Herman Miller Inc Case Study
Herman Miller Inc Case Study
Until 2003, HMI offered lifelong employment. How did this practice affect the company’s ability to staff the organization with managers and employees capable of executing the strategy? How did this practice build the organizational capabilities required for successful strategy execution?
Lifelong employment is known as permanent employees work for a single employer and are paid directly by that employer. In addition to their wages, they often receive benefits like subsidized health care, paid vacations, holidays, sick time, or contributions to a retirement plan. Permanent employees are often eligible to switch job positions within their companies. Even when employment is “at will”, permanent employees of large companies are generally protected from abrupt job termination by severance policies, like advance notice in case of layoffs, or formal discipline procedures. They may be eligible to join a union, and may enjoy both social and financial benefits of their employment.
Lifelong employment facilitates long-term growth for employees, companies and industries. It develops seasoned personnel and allows company and projects to build on lessons learned. Project in particular, benefit from this information transfer, as teams and individual are poised to take the expertise and knowledge of one experience to the next challenge, building continuity for the entire industry. This experience results in better asset management and improved life-of-field systems that are safe and efficient to operate. Lifelong employment facilitate: improved engineering designs; longer lead times for manufacturing and sourcing of equipment; improved constructability; lower cost for operations and maintenance; opportunities for expanded development; stronger knowledge base to tackle tough technical issues.
Organization provides lifelong employees a much better benefit package such as paid vacation, sick leave and holidays. Most importantly, those employees normally can expect career advancement and the opportunity to be part of a larger team and the pursuit of long-term goals. Organization takes a long-term focus on employees with regard to training, benefits, retention and involvement in industry activities. Most importantly, organization focused on improvement through lessons learned, translating knowledge gained with each project into innovative opportunities for projects worldwide. Experienced, lifelong employment makes this challenge a reality, capturing lessons, observations and new ideas for ongoing and future applications. (Bruce Crager, World Energy, Vol.9, No. 1, P88-90)
Do non-monetary incentives facilitate strategy execution at HMI? Explain.
Yes, non-monetary incentives facilitate strategy execution at HMI.
Tangible incentives offer features that recipients often see as luxuries. In other words, a trip or item that a sales person may not be able to justify purchasing themselves, even if they had sufficient funds, is now attainable through their performance. The need to justify the consumption of the tangible reward is eliminated by the hard work put forth to create the opportunity. The value increases in the participant’s mind with the increased difficulty to obtain it. This lack of need to justify the use of the reward increases the motivational impact of working to obtain it. ( Jeffrey, Scott A., Shaffer, V. The Motivational Properties of Tangible Incentives. Compensation and Benefits Review. May/June 2007)
The high level of visibility of this reward increases the ability for family, friends and colleagues to recognize and acknowledge the tangible incentive. The ‘trophy value’ is high hence reinforcing the performance to obtain it.
Tangible non-cash incentive rewards offer an immediate visual imagery and associated experience. The ability to see oneself sitting on the beach in Hawaii or watching the 60” plasma television has an immediate motivating response to individuals over the monetary value that would be equal to these items. Separate Impact
A tangible non-cash award is immediately separated from the sales person’s income and therefore typically not ‘lumped’ with other funds. This separation from regular income has positive association back to the awarding firm and provides more motivational impact for sales people or employees.
Companies get extended value from offering tangible non-cash awards because the recipients often will share their rewards or experiences with others. They also are proud to communicate their accomplishment with others, spreading the word about the company in the process.
Because tangible non-cash rewards are not designed to be used for regular bill paying, recipients feel good about using them for aspirational, memorable items or experiences. These good feelings extend toward the company whenever they use the items or look at the trip pictures.
Success Creation in Program Design
The incentive non-cash program should include the following key components building on the motivating factors to insure its success during implementation, acceptance and rollout. (Jeffrey, Scott, 2004, University of Chicago, Graduate School of Business, The Benefits of Tangible Non-Monetary Incentculture as ives)
Describe the culture at HMI. Would you characterize HMI’s culture as healthy and largely supportive of good strategy execution? Explain.
Teams were often cross-functional. Membership on a team was based on the employee’s ability to contribute to that team. Teams were often based on product development. When the product had been developed, the members of that team were redistributed to new projects. New projects could come from any level in the organization. Workers at all levels were encouraged to put forth new ideas. Because Herman Miller workers felt empowered, a new manager could run into some startling behavior. All Herman Miller employees could work 16 paid hours a year with a charitable organization of their choice. The company set goals for the number of employee volunteer hours contributed annually to its communities. Progress toward meeting those goals was reported to the CEO.
The environmental Affairs Team had responsibility for such activities as recycling solid waste and designing products from sustainable resources. Herman Miller’s beliefs carried over to the family and the community. For example, one employee chose more costly fiber cement board over PVC siding when in restoring their home, because Herman Miller had a policy “to avoid PVC wherever possible”. Another employee was involved in a youth soccer association that raised money to buy uniforms by collecting newspapers and aluminum cans. The company’s beliefs carried over to all functional areas of the business. Some of them were obviously beneficial, and some were simply the way Herman Miller chose to conduct its business. But we cannot deny HMI’s culture as healthy and largely supportive of good strategy execution.
To sum up, the overall business goals of any organization are both bottom-line-oriented and employee satisfaction-oriented. In the development of an incentive reward system it is important to implement a program that will help an organization reach its organizational objectives while enhancing employee/customer satisfaction, retention and performance. The implementation of non-monetary tangible rewards in an organization’s incentive program will be the best decision for all employee/customer influencing managers to implement when working to reach sales quota, revenue numbers and overall goals for the firm. The motivating factors behind performance can be far reaching. (Jeffrey, Scott A., Shaffer, V. The Motivational Properties of Tangible Incentives. Compensation and Benefits Review. May/June 2007)
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 14 October 2016
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