Last week, Kimball International announced it would be reorganizing the company to address changes in the industry brought about by the pandemic.
The new organization is comprised of four market-centric business units; Workplace, Health, Hospitality, and eBusiness. According to the company, the new organization will enable it to maximize growth opportunities in today’s marketplace. This next phase of the Kimball International Connect Strategy designated Connect 2.0, specifically addresses the changing industry dynamics brought about by the COVID-19 health crisis and its aftermath.
Along with announcing the new structure of the company, Kimball also announced a reduction in the size of its professional workforce. Last Friday, 121 employees — about 5 percent of the company’s workforce — were notified of the permanent layoff. Those employees were across the company’s worldwide footprint.
“We made two sets of very different communications last week,” CEO Kristine Juster explained during a video conference held Tuesday. “I want to face that head-on and share with you why we made those decisions.”
She pointed out that the three industries the company is focused in, workplace, health and hospitality, have been dramatically impacted by the pandemic.
“In the earnings call we just released, we shared that we were down 20 percent at Kimball International,” she said adding that is likely to continue. “We do believe 2021 is going to be a depressed year for Kimball International because it is going to take those markets time to ramp back up.”
In light of those financials, Juster said the company was accelerating its planned reorganization to set the company up for a strong recovery when the crisis passes.
In regards to the layoffs, Juster commented the company made the tough decisions in a careful and planned way. “I commit to you that we owned transitioning those employees in a way that they can move out of this organization with what they need to be personally successful,” she said.
To support the company’s new business model, it streamlined its core center-led support functions and formed a world-class global operations supply chain and manufacturing organization.
The new eBusiness unit is set up to allow Kimball to operate in a market that is moving toward home offices. “Companies like Google are reimbursing their employees for purchasing at-home products (for offices),” Juster said. “In the last six months, a $20 million market has formed as corporations actually tell their employees what products they can buy for in-home use. It is a brand new market.”
An article on the growth factor in the office furniture market recently published in Bloomberg from the established market research company Technavio stated the industry should grow by up to $22.6 billion over the next three years. Kimball International was named as a top player in the market with Herman Miller Inc., Steelcase and several others.
“That is what is really driving the announcement around this stage of our strategy and acceleration,” Juster said. “We’ve been working on ecom[merce] for a little while. It is hard.”
According to Juster, they were attempting to do so under the previous structures at National, Kimball and Kimball Hospitality but were unable to accelerate it the way they wanted to. “That is why we created this new eBusiness unit that is responsible for the product development and creating all this digital and marketing capabilities online.”
She explained they were excited about the role each of the new business units will play in Kimball International’s growth.
“We are also very excited about the leadership that is in those roles (referring to the newly appointed presidents of the new business units),” Juster said.
“I’m confident in our journey,” Juster added. “Pre-Covid we were very successful in our strategy called Kimball International Connect. All we’ve done is accelerate our strategy so we can emerge from the crisis more successful than ever before.”