Innovative HRM Practices at IKEA


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  • Kamprad began to develop a business as a young boy, selling matches to neighbors from his bicycle. He found that he could buy matches in bulk very cheaply from Stockholm, sell them individually at a low price, and still make a good profit. From matches, he expanded to selling fish, Christmas tree decorations, seeds, and later ballpoint pens and pencils. When Kamprad was 17, his father gave him a cash reward for succeeding in his studies.IKEA was founded in 1943 at Kamprad's uncle Ernst's kitchen table. In 1948, Kamprad diversified his portfolio, adding furniture. His business was mostly mail-order. The acronym IKEA is made up of the initials of his name (Ingvar Kamprad) plus those of Elmtaryd, the family farm where he was born, and the nearby village Agunnaryd.
  • IKEA is owned and operated by a complicated array of not-for-profit and for-profit 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 StichtingIngka Foundation, which Kamprad established in 1982 in the Netherlands as a tax-exempt, 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. 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
  • Stp in areas like diversity health and safety and environmental conciousneess
  • A union-organizing battle hangs over the Ikea plant in Virginia. Workers complain of eliminated raises, a frenzied pace, mandatory overtime and racial discrimination.Reporting from Danville, VaIn richmond they also were against unionising and they did a 1 hr lockoutthese practices pay great dividends and any punishment employers might face for violating the law is considered a small price for preventing a union organizing campaign.
  • If you live in Paris, France, and you’re waiting for the bus, get a change of scenery and comfort by trying out these IKEA bus terminals. The latest endeavor by IKEA hopes to reach out everyday commuters by replacing traditional terminal seating with comfy, cozy couches. The design is a smart and effective way to make your wait a tad more stylish and comfortable.The IKEA bus terminals have been applied to 12 shelters thus far and will run from the 15th to the 21st of December, 2010. The living room concepts include pieces such as the KLIPPAN and EKTORP sofas that have been consistently best sellers at IKEA.
  • Building furniture the IKEA way is almost simple enough for anyone, but Poles Apart by Adrian Bergman requires no handyman experience at all, because no tools are necessary for the construction of these pieces.A graduate of the London Metropolitan University, the creator of this compelling system of easily assembled objects presented his project at the New Designers exhibition. As a proposal for an efficient retail display collection, the various wooden components can be flexibly arranged to form desired custom furnishings. Large wooden dowels make up the vertical supports and horizontal bracing for the tables and clothes racks, while pre-drilled timber panels make adequate flat surfaces for visual merchandizing. Poles Apart by Adrian Bergman can be intuitively and imaginatively put together by any sales associate, and temporarily fixed together with black elastic O-rings.
  • The end table's days may be numbered thanks to Frederik Roijé's Slow Sofa. The Slow Sofa is a set of modular sofas designed with attached end tables.The best part about the Slow Sofa is that it can be split into two parts. The two pieces can combine to form several different sofas, letting you switch up the look of your living room or den at will. Here's hoping that the Slow Sofa will somehow find its way to IKEA after its run ends at the GalerieFiebach & Minninger in Cologne, Germany.
  • This table vase by Tomokazu Hayakawa replaces the need for messy vases that spill water everywhere. Instead you get a neat, cute vase that is built into the table.But rather than having to run out and buy yourself a table vase, there are pretty simple instructions on how to build your own version of the table vase by Tomokazu Hayakawa using IKEA products. Just screw a mason-type jar to the table, drill some holes here and there, and fill the jar with water.
  • Using chairs as coat hangers is not a new concept, but I just love how cleverly these half IKEA 'Bertil' chair hangers came about. Posted on IKEAhacker, seattastic slings add an interior design element to small space storage solutions. The designer was inspired to make these half IKEA 'Bertil' chair hangers after seeing a similar conception from 'Laphoeff.' Using two second-hand dining chairs, the resourceful and design-minded decorator cut the seat edges off and mounted the functional furnishings on his wall so that they now fulfill another use.
