HRM WHITEPAPER

IKEA’s Innovative HRM Practices

Group VII

Submitted By

Bukke Nireesha 14020841070

Dheeraj 14020841071

Dommeti N V Deepika 14020841074

Vigneshwaran C 14020841110

Vyas Agastya 14020841112

INTRODUCTION

IKEA is a Swedish company that designs and sells ready to assemble furniture (such as beds,

chairs and desks), appliances and home accessories. IKEA is one of the rare companies which

have innovation at its bedrock philosophy.

As of October 2011, IKEA owns and operates 332 stores in 38 countries. It is one of the

world’s largest furniture retailers. The IKEA website consists of about 12000 products and

there are close to 470 million visitors to IKEA’s. As of July, IKEA is the world’s largest

consumer of wood after a finding that the company uses 1% of the earth’s wood supply

BACKGROUND OF IKEA

Founder Ingvar Kamprad, his name is the first two letters of IKEA. In 1943, when he was 17

yrs. he formed IKEA (made of first two letter and rest are Elmtaryd and Agunnaryd). At start

he used to sell stationery items. His business was good and he increased it by selling frames

and wallets.

In 1947, furniture was introduced; furniture sales were so high that he had started selling

furniture discontinuing the other line of products. From then onwards he had started selling

innovative furniture items and never turned back on his career.

BEST EMPLOYER AWARD

In January 2005, Fortune, a prominent international business magazine, published its annual

list of ‘100 best companies to work for’, IKEA was ranked as 62nd on the list.

According Spiers-Lopez, IKEA’s president says about company, At IKEA we live by

philosophy that when co-workers have the support and flexibility to make their personal lives

a success, they thrive in workplace too.

According to the surveys conducted it was proven that it is one the best employer for working

mothers, because of their efforts at creating a workplace that accommodated the needs of

mothers, which has taken the stress from them regarding the child care during the work.

COMPANY PROFILE

• Private company

• Founder: Ingvar Kampard

• Peter Agnefjäll-present CEO and chairman

• Products: Self-assembly furniture

• Employee strength: 139,000(2013)

• Operating revenue: 28 billion

TIMELINE

• 1943- started(stationery, jewelry, wallets)

• 1945-increased business(shipping through milk van

• 1947-introduced IKEA’S product line(armchairs)

• 1951-sales increased(focus mainly of low cost furniture)

• 1953-first showroom(customers can feel the furniture)

• 1955-introduced best and innovative furniture

• 1963-overseas expansion

• 1985-first store in US

• 1986-Kamprad retired.

• 1999-big thank you Event

• Sep 24,2014-Ikea planning to set up a store in Hyderabad and in Karnataka

ORGANIZATION STRUCTURE

The IKEA Group of companies (INGKA Holding B.V. and its controlled entities) has

an ownership structure that ensures independence and a long-term approach.

• Stitching INGKA Foundation based in the Netherlands is the owner of INGKA

Holding B.V. (and The IKEA group) and its funds can only be used in two ways,

either reinvested in the IKEA Group or, donated for charitable purposes through

the Stitching IKEA Foundation.

Range IKEA of

Sweden

Distribution and

Wholesale

Purchasing

Industry Swedwood

Group

Retail

INGKA Foundation

INGKA

HOLDINGS B.V.

IKEA Group

Support Functions

Inter IKEA Systems B.V.

• The Supervisory Board of Ingka Holding B.V. (located in Leiden, the Netherlands

and the parent company of The IKEA Group) consists of Göran Grosskopf

(Chairman), Luisa Delgado, Stina Honkamaa Bergfors, Lars-Johan Jarnheimer, Jonas

Kamprad, Göran Lindahl, Peter Lund and Tore Bertilsson. Ingvar Kamprad is senior

advisor to the Supervisory board.

• The IKEA Group is led by President and CEO, Peter Agnefjäll together with the

management group. The IKEA Group operates throughout the whole value chain from

range strategy and product development to production, distribution and retail. This

includes manufacturing units, trading offices, customer distribution centers and stores.

• The IKEA Group franchises the IKEA retail system and methods from Inter IKEA

Systems B.V. in the Netherlands. Inter IKEA Systems B.V. is the owner of the IKEA

Concept and the worldwide IKEA franchisor

IKEA’S VALUES

Throughout the years, IKEA has stood by a set of values that affect the way they work. These

values are as important at an IKEA store in Ireland as they are in a photo studio in Sweden or

a distribution centre in China. An ability to do the job is obviously the starting point. But

beyond that IKEA looks for many other personal qualities such as a strong desire to learn, the

motivation to continually do things better, simplicity and common sense, the ability to lead

by example, efficiency and cost-consciousness. These values are important to IKEA because

their way of working is less structured than that of many other organizations.

The IKEA culture is hard to describe but easy to embrace. It’s a culture of enthusiasm,

togetherness and willpower, born from their roots in southern Sweden and inspired by the

IKEA founder, Ingvar Kamprad. The IKEA culture humbly unites the employees in their

work to create a better everyday life for the many people. It’s not an easy task – and maybe

that’s why all the IKEA workers are so dedicated and so stubborn. They all share the same

conviction that many, not few, shall be able to create the home they want and dream of and

when we put our heart into your work, it’s then we really can make a difference.

