Herman Case

Companies list in both 2008 and 2010. The three high-technology nerves s select for these lists were Microsoft, Cisco, and Google. distant most firms, especi solelyy those in mature industries and most of its office furniture rivals, Herman moth miller had pursued a path distinctively marked by reinvention and re contracttingal. This path had served it well oer the decades. It survived the gravid Depression primordial in its history and multiple recessions in the 20th century In the early part of the 21st century, it recovered from the dot. Com bust.In 201 2, Herman moth miller once again was veneering turbulent and uncertain economic conditions. Would its propensity for using innovation to reinvent and re wise its business once again eitherow the gild to din and grow? How far and how fast might the political party be satisf makeory to push its annual revenues above the 201 1 train of $1. 6 one thousand thousand? COMPANY BACKGROUND Herman Millers roots went congest to 1905 and the head Furniture keep comp any(prenominal), a manufacturer of tralatitiousistic bedroom suites in Zealand, Michigan. In 1909, it was renamed Michigan Star Furniture Company and hired Dirk Jan De Pre as a clerk.De Pre, became president in 191 9 and four around age later convinced his father-in-law, Herman Miller, to purchase the absolute majority of h ares De Pre renamed the corporation Herman Miller Furniture Company in recognition of Millers support. In 1 927, De Pre committed himself to treating solely workers as individuals with special talents and potential. This occurred later he visited the family of a millwright who had died unexpectedly. During the visit, the widow read approximately numbers Upon asking the widow who the poet was, De Pre was surprised to learn it was the millwright.This led him to wonder whether the millwright was a worker who wrote poetry or a poet who worked as a millwright. This story was part of Herman Millers somatic culture , which int wipe knocked out(p)ed to generate respect for exclusively employees and fueled the quest to stop the diversity of gifts and skills held by every. In 1 930, the United States was in the Great Depression and Herman Miller was in financial trouble. As De Pre was looking for a elan to save the fraternity, sarin Rhode, a determinationer from bleak York, approached him and told him active his ante uping philosophy.Rhode whence asked for an opportunity to design a bedroom suite for a fee of $1 ,OHO. When De Pre reacted negatively to such a fee, Rhode suggested an alternative payment plan-?a 3 percent royalty on the furniture sold-?to which De Pre agreed, figuring that there as nothing to lose. A few weeks later, De Pre true the- prototypic designs from Rhode. Again, he reacted negatively. In response, Rhode wrote De Pre a letter explaining his design philosophy Horst, converse simplicity no surface enrichment, no carvings, no molding, and second, furniture should be anonymous.People are Important, not furniture. Furniture should be physical exertionful Rhodes designs were antithetical to traditional designs, but De Pre saw merit in them and set Herman Miller on a course of aim and selling furniture that reflected a way of life. In 1 942, Herman Miller produced its first of all office furniture-?a Gilbert Rhode sign referred to as the Executive Office Group. Rhode died two eld later, and De Pre began a search for a unsanded design leader. After reading an phrase in Life magazine somewhat designer George Nelson, De Pre hired Nelson as Herman Millers first design director.In 1 946, De Pre hired Charles and Ray Names, a husband-and-wife design squad found in Los Angels. In the same year, Charles Earn sees designs were become in the first one-man furniture exhibit at New Works Museum of Modern Art. Some of his designs became part of the museums permanent collection. Many sources were attend toful in providing corporal for this case, mSST articulacy employees at Herman Miller who generously shared their clock time and viewpoints about the company to serve up ensure that the case accurately reflected the companys practices and culture.They provided many a(prenominal) an separate(prenominal) resources, including internal documents and stories of their mortalal experiences. In 1 950, Herman Miller, under the guidance of Dry. Carl Frost, a professor at Michigan State University, became the first company in the state of Michigan to implement a S dischargesion purpose, a productivity incentive program devised by labor expert Joseph N. S put upsion. Underlying the Scansion Plan were the principles of legality and justice for eitherone in the company Two major sportctional elements Of Scansion plans were the use of deputations for sharing ideas on amendments and a structure for sharing increased profitability.The human relationship between Frost and Herman Miller continued for at least four decades. During the asses, Herman Miller introduced a number of new furniture designs, including those by black lovage Gerard, Charles and Ray Names, and George Nelson. Specifically, the company introduced the first molded roleglass hold ins and the Names hover chair and ottoman (see Exhibit 1). The Names designs were introduced on NBC Home appearance with Arlene Francis, a precursor to the Today show. Also in the asses, Herman Miller began its first overseas foray, selling its products in the European market. In 1 962, D. J.De Pre became prexy of the board and his son, Hugh De Pre, became president and chief executive ships officer. D. J. De Pre had served for to a great(p)er extent than 40 years as the president of Herman Miller. EXHIBIT 1 Names Lounge electric chair and Ottoman During the 1 sass, Herman Miller introduced many new designs for both dwelling house and office. The most notable design was the challenge Office System, the rolls first open-plan modular office arrangement of movable panels and attachments. By the end of the 1 sass, Herman Miller had formed a subsidiary in England with gross sales and market responsibility throughout England and the Scandinavian countries.The company also established dealers in South and Central America, Australia, Canada, Europe, Africa, the Near East, and Japan. In 1 970, Herman Miller went unexclusive and made its first transport offering. The stock certificate was designed by the Names office staff. The company entered the health/science market in 1 971 and introduced the Oregon chair, its first design eased on scientific observation and ergonomic principles, in 1976. In 1 979, in connection with the University of Michigan, Herman Miller established the Facility centering Institute, which pioneered the profession of facility management.The company continued to expand overseas and introduce new designs throughout the asses. By 1 977, more than half of Herman Millers 2,500 employees worked away the production ar ea. The Scansion Plan whence needed to be overhauled, since it had been designed originally for a production workforce. In addition, employees worked at multiple U. S. And overseas locations. In 1 978, an ad hoc committee of 54 people from nearly every segment of the company was elected to examine the need for changes and to put forward recommendations.By January 1979, the committee had developed a last(a) draft. The plan established a new organization structure based on work teams, caucuses, and councils. All employees were given an opportunity to discuss the new plan in small group settings. On January 26,1 979,96 percent of the employees voted to require the new plan. After 18 years as president and CEO, Hugh De Pre stepped stack his younger brother, goop De pre, became chairman and chief executive officer n 1980. In 1981, Herman Miller took a major orifice to become more efficient and environmentally friendly.Its Energy Center generated both electrical and locomote power to run its 1 -million-square-foot facility by burning dissolution. 2 In 1983, Herman Miller established a plan whereby all employees became shareholders. This initiative occurred around 10 years to begin with congressional incentives fueled employee stock ownership plan (ESP.) growth. In 1 984, Herman Miller introduced the Aqua chair, a second chair based on ergonomic principles many other designs followed in the 1 9805. In 1987, the iris non-De Pre family part, Dickered, became chief executive officer.By the end of the decade, Time magazine had recognized the Aqua chair as a radiation diagram of the Decade. Also, in 1989, Herman Miller established its Environmental Quality Action Team, whose purpose was to coordinate environmental programs areawide and involve as many employees as possible. In 1990, Herman Miller became a founding member of the tropical Forest Foundation and was the only furniture manufacturer to belong. That same year, it discontinue using endangered rosew ood in its redrawing Names lounge chair and ottoman, and substituted cherry and walnut from sustainable sources.It also became a founding member of the U. S. Green Building Council in 1994. Some of the buildings at Herman Miller were utilise to establish Leadership in Energy and Environmental visualize (LED) standards. Because of its environmental efforts, Herman Miller received awards from Fortune magazine and the National Wildlife Federation in the 1 9905. Also in the 1 sass, Herman Miller again introduced some groundbreaking designs. In 1 994, it introduced the Aaron chair (see Exhibit 2), which almost right off was added to the New York Museum of Modern Arts permanent sign collection.In 1999, the Aaron chair won the figure of speech of the Decade Award from Businesslike and the Industrial Designers I Society of America. In 1 992, J. Kermit Campbell became Herman Millers fifth CEO and president. He was the first person from outside the company to hold both position. In 1995, Campbell resigned and Mike Evolved was promoted to CEO. Evolved, just 39 years old, had been with a company called Meridian for seven years before Herman Miller acquired it in 1990, so when he became CEO he had been with either Herman Miller or its subsidiary for 12 years.At the time, the industry was in a slump and Herman Miller was being restructured. Sales were approximately $1 gazillion annually. EXHIBIT 2 The Herman Miller Aaron Chair In 1 994, the company launched a product line called Herman