IKEA's Innovative Human Resource Management Practices and Work Culture
| Case Code: HROB066 Case Length: 15 Pages Period: 1953 - 2005 Pub Date: 2005 Teaching Note: Available |
Price: Rs.500 Organization: IKEA Industry: Furniture Retailing Countries: Sweden Themes: - |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Human Resource Management Practices
IKEA's vision was "To create a better everyday life for the many people." 'People' included employees, customers, as well as the community. The company's human resource philosophy subscribed to the belief that employees were more productive and committed when the company took care of them and their needs.
IKEA adopted a paternalistic stance toward employees and their needs (as did many other Swedish companies) and promoted employee empowerment. However, although the company had a positive HR philosophy and offered generous benefits, their application was more or less standardized and policies applied uniformly to all 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, as the policies did not always match individual needs and requirements. She felt that employees would benefit more if there were a greater amount of flexibility in benefits administration...
Work Culture
IKEA's positive HR policies were supported by a strong and nurturing culture that promoted diversity and creativity. Spiers-Lopez said 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 coworker family is encouraged to and excels at supporting and taking care of each other," she said. 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."...
The Payoff
No doubt IKEA's generous policies involved substantial costs for the company (sometimes they seemed to be the antithesis of the company's cost conscious culture), but the pay off far outweighed the costs. For one thing, 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. This substantially lowered the company's costs in recruiting and training replacements...
Exhibits
Exhibit I: IKEA's Ownership Structure
Exhibit II: An Indicative List of IKEA's Product Names
Exhibit III: IKEA's Advertisement
Exhibit IV: IKEA's Values
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