Ikea_White Paper

Innovative HRM Practices & Culture at

A Project Report on

Innovative HRM Practices
& Culture at IKEA

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Prepared By:
Jaskaran Singh
Prashant Patro
Prithvi Rao
Sona Phogat
Stuti Ahuja
Sweta Chauhan

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Company Background:
IKEA is a Swedish company registered in the Netherlands that designs and sells ready-toassemble furniture (such as beds, chairs and desks), appliances and home accessories. As of
January 2008, the company is the world's largest furniture retailer. Founded in Sweden in
1943 by 17-year-old, Ingvar Kamprad, who was listed as one of the world's richest people
in 2013, the company's name is an acronym that consists of the initials of, Ingvar Kamprad,
Elmtaryd (the farm where he grew up), and Agunnaryd (his hometown in Småland, south
Sweden). The company is known for its modern architectural designs for various types of
appliances and furniture, and its interior design work is often associated with eco-friendly
simplicity. In addition, the firm is known for its attention to cost control, operational
details, and continuous product development, corporate attributes that allowed IKEA to
lower its prices by an average of two to three percent over the decade to 2010 during a
period of global expansion.
As of January 2014, IKEA owns and operates 349 stores in 43 countries. In fiscal year 2010,
US$23.1 billion worth of goods were sold, a total that represented a 7.7 percent increase
over 2009. The IKEA website contains about 12,000 products and is the closest
representation of the entire IKEA range. There were over 470 million visitors to IKEA’s
websites in the year from September 2007 to September 2008. A July 2013 media report
speculated that IKEA is the world's largest consumer of wood after a finding that the
company uses 1% of the Earth's wood supply.

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Stores Worldwide: (As of January 2014)


History of IKEA:
The first Möbel-IKÉA store was opened in Älmhult, Småland in 1958, while the first stores
outside Sweden were opened in Norway (1963) and Denmark (1969). The stores spread to
other parts of Europe in the 1970s, with the first store outside Scandinavia opening in
Switzerland (1973), followed by Germany (1974).
Amid a high level of success, the company's German executives accidentally opened a store
in Konstanz in 1973 instead of Koblenz. Later that decade, stores opened in other parts of
the world, such as Japan (1974), Australia and Hong Kong (1975), Canada (1976), and
Singapore (1978).[citation needed] IKEA further expanded in the 1980s, opening stores in
countries such as France and Spain (1981), Canada (1982), Belgium (1984), the United
States (1985), the United Kingdom (1987), and Italy (1989).[citation needed] The company
then expanded into more countries in the 1990s and 2000s. Germany, with 44 stores, is
IKEA’s biggest market, followed by the United States, with 37 stores. At the end of the 2009
financial year, the IKEA group operated 267 stores in 25 countries. The first IKEA store in
Latin America opened on 17 February 2010 in Santo Domingo, Dominican Republic. As of
July 2013, the company's presence in developing countries remains minimal.
The world's five largest IKEA stores are:
1.
2.
3.
4.
5.

Stockholm Kungens Kurva, Sweden: 55,200 m2 (594,000 sq ft)
Shanghai Baoshan, China: 55,032 m2 (592,360 sq ft)
Shanghai Pudong Beicai, China: 49,400 m2 (532,000 sq ft)
Wuxi, China: 49,117 m2 (528,690 sq ft)
Ningbo, China: 47,505 m2 (511,340 sq ft)

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The largest store in the Southern Hemisphere is located in Tempe, Sydney, Australia with a
total area of 39,000 m2 (420,000 sq ft). The biggest store in North America is located in
Montreal, in the province of Quebec, Canada. The store was opened in 1986 in the Ville-StLaurent area, and was completely renovated and expanded in 2012-2013. Built in 1986, the
store's initial area was 22,062 m2 (237,470 sq ft), while the renovated store now measures
43,636 m2 (469,690 sq ft).
By the end of 2013, IKEA planned to open its first warehouse in Croatia, near Zagreb. Due
to problems with building permissions, the construction started on 28 August 2013 and is
planned to be finished in mid-2014. The adjacent shopping centre, which will be completed
in 2015, will be one of the 5 biggest in Europe and among the 10 biggest IKEA stores in the
world. In 2013, IKEA opened its first shopping centre in Vilnius, Lithuania that is the
biggest furniture-selling mall in Baltic states.