Over 150,000 people are involved in the creation of a better everyday life for the many

people. Business plans and expansion ideas are great motivators to work hard.

Values cannot be invented, they can only emerge from one place: the heart. IKEA values are very much a product of their origin. Hard work, tough challenges, common sense, Swedish roots and limited resources have formed IKEA values. To keep the IKEA Concept successful,

they work to keep their values close to their heart. The IKEA values convey the essence of the entire IKEA culture. Over the years they have learned that acting according to IKEA

values not only brings them together no matter what age, race or part of the world they live in ,it helps them to do business successfully.

The IKEA Values include the following:

Humbleness

They respect each other, their customers and their supplier’s. They are humble towards their competitors, respecting their proficiency and realizing that they

constantly have to be better than they are to keep their market share. They respect

their co-workers and their views, and have respect for the task they have set for themselves.

Willpower

They first agree on mutual objectives and do not let anything stand in the way of actually achieving them. They know exactly what they want and the desire to get it should be irrepressible.

Leadership by example

The leaders at IKEA are expected and encouraged to behave the way they expect their co-workers to behave. It means pitching in when there’s more than the unusual work

to be done, respecting co-workers and encouraging the initiative and achievements of everyone in the group. A leader at the IKEA group can accomplish more by creating a feeling of well-being and a good working environment than any other means.

Daring to be different

They question old solutions and, if they have a better idea, they are willing to change .They always encourage new ideas.

Togetherness and enthusiasm

They respect their colleagues and help each other in difficult times. They look for

people who are supportive, work well in teams and are open with each other in the way they talk, interact and connect. IKEA supports this attitude with open plan offices and by laying out clear goals that co-workers can stand behind.

Cost-consciousness

This value goes hand in hand with IKEA’s business idea. They believe that it is impossible to have low prices, good quality and good profitability if you don’t have

low cost. So cost-consciousness is part of everything they do, from constantly finding better ways to produce home furnishings, to purchasing wisely and travelling cost-effectively.

Accept and delegate responsibility

They promote co-workers with potential and stimulate them to surpass their expectations. They believe that people make mistakes but they learn from their mistakes.

Constant desire for renewal

They expect people to look for better ways and new ways of doing things in every aspect of their work. They like change and encourage people to look for constant

improvement. People in the IKEA group are often more stimulated by finding ways to

achieving their goals, than by goal itself. They take inspiration from discovery and are constantly on the way to the next challenge.

Simplicity

Behind this values are ideas like efficiency, common sense and avoiding complicated solutions. Simple habits, simple actions and a healthy aversion to status symbols are a part of IKEA.

Diversity is part of this

IKEA encourages an environment where people of different views, age, gender and ethnic background feel welcome. They believe that a diverse workforce will improve

business results, strengthen their competitiveness and make IKEA a better place to work.

HUMAN RESOURCE MANAGEMENT PRACTICES

• IKEA’s vision was “To create a better everyday life for the many people”. They felt

that if the company took care of the needs of the employees they were more productive and committed to work. Although the company had a positive HR philosophy and offered generous benefits, they had standardized policies which

applied uniformly to all employees. • Spiers- Lopez in late 1990’s became the HR Head of IKEA North America, she

wanted the employees to derive maximum benefit from IKEA’s generous HR policies and felt that employees could benefit more if there were a greater amount of flexibility in benefits administration.

• She introduced greater flexibility in benefits administration matching individual needs and requirements. For this she had conducted many employee surveys asking those

detailed questions about the individual needs and requirements. • Spiers-Lopez believed in “Life balance and diversity”. She introduced flexible

holiday schedule which allowed employees to choose which six days they choose to observe holidays every year.

• She introduced flexitime which allowed the employees to choose when they would

start and end their workdays depending on the requirements of the store or office in which they worked. She believed that the employees had a life beyond work.

• Condensed work-weeks, job sharing and telecommunicating are introduced which helped the employees to do justice to both their personal lives as well as careers.

• The company adopted videoconferencing in a big way to help employees avoid business travel and spend more time with their family.

• IKEA allowed its employees to coordinate their schedules with their spouses’ work

hours in case they have small children. • The company was open to transferring employees between locations provided there is

a matching opening for the employee at the place he or she wanted to move. • It was estimated that by 2004, 65% of IKEA’s full time employees and 10% of part

time employees had taken advantage of the company’s flexible work policy. • The company wanted to make the stores more comfortable for employees during non-

working times and breaks. It introduced “Quiet rooms” for prayer and meditation for

its employees. • “Lactation rooms” for nursing mothers and child care facilities were introduced.

• Entertaining rooms where employees could receive visiting friends and family members were introduced.

• Discounts at IKEA’s onsite restaurants were given for themselves and their families. • Resource rooms were introduced where employees could access computers to browse

IKEA approved websites containing health information and self-improvement tips. They can also get details of forthcoming training and development programs and job

openings within the IKEA system. • The company gave full medical and dental insurance to all employees working 20

hours or more per week. It also gave discounts on weight reduction and smoking

cessation services • Maternity leave for 7 weeks was given with full pay while men and adoptive parents

received 1 week with full pay. • All employees were eligible for 2 to 5 weeks of annual paid vacation. They can carry

forward vacation time for next year. • Employees were eligible for 15% discount on IKEA merchandise. • Annual “Co-worker appreciation Day” was introduced where 40% discount was given

on store purchases for themselves and families depending on the annual performance of the store.

