of Cerberus Operations and Advisory Company, LLC – Cerberus Capital Management, L.P. and has continued to work internationally with Cerberus portfolio companies. Prior to this, he was Executive Vice President of The Home Depot.

Previously, Dennis was Senior Vice President of Raytheon Company. Before Raytheon, he was a Company Officer of General Electric, and served as Vice President – Power Systems. While at General Electric, Dennis also worked with: Defense Systems; Transformer; Plastics; Major Appliance; Housewares; Lighting; Consumer Electronics; and Industrial Systems.

Dennis has held key leadership roles in numerous business transformations with multi-national companies. His global experience includes: private equity; manufacturing; industrial and automotive; distribution; health care; energy; technology; aerospace & defense; government services; consumer & retail; transportation; financial services; materials and chemicals; engineering & construction; and, building products. Dennis has been a Board Member and Advisor to the Board of Directors for multiple companies in Europe, Canada and the United States. He has been a frequent guest lecturer at universities, corporations, government agencies and professional associations. Dennis and his work have received extensive media coverage.

About White Wolf
White Wolf is a private investment firm that began operations in late 2011 and is focused on making direct and indirect investments in leading North American middle market companies.

White Wolf seeks private equity and private credit investment opportunities in companies with $20 million to $200 million in revenues and up to $20 million in EBITDA. Typical situations include management buyouts, leveraged buyouts, recapitalizations, and investments for growth. Preferred industries include manufacturing, business services, government services, information technology, security, aerospace, and defense.

White Wolf also looks to invest with other private fund managers as a limited partner. Targeted investment candidates are North American focused private credit funds looking to raise $50 million to $500 million, with a focus on the lower-middle and middle-market.

White Wolf’s office locations include Miami, Chicago, Montreal, and New York City.
For further information, please visit www.whitewolfcapital.com.

Dennis and I have worked together for the past 13 years. He has been a partner of mine on many successful acquisitions, turnarounds, and monetizations of domestic and international businesses. What sets Dennis apart from others is his unique blend of business knowledge, multi-functional competence and leadership. He has been a key contributor on the Board of Directors and Compensation Committees of many of these companies – providing a thoughtful, pragmatic and actionable perspective. He has a wealth of knowledge, experience and expertise – assisting portfolio company CEOs, executive teams and management with comprehensive planning and focused execution of operating and human capital initiatives. In this regard, Dennis is recognized as one of the top human resource executives in industry. And, with his legal background, he has been on point with international law firms dealing with complex transactions – bringing them to successful closure. Bottom line – Dennis adds significant value and is widely respected by those who work with him.

I had the life-changing opportunity to work for Dennis at The Home Depot and have been fortunate to continue our collaboration for the last 20+ years. Dennis is widely viewed as one of the very best Human Resources leaders in the world, but the reality is he is one of the best business executives in the world. Under Dennis’ leadership at The Home Depot, we executed over 100 highly successful HR initiatives that transformed the culture and business performance of the organization. Dennis challenged all of us to not only build high-quality human capital platforms, but also ensure initiatives had demonstrable impact on the metrics that mattered most to the business, including sales-per-labor-hour, operating margin, shrink, and same-store-sales. This impact on financial and operating performance made certain these were not just world class HR initiatives, but more importantly, were embraced by leaders across Home Depot as important levers they could pull to manage the business. Perhaps most significantly, Dennis created the most meaningful development experience of my career – just like he has done for dozens of others. His guidance, leadership and mentoring has allowed me to help build three businesses valued in the billions of dollars, and I continue to rely on his expertise and global perspective to this day.

Whilst drawing down on committed funds and having capital “at work” is most people’s core understanding of what the modern private equity firm does, having the right human capital in place to maximize return-on-assets and marshal the firm’s capital adequately is of equal critical importance. Against this backdrop, it is perhaps a logical development to see the evolution and rise to prominence of the chief talent officer role in the modern PE firm.

Often an operating partner within the firm structure, denoting the seniority of the role, the chief talent officer takes ownership of the talent agenda within the portfolio companies – ensuring the leadership is fit for purpose and possesses the capabilities necessary to deliver on the agreed strategy. Where capability gaps exist, working with the management to set the right learning agenda to bridge the gaps, or going externally to buy in those capabilities, are two natural courses of action.

The ranks of modern CTO’s are highly accomplished. Jim Williams at TPG (former Managing Partner at Hay Group) and Dennis Donovan at Cerberus (former CHRO at Home Depot) were among the first . . .

If we have learned anything over the last 12-14 months, it is around the need for firms to be able to adjust very quickly, both the PE firms and the actual portfolio companies.

This requires strong attention to both business levers and understanding how the strengths/opportunities of your leadership will be able to adapt to the evolving landscape.

A CTO role can have one eye on building capability for the leaders/teams and one eye towards creating more organizational capacity – this shapes how companies can focus on strategy, short and long-term priorities, and delivering on financial results for stakeholders.

After several years as a business consultant with McKinsey & Company, I had the pleasure of working with Dennis Donovan at Home Depot in several leadership capacities, including Senior Director Staffing reporting to him. From the first time I met Dennis, he left a lasting impression in many respects. The combination of his leadership style, results orientation, functional expertise, and networking was and remains quite impressive.

Dennis always saw more in his leaders than many saw in themselves. He challenged us all to think bigger. He stretched us with increased scope and complexity of work. He coached, mentored, encouraged and developed us. We all became better leaders and cultivated engaged teams because of him.

Annually, Dennis set ambitious targets which often seemed insurmountable. Yet his structured thinking and formulaic execution always provided a clear path to dissect the issue, leverage analytics and define a course of action leading to successful outcomes.

Having earned a J.D. degree, Dennis’ depth of expertise in industrial relations and executive compensation was world class. This was complemented by his proven years of global experience in training, executive development, succession planning, executive search and business human resources.

His HR experience, strategic thinking and strong business acumen often earned him a seat at the table and the ability to influence C-Suite peers and the CEO alike. The combination of these skills and experiences enabled Dennis to be a change agent, empowering the workforce to sustainably grow the business.

During his time at Home Depot, Dennis led many new, high impact initiatives, such as: ensuring all 2,000 stores had an HR leader, hiring more than 150,000 seasonal works via Mass Hiring Events, partnering with the DOL to hire JMOs to build store leadership pipeline, and optimizing a workforce of 350,000+ via staffing utilization models.

Those of us who have had the opportunity to work with Dennis are better leaders and HR professionals because of it. It is no surprise that many of us have had success professionally and personally in part due to his impact.

I have been a direct report and mentee to Dennis and I can attest that he is among the most influential leaders that I have worked with. He creates a learning environment for team members and consistently shares his knowledge and expertise. Dennis also creates a common mindset around continuous improvement and expects the same from all serving in a leadership capacity. Known for his ability to think beyond HR, Dennis is a strategic, business focused executive who has the ability to lead in complex environments.

Dennis offers value-add insights beyond HR and consistently displays business, financial and operating acumen more reflective of a CEO. His diverse background across industries translates into broad business knowledge used to optimize productivity, drive business results and ultimately shareholder return. He also possesses a keen understanding of how to enable international expansion and drive profitable growth. This rare combination of attributes result in his ability to navigate and influence global organizations in a highly effective manner.

In closing, Dennis is one of those rare leaders who is naturally inspiring and can serve as the “profile of leadership” for any organization.

I have known Dennis for over 13 years, since working with him at Cerberus Capital Management and now at Staple Street Capital, a private equity firm with over $750 M of capital under management that I co-founded over 10 years ago. He is a member of our firm’s Executive Board. Dennis is not your typical Human Resources professional. He serves as a true strategic partner for private equity sponsors and CEOs in helping them navigate highly complex operational issues which led to his appointment as Senior Executive, Director and Co-Lead at Cerberus Operations & Advisory Company prior to assuming the role of Vice Chairman. Whether it’s redesigning an organizational structure, or developing a comprehensive system to attract and retain best-in-class talent, to dealing with thorny labor related issues, to helping management teams identify and improve their blindspots, Dennis is second to none. Not only does he have great business and operational acumen, he has the innate ability to build trust within teams and get the most out of them in change intensive environments where he commonly operates. His relationships with seasoned executives have been built over the years from both Fortune 50 companies and high performing private equity firms. He intuitively understands value creation and how to help teams optimize it in a sustainable way.