In March 2013, IKEA opened its first outlet in Qatar, after a delay of several months. Like
others in the GCC, the Doha outlet is operated by the Al-Futtaim Group. In May 2013, the
demolition of the vacant Merriam Village Shopping Center in Johnson County, Kansas was
carried out in preparation for the construction of an IKEA store that will measure
approximately 400,000 sq ft (37,000 m2)—at the time of the demolition, the company
claimed that 60,000 IKEA customers existed in the Kansas City area. In August 2013, the
first store in the Baltic States was opened in the Vilnius region of Lithuania. Construction of
the 26,500 sq ft (2,500 m2) store commenced in 2011 and the store employs over 200
people. IKEA announced on 4 December 2013, a new 389,000 square foot store will begin
construction in 2014 in St. Louis, Missouri in the city's Midtown District.

Evolution of the IKEA logo:

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The IKEA logo has changed little throughout the history of the IKEA organisation. The
design of the 1967 logo remains a consistent symbol of the IKEA business. The blue and
yellow logo was first used in 1977 and since 1983 focus has been on this version of the
IKEA logo. Today, it is one of the world’s strongest brands.


IKEA Ownership Structure:
IKEA is owned and operated by a complicated array of not-for-profit and forprofit corporations. The corporate structure is divided into two main parts: operations and
franchising. Most of IKEA’s operations, including the management of the majority of its
stores, the design and manufacture of its furniture, and purchasing and supply functions
are overseen by INGKA Holding, a private, for-profit Dutch company. Of the IKEA stores in
36 countries, 301 are run by the INGKA Holding. The remaining 47 stores are run by
franchisees outside of the INGKA Holding, with the exception of IKEA Delft which is not
franchised.
INGKA Holding is not an independent company, but is wholly owned by the Stichting
INGKA Foundation, which Kamprad established in 1982 in the Netherlands as a taxexempt, not-for-profit foundation. The INGKA Foundation is controlled by a five-member
executive committee that is chaired by Kamprad and includes his wife and attorney.
While most IKEA stores operate under the direct purview of INGKA Holding and the INGKA
Foundation, the IKEA trademark and concept is owned by an entirely separate Dutch
company Inter IKEA Systems. Every IKEA store, including those run by INGKA Holding,
pays a franchise fee of 3% of revenue to Inter IKEA Systems. The ownership of Inter IKEA
Systems is exceedingly complicated and not publicly known. Inter IKEA Systems is owned
by Inter IKEA Holding, a company registered in Luxembourg. Inter IKEA Holding, in turn,
belongs to an identically named company in the former Netherlands Antilles that is run by
a trust company based in Curacao. In 2009 the company in Curacao was liquidated and the
company responsible for this liquidation traces back to the Interogo Foundation in
Liechtenstein. Ingvar Kamprad has confirmed that this foundation owns Inter IKEA Holding
S.A. in Luxembourg and is controlled by the Kamprad family. The IKEA food concessions
that operate in IKEA stores are still directly owned by the Kamprad family and represent a
major part of the family's income.

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In Australia, IKEA is operated by two companies. Stores located on the East Coast
including Queensland, New South Wales and Victoria are owned by INGKA Holding. Stores
elsewhere in the country including South Australia and Western Australia are owned by
Cebas Pty Ltd. Like elsewhere, all stores are operated under a franchise agreement with
Inter IKEA Systems.
In June 2013, Ingvar Kamprad resigned from the board of Inter IKEA Holding SA and his
youngest son Mathias Kamprad replaced Per Ludvigsson as the chairman of the holding
company. Following his decision to step down, the 87-year-old founder explained, ”I see
this as a good time for me to leave the board of Inter IKEA Group. By that we are also taking
another step in the generation shift that has been ongoing for some years.” Mathias and his


two older brothers, who also have leadership roles at IKEA, work on the corporation's
overall vision and long-term strategy.
Along with helping IKEA make non-taxable profit, IKEA’s complicated corporate structure
allows Kamprad to maintain tight control over the operations of INGKA Holding, and thus
the operation of most IKEA stores. The INGKA Foundation's five-person executive
committee is chaired by Kamprad. It appoints the board of INGKA Holding, approves any
changes to INGKA Holding's bylaws, and has the right to preempt new share issues. If a
member of the executive committee quits or dies, the other four members appoint his or
her replacement.