• Employees also received Credit Card with no interest for 90 days and also could join the company’s 401(k) policy (tax saving fund)where employees contribute a certain

percentage of their pre-tax salary with a proportionate contribution by the employer as well.

Additional benefits included tuition reimbursement for graduate and undergraduate courses for all employees regardless of how many hours they worked. Employees were

encouraged to pursue courses that had potential application in the retail sector, such as general management, accounting and interior design. Study of languages was also

encouraged. IKEA paid 75 per cent of the course fee upfront and the remaining 25 per cent after the course was completed. The company reimbursed up to $2500 per year for undergraduate and up to $5000 a year for graduate courses. As an added benefit, IKEA

gave a special bonus of $1000 to employees who stayed with the company for one year after completing the course. Analysts said IKEA’s tuition reimbursement policy was the

most generous in the industry and reflected the company’s commitment to contributing to the continuous development of its employees. This policy offered significant benefits to the company as well as IKEA believed in promoting from within and therefore required

skilled candidates for future promotions. In 2003 about 1500 employees utilized IKEA’s tuition reimbursement program. The distinctive feature of IKEA was that not only full-

time workers but part-time workers were also eligible for the company’s benefits program. Another noteworthy aspect was that the company did not lay minimum service conditions for employees to become eligible for benefits. Most employees were eligible

for benefits from the day they joined the company. Most retailers also excluded part timers from their benefits policies. IKEA’s commitment to the on-going development was

reflected even in the company’s policies on training and development.

IMPACTS OF POSITIVE HR PRACTICES:

The Flexibility policy followed by the IKEA has helped in creating the better work life

balance. It has enhanced the trust of the employees on the organization. Thus the employees

were giving out their best thereby increasing the productivity. The commitment towards the

organisation was high in the employees of IKEA. IKEA cared about employees well-being it

has provided onsite childcare facilities, this has developed the greater perceived

organizational support. The employees were too satisfied with all the practices and didn’t

want to leave the organization at any point of time. So, the attrition rate was low.

EMPLOYEE DEVELOPMENT PROGRAMS

• Training and development programs: The Company put in place an extensive

training and professional development program to promote the advancement of its

employees. Employees could use several resources including books, classroom

sessions, and online instruction to meet their requirements in sharpening their skills or

acquiring advanced knowledge. The company also had specialized training programs

in areas like diversity, health and safety, and environmental consciousness.

• Mentoring: It formed an important part of the employee development program

because Spiers-Lopez believed in the benefits that can be obtained from the mentoring

program. In light of this a program named "Partners for Growth" was launched. It was

a formal one year mentoring program in which teams were created between junior and

senior managers from different locations of IKEA. The purpose of mentoring

programs was to train and prepare the junior managers for position of greater

responsibility in the future. Another purpose was to meet its future demand of leaders

from within IKEA. Spiers-Lopez believed that mentoring made employees feel

supported and it helped them to grow within the company.

• Paddle Your Own Course: It was kind of self-assessment tool in which the

employees who were trained were asked to take responsibility of their own careers

and should acquire knowledge which would help them to rise within IKEA to higher

positions. In this method the employees used to sit down with their managers and

discuss the career path within the company and to identify the additional skills and

knowledge required to progress on the chosen career path. The employees first

conducted a self-assessment of their capabilities and then identified their training

requirements in coordination with their managers. IKEA also had a system in which

the employee could visit the website and could see all the development tools that were

available to them. They could choose the tool which best suited them. “There are no

limitations on what you can achieve by working with us,” said IKEA store manager,

Max Hedberg. “Your career path is laid out.”

• I Want Your Job: It was a program that was launched in 2003. This program allowed

employees to train actively with the person whose job they would like to hold in the

future. Typically, between 10 and 15 per cent of IKEA’s store employees went on to

manage stores of their own.

All the development programs were basically designed to provide a ready pool of qualified

candidates for IKEA’s future growth and expansion programs being undertaken by IKEA.

Around 10-15 per cent of the store employees at IKEA went on and became store managers.

IKEA believed in the policy that every employee must be given a chance to advance within

the company and not look for opportunities elsewhere. Therefore all the training development

programs that were initiated were two ways in which both the employee as well as the

manager was involved. The idea behind this was that the manger should not exercise

arbitrariness in deciding which of their subordinates would get praising or be promoted.

INITIATIVES LAUNCHED BY IKEA

• Open IKEA: It was basically designed to update employees on new job openings in

IKEA. The openings were posted on both employee website and company Intranet.

One very innovative method of advertising jobs was by putting up catchy stickers and

slogans at places where employees would see them every day. For example stickers

that were put on mirrors read "Find a job that reflects your interests." Another posted

on soft drink machine read "Refreshing Opportunities."

• Enterprise: It was a global application tracking system in late 2003. It was an e-

recruiting system designed to reduce the delays in the hiring process by facilitating

faster communication with candidates from around the world. By using this software

the employees could track openings in the places in which they wanted to apply and

apply immediately online there and then without any time lag. It was also a system

which was designed to put the responsibility for hiring of candidates in the hands of

the store managers rather in the hands of the IKEA’S HR recruiters.