Miller for the Home to focus on the residential market. It reintroduced some Of its modern classic designs from the asses, asses, and asses as well as new designs. In 1998, it set up a specific website (www. Home. Com) to pink into this market. Attachments took additional marketing initiatives to focus on small and midsized businesses.It established a network of 1 80 retailers to focus on small authenticity and made a 3-D design computer program visible(prenominal) to midsized gues ts. In addition, its order entries were digitally linked among the company and its suppliers, distributors, and customers to expedite orders and improve their accuracy 3 THE FIRST DECADE OF THE 21ST CENTURY The first decade of the 21 SST century started off spectacularly for Herman Miller, with disgrace sugar and sales in 2000 and 2001.The company offered an employee stock option plan (ESP.) in July 2000, and Time magazine selected the Names molded ply. Judd chair a Design of the Century. Sales had ore than doubled in the six years that Mike Evolved had been CEO. consequently the dot. Com bubble burst and the terrorist attacks of September 1 1 , 2001, shook the U. S. Economy. Herman Millers sales dropped by 34 percent, from more than $22 billion in 2001 to less(prenominal) than $1. 5 billion in 2002. In the same two years, the company saw a decline in profits from a substantiating $144 million to a negative $56 million.In an interview for bewitching magazine in 2007, Evolved sai d, One night went to bed a flare and woke up the town idiot Although sales continued to drop in 2003, Herman Miller returned to reparability in that year. To do so, Herman Miller had to drop its long-held tradition of lifelong employment approximately 38 percent of the workforce was laid off, and an faultless plant in Georgia was closed. Mike Evolved and Brian Walker, then president of Herman Miller North America, met with all the workers to tell them what was happening and why it had to be done.One Of the workers being laid off was so moved by Evolved and Walkers presentation that she told them she mat sorry for them having to personally lay off workers. To re keister the tradition of lifelong employment, Evolved, tit input from many others, developed what the company referred to as the new social contract. He explained it as follows We are a commercial enterprise, and the customer has to be on center stage, so we fork over to first radiation diagram out whether your gifts an d talents study a match with the needs and deprivations of this commercial enterprise.If they dont, then we want to wish you the best, but we do need to tell you that I dont have a job for you right now. As part of the instruction execution of the social contract, the company redesigned benefit plans such as educational reimbursement and 401 (k) plans to be more portable. This done to decrease the cost of changing jobs for employees whose gifts and talents no endless matched customer needs. Herman Millers sales and profits began to climb from 2003 to 2008. In 2008, even though sales were not at an all-time high, the companys profits had reached a record level.Walker became president in 2003 and CEO in 2004. Evolved became chairman of the board in 2004. Then Herman Miller was hit by the recession of 2009. Sales dropped by 1 9 percent, from approximately $2. 0 billion in 2008 to approximately $ 1. 6 billion in 2009. In the same years, profits dropped from $1 52 million to $68 mill ion. In action 2009, Mark Churchman, director of external communications at Herman Miller, predicted that the changes made to recover from the 2001-2003 recession would help the company weather the recession that began in late 2007.HERMAN MILLER IN 2012 Herman Miller had codified its long-practiced organizational respects and published them on its website on a page titled What We Believe. Those beliefs, listed as follows, were intended as a basis for uniting all employees, building relationships, and contributing to communities Curiosity & geographic expedition These are two of our greatest intensivenesss. They he behind our heritage of research- set design. How do we keep our curiosity? By respecting and encouraging risk, and by practicing forgiveness. You cant be curious and infallible.In one sense, if you never make a mistake, youre not exploring new ideas often enough. Everybody makes mistakes we ought to celebrate honest mistakes, learn from them, and move on. Engagemen t For us, it is about being owners-? actively committed to the life of this community called Herman Miller, sharing in its success and risk. Stock ownership is an important ingredient, but its not enough. The strength and the payoff truely come when engaged people own problems, solutions, and behavior. note responsibility, choose to step forward and be counted.Care about this community and make a difference in it. Performance Performance is required for leadership. We want to be leaders, so we are committed to performing at the highest level possible. Performance isnt a choice. Its up to everybody at Herman Miller to perform at his or her best. Our own high performance-?however we measure it-?enriches our lives as