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In Kamprad's absence the foundation's bylaws include specific provisions requiring it to
continue operating the INGKA Holding group and specifying that shares can be sold only to
another foundation with the same objectives as the INGKA Foundation.


About IKEA Concept:
”The floor is where we learn still today, be it in the store or in the factory.”
Ingvar Kamprad
IKEA founder

Supporting:
The IKEA Concept Center is also home to specialists who, in co-operation with the
IKEA retailers, find and identify good ideas and solutions. New solutions are
developed, documented and analyzed from a conceptual viewpoint. We provide
systematic transfer of IKEA know-how. And communicate proven solutions to all
IKEA retailers, so that each and every one can benefit from these in their business.
Together, we work to keep the IKEA Concept successful.

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Learning:
At the IKEA Concept Center IKEA retailers can learn to develop their business and
have lots of fun while doing it! We offer more than 50 different training programmes
and workshops to IKEA managers and specialists at the IKEA College. In addition,
many training programmes are offered locally or as e-learning programmes. Every
year thousands of students are educated on how to use proven systems, methods
and solutions to maximize the possibilities of the IKEA Concept.

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Shopping:
For most visitors, the main attraction of the IKEA Concept Center is the IKEA store.
Like all IKEA stores in the world it offers inspiring solutions, low prices, tasty food
and shopping that is fun and enjoyable. IKEA Delft also offers online shopping,
putting the IKEA offer at people’s fingertips 24 hours a day.

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Testing:
Just as all IKEA products are tested to ensure quality and to find ways to improve,
we are always interested in improving the living IKEA Concept. We test lots of new
and innovative ideas at the IKEA Concept Center. These could be ideas suggested by
IKEA retailers or ones that we come up with ourselves. When we find solutions that
work well we make the part of the IKEA Concept and document and describe them
so that all IKEA retailers benefit.


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Some retails facts about IKEA: (As of Dec 2013)


The IKEA Product Range:
Developing IKEA products can take place almost anywhere around the world - on a factory
floor in Asia or on the drawing board in Älmhult, Sweden. And everybody involved works
together to create a product range that is simple and straightforward, with products that
are hard-wearing, easy to live with and affordable.

Form follow function:
IKEA designers constantly seek new ways to improve people’s lives - without
emptying their wallets. But how can good design and function be combined with
good quality, all at a low price? It starts with focusing on what’s important. Will an
expensive finish on the back of a shelf or under a table-top improve the function? Of
course not. So IKEA designers do not do it, because a product is of no use to the
many people if it is not affordable.

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Democratic design:
Good design should be available for the many, not the few. That’s why all IKEA
designers design every IKEA product starting with a functional need and a price.
Then they use their creativity and knowledge and use low-cost raw materials and
manufacturing processes to create functional products. Then large volumes are
purchased to push prices down even further. Most IKEA products are also designed
to be transported in flat packs and assembled at the customer’s home. This also
lowers the price by minimizing transportation and storage costs. By doing all this,
the IKEA Concept uses design to make sure that IKEA products can be bought and
enjoyed by as many people as possible.

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Low prices with meaning:
Low prices are only valuable if they offer good function, quality and design. IKEA
product development teams constantly ask themselves – does this product
contribute to a better everyday life? Does it have a good, sustainable design? Is the
function and quality suited for everyday life? And most crucial – is the price low
enough to make this product accessible to many, not just the few?


IKEA Business Range:

Houses and Flats:
IKEA has also expanded its product base to include flat-pack houses, in an effort to
cut prices involved in a first-time buyer's home. The product, named BoKlok was
launched in Sweden in 1996 in a joint venture with Skanska. Now working in the
Nordic countries and in the UK, sites confirmed in England include London, Ashtonunder-Lyne, Leeds, Gateshead, Warrington and Liverpool.