  • Innovative HRM Practices at IKEA

    1. 1. IKEA’s & Innovative HRM Practices Work Culture Presented by Jaskaran, Prithvi, Stuti, Sona, Prashant, Sweta
    2. 2. Content 1 Company Background 2 Organizational Structure 3 Products 4 HRM Practices 5 Values 6 Complaints 7 Work Culture 8 Reasons Why People Stay @ IKEA 9 Best Employer 10 Values Offered At Workplace 11 Payoff 12 Sustainability Initiatives 13 Culture & Innovation 14 Some Innovative Products
    3. 3. Company Background
    4. 4. • • • • • • IKEA is a Swedish company registered in the Netherlands that designs and sells ready-to-assemble furniture appliances, and home accessories. Founded in Sweden in 1943 by a 17-yearold Ingvar Kamprad. The first IKEA store was opened in Älmhult, Småland in 1958. Name is an acronym of Ingvar Kamprad, Elmtaryd (the farm where he grew up), and Agunnaryd (his hometown in Småland, South Sweden). Furniture work is often associated with an eco-friendly simplicity. The firm is known for its attention to cost control, operational details, and continuous product development, corporate attributes. LEIDEN in the World Map Ingvar Kamprad
    5. 5. Global Expansion • • • • • • • First stores outside Sweden were opened in Norway (1963) and Denmark (1969). In the 1970s, the first store outside Scandinavia opened in Switzerland (1973) followed by Germany (1974) 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) 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) Germany, with 44 stores, is IKEA's biggest market, followed by the United States, with 37 stores The first IKEA store in Latin America opened on February 2010 in Santo Domingo, Dominican Republic. With 70 years of experience IKEA is serving in 42 countries to approx 552 million customers
    6. 6. IKEA Numbers
    7. 7. Recent Expansion •Doha, Qatar (Mar 2013) •Johnson, Kansas (May 2013) •Lithuania, Baltic (Aug 2013) •Missouri, US (Dec 2013) Location Worldwide Stockholm Kugens Kurva, Sweden, 55200 m2 Sanghai Baoshan, China, 55032 m2 Montreal, Quebec Canada, 43636 m2 Sanghai Pudong Beicai China, 49400 m2 Tempe, Sydney, Australia, 42000 m2
    8. 8. Co - Workers Co – workers per function Co – workers per region Retail 106,500 Europe 99,000 Purchase & Distribution 14,500 North America 18,000 Industry Group 18,000 Asia & Australia 11,000 Total 139,000 Russia 11,000
    9. 9. Ownership Structure
    10. 10. Shops & Factory INGKA Holdings (Netherlands) Stitching INGKA Foundation (Netherlands) Franchise & Trademark Inter IKEA Systems (Netherlands) Inter IKEA Holding (Luxembourg) Interogo Foundation (Lichtenstein)
    11. 11. Products
    12. 12. IKEA’s around 9500 products, that are identified by one word (mostly Scandinavian) Articles Name derived from Upholstered furniture, coffee tables, rattan furniture, media storage, doorknobs Swedish Place names Beds, wardrobes, hall furniture Norwegian Place names Bookcase ranges Occupation Bathroom articles Scandinavian lakes, bays and rivers Kitchens Grammatical names Chairs, desks Men’s names Garden furniture Swedish Islands Lighting Terms from music, chemistry, seasons Children items Mammals, birds, adjectives Kitchen utensils Spices, herbs, fish, mushrooms, berries Curtains, carpets, bed accessories Mathematical & geometrical terms
    13. 13. Guess What ??
    14. 14. DUKTIG (well-behaved) KASSETT (cassette) BILLY (Swedish Male Name) DINERA (to dine) SKARPT (Sharp) OSLO (capital of Norway)
    15. 15. Funny items !!