Dennis is one of the most effective strategic business partners and leaders that I have ever had the privilege to work with. I met Dennis 6 years ago when he was advising a leading New York based private equity group on the acquisition of ABC Technologies Inc, a global tier 1 thermoplastic automotive parts supplier that had been family owned for 45 years. Always a straight shooter, with a laser focus on working with executive management to accomplish multidisciplinary business imperatives, Dennis very quickly became an invaluable thought partner to me as the CEO in terms of working together to assess, evaluate and drive necessary positive changes throughout the global organization in a way that valued our culture, our employee loyalty and dedication, and our team mentality to always drive for success. His skills and expertise prioritized the values we placed on our employees safety and professional development and also our focus on the value of diversity, equity and inclusion in the workplace. Dennis always led with integrity and a lens towards sustainable business profitability by creating and developing the right teams from the plant floor to the C-Suite. Dennis started as a human capital management and business change expert providing our organization with the necessary expertise to navigate the change to private equity ownership and developing people, process, metrics and systems necessary to become a publicly traded company … he continues to be a valued colleague, mentor and friend.

Long before the words “HR Business Partner “ were in vogue, Dennis Donovan was operationalizing and connecting business outcomes with human resources. As the consummate intrapreneur and entrepreneur, Dennis has the unique ability to “look around corners” and implement strategies that create new channels in the marketplace while also supporting human capital initiatives. I had the privilege to work with Dennis in launching the first of its kind hiring partnership designed to increase the number of bilingual Spanish speaking associates at The Home Depot. This partnership entitled Unidos Podemos (“United We Can”) not only enabled the company to effectively staff its stores in response to customers’ needs, it also provided the company with a channel to new customer insights, products and services that still impact the company’s operations almost two decades later.

Dennis and I worked together directly for about a decade in my role as President and CEO of GE’s Electrical Power and Industrial Businesses. When Jack Welch asked me to take on this role the business had been in survival mode for a number of years following the severe downturn resulting from the Arab Oil Embargo. The mission was to completely rejuvenate this world leading global business and take advantage of a surging market. Dennis was my VP of HR, but played a much larger role, from my personal coach and right hand to Congressional and Community communications. His responsibilities covered our people around the globe, and he created and leveraged our HR processes as a sales tool with customers. In our time together at GE the Business revenue more than doubled. There were obviously many dramatic changes and improvements required to achieve this and Dennis played a key role, directly or indirectly, in all of them. He is clearly a giant of the HR world, but his talent and contributions go way beyond that, as his subsequent career has shown. I will have to say that of all the people I have worked with, Dennis was the most valuable. His ability to put theory into practice and “execute” is extraordinary. Since our time working together, he went on to become one of the most highly regarded Business Executives in the nation. I would add that people who have worked for, or with, Dennis over the years remain devoted to him.

In many companies, the head of human resources has little clout. The opposite is true at Home Depot, which will create 20,000 new jobs this year. Dennis Donovan, . . . advises on nearly every executive decision, from new store sites (are there enough workers nearby?) to marketing (can the company’s hot NASCAR sponsorship to be used to reward top employees?). Home Depot has created hiring programs for retirees, Hispanics, and military officers. For established high performers, there’s the Accelerated Leadership Program. Others include the Business Leadership Program for MBAs and the Store Leadership Program for new hires and some leadership experience. Many in this last group-529 so far-are ex-junior military officers, . . . increased sales and lower turnover prove the strategy.

I have had the privilege to work for and with a variety of extraordinary companies, including GE, Raytheon, and Cerberus –through which I met Dennis Donovan and embarked on a 30 year journey. It began as a recruit, developed as a direct report, deepened as a mentee, and further evolved as a consultant, colleague and friend. Aside from the significant and sometimes stunning subject matter expertise across multiple functions, Dennis provided three great lessons for me and I believe is the source of the rich value he provides companies and clients. First, he starts at the top – what are the critical business problems to be solved, and everything from there is focused on solving those. He can simultaneous design and build down and up – but always with a laser focus on the business problems to be solved. Secondly, disciplined processes and tools are important to measure and calibrate, but not in and of themselves – only insofar as they make progress towards solving the business goals. He is not afraid to redesign, rebuild, refocus the processes and tools to constantly gain ground on the critical business issues. And lastly and perhaps most importantly, imbedding an embrace of constant and sustainable change into the culture is the surest and maybe only path to sustainable competitive advantage.

Donovan has served in key leadership roles for numerous global business transformations. He has designed and executed a fully integrated, large scale change process to enhance organizational effectiveness and drive competitive advantage in major corporations. Currently a senior advisor at Cerberus Operations and Advisory Company, an affiliate of Cerberus Capital Management, he previously served as executive vice president, Human Resources at The Home Depot, a $90B company.

Elliot Clark, CEO of Shared Xpertise, said, “We’re gratified that our first year event has already attracted a stellar roster of sponsors, including Kenexa, Lawson, Monster, Northgate Arinso, Rideau, SuccessFactors, Taleo and Workday. Dennis’ presentation is aptly titled ‘Competitive Advantage through Change’ which reflects the post-recessionary times faced by HR professionals who need to make strategic decisions that will catapult their organizations into the next decade.” He continued, “Dennis possesses the unique perspective of having run large-scale HR organizations and now both advising Cerberus on talent management and reviewing HR service and technology companies for investment potential.” Attendees at the HR Demo Show will gain a first-chance opportunity to learn from him as well as to research their own software buying decisions in a manner that is unprecedented.

“He’s not a backroom, second-chair member of the staff,” . . . referring to Dennis Donovan. Donovan makes presentations at every board meeting, gives quarterly progress reports to financial analysts and regularly sits down with suppliers to describe the company’s latest processes and planning.

It would be easy to mistake him for a chief operating officer – after all, his responsibilities reach every corner of the company. But Donovan’s title is “executive vice president of human resources.” And his role – an amalgam of company ambassador, personal confidante and self-described “chief change officer” – represents a profound shift taking place in C-suites across the country. . . . “CEOs and boards of directors are learning that human resources can be one of your biggest game-changers in terms of competitive advantage,” says Donovan.

. . . “Effective leadership is the common denominator in overall performance,” says Donovan. “If I had a buck, I’d spend 99 cents on picking great leaders.” As a result of a 75-question survey that went out to 276,000 Home Depot employees—and sparked an 81 percent response rate – Donovan was able to link the turnover rates of store managers with the financial performance of the store.

. . . At the same time, Home Depot was facing a crippling shortage in its work force. With 200 new stores opening every year, 40,000 new employees had to be found, placed, trained, monitored and evaluated.

. . . Donovan created a learning forum for store and district managers and within five months put 1,800 leaders through a full week of learning – for many of them, their first experience in learning to develop strategy and operating plans. He instituted a formal two-year rotational program for assistant store managers, an executive leadership program for senior staff and a learning curriculum for the entire company. He oversaw the centralization of Home Depot’s enormous merchandising operations. In 10 weeks, he hired 1,300 HR professionals, upgrading the job from an hourly rating to the equivalent of an assistant store manager, eligible for bonus and stock options. That alone, he says, “was probably worth a penny a share.

. . . That’s why savvy companies like Home Depot have their HR managers meet regularly with analysts. “At the beginning, I think they wondered what the hell was going on,” Donovan recalls. But as he described HR’s role in building a high-performance work force, an attitude adjustment took place. Now, Donovan concludes, “I think they understand the value-add for human resources in our equation.” So, too, do more and more CEOs.

. . . The Home Depot approach features a “competency model” for its high-potential leaders. Donovan and his team have researched other large companies and interviewed successful leaders internally to come up with a profile of the person who will perform best at Home Depot.

These high-potential people are then put through an assessment. Candidates for senior executive jobs face a four to eight-hour interview and must provide as many as 10-15 references. “We get an MRI on that person’s leadership ability,” says Donovan. “That gets fed back to the individual for development. . . .” At this level, the company tracks 200-300 “high potentials.”

. . . The Home Depot answer is to use the 360-degree tool quite aggressively. “If we’re serious about leadership, we’re going to use instruments like 360s to develop, select, reward and manage the careers of people,” says Donovan. His team has trained 500 internal coaches who manage the process. They ask questions such as, What’s the root cause of a particular behavior?

Among the most powerful tools at all the companies that develop management talent well are the personal involvement of the CEO and his close relationship with the top HR executive. . . .

Having known and worked with Dennis for almost twenty years, I can attest to the future focus, strategic leadership and the process discipline he brings to every situation. Everything I have learned and use today regarding global business transformation and talent management, I learned from Dennis. He is a master at launching and executing multiple change initiatives and bringing them all to bear in order to drive business to the next level. He sets an aggressive pace and inspires others to keep up.

Dennis is a business leader of great insight into people, process and how to make effective change happen. I have known him for 30 years, working with him for a decade at GE and then several more years at The Home Depot, where I retired as CEO. He relishes taking on big challenges and rarely (I’m not sure if ever) fails. Everyone who is connected with Dennis benefits from this association.

