Herman Miller: Role Model in Employee and Environmental Relations Case Summary and Questions for debate o The company had been a model for almost 70 years – until the 1990′ Used as example of superb employee relations in business text books like A Passion for Excellence The 100 Best Companies to Work For in American Interesting point of how the founder named the company after his father-in-law, giving honor to him who supported the business both in financial start-up and via family The DuPree family maintained a paternalistic relationship with their employee so DuPree family brought their devout, faith influenced values to the company in various ways: o Kind, gentle tones with employee communication so Profit sharing and employee incentive programs (before they were popular) o Participative management method so Silver parachutes for those who might lose their job so Considered the employees as vice president so Salary of top executives were not more that 20 times the average wage of the line workers Evaluations given to and by employees every six month so Results and evidence of Excellent Employee Relations include o Loyal workforce o Development and movement from within the company Gifted design team so Commitment to doing what was right (rather than what was best) ENVIRONMENTAL RELATIONS o Stopped using two species of trees for their rosewood signature piece “Eames chair” when it was discovered they came from vulnerable rain forest so 90% cut in trash hauled to landfill so Built $11 million waste-to-energy heating and cooling plant resulting in $750, 000 annual savings in fuel and landfill cost so Ceased use of Styrofoam cups and distributed 5, 000 mugs to compensate o ‘on spaceship earth there are no passengers… only crew’o Exceeded Clean Air Act requirement with ‘ethically correct’ machines built to incinerate 98% of the toxic solvents from the staining of wood Herman Miller Case Study BUSINESS FROM THE OTHER STAKEHOLDER’S Perspective Herman Miller profits over $40 million in the 1980’so First loss recorded in 1992 of $3. 5 million By 1995, a $1 million company, yet profits down to $4. 3 million Major competitor “Hon Industries” reports steady profit increase so Net income as percent of revenue declined steadily to. 4% in 1995 o Hon Industries percent of revenues two to three times better in 90’so Decline in market of office furniture – basic shift in demand / technology o Stock unchanged from 1985 to 1995 o Increased competition from Office Depot and Office Max CHANGES MADE o J Kermit Campbell name first ‘outsider’ CEO in 1992 o Max Dupree retires and Campbell takes chairman position in 1995 o “survival more important than preserving reputation of pristine employee relations”o Quick and severe changes made o Top executives fired CFO head of workplace systems division additional discharges and forced early retirement so closing of several showroom so Texas and New Jersey plants close do Two months later, new chief executive named, Michael Volkemao Young, driven, charismatic and effective in cost-cutting o Volk ema was from within Herman Miller ranks From 1990 Meridian acquisition o By end of 2000 sales almost doubled to $1. 938 billion Net income percent of revenues increased to 7.
2%o Net income and net profit percentages better than competitor, Hon web Us/0, 1799, a 10-c 489, 00. html Herman Miller Case Study DEBATE QUESTIONS 1. Do the best in employee relations add unacceptable costs? Add costs, yes – unacceptable costs, probably not when considering the benefits that are added when employee relations are such that workers take price and ownership and therefore perform better overall! 2. In an age of impersonal cost-cutting and downsizing, can a company be competitive and conscientious of employee and environmental relations? Why not, one of the edges a company like HMI can have over the competition is that the fact that they really care, and employees, customers, suppliers that know this can benefit – this can give them an edge over the competitor who doesn’t even consider ‘special concerns’3. Were Herman Miller’s problems the result of policies that protect employees and the environment? I don’t think so, at least not entirely! HMI forgot to keep up the changes in times in other areas, such as advertising and distribution improved with 21 st century technology 4. Were those policies unrealistic in the late 80’s early 90’s? a.
Participative management – still a new and un-tested ‘idea’ – most organizations were still very structured by hierarchy b. Profit sharing incentives – gotta love that! c. Opportunities for advancement d. Allowing employees to feel valued and part of tea me.
Job security 5. Do these types of policies add to costs in an unacceptable level? – if these areas are benefiting the company enough, they can always find other efficient manners of cost-cutting and still producing quality! A few really good loyal workers with great benefits can get a lot more work done in less time than many who are out for themselves and really have not concern for the good of the company 6. Were competitors too lean and mean? 7. Was there a better way to handle the inevitable ‘letting go’ of some employees? 8. Were there alternatives? – there are almost always alternatives a. Cutting costs in other areas? b.
Increasing advertising? c. Expanding market?