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Ikea hr practices

Ikea HR practices

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Ikea hr practices

  1. 1. 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
  2. 2. 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
  3. 3. • 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.
  4. 4. • 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
  5. 5. 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
  6. 6. 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.
  7. 7. • 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
  8. 8. 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
  9. 9. 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.
  10. 10. 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
  11. 11. 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:
  12. 12. “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
  13. 13. 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
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. 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.
  18. 18.  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.
  19. 19. 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
  20. 20. 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
  21. 21. 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.

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Ikea HR practices

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