HR Chief
Recognizing that he had to win the hearts and minds of Home Depot’s people, Mr. Nardelli determined that one of his first moves as CEO would be to hire a highly visible, experienced human resources executive to co-lead the charge for change with him. He knew exactly the person to ask: Dennis Donovan, a former colleague. He was known as a tough but highly motivational leader who had done his share of human transformations in several parts of GE.

Mr. Donovan’s responsibilities are so far-ranging that he’s considered to be more of a chief operating officer than an HR leader. He is among a very new breed of “chief human resources officers” (CHROs), who are often handpicked by the CEO. Edward E. Lawler III, the founder of the University of Southern California’s Center for Effective Organization and a faculty member in the Management and Organization Department at USC’s Marshall School of Business, describes CHROs as executives “who can provide leadership in the areas of human capital management, organization design, and effectiveness” and who “are involved in all areas of business decision making – whether it is a long-term strategic initiative, such as buying and integrating companies; or changes in the marker and brand positioning; or ongoing operational concerns such as managing supplier relationships, communications, and customer service.”

Many of Home Depots’ most important strategic change initiatives have come from and been led by Mr. Donovan. When he became CHRO . . . he swiftly beefed up resources for hiring and developing workers. To accomplish that, he declared that every store would have its own human resources manager. It was no small task, since the company at that time already had about 1,300 stores.

. . . 157 employee performance evaluation forms had been in use: within months of Mr. Donovan’s arrival, he had cut that down to just two, one for managers and one for other workers. Managers are rated in 360 degree reviews with straight-forward points for specific behaviors, such as “Displays Character” and “Drives Change.”

The decision to place a human resources manager in every store in the country tested Mr. Donovan’s organization skills, the proposal promised to be a logistics nightmare. How could the company hire more than 1,000 competent people in such a short time? The answer, for Mr. Donovan, came down to numbers. Within 12 weeks of initiating the new policy, the company collected 37,000 applications for human resources manager jobs. Mr. Donovan’s staff interviewed 3,000 applicants; the company offered jobs to 1,300. The new managers all started the following week.

Mr. Donovan is also obsessed with having the facts and numbers at his disposal. He talks in headings and subheadings, as if he is reading from a chart in his mind. Numbers, he says, can be your best friend when others are attacking you.

Today, data drives most of the HR decisions at Home Depot. For example, by examining the performance attributes of store workers from certain demographic groups, Mr. Donovan discovered that senior citizens had, on average a 14 percent higher score on the entrance test than other applicants., They also tended to stay with their job longer and had fewer absences than other groups. This was clearly a group Home Depot wanted to target … the company signed a recruiting partnership with the AARP, a U.S. advocacy group representing people 50 and older, to attract the elderly and retirees.

The HR team has also identified veterans, military reservists, and their spouses as a good fit for Home Depot stores; the company now has a partnership with the U.S. government to attract people from the military community.

Mr. Donovan and the teams he leads continue to leverage research to develop more human capital initiatives. Surveys showed that employees like semiannual bonuses better than annual bonuses, so he put them in place. The discovery that the difference between the best-performing stores and the rest “almost always” came down to one variable, the store manager, was what prompted Home Depot to make identification, promotion and training of these managers a high corporate priority. “The key is to put a good store manager in place,” says Mr. Donovan. “Then you let them worry about the sales assistants. If I have one dollar to spend, I’ll spend 99 cents on getting the right leaders and one cent on everything else. That’s only a slight exaggeration.

[“Winning Hearts and Minds at Home Depot” from strategy+business. © 2005 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. www.strategy-business.com.]

I have had the pleasure and benefit of working with Dennis Donovan for over a decade in a variety of businesses. Dennis was our CHRO at GE Power Systems and then again at Home Depot, from heavy industrial to retail. He is among the best in his field and has been recognized time and again by his peers and the media. Dennis brings a proven discipline and process to every business. He is metrics driven and quantitively links process-based initiatives to business outcomes. His passion and focus was immeasurable with extraordinary impact in multi-functional areas including organizational effectiveness, acquisitions, leadership selection & development, change management, labor relations, compensation, international relations, learning, external affairs and performance management, just to name a few. The added benefit is the business and global acumen he brings to the business. His theme of functionally aligned and operationally assigned is an indicator of Dennis’ total business approach and contribution. Many refer to Dennis as a “Chief Change Officer” with his mantra “if competitive advantage is the end game, change is the common denominator – organizations that change effectively win, and those that don’t lose.” At both GE Power Systems and Home Depot we more than doubled the size of the business and became a leader in each sector we served.

Donovan . . . has put HR at the center of the company’s transformation. His accomplishments have ranged from putting an HR manager into every single Home Depot store to overseeing an effort that dramatically reshaped the company’s enormous purchasing operations within an eight-­hour time period.

“Before Dennis arrived, working here was kind of like riding a wild stallion,” says Don Singletary, the company’s vice president for compliance training and a 13-year veteran of Horne Depot.

Donovan had lots of ideas. But before he could put them into action, he wanted to ensure that HR had the “traction” within the company to win support for its plans from the rest of the organization.

Effective execution is the difference between plans that become reality and those that go nowhere, he says. Donovan has an equation that summarizes his thinking on this matter, one he repeats like a mantra to his staff: VA= QxAxE, or the value added of any HR initiative is the result of the quality of the effort, the acceptance of stake-holders and its execution.

“Basically, I wanted to ensure that all of our human resource initiatives are world-class in design, process­-focused, metrics-based, systems-­capable and simple,” he says. Within a few months, Donovan and his HR team devised more than 300 initiatives that the HR department promised to deliver within the following three years. Approximately 70 percent of them have already been achieved, including an annual HR Review process, in which the entire HR organization, from the store level on up, analyzes its progress over the past year and learns about new initiatives and programs for the upcoming year; replacing the 157 different performance-evaluation processes with one process for the entire organization; creating four “learning institutes” focusing on leadership, Six Sigma, customer service and enterprise learning; deploying a Web-based e-learning platform to deliver basic product knowledge and selling skills to employees in every store; and implementing a profit-sharing plan for non-bonus eligible employees. One of Donovan’s biggest accomplishments was expanding HR down to the store level.

“Ninety-five percent of our employees are in the stores,” he says. “So that’s where we need top HR talent to be.” Within three months, the HR department processed more than 37,000 applications for the positions, conducted 97 full-day career forums, interviewed 3,000 candidates, and ultimately selected 1,500 new HR managers, 800 of whom came from outside the company.

The project ushered in a new “mass hiring” model that Home Depot would use for other companywide positions.

The company’s business leaders praise the initiative. “Introducing HR managers into the stores was a smart, gutsy move that’s been extraordinarily key,” says Annette Verschuren, who, as president of Home Depot’s Canadian division, oversees 19,000 people and 89 stores.

Tom Taylor, who as president of Home Depot’s Eastern division oversees 600 stores and 148,000 employees, says the HR managers make the store managers’ jobs easier.

“Managers used to have to wear multiple hats, but now they’re free to run the business,” he says. “[Putting HR professionals in the stores] has helped us hire more efficiently and find better people.”

Key to the process, says Donovan, was getting the buy-in of all the company’s leaders at the outset, something that’s integral to the “acceptance” part of his aforementioned equation. This has meant that with every major initiative Donovan and his team undertakes, he first consults with the company’s division presidents and regional managers, right down to store-level managers. For example, Donovan made a point of getting together with the company’s business leaders right after HR had completed its initial assessment to find out what they thought HR should focus on.

Says Taylor: “HR under Dennis is very responsive and in tune with the business. The folks in HR today are as much operations people as they are HR people.” One of the things the division presidents told Donovan was that they were somewhat skeptical of the HR department’s ability to actually deliver what it promised. To help lessen that skepticism, Donovan requires the HR staff to submit detailed plans for each project they’re responsible for and to meticulously document their progress each month.

“Everyone on the HR team project-reviews every single process area, and they do it religiously,” says Donovan. “That’s how we focus on the ‘execution’ part.” As a result, says Singletary, “we have a newfound respect for process since Dennis arrived. We’re a much more organized and professional HR department than before.”

‘Super Saturday’
Another key part of Donovan’s accomplishments at Home Depot has been a renewed focus on leadership development. Donovan’s efforts in this area have included a number of initiatives, including one designed to locate and train managerial candidates from outside the company.