• Why Sayers: It was a program launched by IKEA in early 2000's in which the

employees were encouraged to give ideas to improve their stores. These ideas were

then implemented in some stores by their supervisors. If the ideas given by them

worked, they were made standard practices. The company was so passionate about

this thing that they put up advertisements for 'Why Sayers' to join the company.

• Express Yourself: Spiers-Lopez also started this program through which employees

could share any issues they had or any complaints that they want to make directly

with her. This was done either by e-mail or postcards earmarked for her. This program

improved the morale of the employees at IKEA, as the employees felt important when

the president herself personally sought and responded to their concerns.

IKEA also had a comprehensive communication policy in place for employee

communications. IKEA Radio was a short news program that was aired over public

address systems in the stores. This usually broadcast communications of a general nature.

The company intranet was another effective tool for communications. IKEA also reached

to its employees through printed material like newsletters and brochures. Another thing

that IKEA made sure that it hired the right kind of people. The company in its hiring

focused more on practical skills and how a person got along with others. The employees

were expected to ask questions and give inputs as well. The practice at IKEA was to

communicate effectively, question the decision of the management and to openly express

their ideas and beliefs.

RELATION BETWEEN IKEA CULTURES AND VALUES

The values and culture of the IKEA Group reflect the entrepreneurial spirit of their founder

Ingvar Kamprad. In the practical business world of today this means that IKEA values

encourage a constant desire for renewal and a willingness to make changes, as well as a cost-

conscious mind-set applied in all areas of operations.

They also imply a willingness to try solutions other than the conventional ones and daring to

be different while maintaining practical connections with the day-to-day activities.

Humbleness in approaching their task and simplicity in their way of doing things are also

cornerstones in the IKEA culture. The IKEA culture and values shape everything that IKEA

does.

ALLOWANCES FOR MOTHERS AFTER CHILD BIRTH IN IKEA

Paid parental leave - In addition to the legislative rights, paid parental leave is offered to all

permanent co-workers with a minimum of one year’s service. IKEA offers 6 weeks maternity

leave after 12 months service and 8 weeks maternity leave after 24 months service at full pay

and one week paid paternity leave. In addition to this it also has lactation rooms and child

care facilities to help the mothers to take care of their children.

PART TIME AND FULL TIME EMPLOYEE BENEFITS

Working at IKEA is not just about having a ‘job’ it’s about having a great life at the same

time .The benefits for employees include

First day of school leave: All permanent co-workers get one day paid leave for this purpose.

In addition to annual leave and personal leave, they offer other leave options which includes:

• Co-worker Day leave - All permanent co-workers with at least 12 months continuous

service are entitled to 1 paid day off per year.

• Blood donor’s leave - Up to 4 hours paid leave every quarter.

• Career break - Up to 6 months extended unpaid leave, linked to personal development

(studies, training etc.), may be taken as an extension of the standard leave days.

• Volunteer leave - You are entitled to be absent from work for the purpose of performing

volunteer service work in times of emergency, crisis or disaster.

• Wellness day - Permanent co-workers are entitled to access 1 of the personal leave days per

year to use as wellness days.

REWARDS

Casual co-worker - $50 to spend in store

Part-time co-worker - $75 to spend in store

Full-time co-worker - $100 to spend in store

Manager - $200 to spend in store

Senior manager - $500 to spend in store

LONG TERM SERVICE AWARD

5 years’ service - $500 to spend in store

10 years’ service - $1000 to spend in store

15 years’ service - $1500 Travel voucher

20 years’ service - $3000 Travel voucher

25 years’ service - $5000 Contribution into super fund

IKEA IN INDIA

Ikea, the world’s largest furniture retailer, moved one step closer to opening its stores in India

after it signed an agreement with the Indian states of Karnataka and Telangana. Ikea, which

has over 350 stores across more than 40 countries, is one of the first foreign companies to get

the Indian government’s approval to begin a fully-owned business in the $500 billion retail

market in India.

IKEA WOMEN'S EMPOWERMENT PROGRAM IN INDIA

This cooperation with the UN Development Programme (UNDP) during 2009-2013 will

enhance the social, economic and political empowerment of women in 500 villages in Uttar

Pradesh, India where IKEA Social Initiative and UNICEF have been present since 2000. At

least 50,000 women will be encouraged to become entrepreneurs, contribute substantially to

their household income and strengthen legal awareness and participation in local political

decision making processes. Through this program, UNDP will help women by training them

in good financial practice, help with access to micro credit loans and equip them with

business skills. In addition, women will get more advanced literacy and leadership training in

order to take on a catalytic and decision making role as village leaders in institutions of their

local community.

RECRUITMENT

Ikea’s human resources teams are responsible for drawing in and inspiring workers and

creating a bracing environment in order to favour innovation and dynamism. The success of

IKEA depends on the continuing development of IKEA’s human resources policies and thus

managers’ greatest efforts are indispensable to succeed on that path.

Human Resources are present in all parts of the company and in every country where

the company is established. They look after recruitment and training. They are also

responsible for keeping and strengthening IKEA’s culture, which is based on a

specific set of values that help them develop and transform their vision and beliefs

into a fact.

