Herman Miller

Madelyn Deemter

11-1-16

Business 101 WI

Central Michigan University

Executive Summary

Herman Miller

Herman Miller Inc. was a company that specialized in producing modern office furniture

since 1905. They faced many leadership changes throughout the years, as well as changes

in designers. The company managed to stay true to their core values, which is what

ultimately helped them be successful in the furniture industry.

The company came out with several pieces of furniture, particularly office chairs,

that they are best recognized by. The Aeron, Eames, and Embody chairs all became the

standard by which fashion and function were based off of in the office furniture industry.

Herman Miller expanded to the global platform in an effort to broaden their customer

base by opening facilities across the world.

One of the values that Herman Miller stood by since their conception was the idea

of each individual employee being a valuable asset with their own set of unique skills.

They made it a priority to take care of the people working for them. Another one of

Herman Miller’s core values was sustainability. The company strived to be ahead of the

industry when it came to incorporating environmentally safe substances in their products.

Financially, Herman Miller faced many upturns as well as their share of

downturns throughout the course of their existence. They always managed to bounce

back and seemed to be heading in a positive direction based on recent financial reports.

The company was setting aggressive goals both in terms of sales and sustainability, and it

was largely accredited to the quality of their leadership from top to bottom, as well as the

cohesiveness of their staff.

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History

Herman Miller was founded in 1905 under the name of Star Manufacturing

Company. A young man by the name of Dirk Jan De Pree (D.J.) joined the company at a

low level in 1909, and by 1919 he had become the president (Hench, 1998). In 1923, D.J.

De Pree was running the company, which was financially backed by his father-in-law,

Herman Miller. De Pree’s father-in-law proceeded to name the company after himself by

calling it Herman Miller Furniture Compnay (Manz, Manz, Adams, & Shipper, 2010).

Herman Miller Furniture Company initially did well under the leadership of De

Pree, but then in 1928 sales fell severely and De Pree had major concerns of an

impending bankruptcy. The company was saved by the brilliance of a designer by the

name of Gilbert Rohde, who introduced the idea of modern furniture. It was through

Rohde’s influence that Herman Miller Furniture Company recovered (Hench, 1998).

Gilbert Rohde passed away in 1944 and George Nelson took over the design

department and brought the company into an era of prosperity. Perhaps the most notable

of Rohde’s accomplishments was enlisting the help of Charles and Ray Eames who were

responsible for one of Herman Miller’s most famous products, the Eames Lounge.

George Nelson developed a new logo to be the face of the company, as well as a new

approach to marketing (Hench, 1998).

In 1960, Herman Miller Furniture Company changed its name to Herman Miller,

Inc. (Herman Miller, Inc., 2015). D.J. De Pree stepped down from the company in 1962.

Also in the 1960s, Herman Miller was weakening financially. According to Hench

(1998), this was largely in part to Knoll International, a new competitor. Herman Miller

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set up a research facility in Ann Arbor, Michigan, and consequently released a new line

of products that helped them get back on track, called Action Office. D.J. De Pree’s sons,

Hugh and Max, ran the company until 1987 (Manz et al., 2010).

By 1970, Herman Miller’s net sales were at $25 million (Hench, 1998). 1970 is

also when the company began selling their stock to the public (Herman Miller, Inc.,

2015). According to Hench (1998), by 1980, Herman Miller’s sales were up to $230

million, and they were second in the furniture industry behind Steelcase. By the time

1996 rolled around, their net sales had reached $1.5 billion. A change in leadership was

also made during this time period, when Richard Ruch was named CEO of the company

in 1988, making him the first CEO who was not related to the De Pree family (Manz et

al., 2010).

Herman Miller soon faced an economic downturn during the early 2000s when a

recession hit the United States and world economy. In 2000, Herman Miller’s sales were

at $2.2 billion, but three years later in 2003 their sales had dropped to $1.3 billion.

According to Linda Tischler in her article “Herman Miller’s Leap of Faith” (2006),

during this period of time Herman Miller laid of 38% of their workforce.

After the 2000’s, Herman Miller was able to get back on its feet and maintain its

place as a leader in the furniture industry. According to Herman Miller Inc.’s 2016 Form

10-K, their 2016 net sales were the highest they had been in a decade up to that point.

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Products

Herman Miller primarily produced modern office furniture. They prided

themselves in innovative research on incorporating ergonomics and sustainability into

their products. (Herman Miller, Inc., 2015). Based on Herman Miller’s product website,

some of their most recognizable chairs were the Aeron, Eames, and Embody. The Eames

Lounge was one of the earlier designs and in 2016 they were sold for around $5,000,

depending on customizations to color and wood grain.