“[Before Dennis arrived], there was a disproportionate amount of inside promotions at the company -­ we needed new ideas and new perspectives,” says Verschuren. Under the company’s new “store leadership program,” specially selected candidates undergo a rigorous two-year training program to eventually run a Home Depot store. The company hired approximately 700 such candidates, 400 of whom are former junior military officers and graduates of the armed-services academies.

“These are people not necessarily experienced in retail, but who we think possess the necessary leadership potential, relevant business knowledge and functional competencies to make good store managers someday,” says Donovan.

Other initiatives include an accelerated leadership program for high-potential managers from across the company who spend two weeks immersed in a learning program designed around strategic thinking, operating excellence and leadership, and an executive leadership program for newly promoted vice presidents from all areas of the company. For that program, . . . company leaders “team teach” courses in partnership with faculty from Emory University’s Goizueta Business School. Donovan has also implemented week-long, on-site “immersion” programs for existing store managers and division leaders, in which they participate in business simulations where the goal is to “beat” Home Depot, thereby honing their strategic skills. Both initiatives are run through the HR department. “If I had a buck to spend, I’d spend 99 cents on picking and developing great leaders and a penny on everything else,” says Donovan. “Even though I consider myself a systems thinker, I also know if I’ve got a great leader, everything else tends to work.”

While Donovan clearly has plenty of workforce-related challenges to worry about, his role goes beyond HR. He also led the company’s transition from a decentralized purchasing model, in which purchasing and selling decisions were made by nine regional offices, to a “hybrid” model in which a central office oversees purchasing while store and division-level managers decide what to sell based on the local market. The new model is designed to cut costs by eliminating redundancies, help the company obtain better terms and conditions from suppliers, and react more quickly to changes in consumer preferences.

Since it was implemented, the hybrid model has helped improve the company’s gross margins by 1 percent – an achievement Fortune magazine described as “a huge accomplishment in the world of retailing.”

A key part of the process was creating the new organizational structure and filling the 29 new senior-­level positions it would require. Donovan formed a team of leaders from across the organization and hired consultants McKinsey & Co. to help them design the hybrid model and map out the new processes and staff positions it entailed. During one eight­ hour period, since referred to as “Super Saturday,” Donovan, his team and all of the company’s business leaders gathered in Atlanta to review the new process, define the new roles, agree on a communications plan for the rest of the company and the media (Donovan also oversees the company’s communications department), and choose a slate of candidates for the new positions. By day’s end, offers had been made and were accepted by the candidates, and the new model was announced to the rest of the company the following Monday.

“We accomplished in eight hours what would take most companies months, if not years, to do,” says Donovan.

Having such a close involvement in the company’s business isn’t new to Donovan. During his time at GE, he oversaw a consulting business within GE Power Systems in addition to his HR duties, traveling to clients around the world to teach them about Six Sigma, leadership development and several other processes that GE helped to make world-famous. “This was an initiative I came up with called HR Solutions,” says Donovan. “Our clients were always asking us how we made things happen, so I said, ‘Why can’t we leverage HR for the business?’ We packaged the service as part of our long-term customer contracts, and our salespeople loved it because it gave them point of entry into the market.” Donovan credits GE for letting him be so closely involved with the business.

“At GE, we in HR never talked about becoming a business partner because you were considered to be one as soon as you walked through the door,” he says. It’s clear that Donovan’s current boss feels the same way about him. “Dennis is a partner and a confidant,” says Nardelli. “He’s brought credibility and respect to a function. . . His personal energy, his ability to energize others and the professionalism by which he packages and gets acceptance of his ideas has been a credit to us in making this transformation.”

While hosting the CAHRS Executive Briefing at The Home Depot Store Support Center in Atlanta, Georgia, Dennis Donovan celebrated his first-year anniversary as Executive Vice President of Human Resources for the company. Associates lead the “Home Depot Cheer” energizing the audience for the day-long event addressing “Building a Winning Future on a Foundation of Change.”

Donovan gathered The Home Depot CFO, Presidents, numerous VP’s, Managers, and Associates, to explain the changes made in HR the past year. The audience was divided into smaller groups rotating to hear the leader’s presentations about: (1) Establishing HR Processes, Metrics and Reporting; (2) Driving E-Learning and Learning Institutes; (3) Transforming Performance Management and Success Sharing; (4) Redesigning the Merchandising Organization; (5) ADS/HRM Restructuring; (6) Business Leadership Program; and (7) Launching the Store Leadership Program.

In one day CAHRS sponsors and Cornell HR faculty witnessed the speed of change and the open, inspiring, culture at The Home Depot. The well-organized, educational event helped us understand how Home Depot reached more than one billion customer transactions this year and for the ninth year reached Fortune magazine’s “Most Admired” list.

Hiring vets is a three-tiered blueprint for success, says Dennis Donovan, Home Depot’s executive vice president of human resources . . . “It’s good for the individual, it’s good for the company and it’s good for the country because it rewards the brave men and women who serve in the military.” Donovan says.

. . . “It’s in our value proposition to take care of people who are defending our country, so we take this very seriously. We look at it not as a cost but an investment. We don’t look at it as an obligation but as an opportunity.”

People transitioning from the military seemed the perfect talent pool from which to draw.  “We find that there is a level of maturity, that people coming out of the military have,” Donovan says.  “There is certainly leadership, and it’s a great place for us to source people with logistics backgrounds, plumbers, electricians and carpenters.  They have discipline, and we can see that discipline at work in our stores.”

The plan for Operation Career Front, an extension of a job partnership formed with the Department of Labor . . . The program reaches out to veterans through transition assistance programs and Web links with the departments of Defense, Labor and Veterans Affairs.

Also flagged for special consideration are the roughly 400,000 military spouses whose careers are interrupted by transfers to new bases.  The company strives to place them in Home Depot stores near their new homes, whether or not they’ve worked for the retailer before.

The company also continues to provide benefits for its associates pressed into service, all of whom have jobs waiting for them upon their return.

Even before Operation Career Front, Home Depot actively recruited retired military. Its Store Leadership Program, launched . . . to groom the best and the brightest as store managers, is a case in point. The intensive 24-month program involves more than 250 hours of classroom learning, four different job rotations and mentoring by company leaders.  To qualify, candidates must have a minimum of four years’ experience in business or retail management – or four years as a commissioned military officer.

Although the program was not specifically created to target them, nearly 70 percent of those accepted are former military; of the program’s 800-plus combined recent alumni and current participants, 530 are junior military officers, including 119 graduates from such military academies as West Point, Annapolis and the Air Force Academy.

https://www.workforce.com/news/reporting-to-the-depot

As a former Director and Chair of the Leadership Development and Compensation Committee of Home Depot I had the good fortune of working with Dennis Donovan. Dennis was the EVP of Human Capital Management and Organizational Effectiveness for over 380,000 associates. His unusual combination of expertise in Operations, Human Resources, and Law was invaluable to me as a director, and to the Company as a whole. The many awards he has received, and the articles written about him are not overstated. He had a significant impact at Home Depot, and I am grateful to him for helping me become a more knowledgeable and effective Committee Chair.

Introduction

The Home Depot’s Executive Briefing meeting was an impressive journey into understanding a company that can be considered, “the gold standard of data-driven human resources,” according to Fred K. Foulkes, Professor of Organizational Behavior at the Boston University School of Management and Director of the Human Resources Policy Institute.

Building a Winning Future on a Foundation of Change

After introductions and welcoming by Fred Foulkes and Dennis Donovan, 30 associates from The Home Depot wearing orange aprons led HRPI members and guests in shouting The Home Depot cheer.

According to Donovan, companies must have a process for change—one that “connects the dots” among each contributing component. “Competitive advantage is the end game…and change is the common denominator,” he said.  “Change is the engine that drives competitive advantage…so if you are going to be effective, you need to hit on all cylinders.  A well-defined changed process allows you to do this.”

In order to build a competitive advantage, according to Donovan, The Home Depot must not only have leadership in the marketplace, but also within the workplace and the community, which includes the media, public and government.  To be a leader, the company carefully considers and executes strategic, operating, and resources imperatives; collectively, they are referred to by the acronym, SOAR.

The HR value proposition at The Home Depot is that “our ability to attract, motivate, and retain human talent gives us our competitive advantage.” Dennis Donovan and the HR team have successfully leveraged the HR value proposition, and, in doing so, have driven and implemented the change architecture to position The Home Depot to garner a significant share of the $970B home improvement market it is targeting. Change management underpins the strategy. Donovan asserts, “The best definition I have ever heard of a healthy organization is one in which the rate of internal change exceeds the rate of external change.”

Hire the Best

The Home Depot has developed a unique hiring strategy that leverages hiring partnerships and technology, and rigorously builds and adheres to job assessments.