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Family Mobile:
On 8 August 2008, IKEA UK launched Family Mobile, a virtual mobile phone
network, running on T-Mobile.

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Manufacturing:
Although IKEA household products and furniture are designed in Sweden, they are
largely manufactured in developing countries to keep costs down. China accounts
for about 2½ times as much supply as Sweden. For most of its products, the final
assembly is performed by the end-user (consumer).

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Furniture:
Rather than being sold pre-assembled, much of IKEA’s furniture is designed to be
self-assembled. The company claims that this helps reduce costs and use of
packaging by not shipping air; the volume of a bookcase, for example, is
considerably less if it is shipped unassembled rather than assembled. This is also
practical for many of the chain's European customers, where public transport is
commonly used, and the flat-pack methods allowing for easier transport via public
transportation.

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Product names:
IKEA products are identified by one-word (rarely two-word) names. Most of the
names are Scandinavian in origin. Although there are some exceptions, most
product names are based on a special naming system developed by IKEA.
o Upholstered furniture, coffee tables, rattan furniture, bookshelves, media
storage, doorknobs: Swedish place names (for example: Klippan)
o Beds, wardrobes, hall furniture: Norwegian place names
o Dining tables and chairs: Finnish place names
o Bookcase ranges: Occupations
o Bathroom articles: Scandinavian lakes, rivers and bays
o Kitchens: grammatical terms, sometimes also other names
o Chairs, desks: men's names


o
o
o
o
o
o
o
o
o

Fabrics, curtains: women's names
Garden furniture: Swedish islands
Carpets: Danish place names
Lighting: terms from music, chemistry, meteorology, measures, weights,
seasons, months, days, boats, nautical terms
Bedlinen, bed covers, pillows/cushions: flowers, plants, precious stones
Children's items: mammals, birds, adjectives
Curtain accessories: mathematical and geometrical terms
Kitchen utensils: foreign words, spices, herbs, fish, mushrooms, fruits or
berries, functional descriptions
Boxes, wall decoration, pictures and frames, clocks: colloquial expressions,
also Swedish place names

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Catalogue:
IKEA publishes an annual catalogue, first published in Swedish in 1951. IKEA
published 197 million catalogues in 2010, in twenty languages and sixty-one
editions. It is considered to be the main marketing tool of the retail giant, consuming
70% of the company's annual marketing budget.

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IKEA Family Loyalty Card:
In common with some other retailers, IKEA has launched a loyalty card called "IKEA
family". The card is free of charge and can be used to obtain discounts on a special
range of products found in each IKEA store. In conjunction with the card, IKEA also
publishes and sells a printed quarterly magazine titled IKEA Family Live which
supplements the card and catalogue. The magazine is already printed in thirteen
languages and an English edition for the United Kingdom was launched in February
2007. It is expected to have a subscription of over 500,000.


HR Management Practices at IKEA:
The vision of IKEA was “To create a better everyday life for the many people”.
The definition of people included not just the employees and customers but the community
as well. The HR philosophy that the company subscribed to was that employees were more
productive and committed when the company took care of them and their needs.
The company took a paternalistic stance towards employees and their needs like many
other Swedish companies and promoted employee empowerment. . But although IKEA had
a positive HR philosophy and offered generous benefits, their application was more
standardized and the policies applied uniformly to all the employees. But all the employees
had different needs so this kind of philosophy did not work well.

Entry of Spiers Lopez:
Spiers-Lopez became the HR head at IKEA North America in the late 1990s. And she was
the first person to realize that employees were not able to derive the maximum benefit
from IKEA’s generous policies. This was because the policies did not always match the
individual requirements and needs of the employees. Lopez felt that employees would
benefit more if greater amount of flexibility was introduced in the system. She wanted to
develop a system which included the individual needs and requirements of the employees
also and keeping this in mind she conducted comprehensive employee surveys in which it
was asked in detail about their needs, preferences and what they expected from the
organization. In the course of this activity, she concluded that while all of IKEA’s employees
believed in and were committed to the culture of the organization, each of them had
different needs and expectations from the company. In order to accommodate these
different needs of the employees she created a set of initiatives that supported ‘life balance
and diversity’.
The main aspect behind which all of these initiatives were based was ‘flexibility’. The
company made a conscious effort to accept and accommodate the different needs of its
people.

