When she took over as CFO of the Home Depot Inc. in May 2001, Carol Tome had pretty precise marching orders: Make finance a strategic partner to the company’s business units and aggressively upgrade Home Depot’s information technology. As treasurer for the six years before, she had already begun the job of integrating her functional area into planning and decision making throughout the company. Home Depot CEO Bob Nardelli had handed down the technology mandate, so she expected support in the modernization of the financial infrastructure. And after four years on the job, her efforts in both areas have yielded impressive returns for the company.
While both accomplishments make her a rare breed among her Fortune 500 counterparts, other visionary CFOs have been pursuing similar goals. In fact, it’s a third, entirely unintentional achievement that makes Tome and Home Depot unique–at least, for the moment–among the largest companies: In the course of revamping finance, she created the only department in which all the key positions–CFO, treasurer, controller and head of investor relations–are held by women. “I haven’t focused on the gender or race,” says the 48-year-old Tome. “I just looked for the best person.”
As it happened, the best people included Rebecca Flick, the 40-year-old treasurer, who joined Home Depot in 1996; Kelly Barrett, 41, who was hired as controller in 2003; and 49-year-old Diane Dayhoff, vice president of investor relations, who also came on board in 2003. In a world in which there are still just 10 women CFOs at Fortune 100 companies and only 35 in the Fortune 500, such a cosmic alignment is worth noting.
The female finance executives at Home Depot tend to shy away from sweeping declarations about how their gender influences what they do. But all agree that diversity ranks high as a value at the $73 billion home improvement chain. Half of the company’s customers are women, Tome notes, and it makes sense that the staff’s make-up reflects that of the customers.
For Tome, however, diversity means not only having employees of different races or genders, but, as important, employees with different ideas. She and other Home Depot executives argue that a diverse workforce is important not as an end in itself but because the variety of approaches to problems makes solving them easier. “Looking at [a problem] from different angles, you can come up with a different solution,” says Dayhoff.
Tome’s subordinates clearly admire her, noting her supportiveness and direct way of speaking. “She brought us new tools and new logic and she really had an impact,” Flick says. “And I think that paved the way for the rest of us.” Barrett says that while she didn’t join Home Depot because she would be working for a woman, “it has been very empowering to me to watch Carol and to see the respect that she has here at the Home Depot and to understand why she has the respect, given certain of her qualities of leadership. I’ve gotten a lot out of that, as well as working with other women.”
WIELDING VELVET HAMMERS
Of course, this is not to say that there is a ban on men. To the contrary, male members of the profession will be comforted to know that men still outnumber women in finance at Home Depot; and there are several men holding important finance titles–like Stuart Burgdoerfer, senior vice president of finance for merchandising and marketing–who technically outrank the women on Tome’s finance team.
While Tome is adamant that she hires on the basis of merit, she also stresses the need for women in business to support each other. “Women are still in a minority,” she says, and adds that being supportive can be as simple as sitting next to another woman in a meeting, rather than choosing a seat across the table.
In fact, Tome formed an organization for all of Home Depot’s female executives at the rank of director or higher, which she calls the Velvet Hammers. “It was very apparent to me that the women in our [company] were not leveraging their relationships,” says Tome. The group encourages networking, invites professional women to speak at its meetings and raises funds for a non-profit group, Girls Inc. “That organization has really taken off,” Tome. “I would love it if we could see Velvet Hammer-like groups in every company.”
So what’s it like to have a department with such a heavy concentration of women executives? Treasurer Rebecca Flick cites finance’s efforts to support and nurture its employees as a reflection of its female leadership. The department sponsors a number of mentoring and education programs, like the Finance Development University, a three-day intensive course that’s offered a few times a year for promising entry- and mid-level managers. Most notably, since Tome took over, the internal audit department has become home to a leadership program that puts new hires through a two-year rotation and then sends them out as leaders not only for finance, but for other parts of the company as well.