Recruiting and selecting candidates are two key aspects to keep up with the

organization’s reputation as it is important for the company to make sure that each

and every one of the candidates will be able to bring an added value into IKEA’s

family.

IKEA’s reputation is a key point for its recruitment process; as said by their

Recruitment and Competencies Development Manager when we interviewed her:

“Applications are usually spontaneous. They either come through the website or

applicants bring their CVs directly to the store. But sometimes they come in response

to an offer.” In most cases, companies need to seek out their prospective employees.

This is linked to the fact that IKEA’s turnover is very low can give us an overview of

how successful IKEA’s recruitment process is.

The HR Department of IKEA receives about 7 CVs every day, and 200 every month.

IKEA’s policy is to build a long-term relationship with its employees and help them

develop themselves both on the professional but also personal level. Therefore, one

of the aspects of recruitment at IKEA is that they tend to privilege internal

recruitment when a position is available. However when there is no potential within

the body of employees, then they search the candidates elsewhere, and this is where

external recruitment comes in.

Selection represents the process of differentiating between applicants with the goal to

identify those with greater probability of success in the job; therefore for an enterprise

such as IKEA it is crucial to keep on with an exceptional and reliable process in order

to succeed.

What makes IKEA’s selection methods efficient is the fact that it is not based on the

curricular information of the candidates, but rather on the “motivation, capacities,

skills, values and personality” as said by the Recruitment and Competencies

Development Manager. IKEA does not look for the typical profile, it is interested in

people that share its values, people who can be inspired by the company to do greater

things, and people that bring something more to the company and help it grow.

WORK CULTURE

Culture is defined as the ideas, customs, and social behaviour of a particular group of people

or society. Culture has played a very important role in development of human civilization

over centuries. Work culture has taken a prominent place in organizational setup after the

onset of globalization. Culture is the character and personality of an organization. It is what

makes an organization unique and is the sum of its values, traditions, beliefs, interactions,

behaviours, and attitudes.

“The nub of our argument is that in the closing decades of the 19th century the U.S. economy

had moved into the position of global productivity leadership, which was to hold for a

remarkably long period thereafter, through a fortunate concordance between America's own

exceptional economic and social characteristics”

Work culture is differentiates any successful organization from rest of the crowd. Successful

organizations have a very strong work culture ingrained into their DNA which enables them

to stay on top of their business. Work culture brings many benefits such as attracting the best

talent, improves employee engagement and retention, enhances the satisfaction level of

employees, and enhances performance level compared to competitors.

IKEA’S WORK CULTURE

Culture has many dimensions and can take several different forms. IKEA’s progressive

Human development strategies were supported by a strong and nurturing culture that

promotes diversity and creativity. Mentioned below are the cultural values which makes

IKEA unique and best employer to work for.

DIVERSITY

Diversity is the presence of people from a wide range of backgrounds and possessing

different traits. Differences in age, race, ethnic origin, culture, religion and sexual orientation

are just some possible contributors to diversity. IKEA encourages an environment where

people of different views, age, nationality, gender, and ethnic background feel welcome.

A number of important benefits are recognized in a well-managed diverse workplace.

Workplaces in which employees represent the basic makeup of the community population are

typically better received by customers and the public. Additionally, diverse work groups

often have more and better ideas because of broader backgrounds and experiences.

Ethnic and cultural diversity often help companies that operate globally to better understand

global markets. IKEA believes that a diverse workforce will improve business results,

strengthen competitiveness and make IKEA a better place to work for.

CREATIVITY

The demand for creativity from employees is rising in this age of rapid technological

advancement. This is evident when we see multinational companies like Google setting up

something known as a the 20 percent program or policy where Google developers get to

spend 20 percent of their working hours (a day at work) on side projects. It was an attempt to

give employees the time and space to think innovatively.

Some behavioural research suggests that creativity is an inborn trait rather than something

that can be learned and developed. This may be so, but without a conducive environment for

creativity to be expressed, how can a creative employee express his/her opinion?

IKEA’s work culture encourages employees to seek innovation in their work. IKEA believes

in a creative work environment where people can make mistakes and come out with a

transformational idea that makes it a great company and leaves competitors trying to catch

up. IKEA encourages people to make mistakes, its founder once remarked, “Only while

sleeping one makes no mistakes, mistakes are privilege of the active person who can start

over and put things straight” which shows a positive environment conductive to think out of

box to nurture creativity and innovation.

WORK ENVIRONMENT

By work environment, I mean everything that forms part of employees’ involvement with the

work itself, such as the relationship with co-workers and supervisors, organizational culture,

room for personal development, etc. A positive work environment makes employees feel

good about coming to work, and this provides the motivation to sustain them throughout the

day.

A positive work environment makes employees feel good about coming to work, and this

provides the motivation to sustain them throughout the day. Spiers-Lopez remarked, “IKEA’s

culture was characterized by a family like quality that made relationships between employees

strong and open” At IKEA, we think of ourselves as a family. Just as one would look after

their parents, siblings or children, our co-worker family is encouraged to and excels at

supporting and taking care of each other.