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Flexible holiday schedule: IKEA traditionally used to have six holidays every year.
Initially, the company had a structured holiday schedule with six standard holidays
for the employees. But in the late 1990s IKEA implemented a flexible six holiday
schedule that allowed employees to decide which six days they chose to observe as
holidays every year.
Other aspect of flexibility was the flexibility in work life balance. Therefore, it made


an effort to incorporate policies that would help employees strike life balance. IKEA
introduced flextime in which employees could choose when they would start and
end their workdays subject to requirements of the store or office in which they
worked.
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Other practices like condensed-work weeks, job sharing, and telecommuting were
also introduced to allow employees to do justice to their personal lives as well as
careers. For eg : Lori Schilling was an IKEA employee from California who said that
the company’s flexibility was a major help to her when she adopted a child in 2003.
She then wanted to spend more time at home and worked out an arrangement with
her boss and direct reports that allowed her to work every alternate fortnight. She
said that the arrangement worked very well for her and she didn’t encounter any
problem with the company.

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Videoconferencing was also adopted by the company to help employees avoid
excessive burden travel at the cost of family time.
IKEA allowed its employees to coordinate their schedules with their spouses’ work
hours, especially if they had small children and one of the parents was required to
be at home all times. Transfer of employees between locations was also open
provided there was a matching opening for the employee at the place she wanted to
move to. This worked in the case of young employees who wanted to spend a year
or two working at different locations, sometimes even abroad.
The flexibility policy ensured that employees didn’t have to sacrifice their careers
due to personal commitments. Since the company was open to accommodating their
requirements, employees were motivated to contribute their best.
Under Lopez’s guidance, several initiatives were introduced to improve the quality
of work life of the employees.

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Steps were taken to make the stores more comfortable for employees during non
working times and breaks.
o Quiet rooms: for praying or meditation
o Lactation rooms: for nursing mothers
o Onsite childcare facilities were also there
o Entertaining rooms: Employees could receive visiting friends and family
members.
o Resource rooms: employees could access computers to browse IKEA
approved websites containing health information and self improvement tips.


Employee websites could also be accessed that listed benefits information,
details of forthcoming training and development programs and job openings
within the IKEA system.
Employees could also avail the substantial discounts at IKEA’s onsite restaurants for
themselves and their families.
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Benefits policy and discounts: IKEA was also well known for its benefits policy. It
gave full medical and dental insurance to all employees working 20 hours or more
per week. Discounts were also given to employees for weight reduction and
smoking cessation services and free subscriptions to health and wellness magazines
were also given.

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Parental benefits: Seven weeks’ maternity leave was given to women with full pay
while men and adoptive parents received one week with full pay. They could take
paid time off for family commitments such as marriages and deaths. All employees
were eligible for between two and five weeks of annual paid vacation depending on
the length of their service at the company. Unlike many other companies, leave
accruals began on the first working day itself and employees could carry forward
vacation time to the next year although they were encouraged to take a vacation
every year.
All employees were eligible for a 15 percent discount on IKEA merchandise and
could purchase anything at IKEA’s restaurants at highly subsidized rates. IKEA even
had an annual ‘Coworker Appreciation Day’ when employees could get a discount of
up to 40 percent on store purchases depending on the annual performance of their
store. This discount was extended to family members as well. Employees also
received a credit card with no interest for 90 days and could choose to join the
company’s policy.

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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 percent of the course fee upfront and
the remaining 25 percent 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. What was distinctive about 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 ongoing development was reflected even in the company’s
policies on training and development.

Mentoring was one of the programs that were 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

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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.

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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. One of
the IKEA managers that there is no limitation to what you can achieve by working
with us.


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I Want Your Job- it was a program that was launched in 2003. This program
allowed employees the employees to train with persons whose job they want in the
future

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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 percent 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 way 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.


Various 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 erecruiting 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

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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 Savers' 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.

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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.


IKEA Values:

Constant desire for renewal: We know that adapting to customer needs with
innovative solutions contributes to a better everyday life at home. We like change
and encourage people to look for constant improvement.

