A Strategic Analysis Of Herman Miller 106v6n
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A Strategic Analysis of Herman Miller, Inc. for the year 1998
Table of contents Introduction History of the case SWOT analysis Vision Mission A strategic thrust HRM objectives Formulating and building employee capabilities strategy Formulating and building commitment of employees Training and development strategy to build employee competencies Recommendations to HMI management Appendix
2
4 5 7 9 9 10 11 12 13 14 16 17
Introduction I am working as an external consultant for Herman Miller, Inc, by whom I was approached for assistance in formulating training and development strategies in alignment with their business strategies for the coming year. To achieve the above mentioned objective, I have prepared this strategic analysis of the company which first discusses its history, as it is important to know the true nature of the company and its situation. Afterwards, a SWOT analysis has been done to determine the strengths, weaknesses, opportunities and threats followed by the vision, mission, strategic thrust, HRM objectives and strategies. The strategies focus on formulating and developing employee capabilities and commitment to the organization. This is followed by training and development strategy that focuses on formulating programs through training design process to the former strategies. Finally, recommendations are given to help in the implementation of the strategy.
3
History of the case Herman Miller Inc., (HMI) was founded in 1905 as star furniture company and is one of the world’s largest manufacturers of office furniture. It has a net income in excess of $74 million on sales of $1.495 million and domestically the company has held sales growth consistently higher than the industry norms. The downturn for the company occurred from late 1980s to 1992 during downsizing era in which the management of the company changed three times but now it has a stable management once again. , employing approximately 7500 employee owners worldwide out of which 3500 are in West Michigan. The company is ranked as one of the best places to work in America. HMI is a values driven company with a history of family ownership and a reputation for innovation in its relationship with employees as well as in its products. It’s culture focuses on: the obligation of management to be a recipient of ideas from all employees, the importance of design and its principles in the development of products, employee participation and employee ownership. . To promote this culture, HMI has adopted measures such as ‘open book management’ approach and Silver parachute Plan. In recent years, the HR became somewhat disconnected from the needs and strategic direction of the business but soon transformed itself to work in harmony with the corporate strategy, thus adding value to the organization and its business goals. HR function of the firm was previously not aligned with business strategy but is now doing so and in the efforts, it has adopted a worldwide shared services approach and has moved significant resources from corporate HR to line or business unit roles. , HMI is in a state of constant reorganization which has resulted in the three primary goals of the human resources strategy: • To build employee capabilities • To build employee commitment • To improve the professional capabilities of the HR function itself Besides, a competency model has been developed for the top leaders which is fully ed by the senior management and is actively used in recruitment, selection, development and performance. HMI believes that participation in decision making facilitates ‘ownership’ among employees, heightens the quality of decision making and acts as a potential source of
4
competitive advantage. HMI gives its employee owners significant information about the ongoing financial condition of the business, sends considerable amount of effort in training employees in the processes through which they create economic and customer value. The recent adoption of EVA has increased the involvement in business literacy. The firm has developed a number of courses to train the employees and team leaders. HR evaluates every one of its own proposals from the perspective of whether they will create economic value for the business. HMI believes that an equity stake in the company is crucial if employees are to act like owners. HMI places a huge value on becoming a good corporate citizen in the communities in which it operates and a good steward of the environment. HMI has adequately deployed ‘HR fundamentals’ to employees and has recently tried to integrate more closely the performance management and planning processes and the other elements of the HR system. There is formal and informal training to help employees understand the HMI system and a market based compensation program features unlimited upside potential for all employees. HMI has begun to negotiate innovative and risk bearing partnerships with consultants and suppliers which reflect a natural extension of its focus on values, ownership, equity and participation. The key challenges which the company faces in the future include become intent on proactively managing the change process at HMI by asking itself various questions about different aspects such as empowered environment, communication, integrity, ability etc. The HR itself is asking questions about its role in the change process. The CEO has made attracting and retaining key talent and a diverse workforce a major initiative consistent with the firm’s mission, vision and values. HMI’s location is a hindrance in achieving this goal but the firm believes that a productive environment based on the culture and value will help in the attainment of the goals.