EMPOWERMENT AND RESPONSIBILITY

Another feature that made employees feel rewarded was the highest level of empowerment at

IKEA. Empowerment is where employees are given the responsibility for making decisions

about their own work. These decisions can be small or large depending on the level of

empowerment a manager wants to give, and may include:

• What work they do (e.g. employees are free to manage their own workload/diary)

• Where they work (e.g. working from home instead of at the office)

• When they work (e.g. the ability to work flexible hours)

• How they complete their work (e.g. how they structure information in a presentation)

It’s always worth remembering the 80:20 principle: 80% of the benefit is created from 20%

of the work. As a manager, your job is to identify the 20% of decisions that will really make

the difference, and focus efforts on that, rather than constantly trying to change the 80% of

things that aren’t worth it and demoralising your staff in the process.

IKEA never gave its employees detailed instructions about their job activities and behaviours.

It gave general instructions on what they were expected to achieve, and allowed them to

choose their own methods of achieving that, within reasonable limits of cost and ethical

behaviour. “The main part is freedom of responsibility,” said Spiers-Lopez. “In every job,

there’s always some freedom you can take. You don’t have people watching you every

minute.”

EQUALITY AND OPENNESS

Equality forms the foundation of inclusion and it’s important to any employer. Equality in the

workplace is about more than simply giving equal treatment to all of your employees and

complying with the Equality Act. Inclusive Employers work to remove the barriers which

affect recruitment and progression. These barriers can include age, gender, race, sexual

orientation, religion or belief, social background, physical or mental disabilities, marital or

parental status, gender identity, and transgender issues.

All policies and practices within the organisation should create equal opportunities for

personal and professional growth – from establishing fair and transparent pay structures

offering equal access to benefits such as paid holiday and other entitlements, to ensuring that

promotion and progression is fair.

At the very minimum, employers are required to eliminate discrimination from the whole

employment cycle – starting from the application stage and throughout an employee's career.

Openness and equality were important values at IKEA, to emphasize equality, IKEA called

all its employees, regardless of rank, ‘co-workers.’ “We’re all co-workers because we all

make a difference. It doesn’t matter what we do, whether in an office or on the sales floor.

We all affect the customer in very different ways, and all of our efforts are appreciated the

same way,” said Hope Bear, a deputy HR manager at IKEA. Equality was important because

it created an informal atmosphere at the workplace and promoted open communication

between employees.

OPENNESS TO CHANGE AND ADAPTABILITY

Organizations today are facing more change than ever before. As they strive to retain their

competitive edge, they are reorganizing, downsizing, and implementing new technology. The

traditional notion of a "job" is becoming antiquated as work becomes more project based and

employees are required to work beyond fixed job descriptions. Employees today are facing

greater changes, at a more rapid pace, than ever before.

Unfortunately, coping with change can be very difficult for individuals. Employees

experiencing change often feel a loss of territory, are uncertain about what the future holds,

and may fear failure as they are faced with new tasks. Whereas some employees may not be

bothered by organizational change and may look at change as a chance to grow and learn,

other employees may react negatively to even the smallest of changes.

IKEA understood that change is the key to continuous success and therefore encouraged

employees to come up with newer ideas and methods to do things. IKEA’s commitment to

change was probably rooted in the fact that many of its successful innovations were a result

of innovation. The natural consequence of being open to change enhanced employee

creativity.

COST CONSCIOUSNESS

Cost consciousness was a value that was deeply embedded in IKEA’s culture. This

supposedly stemmed from Kampard, who was notorious for this, his tight-fisted attitude

towards spending money. According to Kampard, IKEA’s business goal was to offer a wide

range of well-designed functional home furnishing products priced low so the largest number

of people possible will be able to afford it. Therefore, economy was ingrained in every action

of the company. All the executives flew economy class or on low cost airlines for business

trips. They also stayed in budget hotels and commuted by public transport on their trips.

Kampard himself had a frugal lifestyle for a person rumoured to be the richest man in the

world.

Cost was the basic of all decisions. Product development was done on the basic of the

expected price of the product. Before any new plan was implemented, the costs were

weighted carefully. IKEA sold furniture at prices that were 30 to 50 percent lower than those

of its competitors. Therefore, it was imperative for the company to have a cost structure that

supported its pricing strategies.

OPEN COMMUNICATION

Open communication at work is an important aspect of work at IKEA. With a view to

promoting open communication, IKEA adopted a flat structure with no hierarchical

distinctions. At most of the stores, there was an open plan office structure where managers

and employees sat together and shared the same facilities. They also dressed alike in yellow

shirts and blue trousers and usually addressed each other’s by their first names.

IKEA’s employees were encouraged to express their opinion and ideas directly to the top

management. There’s an open and friendly climate with many nice colleagues, said one

IKEA employee of the culture at the company. You can speak your mind, and there are no

obvious hierarchies. One tell-tale sign is the department managers sit at desks among

everyone else in an open office landscape, she continued. She added that the openness and

flat structure allowed employees to speak out, and out when their suggestion were considered

seriously, to feel rewarded.

BELONGINGNESS

Actually, no one can truly motivate anyone else because motivation is a very personal

process and must come from the individual. However, management can influence employee

motivation by creating an environment that allows employees to feel appreciated; free to

express their ideas and that they are treated fairly.