Finance is the only group at Home Depot’s headquarters that holds an annual career fair at which the various parts of finance host booths and explain what they do and what job opportunities they have available to any interested employee. The department also puts on an annual award ceremony at which it gives out “CFO” awards to about 50 employees, and it just held its first Finance Fun Day, with food, games and entertainment that included a karaoke contest featuring top finance executives.
“I think you have a greater chance of being productive and leading your team to produce results if you do care about them and you’re inclusive and you listen to them,” Flick says. “With the workload we have and the demands we make of people, to have them come in here and bust their ass and then we don’t care, that’s the easiest way to lose your team and have 100% turnover every single year. And then look at the impact on productivity.”
In fact, “being the best place to work” is part of the finance department’s mission statement, and Tome emphasizes the business logic behind that. “There’s competition for talent in the world today,” she says. “We want to make sure that when people say, ‘I have choices, I can select a company to work for,’ that they select us.”
When Tome joined Home Depot in 1995 as its first treasurer, she was also the first officer hired from the outside. From the start, getting the finance department involved in strategic decisions was her goal, she says, although the company wasn’t ready at that point. Strategic finance wasn’t the buzzword back then that it is now, but Tome says it has always been her main interest. “I happen to be a finance practitioner, but I’ve always been on the strategy side of the business,” she says. “It’s really what we can do to influence business that’s the exciting part.” She traces that interest back through her career, from her first job as a commercial lender at a bank, where she devised financing solutions for companies. Tome then went to Johns Manville Corp. as it was reorganizing to emerge from bankruptcy and stayed on to work on acquisitions for the company. Later, she was treasurer at Riverwood International Corp. as it went public.
Even before she was named CFO, Tome started to deploy finance executives into Home Depot’s operational units. Early on, she had to be persuasive. “Just trust me,” Tome says she would tell executives, “you’re going to like this.” She recalls a merchandising executive who came back to her after a few months and said, “‘You know what? I wouldn’t make a single decision without my finance partner at my side.’ It was like music to my ears,” she says.
Tome credits the support she got from Nardelli, a General Electric Co. executive who was hired as Home Depot’s president and CEO in late 2000. “Bob understands the value of a strong finance organization and the impact a strong finance organization can have on a company,” she says. Tome adds that when executives saw Nardelli working with her and consulting her, it helped persuade them to have finance executives on their teams.
Susan O’Farrell, the senior director of financial operations, was the first finance person to join a store division as controller back in 2000. O’Farrell says that it’s much easier to influence decisions when you’re involved from the start. “If you’re there for the upfront discussions, you understand the business context of what’s going to change and why, versus [getting] some call later on, ‘Can you do a spreadsheet for me?’” she says. “Truthfully, you’re out in the cold if you’re doing that.”
Over time, finance has placed executives to serve as controllers in the company’s store divisions, and as finance leaders in its operating units and merchandise groups, all of whom report to finance as well as to the leader of their business unit. “We’ve got finance people supporting everyone now,” Tome says. “It’s the model I envisioned, which is decentralized decision support: You put people next to the business leaders and you drive the heck out of the business.”
MORE SOFTWARE, FEWER HEADS
Since Nardelli’s arrival, the company has invested a lot to upgrade its information technology infrastructure, which was neglected during the 1990s as the company concentrated on opening new stores. In the last few years, Home Depot has invested $600 million annually in IT. As part of that effort, in 2004, the finance department undertook the biggest implementation ever of SAP AG’s financials and general ledger system, at the same time it was complying with Section 404 of the Sarbanes-Oxley Act.
Tome points out that her finance department has accomplished all of this while its head count was being chopped. There are currently just over 1,000 employees in finance, down from 1,500 in 2001, when she became CFO. “And we doubled our store count in that time,” Tome adds. “So we’ve driven productivity gains in a company that has had significant growth. That is, I think, a tremendous accomplishment of the team.”