Office furniture maker Herman Miller Inc. had to cut staff because of an industry downturn. At the same time, however, it recognized the need to invest in retaining star employees and grooming leaders for better times ahead.
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2000 and 2003, Herman Miller Inc., the 82-year-old office furniture maker, went
into what Don Goeman, executive VP of research, design and development, calls a
free fall. As the dot-com bubble burst, sales plummeted by 40 percent to $1.3
billion and the company slashed its full-time employee ranks by 60 percent.
In this environment, most companies would think about
nothing beyond the next quarterly earnings statement--if not just about the
day-to-day concerns of keeping afloat. Herman Miller, however, has historically
taken a long-term outlook.
In the middle of the downturn, the company launched a new
compensation system, which for the first time pegged pay directly to individual
performance, including behaviors tied to the company’s values. Over a two-year
period Herman Miller also invested $500,000 in a new program to groom 40 future
leaders.
"We looked ahead and saw there would be a time when the
economy would turn around and people would be looking for the best employees and
willing to pay big bucks for them," says Linda Milanowski, Herman Miller’s
director of learning and development. "Companies always say how much they value
employees, but that doesn’t mean much unless you put your money where your mouth
is."
In 2002, Herman Miller launched the Leading Edge Work Team
Leader Program, a one-stop location for nearly all development material on the
corporate intranet. Anyone in the company could sign up for the course work. It
also began its Leadership Development Program, a special two-year initiative for
40 high-performance or high-potential employees at the vice president or
director level. The program was designed to create foundational leadership
skills based on principles from the book The Leadership Challenge.
The following year the leadership program expanded the
initiative to some workers at lower levels. "During a time of downsizing, people
really notice that you care and continue to invest in their careers," Milanowski
says. In that two-year period, the company spent $1 million for overall
leadership development.
"We knew there was talent in the organization," says
Raymond Bennett, a leadership development consultant at the company. "We didn’t
know where it was."
As with every effort, Herman Miller approached training
from the perspective of an economic measuring system called Economic Value
Added. It shifts the focus from budget performance to long-term improvements and
the creation of economic value.
This philosophy has resulted in the fine-tuning of a host
of human resources programs. In years past, for instance, managers decided on
raises by dividing a set sum among their staff.
"There was no direct correlation for why one person got a
2 percent raise and another got 4 percent," Milanowski says.
That was corrected with the new system, in which people
are evaluated half on agreed-upon objectives for the year and half on their
skills and behaviors that link to company values.
Herman Miller is the winner of the 2005 Optimas Award
for Competitive Advantage for demonstrating that employee participation is a
core value.
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