5
SWOT Analysis Strengths: • The customers are exhibiting brand loyalty. • The company is maintaining a formidable position vis a vis competitors. • HMI is maintaining good company relationship with suppliers, vendors and consulting firms. • HMI is maintaining good company relationship with CBR/ union. • Marketing strategy apparently seems well designed and well executed. • The company has been demonstrating financial strength. • Production processes, systems and procedures are of reasonably high standard.
Weaknesses: • The organizational aspects including vision, mission, long term objectives and HRM directions need to be improved. • The HRM department needs major overhauling virtually in all the functional areas.
Opportunities: •
• • • • •
The economic condition of USA reflects healthy prospects. HMI is internalizing the facets of social shift. HMI is making reasonable efforts to implement the covenants of legislations. In USA, the political environments are portraying stable picture. The company is reasonably equipped in of technology. The international environment, where HMI’s presence is there, depicts stability in the overall context.
6
Threats: • The furniture industry is being impacted by the forces of social shift. Social shift includes among others caring the environment, customer’s value seeking attitude and patronizing those companies who are abide by legislations. • In USA, many laws have been enacted relating to industry, HRM, consumers, environment and so forth. • The furniture industry is subject to technological advancements.
7
Vision To become the world’s largest international manufacturer of office and home furniture, valued by both its customers and employees across the globe.
Mission Herman Miller inc. exists to make profits by providing its customers with quality furniture that caters to their unique demands in a hassle free manner and by providing employees a productive and healthy work environment.
8
A strategic thrust The following will be the driving forces to bring about and manage the strategic business changes in the company: • • • •
Change management Building employee competency Building employee capabilities Use training and development to the strategy
9
HRM Objectives • Prepare employees to meet new challenges that may come along with the changes in technology, economy and society. • the changes in the business strategy. • Identification of the employees’ competencies. • Arrange funding to develop the competencies in employees. • Increase participation of employees in order to build their capabilities. • Provide employees with knowledge and skills to enhance their capabilities. • Provide training to employees to make them work in alignment with the management’s strategy. •
Provide training to employees and make them able for its implementation.
10
Formulating and building employee capabilities strategy In order to meet the ever increasing demands of the business, it is important that the employees are equipped with such capabilities that enable them to do so. For this purpose, the formulation and building of employees’ capabilities will consist of the following strategy: The first step in this regard is to increase the knowledge that employees possess as there is increased value being placed on knowledge. The focus should be on building intellectual capital which means employees who are equipped with not only the basic and advance skills but also have knowledge about the entire system. Without such knowledge, meeting the needs of the expanding business would not possible. Secondly, the employees should be empowered. This means that the employees should be given responsibilities and the chance to make decisions; this makes the employees more diligent as they are able for their actions. Through empowerment, the employees get a better chance of participation in the business and utilizing their skills and knowledge. Lastly, the employees should be aware of the business conditions. Realization of the needs and changes in business make employees more prepared to meet the challenges and get themselves equipped to meet any deficiency that might be visible. Employees with required capabilities of knowledge and skills are more productive for the business as compared to those who do not have the essential capabilities.
11
Formulating and building commitment of employees With many of the changes influencing the workforce, retaining talented employees is a key issue. In this regard, it is important to build the commitment of employees to the business. To increase the commitment of employees, the following strategy should be pursued: Valuing employees is a part of the company’s culture and providing them with a healthy and productive environment is a part of its mission; this should be communicated to the employees in order to let them know that the company cares for them. Employees should be provided opportunities for growth and development as this would pave the way for their career development and make them more committed. The company should continue providing employees with financial benefits linked to performance management. Employees’ stake in the company will also serve a similar purpose; these would increase the commitment of employees to the firm and increase their productivity. This strategy would result in committed employees who will contribute whole heartedly to the success of the business. Besides, turnover will also be reduced and the retained talented employees will serve as the company’s asset.