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Togetherness and enthusiasm: Together, we have the power to solve seemingly
unsolvable problems. We do it all the time. We look for people show are supportive,
work well in teams and are open with each other in the way they talk and connect.



Cost-consciousness: Low prices are impossible without low costs, so we proudly
achieve good results with small resources. This value goes hand in hand with our
business idea.

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Striving to meet reality: We stay true to practical solutions to develop, improve
and make decisions based on reality.

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Humbleness and willpower: We respect each other, our customers and our
suppliers. Using our willpower means we get things done. In other words, it means
we know exactly what we want, and our desire to get it should be irrepressible.

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Daring to be different: We question old solutions and, if we have a better idea, we
are willing to change.

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Accept and delegate responsibility: We promote co-workers with potential and
stimulate them to surpass their expectations.

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Simplicity:We take an easy-going, straightforward approach when solving
problems, dealing with people or facing challenges.

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Leadership by example: Our managers act according to IKEA values, create an
atmosphere of well-being and expect the same from co-workers. It means pitching
in when there is more than the usual work to be done, respecting those around you
and encouraging the initiative and achievements of everyone in the group.

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Constantly being “on the way”: We review what’s done today and ask what can be
done better tomorrow, so we can find new ideas and inspiration.


Best Employer
In January 2005, Fortune named IKEA in the list of “100 Best Companies to Work for”. It
won points for its innovative human resource practices and policies. And the
encouragement for creativity and diversity was also applauded in the Fortune article.
A few months earlier, in 2004, IKEA was also listed as one of the “100 best companies for
working mothers.” IKEA’s efforts for creating a workplace that accommodated the needs of
mothers were appreciated. The facilities provided IKEA are flexible work scheduling, time
off for new parents and childcare facilities.
IKEA stood out in the industry for being employee friendly. The retail sector in the US was
not known for being employee friendly. They paid substantially low salaries and negligible
employee benefits. This was the primary reason for high attrition rate in the retail sector.
This resulted in high HR costs due to repeated recruitment processes. But IKEA was an
exception. It had employee friendly salaries and offered benefits which resulted in
surprisingly low attrition rate.
In 2000, IKEA was one of the largest privately held companies in the world. It was claimed
that IKEA founder, Ingvar Kamprad, was the richest man in the world, but this could not be
proved considering the fact that it was a private company and therefore it did not share it
financials.
Apart from this IKEA was also listed on TIME magazine and Forbes magazine as one of the
most reputed companies in the world. Ethisphere recognized IKEA as one of the most
ethical companies.

Payoff:

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IKEA’s HR policies did cost a lot to the company but the payoff far outweighed the costs.
Firstly the attrition rate decreased drastically from 76% in 2001 to 35% in 2003. This
lowered the company’s costs in hiring and training new employees as was the case with
most companies in the retail sector. Most of the employees had high morale and were
looking for long term engagement with the company. Also the profit margin of IKEA was
almost double of that of its competitors. Also IKEA also knew the importance of a
committed workforce and made an effort to retain its people and provide them with
benefits.


Work Culture:
“At IKEA, we think of ourselves as a family. Just as one would look after their parents, siblings or
children, our coworker family is encouraged to and excels at supporting and taking care of each other.”

-Spiers-Lopez
IKEA has a strong and nurturing culture which supports its innovative and positive HR
policies. According to Spiers-Lopez, IKEA’s culture is attributed by a family-like quality that
strengthens the relationship between the employees.
The following are the main attributes of the work-culture at IKEA:

Openness & Equality - All employees are called coworkers regardless of their rank.
This is because they believe that all the employees make a difference, whether in an
office or on the sales floor.



In order to promote an environment of open communication IKEA adopted flat
organizational structure. Employees can express their opinion in open forums and
even discuss it directly with the president via email or post cards, culturally/
ethnically diverse. All training programs are 2 way activity where the manager
interacts openly with their subordinates. Employees were encouraged to express
their opinions and ideas directly to the top management.



-

Independence–Employees were rewarded with high level of empowerment.
Employees were encouraged to be independent and define their own ways of doing
things right. They are never given detailed instructions about job activities and
behavior. Instead, they are given general instructions on what they are expected to
achieve, and allowed to choose their methods in achieving that, within reasonable
limits of cost and ethical behavior.



