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Herman location

Formally known as headquarters is located:

Herman Miller, Inc. 855 East Main Avenue Zeeland, MI 49464

HistoryHistoryD.J DePree founded the company in

1923 in small town in west – central Michigan.

He named it Herman Miller after his father-in-law , who provided startup capital.

Through the 1960 and 1970s the company prospered with the expanding office furniture industry.

Since 1968 the company had turned its attention to designing product for a so-called Action Office.

In the 1970s, an enormously successful desk chair called the Ergon was introduced.

Employee RelationsEmployee Relations Used as example of superb employee relations in business text books like

o A Passion for Excellenceo The 100 Best Companies to Work For in America

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 communicationso Profit sharing and employee incentive programs (before they were popular)o Participative management methodso Silver parachutes for those who might lose their jobso Considered the employees as vice presidentso Salary of top executives were not more that 20 times the average wage of the line workero Evaluations given to and by employees every six months

Results and evidence of Excellent Employee Relations include o Loyal workforceo Development and movement from within the companyo Gifted design teamso Commitment to doing what was right (rather than what was best)

Participative ManagementManagement kept a paternalistic relationship

with employees – they practiced a participative management style by involving them in management processes.

Dictatorial

Authoritative

Participative

Democratic

Least

Degree of subordinate involvement in planning and decision making Most

Product Development

Office and healthcare furniture systems and accessoriesFreestanding furniture products for office, healthcare, and learning environmentsOffice and institutional seatingSmall office, home office, and residential furnitureFiling and storage products

Environmental RelationsEnvironmental RelationsBuilt $ 11 million waste-to-energy heating and

cooling plant resulting in $750,000 annual savings in fuel and landfill costs

Employees use 800.000 Styrofoam cups and distributed 5,000 mugs to compensate

Exceeded Clean Air Act requirement with ‘ethically correct' machines built to incinerate 98% of the toxic solvents from the staining of wood

Problem in The Changing MarketSales of office furniture were not expected to grow

at more than 5% Computer technology required fewer layers of

management, leading to general downsizing of office space needs

Aggressive competitors and category killer chains, such as Office Depot that offering good merchandise at prices half or less those Herman Miller

Premium-end of the market chose to reduce costs by using lower-priced furniture

Major promotional Herman Miller reliance on word of mouth rather than advertising

Sales & Profit Performance of Miller Revenue (in millions USD)

YEAR REVENUES TOTAL NET INCOME

PERCENT OF SALES

1985 492 40.9 8.3

1987 574 33.3 5.8

1989 793 41.4 5.2

1991 879 14.1 1.6

1993 856 22.1 2.3

1995 1,083 4.3 0.4

Sales & Profit Performance of Major Competitor, Hon Industries

(in millions USD)

YEAR REVENUES TOTAL NET INCOME

PERCENT OF SALES

1985 473 26

1987 555 24.8 5.5

1989 602 27.5 4.5

1991 608 32.9 5.4

1993 780 44.6 5.7

1995 846 54.4 6.4

Restructuration by Michael VolkemaExpanded the narrow high-end customer base to emerging

and midsize businesses and homes In 3 years spent more than $300 millions on computer

systems and other technology, aimed at assuring speddy delivery, on research and development for new products

Developed the web site to attract consumers, featuring office furniture specially designed for this market

Result:By the end of 2000, sales almost doubled to $ 1.938 billion

and operating income went from $ 1.2 million to $ 140 million (7.2% from sales). Comparing with Hon Industries, revenues were almost the same, but Herman Miller’s net Income was well above Hon’s of $ 106 million (5.2% from sales)

QUESTIONS1. ”A worker-sensitive firm is bound eventually to

face a competitive disadvantages. It cannot control its labor costs.” Evaluate this statement.