12
Training and development strategy to build employee competencies Training and development should be aligned with the company’s business strategy. The business strategy focuses on building employees’ capabilities and commitment to the firm, therefore the training and development strategy should focus on building employees competencies that would help them make best use of their capabilities and this will also the strategy of increasing employees’ commitment by providing them opportunity for development. In order to develop the training and development strategies, the training design process (see appendix) should be followed. The most important part of this is the needs assessment (see appendix). The needs assessment helped in allocating the financial resources to training and development through organizational analysis, through person analysis we determine that because of the job changes, the employees need to be trained in their new jobs; training should specifically focus on equipping employees with the latest technology and the art of dealing with customers. The work environment should be ive for learning and training should cater to the employees’ growth needs. Besides, using reinforcement theory employees should be provided incentives such as performance based financial benefits as mentioned earlier. As a part of the needs assessment, the task analysis helped determine the various tasks to be performed in certain jobs and training should be provided to employees in those tasks where employees are least competent. Competency model for the top leaders is also an efficient alternative of needs assessment. The pace of learning should be accelerated and training and development objectives should focus on keeping employees update with advanced and latest technology so that their knowledge doesn’t run obsolete and reduce their productivity. Learning should also focus on providing employees with knowledge of the entire system as this would help them integrate the vast business. The learning portfolio should be diversified and make use of internet to train employees across the globe. Training should also focus on improving customer service as the customers are the focus of every business. If customers are not satisfied with the products or the personnel of the company, the company faces the risk of losing market share. 13
The training and development programs should also expand beyond employees to include suppliers, vendors and customers themselves. As the company is working on the global level, everyone who is involved in the supply chain should be provided training so as to improve the accuracy of the products and the efficiency of the business. These training and development objectives should be ed by the management and all employees because otherwise, the learning will be obstructed. The training design process also calls for developing an evaluation plan. After every few months, all employees should be tests to see how much training has contributed to their competencies. A cost benefit analysis should also be conducted to see how much return the company has earned on the financial resources that it allocated to training employees. The training methods should be an amalgamation of traditional and e learning according to the requirement of the above mentioned training objectives. The training program that would be designed to implement this strategy should be evaluated to see how much it has contributed to the learning objectives, if the program lacks objectivity or doesn’t contributes significantly to the business strategy by improving productivity, the program should be redesigned for improvements .
14
Recommendations After this strategic analysis, it is evident that HMI needs improvement in its HR functions and its mission, vision and strategies. These improvements have been chalked out in this report for the New Year 1998. As it has been put forward in this analysis, HMI should work on building employee capabilities and commitment to the company. Management should focus on the employee capabilities building and employee commitment building strategies that have been outlined and use the cited training and development strategies to achieve this purpose as they lend to these objectives.
15
Appendix
16
Table of contents Introduction History of the case SWOT analysis Vision Mission A strategic thrust HRM objectives Formulating and building employee capabilities strategy Formulating and building commitment of employees Training and development strategy to build employee competencies Recommendations to HMI management Appendix
2
4 5 7 9 9 10 11 12 13 14 16 17
Introduction I am working as an external consultant for Herman Miller, Inc, by whom I was approached for assistance in formulating training and development strategies in alignment with their business strategies for the coming year. To achieve the above mentioned objective, I have prepared this strategic analysis of the company which first discusses its history, as it is important to know the true nature of the company and its situation. Afterwards, a SWOT analysis has been done to determine the strengths, weaknesses, opportunities and threats followed by the vision, mission, strategic thrust, HRM objectives and strategies. The strategies focus on formulating and developing employee capabilities and commitment to the organization. This is followed by training and development strategy that focuses on formulating programs through training design process to the former strategies. Finally, recommendations are given to help in the implementation of the strategy.