Sense of “home” or “belonging” has tremendous impact on employees. If this element is

missing from the workplace, negative talk and complaining will fill the void, creating an

atmosphere of fear and resentment. So it’s important for management to carefully plan

activities and events that will stimulate employee motivation.

IKEA created a sense of belonging among employees by creating a set of distinct values and

norms they could identify as IKEA standards. The company maintained an obvious Swedish

atmosphere, so that people do not lose touch with culture. It even celebrated culture day and

gave all Scandinavian names which created a strong sense of identity

LEADERSHIP BY EXAMPLE

No method is more effective than the good example. It means leaders at IKEA are expected

and encouraged to behave the way they expect their co-workers to behave. It means pitching

in when there’s more than the usual work to be done, respecting those around you, and

encouraging the initiative and achievements of everyone in the group. A leader at IKEA

group can accomplish more by creating a feeling of wellbeing and a good working

environment than any other means.

TOGETHERNESS AND ENTHUSIASM

This means we respect our colleagues and help each other in difficult times. We look for

people who are supportive, work well in teams and are open with each other in the way they

talk, interact, and connect. IKEA supports this attitude with open plan offices and by laying

out clear goals that co-workers can stand behind.

COMPETITIVE AND HUMBLE

IKEA is a highly competitive company and strove to be the best in every region that it had

operations. IKEA believed that competition stimulated improvement and kept everyone at

their toes. Humble towards competitors, respecting their proficiency and realizing we

constantly have to be better than they are to keep market share.

REASONS TO STAY WITH IKEA

IKEA co-workers are known for being down-to-earth, friendly hard-working with a genuine willingness to work together. While there may be many reasons why people join IKEA, if you ask any co-workers why they stay, their number one response will be “because of the

people”. When a company has a vision and clear values you can believe in, it’s not really

difficult to get inspired. More than 90% of IKEA co-workers know what we’re here for and what is expected from them. In a survey it was found that 80% of the IKEA co-workers feel

inspired and motivated and IKEA’s management is working on the remaining 20%.

There’s a saying at IKEA companies that it’s okay to make mistakes - everyone does it. In fact, they believe that making mistakes is a healthy way to learn and improve. IKEA has more different types of jobs than any other company in the world. If co-workers get tired of

what they’re doing or just want to try something else, they can move to a new role within IKEA, not outside IKEA. Since IKEA has its stores and offices in more than 44 countries

around the world, with the same values and business idea worldwide, moving from one country to another is a common practice. And if you do move, there’s always another friendly IKEA person to help you adjust to the new working environment and locality.

IKEA is not big on fancy titles, corner offices or private jets, and so the co-workers are asked

to leave their egos at the door. This is so that you get to work as a team member, have fun and get on with the job. People like working for a company they can be proud of. So far IKEA Social Initiative has benefited 100 million children in need. And we are working on the

never-ending job of being kinder to the environment. IKEA is a business, without a doubt, but it is our policy to put people first. And people have lives outside work that include

families. That means we believe in a parent-friendly environment. The people you work with are also your friends. You know there’s someone to turn to in every major city around the world. That's a big social network.

COMPLAINTS ON IKEA

In 2004, there was controversy about an Irish law restricting the maximum size of a

retail outlet to 6,000 m2. IKEA’s plan to build a much larger store in Dublin caused

the law to be put up for debate. The law was changed to remove the size limit for

retail outlets selling durable goods in designated areas. The Minister for the

Environment was criticized for allegedly changing the law to suit one company and

other agencies protested the law change as damaging to small businesses while the

government defended their decision stating that the move was a positive one for Irish

consumers. IKEA Dublin has since opened on 27 July 2009.

June 2007: the designated nationalist Social Democratic and Labor Party complained

about an artist's rendering of IKEA Belfast that included both the Union Flag and the

Ulster Banner flag as two of the three flags in front of the store. After being labeled

"an up market Orange hall" by the party, IKEA assured customers and co-workers

that only the Swedish flag would be seen outside the actual store.

A researcher from the University of Copenhagen pointed out that for years, IKEA has

named their cheap rugs after Danish places, while the more expensive and luxurious

furniture was named after Swedish places. The researcher, Klaus Kjøller, who is well

known for tongue-in-cheek statements, accused IKEA of imperialism.

In 2011, IKEA and its Swedwood affiliate came under criticism for its treatment of

workers at a U.S. factory in Danville, Virginia and its decision to hire the law firm

Jackson Lewis, which is often employed by companies to counter labour demands, to

consult with IKEA on attempts to form a union at Danville. A petition on Change.org

has received more than 70,000 signatures urging IKEA to respect workers' rights.

In 2012, IKEA in France was accused by the independent newspaper Le Canard

enchaîné and the investigative website Media part of spying on its employees and

clients by illegally accessing French police records. The head of risk management at

IKEA feared his employees were anti-globalists or potential Eco terrorists.

In October 2012, Glendal Foods – a major supplier to IKEA Store Restaurants in

Australia, was the subject of bullying allegations by about 50% of staff at the

company and the National Union of Workers. Claims included self-harm by a worker,

retention of wages & a significant long-term pattern of staff-abuse and complaints are

under investigation by Work Safe Victoria. IKEA Australia has not yet made a formal

comment.

In October 2012, IKEA was criticized for airbrushing women out of pictures in

catalogues which were used in Saudi Arabia.