The Home Depot has forged strategic alliances with a number of organizations that facilitate mass hiring and account for demographic trends relevant to the workforce and the company’s customer base.  Partnerships have been established with the AARP; the U.S. Departments of Defense, Labor, and Veteran Affairs; Hispanic organizations, and the Art Institute, among others.

Not only do these partnerships aid accelerated hiring of diverse and talented associates, they also allow The Home Depot to attract employees who are in strategically targeted demographic groups. Recognizing that older individuals demonstrate a strong work ethic, leadership, and maturity, have lower attrition levels than their younger counterparts, and possess excellent skills and project knowledge, The Home Depot has entered into a partnership with the AARP, the country’s largest organization for the 50+ population.

Another demographic trend that is of strategic importance at The Home Depot is the significant growth in the Hispanic market, which is three times that of national population growth. With the goal of having an associate base that reflects its customer base, The Home Depot has formed hiring partnerships with four leading Hispanic organizations: ASPIRA Association, the Hispanic Association of Colleges and Universities (HACU), National Council of La Raza (NCLR), and SER-Jobs for Progress National. The company works with these organizations to recruit part-and full-time employees across the country.

“Operation Career Front” is the result of The Home Depot’s alliance with the U.S. Departments of Defense, Labor, and Veterans Affairs. Having found that former military personnel demonstrated a strong work ethic and possessed relevant leadership competencies, the company now hires a high percentage of former junior military officers for its leadership development programs.

Each of these partnerships aids mass hiring events, during which The Home Depot leverages pooled resources, standardized tools, and an efficient process to meet with and make offers to a select group from a large volume of applicants.

The Home Depot has developed Web EA (Electronic Application) to expedite the hiring process, minimize paperwork, ensure the collection of all relevant job candidate information, and offer potential applicants a user-friendly interface.  Given that, on average, each job candidate applies to seven stores, having a standardized template eases the application process for the HR team and for applicants.

Another critical facet of The Home Depot’s “Hire the Best” strategy is the company’s commitment to developing and utilizing job assessments in the hiring process.  The HR team rigorously uses multiple methods—interviews, observations, and questionnaires—to analyze jobs and subsequently design competency-based assessments.

In addition to a rigorous design strategy, the I-O psychologists on the HR team also conduct extensive research to ensure the statistical validity of their selection tools and to evaluate the impact of selection on business metrics. With technology as an enabler, the next generation of Home Depot’s selection tools will include the web-enabling of specialty assessments used to test the experience and technical skills of applicants of critical store departments (i.e., electrical, plumbing, millwork, etc.).

Taken together, The Home Depot’s hiring alliances, utilization of technology, and job assessments allow the company to hire accurately and expeditiously. One HRPI member labeled one of The Home Depot’s strengths as its ability to be “big and fast simultaneously.” Not only does The Home Depot hire quickly and en masse, it also attracts some of the “best and brightest” talent in the marketplace.

HR Processes, Metrics & Reporting

In order to maximize HR’s “Value Added” to the company’s performance, the HR team has vigorously implemented process mapping and process improvement methodologies as an organization-wide transformation and developed HR metrics to measure how well customer, financial, process and people goals are being met.

One of the core elements of the HR strategy, and one of the first processes that Donovan launched, was a systematic method for evaluating the HR organization.  The HR team toll-gated each of the critical HR processes for the purpose of identifying strengths and opportunities in strategy and execution.  As a result of this in-depth analysis, the HR team became aligned around a clearly defined set of metrics and created a series of cross-functional initiatives to close any gaps that were identified.  Today, that metrics dashboard is the primary measure of HR effectiveness.

The HR team at The Home Depot also utilizes Six Sigma as its main process improvement tool.

An example of a successful HR process improvement came out of a Six Sigma Project that focused on improving selection by investigating the cost of vendor-managed, manual background checks.  In this particular project, the project team utilized the Six Sigma methodology and determined that not verifying candidate information at the time of input (e.g. social security numbers) caused requests for background checks to be returned or not processed by the vendor company.  This caused lengthened time-to-fill periods and higher vendor costs.  By eliminating these defects through process improvement, HR significantly reduced vendor fees.  In addition to Staffing, HR has realized savings through Six Sigma Projects in areas that include Learning, Compensation, Employee Practices and HR Information Systems.

In contrast to four years ago, when Six Sigma was perceived as “something from Mars,” as one speaker explained, it is now requested frequently from managers who seek to enhance processes and performance outcomes.

Another prong of HR’s business philosophy relates to the importance of metrics in driving business results and providing tools to support this belief.  As presented, The Home Depot has developed a cache of dashboard reports to monitor progress towards Key Performance Indicators.  The Home Depot also created a performance management process that aligned the organization around achievement.  The company utilizes three basic documents to achieve this:  4-Block metrics (financial, operational, customer and people); performance screens; and performance and development summaries that drive rating distribution and reward differentiation throughout the entire enterprise.

Employer of Choice Survey and Employee Engagement

The Service-Profit Chain demonstrates that customer buying behavior is significantly influenced by the service behavior of sales associates and that service behavior is significantly influenced by associate engagement.

In the journey to be an Employer of Choice (EOC), The Home Depot administers a bi­ annual survey to its associates. The results provide a clear reading on associate engagement. The Home Depot has empirically demonstrated that fourteen key elements drive associate engagement and are key to being an Employer of Choice. These 14 elements are measured by 84 questions.  Some would assert that 84 questions is far too many and no one will take the time to answer the survey… Not at The Home Depot, where participation rates exceed 80% at each administration.

After surveys have been collected from each store and results are aggregated and analyzed, feedback is cascaded through the organization, starting with the CEO and his senior team.  From there it flows to the functions, regions, districts and each individual store.  All feedback is provided as a partnership between HR and Operations. The Home Depot avoids the “Achilles heel” of effective organizational surveys by measuring every step in the process, providing real time feedback, driving action implementation and reporting accomplishments regularly. In fact, EOC survey scores are part of the talent management and leadership assessment processes, reviewed by senior leadership every year. Research by multiple consulting firms (e.g., Towers Perrin, Gallup, etc.) and by The Home Depot itself has shown that high engagement drives revenue and lowers costs – consistent with the promise of the Service-Profit Chain. Highly engaged customers spend more money than lesser engaged customers during store visits.

Leadership Development

Dennis Donovan’s statement that “if I had a dollar, I’d spend 99 cents on leadership” epitomizes The Home Depot’s commitment to leadership development. Just consider the following: five multi-year leadership pipeline programs; two multi-week executive development programs; a 418-hour retail leadership development program; five to seven high potential leaders forums each year; a comprehensive, annual talent management and succession planning process; annual 360-degree assessments of all leaders; more than 100 internal leadership coaches and a multitude of assessments at key junctures in career paths to ensure feedback and job success.

Leadership Pipeline Programs: These five programs serve to develop a pipeline of leaders who can fill functional positions, including accounting, finance, human resources, marketing, and merchandising.

• The Home Depot targets early career candidates through its Future Leaders Program (FLP).
• The Business Leaders Program (BLP) targets high-performing student leaders who are approaching their final academic year in top-school Master’s degree programs.
• The Internal Audit Program (IALP) seeks out candidates who typically have public accounting backgrounds and masters of business administration degrees to develop their financial acumen, process, and operational
• Merchandising Leadership Program (MLP) participants are groomed for The Home Depot’s senior merchant team.
• Store Leadership Program (SLP) participants are experienced professionals with proven leadership capabilities that have a commitment to taking leadership positions in one of the more than 2,000 stores.

Executive Development Programs:

The Executive Leadership (ELP) and Accelerated Leadership Programs (ALP) are designed to groom officer- and director-level employees for the executive pipeline.

• ELP is an in-residence program hosted by Emory
• ALP is an in-residence program also hosted by Emory University.

Retail Leadership Development Program (RLDP): Retail Leadership Development Program (RLDP). This is a comprehensive leadership development curriculum that ensures that The Home Depot retail leaders get “the right learning, for the right person at the right time.”

High potential leadership forums: Each year approximately 2,000 high performing, high potential store leaders are invited to participate in a multi-day leadership development forum.

Human Resources Review: The Home Depot’s talent review and succession planning process is referred to as the Human Resources Review.  This annual process provides a  human resources “MRI” of the organization where the CEO and EVP of HR look at organizational design, staffing, learning, performance management, career development and communications as well as conduct a detailed assessment of the talent pipeline in the field and Store Support Center (corporate headquarters).

Annual 360° assessments: Each year 5,000-plus Home Depot leaders are required to participate in the annual multi-source feedback process to assess their leadership skills relative to the company’s leadership competency model.