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

Creativity & Innovation – Innovation and creativity is encouraged throughout the
organization, in every level. In fact is the cornerstone on which the company is built
upon. IKEA promoted the attribute of openness to change and adaptability. IKEA
encouraged its employees to come up with new ideas and methods as it believed
that the key to continuous success was innovation. In fact many of the
experimentation done by the employees were actually commercialized into new
products.



Cost Conscious –Another value that was emphasized in IKEA was costconsciousness. This quality is said to have percolated from Kamprad himself who
was known for his tight fisted approach. "Wasting resources is mortal sin", everyone


travelled in low cost airlines and stayed in budget hotels. They even used public
transport while they were on trip.

-

All the major decisions were taken keeping in mind the cost involved. The expected
price of the product was calculated whenever they went for new product
development. Similarly the costs were cautiously weighed before implementing any
changes or new plan. Since IKEA offered prices which were significantly lower than
that of its competitors therefore it was necessary for them to have a supportive cost
structure.

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

Diversity- Diverstity was another attribute that was ingrained in the culture of
IKEA. The company introduced a number of diversity-focussed program so that it
becomes easier for the employees to accept and promote diversity. The managers
were trained to avoid the possible cultural biases in the hiring process. In fact the
mangers were annually evaluated on the basis of the amount of ethnic diversity that
was present in their workforce.


8 Reasons People Stay with IKEA:

They’re inspired!: 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%.



Making mistakes is okay – really: 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.



An up, down and sideways career: 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.



Sweden today, China tomorrow: 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.



Egos parked at the door: 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.



The rewards of a never-ending 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.



Learning by the seat of your pants: What other company trusts you with a €30
million budget? At the age of 22? If you are the right person for the job, learning
with support and coaching is a way of life at IKEA.



-

We hire the right people: 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”.



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

A parent-friendly 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.


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

The original social network: The people you work with are also your friends. You
know there’s someone to turn to in every major city around the world. And you
instantly have something to talk about with 131,000 people a lot like yourself. That's
a big social network.


Criticism on IKEA:

Former Norwegian Prime Minister Kjell Magne Bondevik has criticized IKEA for not
depicting women assembling furniture in its instruction booklets. IKEA denied this
claim in a statement.



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 Labour 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.



June 2007: The BRUNKRISSLA bedding notes said, "Brightens up your grad's dorm.
Unlike a creepy gothic room-mate, who can be a bad influence?" Members of the
Goth subculture took offence at the stereotype.



-

As a teenager, IKEA founder Ingvar Kamprad was directly involved in the pro-Nazi
New Swedish Movement (Nysvenska Rörelsen) until at least 1948, causing tensions
when IKEA began opening stores in Israel,[96] although one source has claimed that
the movement was not pro-Nazi. Kamprad devotes two chapters to his time in
Nysvenska Rörelsen in his book, Leading By Design: The IKEA Story and, in a 1994
letter to IKEA employees, called his affiliation with the organisation the "greatest
mistake of my life." After the revelations came to light, he pledged £1 billion to
charity.



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

2007 Several ancient tombs were destroyed while building an IKEA store in Nanjing,
south-eastern China. Archaeologists asked whether the building company could stop
working for some days for providing archaeologists to work on the side, but they did
not get the permission.


IKEA has been criticized by City TV in Canada for charging as much as twice the
price in their Canadian stores for the same items sold in their American stores, this
despite the Canadian dollar reaching parity with the U.S. dollar.



In 2008, IKEA sent an email to their British customers advising that "IKEA Shop
Online is open everywhere", even though this only applied to England and Wales. As
of April 2013, Scottish residents are able to shop online, but not Northern Irish
residents.



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 labor 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 Mediapart 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 ecoterrorists.



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 WorkSafe Victoria. IKEA Australia have 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.



-

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.



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

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


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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.


