IKEA Innovative human resource management practices

Bukke NireeshaVyas AgasthyaDommeti DeepikaChallagali Bala DheerajVigneshwaran C

Best Employer Award

• Got rank 62 in fortune (international business magazine)

• Innovative HRM practices

• Coworkers have the support and flexibility to make their personal lives a success

Data

• Private company• Founder: Ingvar kamprad• Peter Agnefjäll-present CEO and chairman• Products-Self assembly furniture• Employee strength-139,000(2013)• Operating revenue-28 billion

• Kamprad born businessman• Used to sell matches, Christmas decorations

stationery items ,fish and seeds• One of the largest furniture manufacturers• Ikea’s founder was rumored to be richest man

in the world• IKEA expanded using franchisee model

TimeLine

• 1943 -started(stationery, jewelry, wallets)• 1945 -increased business(shipping through milk van• 1947 -introduced IKEA’S product line(armchairs)• 1951 -sales increased(focus mainly of low cost furniture)• 1953 -first showroom(customers can feel the furniture)• 1955 -introduced best and innovative furniture• 1963 -overseas expansion• 1985 -first store in US• 1986 -Kamprad retd.• 1999 -big thank you Event• Sep 24,2014-Ikea planning to set up a store in hyd and in

karnataka

IKEA FACTS

• All its furniture is based on names of places in Norway, Sweden, Finland

• If you are in china, you can go to a IKEA store and take a nap over there

• In 2012 they started brewing beer• In Sweden, it is illegal to name a baby by name

IKEA

INGKAFOUNDATION

INGKAHOLDINGS B.V.

Inter IKEA Systems B.V.

Industry Swedwood

Grouppurchasing

Distribution and

Wholesale

Range IKEA of

SwedenRetail

The IKEA GroupSupport

Functions

Organization Structure

IKEA’s VALUES

•Humbleness

•Willpower

•Leadership by example

•Daring to be different

•Togetherness and enthusiasm

IKEA’s VALUES

• Cost-consciousness

• Accept and delegate responsibility

• Constant desire for renewal

• Simplicity

• Diversity is part of this

Human Resource Management Practices

• “To create a better everyday life for the many people”

• Standardized policiesSpiers- Lopez in late 1990’s HR Head of

IKEA North America• Greater Flexibility in benefits administration

matching individual needs and requirements• Employee surveys• “Life balance and diversity”• Flexible holiday schedule• Flextime(Choose their workdays)• Condensed work-weeks, job sharing and

telecommunicating

Human Resource Management Practices

• Videoconferencing to avoid excessive business travel

• Coordinate their schedules with their spouses’ work hours

• Transferring employees between locations• “Quiet rooms” for prayer and meditation• “lactation rooms” for nursing mothers• Child care facilities• Entertaining rooms for visiting friends and

family members• Discounts at IKEA’s onsite restaurants for

families

Human Resource Management Practices

• Full medical and dental insurance to employees working 20 hours or more per week

• Discounts for weight reduction and smoking cessation services

• Maternity leave for 7 weeks with full pay• 2 to 5 weeks of annual paid vacation• 15% discount on IKEA merchandise• “Coworker appreciation Day” 40%

discount on store purchases• Credit Card with no interest for 90 days • Join the company’s 401(k) policy (tax

saving fund)

Additional Benefits

• Tuition reimbursement for Graduate & Non-graduate courses

• Constant encouragement to pursue various courses

• IKEA paid 75% of the course fee upfront and the remaining 25% after the course completed

• 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

• Part timers were also eligible for benefits

• No minimum service conditions for employees to become eligible for benefits

Impacts of positive HR Practices

Flexibility in all areas : • Better work-life balance• Enhanced trust in the company• Greater productivity

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 attrition rate• Greater employee engagement –open communication, enhanced

motivation and commitment

Employee Development

Ongoing development of employees• Extensive training and professional development program• Sharpening skills and acquiring advanced knowledge• Specialized training programs Mentoring• “Partners for Growth”• Prepare employees for greater responsibility, leadership needs• Employees felt supported• Helped them grow

Paddle Your Own Canoe

• Taking responsibility of their own careers

• Discussed their career paths with their Manager’s

• Self – assessment tool

I Want Your Job

• Train actively with person whose job they would like to hold

• Pool of qualified candidates for IKEA’s future growth

• Manager’s and sub-ordinates worked together

• Promotion related decisions were made easy

Open IKEA

• New job openings update

• Job openings were posted on employee website and company intranet

• Advertising through catchy sticker’s, slogans

Enterprise

• e- recruiting system

• Global tracking system

• Responsibility of hiring with the store manager’s

Why Sayers

• Express ideas to improve the store

• Placed an advertisement on this practice

Express Yourself

• Share complaints or concerns

with Spiers-Lopez directly

• Improved morale within IKEA

IKEA Radio

Company Intranet

Complaints against IKEA

• IKEA France allegedly spied on its employees and customers

• IKEA U.S. – Workers complain of eliminated raises, mandatory overtime and racial discrimination

• IKEA slammed over anti-union bullying in Turkey

WORK CULTURE

Diversity

• IKEA believes in an environment where people of different views, age, nationality, gender and ethnic background feel welcome

• Diverse workgroup often tend to have better ideas because of broader background and experience

Creativity

• IKEA believes in a creative work environment where people can make mistakes and come out with a transformational idea that makes a great company and leaves competitors trying to catch up

• Only while sleeping one makes no mistakes, mistakes are privilege of the active person who can start over and put things straight

Family like work environment

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 excel at supporting and taking care of each other

Empowerment

• The company never gave its employees detailed instruction 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 in achieving that

Willingness to assume responsibility

Equality and Openness

• To emphasize equality, IKEA called all its employees, regardless of rank, ‘co-workers’

• It doesn’t matter what we do, whether in an office or on the sales floor

• Equality was important because it created an informal atmosphere at company and promoted communication between employees

Open Communication

• With a view to promote open communication, IKEA adopted a flat structure with no hierarchical distinctions

• Managers and employees sat together and shared the same facilities

• They also dresses alike in yellow shirts and blue trouser and addressed each other by first name

Leadership by example

• No method is more effective than a good example

• Leaders at IKEA are expected and encouraged to behave the way they expect their co-worker to behave

• It means pitching in when there’s more than usual work to be done, respecting others around you and encouraging the initiatives and achievements of everyone around you

Togetherness & Enthusiasm

• IKEA encourages mutual respect between colleagues and help each other during difficult times

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

• The common denominator in every job well done in enthusiasm

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

• IKEA understood the importance of a committed workforce