In the 1990’s, Herman Miller began a program they called Design for

Environment. They made it a priority to use recyclable materials in their furniture and

they used treatments during production that were not composed of chemicals harmful to

the environment (Rossi, Charon, Wing, Ewell, 2006).

Herman Miller also expanded their product base in an effort to reach different

markets. They produced airport seating, furniture for healthcare facilities, lounge

furniture, work surfaces, and accessories such as lights and trays. (Herman Miller, Inc.,

2015) One of their most famous designs came in 1960 when a designer for Herman

Miller by the name of Robert Propst, who was working under George Nelson, was

responsible for the invention of the first office cubicle (Saval, 2014).

According to Herman Miller’s 2016 Form 10-K, as of 2016 they had facilities

operating in the United States, United Kingdom, Canada, France, Germany, Italy, Japan,

Mexico, Australia, Singapore, China, India, Brazil, and Netherlands. They also opened a

showroom in Africa. Their global presence contributed toward an ease of access and

convenience for customers around the world.

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Work Environment

Valuing employees was something that was embedded in the history of Herman

Miller, going all the way back to the leadership of D.J. De Pree. In 1927, an employee

passed away unexpectedly, and it changed De Pree’s outlook on how he ran his company.

De Pree began to treat his employees as individuals with unique and important sets of

talent. He encouraged people to be themselves, a foundation that Herman Miller

continued to operate on (Adams, 2012). De Pree once said, “Each person was somehow

extraordinary in their own way” (Manz, et al., 2010).

Herman Miller employed a leadership style called “shared leadership.” Operating

under the idea of the shared leadership model, all employees were encouraged to step up

and lead whenever they felt they had expertise or ideas in a given situation, regardless of

their status within the company (Manz et al., 2010). Shared leadership was meant to

create an environment that gave people the confidence to be collaborative and innovative

whether they are the work team leader in charge of a project, or a general member of the

team. Mike Volkema, former CEO of Herman Miller once said, “It’s not the power of the

position; it’s the power of the idea.”

Herman Miller offered jobs to a wide variety of professions. They employed

designers, marketers, advertisers, manufacturers, shippers, accountants, human resource

managers, and supply chain managers, in addition to the executive board.

As of October 6, 2016 Glassdoor.com had 169 reviews of Herman Miller written

by current or former employees. Based on those reviews, Herman Miller had an average

of 3.9/5 stars, and 76% of reviewers would have recommended the company to friend.

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The most reoccurring statement in the reviews was that the company is conscious of

making sure its employees had a healthy balance between their personal lives and their

jobs. Some of the more negative reviews claimed that Herman Miller had no regard for

loyalty and would fire anyone at anytime without warning. An anonymous reviewer

called the upper level management “ruthless,” and “despicable.” Glassdoor.com also

described some of the benefits Herman Miller offered, including: good vacation time,

401k matching, premium health insurance, dental insurance, gym membership, paid

holidays, and tuition assistance.

Herman Miller prided itself in offering employees a creative and engaging

environment where they were pushed to develop themselves and the company. Its offices

were furnished with their latest and greatest modern designs to give employees a positive

environment to work in every day (Hench, 1998).

Anticipated Future

Herman Miller’s resiliency throughout economic hardships proved them to be a

longstanding competitor in the furniture industry. When times were difficult financially,

one of the easiest ways for a company to cut costs was by not purchasing new office

furniture. That is why Herman Miller and its competitors suffered and thrived in

accordance to the state of the economy. That being said, Herman Miller found a way to

survive the Great Depression, many recessions throughout the last century, and most

recently, the Great Recession from 2007-2009.

Based on their history and current financial state, Herman Miller was a company

that was in a position to continue growing and competing in the furniture industry for

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years to come. Their Form 10-K that was released in 2016 showed a steady rise in sales

from 2012-2016. In 2009 and 2010, they faced net sales declines, which were followed

up in 2011 with a high increase of 25.1%.

The Harvard Business Review interviewed the CEO of Herman Miller, Brian

Walker, in December of 2009 to ask him about his vision for the future of the company.

Walker was primarily asked about his goals for sustainability in a day and age that was

very focused on renewable resources and green alternatives. The interview stated that

Herman Miller hoped to, “increase their environmental impact by decreasing their carbon

footprint and contributions to landfills.” The company was even so bold to impose a goal

of, “…vowing to produce no landfill waste, hazardous waste, or manufacturing emissions

and to rely completely on ‘green energy’ by 2020.” Herman Miller was always, and

continued to be, a company with its sights set on the future in terms of sustainability.