3
History of the case Herman Miller Inc., (HMI) was founded in 1905 as star furniture company and is one of the world’s largest manufacturers of office furniture. It has a net income in excess of $74 million on sales of $1.495 million and domestically the company has held sales growth consistently higher than the industry norms. The downturn for the company occurred from late 1980s to 1992 during downsizing era in which the management of the company changed three times but now it has a stable management once again. , employing approximately 7500 employee owners worldwide out of which 3500 are in West Michigan. The company is ranked as one of the best places to work in America. HMI is a values driven company with a history of family ownership and a reputation for innovation in its relationship with employees as well as in its products. It’s culture focuses on: the obligation of management to be a recipient of ideas from all employees, the importance of design and its principles in the development of products, employee participation and employee ownership. . To promote this culture, HMI has adopted measures such as ‘open book management’ approach and Silver parachute Plan. In recent years, the HR became somewhat disconnected from the needs and strategic direction of the business but soon transformed itself to work in harmony with the corporate strategy, thus adding value to the organization and its business goals. HR function of the firm was previously not aligned with business strategy but is now doing so and in the efforts, it has adopted a worldwide shared services approach and has moved significant resources from corporate HR to line or business unit roles. , HMI is in a state of constant reorganization which has resulted in the three primary goals of the human resources strategy: • To build employee capabilities • To build employee commitment • To improve the professional capabilities of the HR function itself Besides, a competency model has been developed for the top leaders which is fully ed by the senior management and is actively used in recruitment, selection, development and performance. HMI believes that participation in decision making facilitates ‘ownership’ among employees, heightens the quality of decision making and acts as a potential source of
4
competitive advantage. HMI gives its employee owners significant information about the ongoing financial condition of the business, sends considerable amount of effort in training employees in the processes through which they create economic and customer value. The recent adoption of EVA has increased the involvement in business literacy. The firm has developed a number of courses to train the employees and team leaders. HR evaluates every one of its own proposals from the perspective of whether they will create economic value for the business. HMI believes that an equity stake in the company is crucial if employees are to act like owners. HMI places a huge value on becoming a good corporate citizen in the communities in which it operates and a good steward of the environment. HMI has adequately deployed ‘HR fundamentals’ to employees and has recently tried to integrate more closely the performance management and planning processes and the other elements of the HR system. There is formal and informal training to help employees understand the HMI system and a market based compensation program features unlimited upside potential for all employees. HMI has begun to negotiate innovative and risk bearing partnerships with consultants and suppliers which reflect a natural extension of its focus on values, ownership, equity and participation. The key challenges which the company faces in the future include become intent on proactively managing the change process at HMI by asking itself various questions about different aspects such as empowered environment, communication, integrity, ability etc. The HR itself is asking questions about its role in the change process. The CEO has made attracting and retaining key talent and a diverse workforce a major initiative consistent with the firm’s mission, vision and values. HMI’s location is a hindrance in achieving this goal but the firm believes that a productive environment based on the culture and value will help in the attainment of the goals.
5
SWOT Analysis Strengths: • The customers are exhibiting brand loyalty. • The company is maintaining a formidable position vis a vis competitors. • HMI is maintaining good company relationship with suppliers, vendors and consulting firms. • HMI is maintaining good company relationship with CBR/ union. • Marketing strategy apparently seems well designed and well executed. • The company has been demonstrating financial strength. • Production processes, systems and procedures are of reasonably high standard.
Weaknesses: • The organizational aspects including vision, mission, long term objectives and HRM directions need to be improved. • The HRM department needs major overhauling virtually in all the functional areas.
Opportunities: •
• • • • •
The economic condition of USA reflects healthy prospects. HMI is internalizing the facets of social shift. HMI is making reasonable efforts to implement the covenants of legislations. In USA, the political environments are portraying stable picture. The company is reasonably equipped in of technology. The international environment, where HMI’s presence is there, depicts stability in the overall context.
6
Threats: • The furniture industry is being impacted by the forces of social shift. Social shift includes among others caring the environment, customer’s value seeking attitude and patronizing those companies who are abide by legislations. • In USA, many laws have been enacted relating to industry, HRM, consumers, environment and so forth. • The furniture industry is subject to technological advancements.
7
Vision To become the world’s largest international manufacturer of office and home furniture, valued by both its customers and employees across the globe.
Mission Herman Miller inc. exists to make profits by providing its customers with quality furniture that caters to their unique demands in a hassle free manner and by providing employees a productive and healthy work environment.
8
A strategic thrust The following will be the driving forces to bring about and manage the strategic business changes in the company: • • • •
Change management Building employee competency Building employee capabilities Use training and development to the strategy
9
HRM Objectives • Prepare employees to meet new challenges that may come along with the changes in technology, economy and society. • the changes in the business strategy. • Identification of the employees’ competencies. • Arrange funding to develop the competencies in employees. • Increase participation of employees in order to build their capabilities. • Provide employees with knowledge and skills to enhance their capabilities. • Provide training to employees to make them work in alignment with the management’s strategy. •
Provide training to employees and make them able for its implementation.