employees, delights our customers, and creates strong value for our shareholders Inclusiveness To succeed as a company, we must include all the expressions of human talent and potential that society offers.We value the whole person and everything each of us has to off er, obvious or not so 4 obvious. We reckon that every person should have the chance to realize his or her potential regardless of color, gender, age, sexual orientation, educational background, weight, height, family status, skill level-? the list goes on and on. When we are truly inclusive, we go beyond toleration to understanding all the qualities that make people who they are, that make us incomparable, and most important, that unite us. Design Design for us is a way of looking at the world and how it works-?or doesnt.It is a method for getting something done, for solving a problem. To design a solution, rather than simply devising one, requires research, thought, sometimes starting over, listening, and humility. sometimes design results in memorable occasions, timeless chairs, or really fun parties. Design isnt just the way something looks it sinusitis the way something works, either. Foundations The past can be a tricky thing-?an anchor or a sail, a jumper lead or a launchi ng pad. We value and respect our past without being ruled by it. The stories, people, and experiences in Herman Millers past form a unique foundation.Our past teaches us about design, human shame, leadership, risk taking, seeking out change and working together. From that foundation, we can move forward together with a common language, a set of owned beliefs and understandings. We value our rich legacy more for what it shows us we might become than as a characterisation of what weve been. A Better World This is at the heart of Herman Miller and the real reason why many of us come to work every day. We contribute to a better world by pursuing sustainability and environmental wisdom.Environmental advocacy is part of our heritage and a responsibility we gladly bear for future generations. We reach for a better world by full-grown time and money to our communities and causes outside the company through becoming a good bodily citizen worldwide and even in the (not so) simple act of adding beauty to the world. By participating in the effort, we lift our hard drink and the spirits of those around us. Transparency Transparency begins with letting people see how decisions are made and owning the decisions we make. So when you make a decision, own it.Confidentiality has a place at Herman Miller, but if you cant tell anybody about a decision youve made, youve credibly made a poor choice. Without transparency, its impossible to have religion and integrity. Without trust and integrity, its impossible to be transparent All employees were expected to live these values. Management Mike Evolved remained chairman of the board in 2012, and Brian Walker was president and CEO. Walkers stipend was listed by Bloomberg Businesslike as $693,969 in 2011. The magazine listed compensation for Coos at four competitors as ranging from $778,000 to $973,000.Walker and our other top executives at Herman Miller took a 10 percent pay cut in January 2009 and, along with all salaried wo rkers, another 10 percent cut in March 2009. The production workers were placed on a work schedule that consisted of ix days in two weeks, effectively cutting their pay by 10 percent as well. That the executives would take a pay cut before salaried workers, and one twice as much as that required by workers, was just one way human compassion was practiced at Herman Miller. However, most employees pay cuts and furloughs were ended in June 201 0 when the companys financial performance began to improve.By U. S. Securities and Exchange Commission (SEC) regulations, a publicly traded Company had to have a board of directors. By Herman Millers corporate policy, the majority of the 14 members of the board had to be independent. To be judged independent, the individual as a minimum had to meet the NASDAQ National Market requirements for independent directors (NASDAQ Stock Market ascertain 4200). In addition, the individual could not have any other material relationship with the company or its affiliates or with any executive officer of the company or his or her affiliates. Moreover, according o company documents, any transaction between the Company and any executive officer or director of the Company (including that persons spouse, children, stepchildren, parents, stepparents, siblings, parents-law, children- in-law, siblings-in-law and persons sharing the same residence) must be bring out to the plug-in of Directors and is subject to the approval of the Board of Directors Or the Nominating and Governance deputation unless the proposed transaction is part of a general program available to all directors or employees equally under an existing policy or is a purchase of Company reduces conformable with the price and terms of other proceedings of similar size with other purchasers. Furthermore, It is the policy of the Board that all directors, consistent with their responsibilities to the stockholders of the company as a