From a financial and environmental standpoint, Herman Miller seemed to be a company

that would stand the test of time. They navigated through financial turmoil several times

in their history, and trends indicated they would continue to do so. They did not lack in

terms of innovative design and cutting-edge products meant to foster positive work and

living environments.

Findings

After extensive research on Herman Miller’s history, products, work environment,

and anticipated future, they were a company that held themselves to a high standard and

would be a good place to work. Having been in business for over a century, they were a

company that knew how to handle the ups and downs of the economy. They started off

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small and built themselves into an industry-leading corporation, while still maintaining

the principles and values they were founded on.

Strong leadership was what guided Herman Miller to the forefront of furniture

production, and it is what created such a positive work environment. Herman Miller

offered excellent benefits, which helped set employees up for success in their time in the

work force, as well as retirement. The company also made an effort to encourage their

employees to maintain a healthy balance between work and life. They valued their

people, and their people’s opinions.

The products Herman Miller offered were innovative, stylish, and, most

importantly, environmentally sustainable. Their environmental awareness was highly

revered, and they continued to push forward to improve upon themselves. Herman Miller

was always on the cutting edge in terms of making both their products, and the way their

products were produced safe for the environment.

Financially Herman Miller was often at the mercy of the state of the economy at

any given moment due to existing in an unstable market, but they found ways to continue

growth through the difficult times. The company was in a position to increase sales and

revenue, based off of how they had done in the previous several decades. They were

setting and reaching aggressive goals. Herman Miller was a company that looked to

continue its legacy for decades into the future and remain amongst the best in their

business.

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Bibliography

1. Adams, S. B. (2012). Making a virtue of necessity: Herman miller's model for innovation. Paper presented at the Business History Conference, 1-15. Retrieved from http://cmich.idm.oclc.org/login?url=http://search.proquest.com/docview/1041251135?accountid=10181

2. Akresh-Gonzales, J. (2009, December). Conversation. Harvard Business Review, 26. Retrieved from https://hbr.org/2009/12/herman-miller-ceo-brian-walker-on-meeting-sustainability-goals-with-customers-help

3. Hench, T. J. (1999). The history of herman miller, inc. and the nature of emergence "emergent all the way down". Journal of Management History, 5(6), 362. Retrieved from http://cmich.idm.oclc.org/login?url=http://search.proquest.com/docview/211029701?accountid=10181

4. Herman Miller, Inc. (2015). Herman Miller, Inc. MarketLine Company Profile, 1- 30. Retrieved from http://web.a.ebscohost.com/ehost/detail/detail?sid=b132a8f2-680c-4da5-b0ee-db3d020d3814%40sessionmgr4007&vid=0&hid=4106&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=heh&AN=102697416

5. Herman Miller. (2016, October 6). Retrieved from https://www.glassdoor.com/Overview/Working-at-Herman-Miller-EI_IE1485.11,24.htm

6. Manz, C., Manz, K. P., Adams, S. B., Shipper, F. (2010). Sustainable Performance with Values-Based Shared Leadership: A Case Study of a Virtuous Organization. Canadian Journal of Administrative Sciences, 28, 284-296. Retrieved from http://onlinelibrary.wiley.com/doi/10.1002/cjas.184/full

7. Performance Seating - Herman Miller Office Chairs. (n.d.). Retrieved from http://www.hermanmiller.com/products/seating/performance-work-chairs/performance-seating.html

8. Rossi, M., Charon, S., Wing, G., Ewell, J. (2006). Design for the Next Generation. Journal of Industrial Ecology, 10, 193-210. Retrieved from http://www.c2ccertified.org/images/uploads/Herman_Miller_Journal_Of_Industrial_Ecology.pdf

9. Saval, N. (2014, May 9). A Brief History of the Dreaded Office Cubicle. Wall Street Journal. Retrieved from http://www.wsj.com/articles/SB10001424052702304885404579549800874319342

10. Tischler, L. (2006, June). HERMAN MILLER'S LEAP of FAITH. Fast Company, 52-57. Retrieved from http://cmich.idm.oclc.org/login?url=http://search.proquest.com/docview/228844575?accountid=10181

11. United States Securities and Exchange Commission, Herman Miller, Inc., and Subsidaries. (2016). Form 10-K. Retrieved from http://www.hermanmiller.com/content/dam/hermanmiller/documents/investors/HMI_2016_ANNUAL_REPORT_10-K.pdf