Herman Miller: Business As Unusual

Forward-thinking furniture maker stays ahead of trend and leads the way to a new level of responsibility in corporate governance.

It is a truism in design that form and function are inseperable, that they must flow together as one. In business, it is becoming just as accurate to say that profitability and corporate responsibility must follow the same formula.

Perhaps no American company typifies both of these dual dynamics better than Zeeland, Mich.-based manufacturer Herman Miller. A 2007 IW 50 Best Manufacturer, the company is known worldwide as one of the preeminent furniture firms, both in terms of aesthetics and economics, and has also been the recipient of recognition for everything from triumphs of design to innovative uses of information technology.

Consistently staying ahead of trend throughout its existence has allowed Herman Miller to foster a culture of innovation that keeps its product lines fresh and exciting, while retaining the classic allure that gained it such a strong foothold in homes and offices around the world.

With that worldwide foothold comes a global footprint, however, bringing to light another area where Herman Miller has developed a leadership role -- corporate responsibility.

Way back in 1984, decades before the current PR green machine got its hybrid-electric motor revving, Herman Miller made the decision to stop using wood from a rare rosewood tree in its signature Eames chairs, setting an example for sustainable forestry in its industry.

Subsequent environmentally friendly efforts included the creation of a 295,000-square-foot factory and office campus dubbed The GreenHouse. The then-pioneering design of this new facility brought with it a quantitative increase in productivity, job satisfaction and positive social and ecological impacts -- not to mention continued good press and, along with the company's other programs, listings on the Dow Jones Sustainability Index and two of the prestigious KLD global indexes for ecologically responsible companies.

If its commitment was just a PR campaign, things may well have stopped there. However, the furniture manufacturer's goal is to build a lasting tradition of good corporate citizenship on the solid foundation it has already established.

"Herman Miller does not advocate for the environment to win awards," CEO Brian Walker recently wrote in a policy statement on the company Web site. "We do this for the simple reason that we believe protecting our fragile environment is the right thing to do. We intend to be a good corporate citizen within both our industry and our communities. We also owe it to our employee-owners to conduct our business in ways that protect their health and safety."

This attitude has led to a wholesale overhaul of the company's worldwide supply chain, with a consistent emphasis on sustainable choices of methods and materials. By following the widely known, comprehensive "cradle to cradle" principles of the McDonough Braungart Design Protocol, Herman Miller transitioned earlier efforts into a standard, Design For Environment program that it now uses corporatewide for assessing suppliers, materials and finished products.

Not surprisingly, such moves place the world's second-largest office furniture supplier at the leading edge of some concrete industrywide business trends, most notably among them the increasing adoption of Leadership In Energy and Environmental Design (LEED) standards, by present and potential customers around the globe.

Additionally, its supply chain process upgrade has also allowed the company to become a more-active and knowledgeable participant in the materials market. According to former Advance Projects program manager Keith Winn, "Getting a handle on supply chain issues from an environmental standpoint also helped us get a handle on the organization and prioritization of materials." The company also implemented a distribution systems change allowing for consolidation of shipments, saving even more resources -- among them money -- in the process.

Herman Miller
At A Glance

Herman Miller
Zeeland, Mich.
Primary Industry: Furniture And Fixtures
Number of Employees: 6,242
2006 In Review
Revenue: $1.7 billion
Profit Margin: 5.71%
Sales Turnover: 2.60
Inventory Turnover: 24.78
Revenue Growth: 14.62%
Return On Assets: 14.06%
Return On Equity: 58.18%

The payoffs have been consistent revenue growth and profits. According to the company's June 28 investors webcast, the fourth quarter of 2006 was a good ending to a year that represented Herman Miller's third year in a row of double digit annual sales and orders growth, as well as a record-setting year for earnings per share (at $1.98 per share).

Looking forward, the company's leadership team has designated the year 2020 as the deadline to achieve a range of new sustainability targets, including zeroing out its landfill, air and water emissions and hazardous waste generation, as well as moving all company buildings to meet LEED certification and an aggressive transition to 100% green energy to meet its power needs.


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