More than 100 internal leadership coaches: To support these key leadership development processes, an internal cadre of more than 100 leaders have been trained and certified as leadership coaches.

A multitude of assessments at key junctures in career paths: The Home Depot uses a multitude of assessment processes to ensure that leaders are getting feedback on their effectiveness, their strengths and their development opportunities. These processes include assessment centers, executive assessments, 360s, performance evaluation, coaching and mentoring.

I first met Dennis at the Home Depot in 2002, when I was a manager, Organizational Effectiveness, responsible for designing assessments for individual selection and organizational development. While my formal training was extensive, I credit Dennis with exposing me to how to transform my work into impactful solutions to drive change across the business. Dennis was skillful at ensuring that human resources practitioners had a seat at the table to influence business partner outcomes. Likewise, I developed an incredible ability to utilize data to paint a picture needed for business case development and to secure financial investment in the HR strategy. After many process tollgate reviews, the standard of excellence driven by Dennis truly differentiated the deliverables we produced for the organization. In addition to what I learned about “how” to get work done, it was Dennis who first identified my potential to one day lead as a senior human resources generalist, and he regularly nudged me about my capability and capacity to evolve beyond a specialist in I-O psychology. Today, I serve as the Senior Vice President of Human Resources for the Home Depot and I am grateful for the seeds he planted and watered so many years ago. Today several of my HR colleagues comment on graduating from the “school of Arlette Guthrie” when referencing their ability to present human capital information in a succinct and impactful way. Though he may have been before their time, what they really mean is they’ve actually graduated from the “school of Dennis Donovan” because I continue to apply and share those learnings today.

Dennis hired me to join the Cerberus Operations and Advisory Company (“COAC”) as Practice Lead for portfolio company executive staffing. Dennis was COAC’s Chief HR Officer at that time. The breadth and depth of Dennis’ hands-on multi-industry leadership experience in operations and human resources, coupled with his incomparable ability to mentor others resulted in extraordinary growth for me as a professional during the 5 years that we worked together. In addition, my career path to becoming the Chief HR Officer at a Fortune 500 company was accelerated. Cerberus’ Founder and Sr. Managing Directors utilized Dennis’ operating expertise on the firm’s most challenging projects. And Dennis gave his team the opportunity to support those projects as well. He utilized a cadence of workstreams with multi-functional teams across Cerberus to unlock the value of its investments. Dennis’ high level of value-creating achievements led to his appointment to Vice Chairman, Senior Executive and Director, and Co-Lead of Cerberus Operations and Advisory Company, Cerberus Capital Management.

“Home Depot’s founders firmly believed that if you take care of associates, they’ll take care of the customer, and our Success Sharing plan makes that value come to life,” explains Dennis Donovan, Executive Vice President of HR at Home Depot. “We are committed to being an Employer of Choice, and know that engagement drives customer satisfaction, and customer satisfaction drives business results. So if Home Depot’s talented associates are, in fact, our customer service differentiator, we wanted to find a way for every associate to get ‘skin in the game,’ and mobilize everyone around the rewards structure to drive high engagement in the workforce.”

Designed by Donovan and his team, the Success Sharing plan easily gained senior management’s support, thanks in part to its focusing associates on a common goal: extending and expanding sales. Under the plan, when a store meets its sales plan for a six-month period, a percentage of anything over and above that plan is put into a pool and divided among the eligible associates at the store.

Payouts from the plan are made at jubilant All Store Meetings and can be quite an event, with some stores hiring DJs or entertainment to celebrate the store’s performance.

To date, results from the plan have been impressive. Home Depot paid out $47 million to associates through the Success Sharing plan, with almost 50% of Home Depot’s stores Qualifying for the plan by reaching or exceeding their sales.

In addition, the plan has had a measurable effect on Home Depot’s associate engagement.

Success Sharing has not only fueled Home Depot’s growth and rewarded and recognized associates for their contribution, but it’s also significantly reduced Home Depot’s attrition, which goes directly toward improving the bottom line

“HR at Home Depot is focused on continuous innovation for the business,” says Donovan. “Our ability to attract, motivate, and retain knowledgeable, approachable, and engaged associates fuels our success and drives a sustainable competitive advantage.”

Thanks to such efforts, The Home Depot was ranked No. 1 among the top military-friendly employers last year by G.I. Jobs magazine and was honored with a Secretary of Defense Employment Support Freedom Award.

“Change must be systemic and sustainable,” emphasized Dennis Donovan BBA, MSBA, in a 90 -minute presentation and workshop for MBA students.  Widely admired as a corporate change agent, the Isenberg alumnus has made his mark in key executive positions with GE, Raytheon, Home Depot and Cerberus Capital Management. He is currently President & CEO of Beacon Advisors International, his global consulting firm.

“If competitive advantage is the end game, change is the common denominator. Organizations that change effectively win, and those that don’t lose – it’s that simple. With that said, systematic and sustainable change require a defined process to succeed in a business transformation.

The Isenberg grad illustrated this and other rubrics through a Fortune 100 company case study that revealed quantum organizational change, where he was engaged in a large business transformation. When a new CEO with a mandate for change hired Donovan, the company’s earnings and growth had stalled following years of successful performance. Donovan discussed potential drivers for this performance which focused on the organization not adapting to changing market dynamics and lacking contemporary infrastructure to execute effectively.

Plan. Execute, And Transform

Donovan then assembled the Isenberg students into small groups, charging them – “If you were on my job what would you do, and how would you get it done.” After a lively group interaction, Donovan took the students through his own detailed, multifaceted transformation process which he has deployed at many companies. The Process for Change includes: Link change to competitive advantage; Understand the risks and opportunities in the marketplace, workplace and the community [media, government and public]; Mitigate risks and exploit opportunities through strategic, operating and resource planning; execute this planning through direction, people, process, metrics, systems and structure; and, forward integrate change to your customers and partners – and backward integrate change to your suppliers. Six years after the start of this case study turnaround process – sales doubled, earnings per share increased more than 150% and dividends increased more than 300%.

In closing, Donovan said “I built a great foundation for my career here at Isenberg. This allowed me to join one of GE’s highly acclaimed management development programs after completing my master’s in business. I found my educational experience has been competitive with the best talent in the marketplace and allowed me to achieve and advance my career beyond my expectations. Be confident as you consider internships or your post-graduation career opportunities – you’re really in a great program.

If Change Management is the new mantra of corporate America, Dennis Donovan is its guru. In just five years, Donovan and the leadership team at The Home Depot have leveraged the power of human capital to transform the “Big Box” retail giant into a model of efficiency and profitability that has made organizations from AARP to the US Army eager partners.

His title of “Executive Vice President, Human Resources” does not begin to define Donovan’s role in The Home Depot corporate culture, one that he has helped to restructure from the ground up.

His work is widely recognized. Donovan was named HR Executive Of The Year by HR Executive magazine. He gave the keynote speech at the White House for the inaugural meeting of the government’s Chief Human Capital Officers. He is a Fellow in the National Academy of human Resources and has participated on numerous boards and committees for such organizations as Jobs for America’s Graduates, Inc (JAG), the Human Resource Institute, the U.S. Council for International Business, the Human Resources Policy Association, and the Center for Advancing Human Resources Studies.

Like any great change agent, Dennis Donovan draws readily from the sum of his experience to shape the business architecture he advocates today.

“I’ve worked change in organizations all around the world – Asia, the Middle East, Europe, and Latin America. And I was lucky to have been in the right place at the right time.”

The architecture reflects Donovan’s career-long penchant to look beyond what his job description required to be a catalyst for Big Picture improvements. He has found his legal education to be an integral component in his approach to human resource management as he rose through the executive ranks at General Electric to Vice President of Human Resources for its Power Systems business unit, and as Senior Vice President Human Resources for Raytheon Company before joining The Home Depot . . .

Home Depot’s experience shows-in perhaps the best example I have seen in my 30-year career-that a cultural transition can be achieved systematically, even under less than favorable conditions, not simply through the charisma of the person leading the change but through the use of mechanisms that alter the social interactions of people in the organization.

The effectiveness of this approach was perhaps most dramatically displayed when a group of Home Depot employees, in a public and spontaneous way, threw their support behind the change in an incident guaranteed to give even the toughest CEO goose bumps.

A Culture Change Tool Box
For large corporations to achieve a major-and permanent-change in business performance, they must create a sustainable change in culture. Aware of this, the leaders at Home Depot identified key aspects of the culture that had to change for the company to meet the new performance goals. They then adopted a variety of standard tools in such a way that they strengthened the business and modified the culture. As the mechanisms took hold, the energy of employees became positive, further accelerating the change.