whole, hold an equity interest in the compa ny. Toward this end, the.Board requires that each director will have an equity interest after one year on the Board, and within five years the Board encourages the 5 directors to have shares of common stock of the company with a value of at least three times the amount of the annual abetter _or_ abettor paid to each director. In there words, board members were held to standards consistent with Herman Millers corporate beliefs and its ESP. program. Although Herman Miller had incisions, the most frequently referenced work unit was the team. capital of Minnesota Murray, director of environmental health and safety, explained the relationship between the team and the part as follows At Herman Miller, team has just been the term that has been used since the Scansion Plan and the De Peres brought that into Herman Miller. And so I think thats why we use that almost exclusively.The department-? as a department, we help facilitate the other teams. And so they arent just department driven . Teams were often cross-functional. Membership on a team was based on the employees ability to contribute to that team. As Gave Wing lead chemical engineer for the companys Design for the Environment division, described it, You grab the appropriate representative who can best help your team achieve its goal. It doesnt seem to be driven based on title. Its based on who has the ability to help us drive our initiatives towards our goal. Teams were often based on product development. When the product had been developed, the members of that team were redistributed to new rejects.New projects could come from any level in the organization One way in which leadership was shared at Herman Miller was through the concept of talking up and down the ladder. Workers at all levels were encouraged to put forth new ideas. Herman Miller environmental specialist Rudy Barrels said, If they try something they have folks there that will help them and be there for them.. That requires a presence of on e of us or an e-mail or just to say, Yeah, I think thats a great idea. Thats how a tot In the organization works. Because Herman Miller workers felt empowered, a new manager could run onto some startling behavior. Paul Murray recalled, can remember my first day on the job. I took my safety specs 0 if . ND an employee stepped forward and said, Get your safety glasses back on At Company X, Company there was no way they would have ever talked to a supervisor like that, much less their supervisors manager. Its been a fun journey when the workforce is that empowered. The companys beliefs were also reinforced through the Employee Gifts commission and the Environmental Quality Action Team. True to Herman Millers practice of shared leadership, the Employee Gifts direction distributed funds and other sources based on employee involvement. Jay Link, manager of corporate bragging(a) explained the program as follows Our first priority is to honor organizations where our employees are mix ed.We believe that its important that we engender kind of a giving spirit in our employees, so if we know theyre involved in organizations, which is going to be where we have a manufacturing presence, then our giving kind of comes alongside organizations that the/re involved with. So thats our first priority. In addition, all Herman Miller employees could work 16 paid hours a year with a charitable organization of their choice. The company set goals for the number of employee volunteer hours contributed annually to its communities. Progress toward meeting those goals was describe to the CEO. The Environmental Affairs Team, formed in 1 988 with the authorization of Max De pre, had responsibility for such activities as recycling solid waste and designing products from sustainable resources.One of the teams successes was in the reduction of solid waste taken to landfills. In 1 991, Herman Miller was sending 41 million pounds of solid waste to landfills. That figure was down to 24 mill ion pounds by 1 994 and to 3. 6 million pounds by 2008. Such improvements were both environmentally friendly and costiveness. Herman Millers beliefs carried over to the family and the community. Gave Wing related, Ive got the worst lawn in my neighborhood. Thats because dont spread pesticides on it, and dont put fertiliser down. He went on to say that he and his wife had to make a difficult decision in the summer of 2009 6 because Herman Miller had a policy to avoid PVC polyvinyl chloride wherever possible. In restoring their home, they chose fiber cementum board over PVC siding even though the fiber cement board was considerably more costly. Wing said, Seven years ago, I didnt really think about it. Rudy Barrels was involved in a youth soccer association that raised money to grease ones palms uniforms by collecting newspapers and aluminum cans. Barrels said, When Ill speak theyll say, Yeah, thats Rudy. Hes Herman Miller. You should-?you know were goanna have to do this. The com panys beliefs carried over to all functional areas of the business. Some of them were obviously beneficial, and some were simply the way Herman Miller chose to conduct its business.