Menurut pendapat kami, biaya tenaga kerja dapat dikontrol jika ada perjanjian yang jelas antara pihak management dan pihak karyawan mengenai tugas pekerjaan dan kompensasi yang diberikan Perusahaan. Perusahaan juga harus menentukan anggaran setiap periodenya untuk mengontrol biaya tenaga kerja setiap tahunnya. Selain itu Perusahaan juga harus memberikan kompensasi yang wajar bagi para karyawannya sesuai tugas dan tanggung jawabnya.

Kerugian dalam persaingan disebabkan kurangnya penelitian pasar dan strategi pemasaran kurang efektif selain itu mutu produk juga kurang bersaing dengan produk kompetitor. Perusahaan juga harus memperhatikan kebutuhan pasar dan harga yang dapat diterima oleh pasar.

2. Do you see any risks in Herman Miller lowering its quality and its prices? Do you think it should have done so?

Menurut pendapat kami, risiko yang dihadapi oleh Herman Miller adalah turun image Perusahaan di mata Pelanggan dan Pelanggan akan beralih ke produk kompetitor. Seharusnya Perusahaan melakukan diferensiasi produk dengan memproduksi produk berkualitas tinggi maupun berkualitas standar. Hal ini dilakukan semata-mata untuk memenuhi kebutuhan pelanggan yang menginginkan kualitas tinggi maupun kualitas yang standar. Tujuannya supaya pelanggan tidak beralih ke produk kompetitor. Karena selama ini Herman Miller terkenal dengan produknya yang berkualitas dan harga yang bersaing.

3. What do you think of the “enlightened” policy announced by Max DePree as he retired that henceforth no DePree will ever work for the firm again, in order that able people can have unimpeded career path within the company? Discuss as many facets of this policy changes as you can.

Menurut pendapat kami, kebijakan ini sangat baik bagi jenjang karir karyawan Perusahaan, karena Karyawan diberikan kebebasan untuk mengelola Perusahaan. Tapi DePree juga harus mengontrol operasi Perusahaan sewaktu-waktu dan melakukan pemeriksaan laporan keuangan Perusahaan. Setiap executive dan boardnya harus orang terpercaya dan mampu mencapai target yang telah di tentukan.

4. Evaluate the statement by Dunlap of Scott Paper that “ I see no point in sacrificing100 percent of the employees for the 35 percent who ought to leave.”

Menurut pendapat kami, kami setuju dengan pernyataan ini karena karyawan itu adalah aset bukan beban, yang menjadi permasalahan adalah bagaimana memberdayakan karyawan tersebut agar lebih produktif dan memberikan kontribusi penuh kepada Perusahaan. Seharusnya yang diganti adalah para excutive dan board yang membuat kebijakan-kebijakan yang keliru dan membuat rugi Perusahaan serta manajemen yang tidak kompeten dalam mengelolah operasi Perusahaan. Seharusnya manajemen memikirkan bagaimana memenangkan persaingan pasar dengan memasarkan produk berkualitas tanpa melakukan laid off besar-besaran.

5. What do you think of the decision to forgo using an attractive wood because it was taken from the rain forest, which need to be protected?

Kami setuju dengan keputusan ini, karena dengan begitu Perusahaan turut menjaga lingkungan alam agar terhindar dari Global Warming. Perusahaan yang menggunakan kayu yang dilindungi pemerintah, maka Perusahaan tersebut tidak beretika dalam melakukan bisnisnya karena Produk yang dihasilkan sudah melanggar aturan Pemerintah. Dan Produk tersebut belum tentu disukai masyarakat umum.

6. What would be your prescription for a successful change manager? You might want to compare with Al Dunlap, and with Campbell who only lasted two months at Herman Miller

Menurut pendapat kami, Manager harus melakukan penelitian pasar terhadap produknya, melakukan diferensiasi produk untuk memenuhi kebutuhan pelanggan dan memberdayakan karyawan yang ada serta melakukan pengembangan karyawan dan memberikan kompensasi kepada karyawan yang sewajarnya.