In February 2013, IKEA announced it had pulled 17,000 portions of Swedish

meatballs containing beef and pork from stores in Europe after testing in the Czech

Republic found traces of horse in the product. The company actually removed the

Swedish meatballs from stores' shelves 25 February 2013, but only made the

announcement public after Swedish newspaper Svenska Dagbladet uncovered what

happened. In a March 2013 media report, an IKEA representative stated that the

corporation had made Familjen Dafgard, its main meatball supplier, ceases business

with eight of its 15 suppliers and would reduce the number of purchasing countries.

The discovered horsemeat was traced to a Polish abattoir.

PAYOFF AT IKEA

• IKEA involved substantial costs

• But payoff outweighed the costs due to low employee turnover

• IKEA's employee turnover fell drastically, from 76 percent in 2001, to 56 percent in

2002 and 35 percent in 2003

• The company's turnover was also almost half the average industry rate, which hovered

around 60 percent.

• So this reduced the cost of repeated hiring and training cost

• IKEA was indifferent towards the general opinion among the retailing companies that

lower level employees were easily replaceable and so they did not make any special

effort to retain these employees

• IKEA understood the importance of a committed workforce

• Payroll Support helps IKEA to achieve the objective by making sure all the co-

workers do their work passionately.

• For instance, the pay check has to be processed and delivered on time; paperwork

must be maintained in order and etc.

• Store Control this co-workers together with the store management responsibility to

attain financial goals and also make sure profitability.

GLASSDOOR

Glassdoor holds a growing database of 6 million company reviews, CEO approval ratings,

salary reports, interview reviews and questions, benefits reviews, office photos and more.

Unlike other jobs sites, all of this information is entirely shared by those who know a

company best — the employees

COMPARISON IKEA’S WORK ENVIRONMENT WITH OTHER COMPANIES

USING GLASSDOOR

Among the 620 interviews taken with average difficulty level from IKEA’s current and ex-

employees 71% of them showed positive, 14% showed neutral and 13% showed negative

response to IKEA’s work environment

IKEA RATINGS AND TRENDS

Employees rated IKEA’s work environment in which culture and values are rated highest

(3.8/5.0) and senior management is rated low (3.0/5.0) ,this shows that employees are facing

some issues with the IKEA’s senior management. The statistics in Glassdoor shows that 68%

of employees recommending IKEA to their friends

COMPARISON OF IKEA’S WORK ENVIRONMENT RATINGS WITH OTHER

ORGANISATIONS

IKEA’S COMPENSATION & BENEFITS

Insurance, Health & Wellness

Health Insurance

Dental Insurance

Flexible Spending Account (FSA)

Vision Insurance

Health Savings Account (HSA)

Life Insurance

Supplemental Life Insurance

Disability Insurance

Occupation Accident Insurance

Mental Health Care

Retiree Health & Medical

Accidental Death & Dismemberment Insurance

IKEA

3.5

Walmart

2.8

Target

3.1

Google

4.4

Financial & Retirement

Pension Plan

401K Plan

Retirement Plan

Performance Bonus

Equity Incentive Plan

Family & Parenting

Maternity & Paternity Leave

Fertility Assistance

Dependent Care

Adoption Assistance

Reduced or Flexible Hours

Military Leave

Family Medical Leave

Unpaid Extended Leave

Vacation & Time Off

Vacation & Paid Time Off

Sick Days

Paid Holidays

Sabbatical

Perks & Discounts

Employee Discount

Free Lunch or Snacks

Employee Assistance Program

Commuter Checks & Assistance

Mobile Phone Discount

Company Social Events

Travel Concierge

Legal Assistance

Professional Support

Diversity Program

Job Training

Professional Development

Tuition Assistance

IKEA COMPENSATION & BENEFIT’S COMPARISON WITH OTHER

ORGANISATIONS

Employees rate IKEA increased 11.8% above average for compensation and benefits

Employees rate Target decreased 5.6% below average for compensation and benefits

Employees rate Walmart decreased 12.8% above average for compensation and

benefits

Employees rate Google increased 11.8% above average for compensation and benefits

PROS AND CONS AT IKEA

PROS:

"I believe that work-life balance would be good and working environments are all

friendly"

"Great benefits package is the only reason I have stayed with this company for so

long"

"They have good benefits if you are full time or salary"

"Very accommodating of part-time work schedule so I can go to school"

"Excellent benefits, great work/life balance and awesome work environment"

CONS:

"Work life balance is not always at the forefront for co-workers"

"Coming from a part time you will not choose to do a full time job or work more

hours"

"Upper management or "steering" tends to act like they are above everyone"

"Can be hard to get full-time work"

"Very hard to move into management position since there is very little turnover in

those positions"

CONCLUSION

IKEA’s innovative human resource management practices have helped build a strong and

nurturing culture that promotes diversity and creativity. In an industry characterized by high

turnover, their employee friendly policy has made IKEA a preferred employer in the retail

sector. Working in line with strategy, its HRM practices has helped in sustaining IKEA’s

growth .In many countries, IKEA is the “Employer of Choice” and globally IKEA is listed as

one of the top 50 most attractive employers in 2010. IKEA has the distinction of being in

FORTUNE’s “100 Best Companies to Work For” list for three consecutive years.