    16. 16. Other Businesses
    17. 17. Restaurants And Food Markets IKEA Family – Loyalty Card Samaland - The Play Area IKEA Mobile Catalogue BoKlok – Houses And Flats Family Mobile
    18. 18. IKEA’s Vision “To create a better everyday life for the many people”
    19. 19. HR Management Practices • • • • • • • • • People – Employees, customers and the community. Philosophy subscribed to the belief that employees were more productive and committed when the company took care of them and their needs; paternalistic stance Promoted employee empowerment Grievance procedure “VOICE”- company-wide survey Encountered a problem – Application was standardized, uniformly applied policies to all Didn’t work well – differing needs of employees; maximum benefit not being derived Late 1990s – Spiers-Lopez became HR head at IKEA North America; realized that greater flexibility was needed She conducted comprehensive employee surveys, asked detailed questions about their needs, expectations, preferences. Survey showed that although all IKEA’s employees were committed to IKEA work culture, each had different needs. Spiers-Lopez
    20. 20. Flexibility Policy • Initiatives that supported ‘life balance and diversity’ were created • Flexibility – foundation of IKEA’s HR management philosophy. • Eg - 1. Flexible six-holiday schedule • Eg - 2. Flextime introduced – employees to choose when to start and end workdays, subject to requirements of store or office • Condensed work-weeks, job sharing, telecommuting, video conferencing also introduced • IKEA allowed employees to coordinate schedules with spouses’ work hours, in case of small children
    21. 21. Flexibility Policy(contd.) • Willing to transfer employees between locations if there was a matching opening • Aim of the policy was to ensure employees didn’t have to sacrifice careers due to personal commitments • Spiers-Lopez said “If an IKEA co-worker needs to take time off to find a nursing home for an aging parent, be home to kiss their child before bed, or telecommute to better juggle caring for a newborn, they can actually do that without feeling guilty or worrying about risking their career aspirations” • Led to employee motivation and improved work life quality
    22. 22. Other Initiatives • Substantial investment in making stores more comfortable during nonworking hours 1. Quiet rooms to pray or meditate 2. Lactation rooms for nursing mothers 3. Onsite childcare facilities 4. Entertaining rooms to receive visiting friends and family 5. Resource rooms for employees to access computers to browse IKEA approved websites containing health information, selfimprovement tips, forthcoming training details, development programs, job openings, etc • Also received substantial discounts at IKEA’s onsite restaurants
    23. 23. Benefits Policy • Full medical and dental insurance to all employees working 20 hours or more per week • Discounts for weight reduction, smoking cessation services, free subscription to health & wellness magazines • Parental benefits – 7 weeks’ maternity leave with full pay for women; men and adoptive parents got 1 week with full pay • Employees encouraged to take a vacation every year and could carry vacation time to the next year • All employees were eligible for 15% discount on IKEA merchandise • At annual ‘Coworker Appreciation Day”- upto 40% discount on store purchases depending on the performance of their store
    24. 24. Additional Benefits • Tuition reimbursement for graduate and undergraduate courses for all employees regardless of how many hours they worked-contributed to continuous development of employees • Employees were encouraged to take up study of languages and pursue courses of potential application in retail sector like accounting, interior design, etc • IKEA paid 75% of the course fee upfront and remaining after the course was done • Gave special bonus of $1000 to employees who stayed with the company for one year after completing the course • Policy also benefited IKEA as it required skilled candidates for future promotions • Not just full time but part timers were also eligible for the program • IKEA didn’t lay minimum service conditions for employees to become eligible for benefits
    25. 25. Important Elements of IKEA’s HR Management Policies & Their Effect on Employee Morale 1. Flexibility in all areas : • Employees could achieve better worklife balance • Enhanced trust in the company • Greater productivity 2. Benefits policy : • Greater organizational commitment and job satisfaction • Greater perceived organizational support – IKEA cared about employees’ well being- onsite childcare facilities provided by IKEA • Low employee turnover • Greater employee engagement –open communication, enhanced motivation and commitment
    26. 26. Employee Development • Policy on training and development – Employees could use several resources to sharpen their skills and gain knowledge – Had specialized training programs in various areas • Mentoring – Launched a program called ‘Partners for Growth’ – Prepare them for greater responsibility, leadership needs – This made employees supported helped them grow • ‘Paddle Your Own Canoe’ – Take responsibility for their own careers – Worked with mangers to know the skills required – Training done according to the requirements
    27. 27. • I Want Your Job Train with the person whose job they want • The development programs were designed so that IKEA can have a ready pool of candidates for future • All the employees were given the chance to advance • Programs were two way activities
    28. 28. • ‘Open IKEA’- told employees of new job openings within IKEA • Openings were put on websites, advertised through catchy stickers on mirrors, soft drink machines • ‘Enterprise’- E-recruiting system which reduced the delays in hiring at global level • Responsibility of hiring recruits with store managers
    29. 29. Employees Chosen • Practical skills • Ability to understand and get along with other people • Ability to ask questions and give inputs • Encouraged employees to question the management and express their ideas and belief • Co-workers who had mastered their current jobs were encouraged to seek new challenges • Job enlargement or enrichment • Value fit was the selection criteria
    30. 30. • ‘Why Savers’- ideas to improve store • The company even gave an advertisement inviting ‘Why Savers’ to join the company • ‘Express Yourself’- share companies concerns and complaints with Spiers Lopez • This improved the morale within the company as she responded to their complaints personally • It had a comprehensive communications system for employees like IKEA Radio and intranet. • It also reached employees through printed material as well
    31. 31. IKEA’s Values Togetherness and enthusiasm Constant desire for renewal Humbleness Willpower Cost consciousness Leadership by example Diversity is part of life Simplicity
    32. 32. Complaints Against IKEA • In USA- workers complaint of eliminated raises, a frenzied pace, racial discrimination, mandatory overtime • In Turkey- they were against union forming by its employees, they terminated employees who were unionising and put pressure on others to quit. • In France- it caused an outrage as it spied on its employees
    33. 33. 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
    34. 34. Work Culture • IKEA called all its employees, regardless of rank, “coworkers”. • To promote open communication, IKEA adopted a structure with no hierarchical distinctions. • Employees were encouraged to express their opinions and ideas directly to the top management . • Employees were rewarded with high level of empowerment.
