Second prize in the Central and East European Management Development Association (CEEMAN's) 11th Case Writing Competition in 2005

IKEA's Innovative Human Resource Management Practices and Work Culture

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: -
IKEA's Innovative Human Resource Management Practices and Work Culture
Abstract Case Intro 1 Case Intro 2 Excerpts

Best Employer

In January 2005, Fortune, a prominent international business magazine, published its annual list of the '100 Best Companies to Work For'. IKEA North America (IKEA), a major furniture retailer and the American subsidiary of the Sweden-based IKEA Group, was 62nd on the list. IKEA won points for its innovative human resource management practices that emphasized flexibility and welfare while focusing on employee development. The company's unique work culture that supported coworkers (as employees were called at IKEA) and encouraged creativity and diversity was also applauded.

Pernille Spiers-Lopez (Spiers-Lopez), IKEA's President, said the company was thrilled at being recognized as one of the best companies to work for. "We're delighted to be among Fortune's '100 Best Companies to Work For.' At IKEA, we live by the philosophy that when coworkers have the support and flexibility to make their personal lives a success, they thrive in the workplace, too," she said.

A few months earlier, in September 2004, IKEA was listed as one of the '100 Best Companies for Working Mothers', in a study conducted by Working Mother magazine. It was the second time that IKEA was so listed. Working Mother appreciated IKEA's efforts at creating a workplace that accommodated the needs of mothers. