Business Sense by Al Shams

Several weeks ago I had the pleasure of spending 90 minutes with Home Depot co-founder Bernie Marcus to learn how his values, attitudes, perseverance and actions led him to succeed as a businessman and a human being.

Bernie Marcus

Bernie Marcus

My goal with this article is to learn what events and thoughts shaped his life, how he reacted, and how they led to his success. A few readers, inspired by his actions, in turn will positively affect a few others, creating a chain reaction of goodness.

Formative Years

Bernie was born in 1929 in Newark, N.J., to a loving family with meager resources even before the Depression hit. His father was a carpenter who worked long hours. His mother had the primary impact on his life and his attitudes; from her, he learned the following values:

  • Work hard; do not expect a handout.
  • Be optimistic; look for an opportunity in each problem.
  • Give back to show appreciation for what you have received.
  • Find a way to overcome adversity.
  • Do your best. Do not dwell on mistakes, and look to make things better.

A Difficult Time

By the late 1970s, Bernie was almost 50 years old, a family man, and a businessman who made a good living as CEO of Handy Dan, a 44-store home improvement chain on the West Coast. The chain was held by Daylin, a retail conglomerate that had filed for Chapter 11 bankruptcy protection a few years earlier. Daylin was run by Sanford Sigoloff, a turnaround expert to whom Bernie reported.

Sigoloff had an abrasive, combative management style, leading to a personality clash and ultimately to the firing of Bernie, Arthur Blank and Ron Brill. A campaign of personal attacks on Bernie and his team soon followed.

Fortunately, Bernie had forged a good relationship with a Daylin board member, Ken Langone, who assured Bernie that his firing was a stroke of good luck. He said he would raise capital to start up a new-concept home improvement chain Bernie had been dreaming of.

The transition from Handy Dan to Home Depot was traumatic and challenging. Although he had many other offers, Bernie was determined to be his own boss, to implement his own management style and to be responsible for the success of the business.

Home Depot Operating Points

Home Depot became a retailing success story through some of these points:

  • All team members were treated with respect, compassion and concern.
  • Bernie’s goal was to empower each employee and to tap into that person’s hopes, dreams and desire for positive recognition.
  • Bernie realized that as CEO he did not have all the answers, but he believed that employees on the floor dealing with customers and operations had many of the answers. The guy driving the forklift probably knew a way to improve that function. The guy unloading a lumber truck probably knew a more efficient way to perform that task. The person handling returns likely saw a way to improve that effort.
  • The challenge for the leader is to inspire and energize employees to be innovative, creative and think like an owner.
  • A team member was not punished for advocating an idea that was unsuccessful.
  • The company had a yearly award called the Dumbest Idea. Bernie won on several occasions.
  • Employees showed great respect and appreciation for the customer and always tried to deliver the best value and the best experience.
  • Often, Bernie roamed the store floor, speaking with customers and sales associates. He believed he could learn much by listening to others.
  • Bernie asked customers why they bought certain items but not others. Once when he helped a customer load lumber into a truck, he asked, “Why didn’t you buy nails?” The customer said Home Depot’s nails bent easily. That problem was quickly corrected.
  • Bernie promoted the concept that each store was a part of the community. The store owed its success to the community and had a responsibility to give back to the community.

After the 1995 Oklahoma City bombing, Bernie immediately called the managers of the two Home Depot stores in that city, but neither was available. When one of the managers called back hours later, he told Bernie that the CEO was probably going to fire him, but he and the other manager loaded some trucks with supplies and went to the bomb site to help the victims. Bernie said, “You are not going to get fired; you did the right thing. … I am proud of you.”

During the Atlanta ice storm in January 2014, Home Depot stores stayed open throughout and served as a haven for stranded motorists.

I believe that Home Depot employees had such admiration and respect for Bernie that they were motivated to do their best. They were grateful to be part of a well-led team and to be owners of the company.

  • One of the greatest social programs any organization can undertake is to provide a person a meaningful job in which he can earn a living, provide for his family and contribute to his community.

Incredible Contrast

Bernie and his supervisor at Handy Dan, Sanford Sigoloff, were similar in some respects. Both were the same age, Jewish, smart and well educated in science; had a desire to be successful; and personally experienced the Depression of the 1930s.

Sigoloff had a draconian approach to cutting costs. He drove people through fear and intimidation and was quick to assign blame when goals were not met. He burned through a lot of people and caused much personal distress with his management style.

By contrast, Bernie achieved great operating results by mentoring, energizing, motivating, respecting and encouraging people to do their best. Team members were not penalized if they undertook innovation. The result was an atmosphere of growth through creativity, hope and inspiration.

Shortly after Bernie and his team left Handy Dan, Sigoloff’s career began a long, steady decline. Bernie and his team went on to create thousands of jobs and to benefit consumers worldwide.

Two different ways to manage people, two very different outcomes.

Philanthropy

Even before retiring from Home Depot, Bernie devoted a tremendous effort toward philanthropy on many levels.

Problems affecting his employees or their families were some of his early efforts.

Instead of a 250-foot yacht in Boca Raton named Billie & Bernie, there is a $250 million aquarium in Atlanta that has brought new life to downtown. It provides thousands of jobs and educates thousands of children and adults on the wonders of our planet.

Instead of buying a private island in the Caribbean where he could entertain a few wealthy friends, he launched the Marcus Autism Center, which has saved hundreds of little lives, supported countless families and helped thousands of people live better.

Instead of the Marcus Jet, there is the Marcus Jewish Community Center, which serves the entire community on many levels: spiritual, physical and educational.

Instead of a grand, palatial estate in Buckhead, there is the Marcus Foundation, which has served the community, the state and the nation on many levels.

Some of Bernie’s insights on philanthropy:

  • Don’t wait until you are rich to give back. Each of us in our current circumstances can do some good. Be a blood donor, be an organ donor, serve food to the poor, offer a kind word, send a thank-you card, etc.
  • Charitable acts are even more powerful when the donor and recipient meet on a personal level. The parties should have face-to-face contact.
  • Philanthropy has re-energized Bernie’s life and provided an outlet for his creative management skills.
  • Following up on the idea that providing a job is a good social program, Bernie is focused on helping small-business owners with the Job Creators Network Foundation. The foundation is a voice for real job creators that had been missing from the debate on jobs and the economy. It seeks to help entrepreneurs in all aspects of growing their businesses.
  • Great joy and satisfaction come from helping others achieve their goals.
  • Nonprofit organizations soliciting public money have an obligation to operate in a cost-effective manner; public trust and public resources are not unlimited.
  • While government can be effective on some levels, history has shown that government’s record is poor in creating jobs in a cost-effective manner. Well-run and well-led businesses are far more effective job creators. Government should focus on promoting an atmosphere that is conducive to commercial success. During the past 30 years, government regulation has grown at a rapid pace and has placed an undue financial burden on small, creative companies.
  • Aiding veterans in many aspects of their lives is of great interest to the Marcus Foundation.

Concluding Thoughts

We are all blessed to have Billie and Bernie Marcus in our community, and we have all benefited from their acts of kindness.

There is a saying: “To whom much is given, much is expected.” Bernie Marcus was given an opportunity; added hard work, keen insight, great managerial skills and a willingness to accept risk; and became successful. He has shared that success on an incredible scale.

Al Shams is a Sandy Springs resident, a former CPA and an investment professional with more than 35 years’ industry experience.