A Company Legend Says a 25-Cent Washer Led to a $100,000 Remodel
In the telling, the co-founder answers a missed sale with a call for a promotion.
Acquired · The Home DepotA company legend told often at Home Depot starts with a customer walking in carrying the kitchen faucet from his sink. It is leaking, and he says he thinks he needs a new one for a couple hundred dollars.
The associate who helps him has plumbing experience. He examines the fixture and tells him no replacement is needed, just a 25-cent washer to stop the leak.
The story goes that the customer is so happy he goes home and tells his family. A couple of weeks later, he returns to do a $100,000 kitchen remodel with Home Depot.
In hardware and home improvement, customer service drives big sales.
In the continuation of the story, someone comments that the boss will probably fire the associate. He could have sold a $200 faucet, and instead he sold a 25-cent washer.
Bernie Marcus, a Home Depot co-founder, hears about it and has the opposite reaction. He says he thinks they should promote the associate, and thanks him for exactly the right customer service mentality.
In the telling, the reward grows into another equity grant for the associate. That part was a joke made in the telling, with laughter, not a reported company action.
Frank Blake, a former chief executive of Home Depot, later said, "The best sign of cultural health is walking into the break room and seeing the associates watching the stock price."
Questions people ask
How can a 25-cent washer fix a leaking faucet?
A faucet washer is a small rubber ring that seals the connection inside the tap. When it wears out, water seeps through and the faucet drips. Replacing the washer restores the seal, often for less than a dollar.
What is an equity grant?
It is a grant of company shares, usually that vest over time. Home Depot gave stock options to salaried staff and let hourly workers buy shares at a discount. An additional grant meant the associate owned a larger piece of the company.
Did Home Depot really want store workers watching the stock price?
Yes, at least for many decades. Blake called it the best sign of cultural health. Ben Gilbert said the company wanted and encouraged that, and David Rosenthal described it as the opposite of prevailing Silicon Valley wisdom, where employees were told not to check the stock price.