Herman Miller.

Herman Miller: Role Model in Employee and Environmental Relations

Case Summary and Questions for debate

* The company had been a model for almost 70 years - until the 1990's

EMPLOYEE RELATIONS

* Used as example of superb employee relations in business text books like

o A Passion for Excellence

o The 100 Best Companies to Work For in America

* 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 employees

* DuPree family brought their devout, faith influenced values to the company in various ways:

o Kind, gentle tones with employee communications

o Profit sharing and employee incentive programs (before they were popular)

o Participative management methods

o Silver parachutes for those who might lose their jobs

o Considered the employees as vice presidents

o Salary of top executives were not more that 20 times the average wage of the line worker

o Evaluations given to and by employees every six months

* Results and evidence of Excellent Employee Relations include

o Loyal workforce

o Development and movement from within the company

o Gifted design teams

o Commitment to doing what was right (rather than what was best)

ENVIRONMENTAL RELATIONS

* Stopped using two species of trees for their rosewood signature piece "Eames chair" when it was discovered they came from vunerable rain forests

* 90% cut in trash hauled to landfills

* Built $11 million waste-to-energy heating and cooling plant resulting in $750,000 annual savings in fuel and landfill costs

* Ceased use of Styrofoam cups and distributed 5,000 mugs to compensate

o 'on spaceship earth there are no passengers . . only crew'

* 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's

* 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 increases

* Net income as percent of revenue declined steadily to .4% in 1995

* Hon Industries percent of revenues two to three times better in 90's

* Decline in market of office furniture - basic shift in demand / technology

* Stock unchanged from 1985 to 1995

* Increased competition from Office Depot and Office Max

CHANGES MADE

* J Kermit Campbell name first 'outsider' CEO in 1992

* Max DePree retires and Campbell takes chairman position in 1995

* "survival more important than preserving reputation of pristine employee relations"

* Quick and severe changes made

o Top executives fired

 CFO

 head of workplace systems division

o additional discharges and forced early retirements

o closing of several showrooms

o Texas and New Jersey plants closed

* Two months later, new chief executive named, Michael