Assessing and Improving the HR Function
To better manage Home Depot’s workforce and to signal the importance of analytic processes in the new culture, human resources head Dennis Donovan conducted a detailed assessment of HR’s work. He and his staff examined each of the HR processes, such as staffing, career development, and benefits, and mapped the “toll gates” of each process – that is, the sequence of tasks that must be completed to successfully get the work done. They then evaluated how well the HR organization was performing each of these tasks, based on five criteria: world-class design, a focus on process, the use of quantifiable metrics, systems capability (whether the task could be completed on desktop PC’s throughout the company), and simplicity. More than 300 initiatives were identified, all of which were completed.

What makes the process so emblematic of the new Home depot culture, though, is the way that the planning meeting is integrated with HR planning so that decisions about human resources are aligned with strategic and operating decisions. In a retail business, where human capital is vital to success, a sophisticated HR-planning process is crucial.

Donovan’s belief in the importance of process as a way to embed analysis and rigor into the organization was evident in something he did as soon as he came. He worked with his staff to map what he refers to as “toll gates” – the sequence of tasks that must be successfully completed for every HR process. Staff evaluated how well the HR organization was performing each step and identified those that might be improved. The group then designed 300 initiatives aimed at rectifying shortcomings and agreed to carry out all 300 within 3 years.

https://store.hbr.org/product/home-depot-s-blueprint-for-culture-change/R0604C

Among other things, Donovan and his HR team have embarked upon a dramatic business transformation which has included devising more than 300 initiatives that the HR department committed to deliver within the following three years against the backdrop of a dynamically growing business that opens a new store every 43 hours and creates 40,000 new jobs per year. Some of those initiatives included an annual HR Review process, in which the entire HR organization, from the store level on up, analyzes its progress over the past year and learns about new initiatives and programs for the upcoming year; the creation of new pipelines for leadership talent, the replacement of 157 different performance-evaluation processes with one process for the entire organization; the deployment of a Web-based e-learning platform for delivering basic product knowledge and selling skills to employees in every store; the creation of a “desktop HR” system and the implementation of a profit-sharing plan for non-bonus eligible employees.

Over the past 10 years, the HR function has made significant progress in gaining a strategic voice. Today, the most respected HR leaders are business executives first and HR specialists second.

These premier HR leaders not only occupy coveted seats next to their CEOs, but progressive domestic and global boards of directors are also recruiting them.

Dennis Donovan describes effective HR execution this way: “It is the difference between plans that become reality and those that go nowhere.”

He and a coterie of other HR leaders have mastered how to connect HR strategy and execution. Donovan maintains that the “value added of any HR initiative is the result of the quality of the effort, the acceptance of stakeholders, and its execution.”

This paper sets forth Mercer’s point of view on how to accomplish the level of business contribution that leading executives like Donovan have mastered. It reflects our experiences worldwide and describes an HR function business design.

Nearly 2,000 Home Depot employees have been called up for active duty as reservists or National Guardsmen since the start of the US war against terror. Some companies might baulk at the disruption and cost caused by such a drain on their human resources. But for Home Depot, it is a source of pride. “It’s part of this company’s value system to support the military,” says Dennis Donovan, Home Depot’s executive vice-president for human resources. “When you walk into work each day and see all those blue stars, it reminds us of the people working to protect our freedom.”

The company filled more than 100,000 vacancies last year, about a third of them new positions. It knows that any decline in the standard of recruits would have a damaging impact on customer service. Mr. Donovan says that the armed forces are one of the most plentiful and reliable sources of the skilled and disciplined workers Home Depot needs to run its stores and assist customers. More than a tenth of the company’s 100,000 vacancies last year were filled by veterans, prompting G.I. Jobs, the magazine for military jobseekers, to name it America’s most military-friendly employer.

“Home Depot’s programme, called Operation Career Front, is supported by the US Departments of Defence, Labour and Veterans’ Affairs, which help the company contact departing servicemen through job centres and government websites. Much of Home Depot’s efforts are focused on attracting Junior Military Officers – veterans typically in their late 20s, with several years of leadership experience in the forces. “These are terrific people who tend to make the transition to civilian life well,” says Mr. Donovan. “At a very young age, they’ve been leading a large group of people, making decisions and managing budgets. These are enviable and highly transferable skills.” Home Depot offers junior officers a place on its Store Leadership Programme, a two-year training scheme that ends with a management position in one of the company’s nearly 2,000 stores across North America. Of the 900 people so far enrolled on the programme, more than 500 are former junior officers.”

Frederico Juarbe, US assistant labour secretary for veterans’ employment and training, praises Operation Career Front as a model for other companies.

Reinforcing its support for the military, Home Depot has pledged $1m to carry out repairs and maintenance to the homes of soldiers serving overseas. “While they are protecting our country, we are protecting their home front,” says Mr. Donovan.

Home Depot’s experience shows-in perhaps the best example I have seen in my 30-year career-that a cultural transition can be achieved systematically, even under less than favorable conditions, not simply through the charisma of the person leading the change but through the use of mechanisms that alter the social interactions of people in the organization.

The effectiveness of this approach was perhaps most dramatically displayed when a group of Home Depot employees, in a public and spontaneous way, threw their support behind the change in an incident guaranteed to give even the toughest CEO goose bumps.

A Culture Change Tool Box

For large corporations to achieve a major-and permanent-change in business performance, they must create a sustainable change in culture. Aware of this, the leaders at Home Depot identified key aspects of the culture that had to change for the company to meet the new performance goals. They then adopted a variety of standard tools in such a way that they strengthened the business and modified the culture. As the mechanisms took hold, the energy of employees became positive, further accelerating the change.

Assessing and Improving the HR Function

To better manage Home Depot’s workforce and to signal the importance of analytic processes in the new culture, human resources head Dennis Donovan conducted a detailed assessment of HR’s work. He and his staff examined each of the HR processes, such as staffing, career development, and benefits, and mapped the “toll gates” of each process – that is, the sequence of tasks that must be completed to successfully get the work done. They then evaluated how well the HR organization was performing each of these tasks, based on five criteria: world-class design, a focus on process, the use of quantifiable metrics, systems capability (whether the task could be completed on desktop PC’s throughout the company), and simplicity. More than 300 initiatives were identified, all of which were completed.

What makes the process so emblematic of the new Home depot culture, though, is the way that the planning meeting is integrated with HR planning so that decisions about human resources are aligned with strategic and operating decisions. In a retail business, where human capital is vital to success, a sophisticated HR-planning process is crucial.
Donovan’s belief in the importance of process as a way to embed analysis and rigor into the organization was evident in something he did as soon as he came. He worked with his staff to map what he refers to as “toll gates” – the sequence of tasks that must be successfully completed for every HR process. Staff evaluated how well the HR organization was performing each step and identified those that might be improved. The group then designed 300 initiatives aimed at rectifying shortcomings and agreed to carry out all 300 within 3 years.

https://store.hbr.org/product/home-depot-s-blueprint-for-culture-change/RO6O4C

Says Nardelli: “A lot of HR people are just theorists. Dennis is the ultimate practitioner. He’s the most effective HR manager I’ve ever known.”

He has started by working with Nardelli to make long-overdue changes. They have revamped the evaluation process: Home Depot used to have 157 appraisal forms; now there are two for 295,000 employees. Salaried associates, from the CEO on down, are rated by co-workers, above and below, on identical criteria such as “gets results,” “develops people,” “drives change,” and “displays character.” Graded on overall performance from A (outstanding) to D (improvement required), they’re paid based on how they score.

Nardelli and Donovan are even creating a leadership institute at Home Depot’s Atlanta headquarters . . . where high-potential executives meet with the CEO. A learning center will offer courses on leadership, merchandising, store planning, financial operations, and Six Sigma, of course. “They are building the most systematic teaching organization that I’ve seen in a retailer,” says Noel Tichy, a management professor at the University of Michigan Business School who once ran the Crotonville facility. “Wal-Mart does a great job training people in the stores, but at Home Depot there’s more of a mindset to build leadership throughout the organization.

When most human resources executives talk about their achievements, they might describe a new talent management system they implemented or a compensation program they designed. Donovan is proud of his work in these areas as well.

But when asked which past accomplishments he is most proud of, Donovan talks about how he worked closely with other executives at his former employers General Electric and Raytheon to grow the companies.

When Donovan talks about his time as senior vice president of human resources at Raytheon, he describes how he and the management team “redefined the metrics being used” to assess the entire business.

In other words, he sounds more like a CEO than a head of human resources.

How does your approach to workforce management differ from a more traditional approach?