    35. 35. Work Culture • Cost consciousness was deeply embedded in IKEA’s culture. • IKEA’s culture promoted diversity. • Openness to change and adaptability were stressed at IKEA. • Week-long orientation program in Sweden on the “IKEA WAY”.
    36. 36. 8 Reasons People Stay With IKEA We hire the right people. They’re inspired! Making mistakes is okay-really. An up, Down and sideways career. Sweden today, China tomorrow. Egos parked at the door. The rewards of a never ending job. A parent friendly environment.
    37. 37. Best Employer
    38. 38. Awards & Achievements • In 2005, 100 Best companies to work for In Fortune magazine. • In 2004, listed as 100 best companies for Working Mother • Lowest attrition rate in the US retail sector. • In 2000, largest privately held companies.
    39. 39. Payoff • IKEA involved substantial costs • But payoff outweighed the costs due to low employee turnover • So this reduced the cost of repeated hiring and training cost.
    40. 40. Sustainability Initiatives • Non-renewable material used at IKEA • Recycling of nonrenewable materials • Investment in Renewable energy • UTZ- Certification programme for sustainable growth of coffee, cocoa and tea. • Better Cotton Initiative (BCI)
    41. 41. Culture & Innovation at IKEA
    42. 42. • Ikea has great products, no doubt. • But that is not the only reason why Ikea is successful. • Ikea has a successful concept of coming up with innovative and new products. • This is does successfully by its culture, which fosters and promotes innovation.
    43. 43. • There is absolutely an expectation at IKEA that, with the flat organization structure, everyone contributes. Everyone is expected to contribute their ideas. It doesn't matter what the idea is, it is simply important that everyone contributes. This way, more ideas come up and this helps in more ideas coming up. • Ikea is a very process-oriented company, with three basic processes: creating, communicating and selling the homefurnishings offer. • Each of these three processes has a matrix structure, and someone called a matrix partner is responsible for “communicating the offer” in every country in the world. Since everyone is equal, and constant communication, ideas spread faster.
    44. 44. • Ikea operates by itself when it comes to product development. It is completely independent, and is not involved with any external sources. • Ikea tries and explore new avenues, and tries to operate outside standard operating procedures. By doing so, IKEA manages to hold and maintain its culture of innovation.
    45. 45. Store Layout & Innovation • Everybody has the same desk arrangement. This leads to an accessibility that is rarely found in companies. Even the CEO shares his/her office space with other employees, thus making it an extremely open policy. • Ikea has a dedicated gathering space. By doing so, it ensures the free flow of ideas and thoughts, which otherwise would not occur as easily. • A new concept called ‘huddle rooms’ has been introduced in IKEA, wherein meeting rooms can be arranged for spontaneously and without prior permission. This promotes easier and spontaneous flow of ideas and thoughts.
    46. 46. Innovative Products by IKEA
    47. 47. IKEA Bus Terminals
    48. 48. Adhesive-Free Furnishings
    49. 49. Side Table Sofas
    50. 50. The Table Vase
    51. 51. Severed Seat Storage
    52. 52. THANK YOU