10
Formulating and building employee capabilities strategy In order to meet the ever increasing demands of the business, it is important that the employees are equipped with such capabilities that enable them to do so. For this purpose, the formulation and building of employees’ capabilities will consist of the following strategy: The first step in this regard is to increase the knowledge that employees possess as there is increased value being placed on knowledge. The focus should be on building intellectual capital which means employees who are equipped with not only the basic and advance skills but also have knowledge about the entire system. Without such knowledge, meeting the needs of the expanding business would not possible. Secondly, the employees should be empowered. This means that the employees should be given responsibilities and the chance to make decisions; this makes the employees more diligent as they are able for their actions. Through empowerment, the employees get a better chance of participation in the business and utilizing their skills and knowledge. Lastly, the employees should be aware of the business conditions. Realization of the needs and changes in business make employees more prepared to meet the challenges and get themselves equipped to meet any deficiency that might be visible. Employees with required capabilities of knowledge and skills are more productive for the business as compared to those who do not have the essential capabilities.
11
Formulating and building commitment of employees With many of the changes influencing the workforce, retaining talented employees is a key issue. In this regard, it is important to build the commitment of employees to the business. To increase the commitment of employees, the following strategy should be pursued: Valuing employees is a part of the company’s culture and providing them with a healthy and productive environment is a part of its mission; this should be communicated to the employees in order to let them know that the company cares for them. Employees should be provided opportunities for growth and development as this would pave the way for their career development and make them more committed. The company should continue providing employees with financial benefits linked to performance management. Employees’ stake in the company will also serve a similar purpose; these would increase the commitment of employees to the firm and increase their productivity. This strategy would result in committed employees who will contribute whole heartedly to the success of the business. Besides, turnover will also be reduced and the retained talented employees will serve as the company’s asset.
12
Training and development strategy to build employee competencies Training and development should be aligned with the company’s business strategy. The business strategy focuses on building employees’ capabilities and commitment to the firm, therefore the training and development strategy should focus on building employees competencies that would help them make best use of their capabilities and this will also the strategy of increasing employees’ commitment by providing them opportunity for development. In order to develop the training and development strategies, the training design process (see appendix) should be followed. The most important part of this is the needs assessment (see appendix). The needs assessment helped in allocating the financial resources to training and development through organizational analysis, through person analysis we determine that because of the job changes, the employees need to be trained in their new jobs; training should specifically focus on equipping employees with the latest technology and the art of dealing with customers. The work environment should be ive for learning and training should cater to the employees’ growth needs. Besides, using reinforcement theory employees should be provided incentives such as performance based financial benefits as mentioned earlier. As a part of the needs assessment, the task analysis helped determine the various tasks to be performed in certain jobs and training should be provided to employees in those tasks where employees are least competent. Competency model for the top leaders is also an efficient alternative of needs assessment. The pace of learning should be accelerated and training and development objectives should focus on keeping employees update with advanced and latest technology so that their knowledge doesn’t run obsolete and reduce their productivity. Learning should also focus on providing employees with knowledge of the entire system as this would help them integrate the vast business. The learning portfolio should be diversified and make use of internet to train employees across the globe. Training should also focus on improving customer service as the customers are the focus of every business. If customers are not satisfied with the products or the personnel of the company, the company faces the risk of losing market share. 13
The training and development programs should also expand beyond employees to include suppliers, vendors and customers themselves. As the company is working on the global level, everyone who is involved in the supply chain should be provided training so as to improve the accuracy of the products and the efficiency of the business. These training and development objectives should be ed by the management and all employees because otherwise, the learning will be obstructed. The training design process also calls for developing an evaluation plan. After every few months, all employees should be tests to see how much training has contributed to their competencies. A cost benefit analysis should also be conducted to see how much return the company has earned on the financial resources that it allocated to training employees. The training methods should be an amalgamation of traditional and e learning according to the requirement of the above mentioned training objectives. The training program that would be designed to implement this strategy should be evaluated to see how much it has contributed to the learning objectives, if the program lacks objectivity or doesn’t contributes significantly to the business strategy by improving productivity, the program should be redesigned for improvements .
14
Recommendations After this strategic analysis, it is evident that HMI needs improvement in its HR functions and its mission, vision and strategies. These improvements have been chalked out in this report for the New Year 1998. As it has been put forward in this analysis, HMI should work on building employee capabilities and commitment to the company. Management should focus on the employee capabilities building and employee commitment building strategies that have been outlined and use the cited training and development strategies to achieve this purpose as they lend to these objectives.
15
Appendix
16
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