If people ask me what does HR do, I say there are two basic things. One is you put in a process for change and you populate that process with high-impact initiatives. Some people have titles like chief human resources officer or chief human capital officer. I think of it as a chief change officer. HR is integral to bringing on change and transforming the business according to various metrics.

Shortly after I started at Home Depot, I got in front of every store manager and district manager to cover the change management process so that people could visually see how this would all come together. The creation of the merchandising business went so smoothly because we had that buy-in.

This is a company that in five years — five very tough years given 9/11 and everything else that has gone on — has moved from $45 billion to $81 billion. It took 22 years to get to $45 billion, and in less than six years we have doubled the size of the company (based on an estimate of reaching $90 billion this year).

We have more than doubled earnings per share. Dividends to share owners have jumped to 60 cents from 15 cents, and this is a business that needed major transformation. We have taken store count from 1,200 to over 2,200, and we have created a building supply company with over 900 branch offices. We have done 38 acquisitions in the last two years. Around 90 percent of acquisitions fail to meet pro forma, but all 38 of ours have met or exceeded pro forma. We have added over 120,000 new net jobs to Home Depot.

I had the pleasure of working with Dennis for six years at The Home Depot. Having now led HR organizations at a number of companies, including Ventana Medical Systems, Polycom and Workday, I can say with confidence that leaders like Dennis are rare. When he joined the The Home Depot, no one could have predicted the HR transformation he would bring to the function, as he redefined the talent strategy and brought a high level of executional rigor to the organization. He has extensive global business experience and is skilled in navigating highly complex situations. Few leaders are as disciplined as Dennis, with high standards, clear accountability and an eye for talent. He’s passionate about developing others and there are many CHROs today, such as myself, who recognize the substantial impact his leadership had on our careers.

Dennis is one of the most strategic, laser-focused, hard-working executives I know. Dennis hired me into my first role at GE, and subsequently brought in my firm, ISHR Group, to provide executive assessment and leadership development services at Home Depot and Cerberus Capital Management. What makes Dennis unique from other Human Resource leaders is his ability to always see the strategic impact of his decisions across the entire business equation. He views his role as business advisor, as opposed to a functional leader. He desires to effect real change, always searching for ways to improve the current state. His ability to focus on long-term goals, and then execute plans to accomplish those goals, is always fascinating to watch. Dennis brings an operating mindset that encompasses the entire enterprise and does not operate in silos. He has a mind like a steel-trap, tremendous energy, and a work-ethic like no other. He builds strong relationships, and is inspired by doing what is right for the greater good. Dennis is also a wonderful mentor who makes it a priority to develop talent. He is the consummate professor, always ensuring that he is teaching and leading.

Dennis is one of the founding fathers of modern HR and one of the 2-3 best to ever carry the CHRO title. He’s been a stellar CEO consigliere, a turnaround expert, a thought leader and a renowned HR operator. He was one of the early pioneers in using meaningful people analytics to directly drive business outcomes and has long been considered a master at working through complex Labor issues. Along the way, Dennis mentored and developed countless HR professionals into leading CHROs and had a meaningful imprint on today’s HR landscape. I’ve been fortunate to call Dennis a friend, mentor, and thought partner for the past 15 years!

Dennis Donovan is one of those rare leaders who possess both serious business chops and an understanding of how to motivate and manage teams. Having worked with Dennis during his time at The Home Depot, I had a front seat to his exceptional ability to develop and drive a people strategy that lifts up every part of an organization. Dennis brings both vision and operational excellence to his work, thinking carefully through the most detailed of project plans while balancing the overall strategic objectives of any initiative. He brings out the best in his team by bringing everyone around the table – balancing open discussion with a coaching orientation – which always results in a stronger finished product. Dennis has been a great mentor and a leader in our field, working to advance the practice of Human Capital and the development of the next generation of leaders.

My experience with Dennis started years ago when he was Labor Counsel, Area Labor Relations Manager and Chief Negotiator for GE’s operations in Pittsfield, Massachusetts which included the Plastics, Transformer and Defense businesses. I was a Labor and Employment lawyer with the Boston firm of Foley, Hoag & Elliott working with him on litigations and cases before the National Labor Relations Board. What impressed me about Dennis was the combination of two faculties he possessed in more than ample measure. The first was his studied focus on what I call a motivational search—i.e., what is driving the other side’s behavior. The second was his astute appreciation of what kinds of compromises are tolerable and what kinds are not due to their potential for constraining the company’s flexibility to respond to changed circumstances down the road. Dennis’ ability to hypothesize changed scenarios was quite impressive. When it comes to formulating possible resolutions, Dennis characteristically would think out of the box. It was clear to me early on that Dennis’ career would take the impressive trajectory it has over the years.

As Chief Executive Officer of Reydel, I had the privilege to work with Dennis Donovan who was member of the Board of Directors and Compensation Committee – and served as an Advisor to the management team. Reydel is a $1B automotive interior systems business headquartered in France with 27 manufacturing facilities, just-in-time assembly sites and technical centers in Europe, South America and Asia.

Dennis and I worked together directly in many areas of the business. As a Board Director and Member of the Compensation Committee, his expertise and experience significantly contributed to creating an effective stand-alone company from a complicated carve-out from Visteon. As an Advisor, Dennis always provided sound advice and counsel in any situation. His operational, human resource and international skills were clearly evident and leveraged to successfully launch multiple business initiatives to achieve Reydel’s successful turnaround. He also partnered with me and the CHRO to put in place human capital platforms including new organizational designs, critical C-level staffing, performance management process, various compensation plans, labor relations initiatives and leadership assessment and development. During our interactions we could mix practical items (he was always keen on visiting our factories) with theoretical approaches which was key to effective problem solving and decision making. These are examples of his contribution, but Dennis offered much more since he not only strongly supported the business, he was part of it – and his guidance was invaluable.

I have known Dennis Donovan for over three decades and have had the good fortune of working with—and learning from—him at various times and in various settings over that period. From Fortune 50 public companies at the top of their games to distressed privately held lower middle-market firms struggling to survive, I have watched Dennis time and again cut through numbing complexity and tactical disarray to lead management teams down a path to stellar results.

Dennis’s expertise spans vast latitude and longitude. Few, if any, have attained the level of profound knowledge and experience across all facets of human resources that Dennis has mastered over his career. Dennis literally “wrote the book” on many of the HR best practices found today in the most admired global companies (as is reflected in the numerous awards and recognitions he has received from virtually every professional organization of consequence). Moreover no one has served as a mentor to so many currently sitting in CHRO chairs across every sector of the economy, leaders who attribute no small measure of their success to Dennis’ generativity and wise counsel. As a former Donovan protégé once said to me, “Whenever my back is up against the wall, I pause and ask myself, ‘What would Dennis do?’” But Dennis is more than a HR guru with few peers; his comprehensive business acumen and strategic wisdom make him a much sought-after counselor and director to CEOs and board chairs across today’s global business landscape.

Simply put, Dennis has an uncanny nose for sniffing out potential value and a singular gift for rallying teams around a plan for realizing that potential.

I have been a French qualified lawyer in Paris for over twenty years, leading the employment practice of Ashurst LLP for more than ten years and now Partner in charge of the employment practice in France of GIBSON DUNN. I have had the chance to work with Dennis Donovan as I was advising one of the top clients of my firm, for whom Dennis was leading this project. Our client needed us to advise, prepare and implement critical employment transactions. Needless to say, this project required comprehensive planning and flawless execution to assure all client objectives were met.  I have been very impressed by the way Dennis was heavily involved in the daily preparation of this case and how vital this was in getting things done on schedule. I was also very impressed to see how fast he grasped the complexities of French employment law requirements, known as one of the most complex employment legislations worldwide. Dennis managed to get this done quickly, in both a cost and time effective manner for our client. In achieving this, he adeptly managed the expectations of all parties concerned and treated everyone in the most respectful and amicable manner, which was key to ensure that the desired results were achieved with no adverse reputational consequences. On top of that, it is a great pleasure working with Dennis who is a consummate professional with a very pragmatic approach.

Dan Kaplan

Senior Partner, HR Officers Practice
KornFerry International

Dennis is one of the founding fathers of modern HR and one of the 2-3 best to ever carry the CHRO title. He’s been a stellar CEO consigliere, a turnaround expert, a thought leader and a renowned HR operator. He was one of the early pioneers in using meaningful people analytics to directly drive business outcomes and has long been considered a master at working through complex Labor issues. Along the way, Dennis mentored and developed countless HR professionals into leading CHROs and had a meaningful imprint on today’s HR landscape. I’ve been fortunate to call Dennis a friend, mentor, and thought partner for the past 15 years!