Culture & Innovation at IKEA
IKEA’s vision was "To create a better everyday life for the many people." 'People' here
included employees, customers, as well as the community. The company's human resource
philosophy was that employees were more productive and efficient when the company
took care of their needs. IKEA followed a paternalistic culture and ensured that their
employees were taken care of. They also promoted employee empowerment. However,
even though the company was known for its generous HR policies, the policies were
standardized and this was applicable uniformly to all its employees.
This did not always work well, as different employees had different needs. In the late
1990s, when Spiers-Lopez became the HR head at IKEA North America, she realized that
employees were not able to derive the maximum benefit from IKEA’s generous HR policies
and were not completely satisfied as different employees had different needs. She felt that
employees would benefit more if there were a greater amount of flexibility in benefits
administration. IKEA’s positive HR policies were supported by a strong and nurturing
culture that promoted diversity and creativity. Kea treated its employees like they were a
part of a family. This was substantiated by Spiers-Lopez’s statement that 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," she said.
The founder of IKEA, Ingvar Kamprad had once written in a manifesto that "the true IKEA
spirit is still founded on our enthusiasm, on our constant will to renew, on our cost
consciousness, on our willingness to assume responsibility and to help, on our humbleness
before the task and on the simplicity in our behavior. We must take care of each other,
inspire each other."

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Page 28 -

But how did this all begin?
The IKEA Concept began when Ingvar Kamprad, an entrepreneur from the Småland
province in southern Sweden, had an innovative idea. In the region of Småland, although
the soil is thin and poor, people have a reputation for working hard, living frugally and
making the most out of limited resources. So when Ingvar started his furniture business in
the late 1940s, he applied the lessons that he learnt in Småland to the home furnishings
market. Ingvar’s innovative idea was to offer home furnishing products of good function
and design at prices much lower than competitors by using simple cost-cutting solutions
that did not affect the quality of products. The vision that he had was to create a better
everyday life for the most people by offering a wide range of well-designed function home


furnishing products at price so low that as many people as possible will be able to afford
them. Basic activities such as eating, sleeping, storing items, socializing and so on create a
demand for furniture and practical products that solve essential human needs. Ingvar
decided to fill the void created by this demand through IKEA. Furthermore, the vast
majority of people have limited budgets and limited space in their homes. The IKEA range
included products for every part of the home.
Without IKEA many people couldn't have approached contemporary design and the main
reason is cheapness. To sell nice products (created by designers) with a cheap price Ingvar
used every opportunity to reduce costs, and he scraped and saved in every way possible
except on innovation of ideas and quality.
Today, the IKEA trademark represents the leading home furnishings brand in the world
with more than 300 stores in more than 35 countries and more than 130,000 co-workers.
IKEA sell not only furnishing products but more than 7000 different items (from dishes to
toys) and some pieces of Swedish culture and identity: In almost every shop there is a
restaurant with Swedish dishes and Furniture are named with Sweden toponysm.
Now let us examine what IKEA culture is based on.

Competitiveness: Always try to cut prices, by reducing prices by 40 percent. This
IKEA does by selecting best suppliers of materials and purchasing huge quantity of
goods and materials at global level. By doing so, IKEA maintains its competitiveness
and remains competitive in the market.



-

Lack of hierarchy: In some special weeks all Senior Manager Work in the shops;
everybody, including the Top Managers fly in economy class. IKEA employees work
in a flat structure without a hierarchy.



Page 29 -



Design: The big challenge is to draw and create nice products, cheap and both
pretty and practical. But each design is approved only if production cost is
affordable. While most retailers use design to justify a higher price, IKEA designers
work in exactly the opposite way. Instead they use design to secure the lowest
possible price. IKEA designers design every IKEA product starting with a functional
need and a price. They do this by using their vast knowledge of innovative, low-cost
manufacturing processes to create functional products, often coordinate together.
By producing in large volumes, these prices and costs are pushed down even
further. Most IKEA products are also designed to be transported in flat packs and
assembled at the customer's home. This lowers the price by minimizing
transportation and storage costs. Through this, IKEA ensures that costs are cut even
more, and that the products are customized.


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

Customers cooperation: Sales strategy has a specific focus on Customer
cooperation. IKEA customers also contribute to keeping prices low. They select and
pick up the products themselves, transport them home and then assemble them
themselves. And they can enjoy them already later that day.

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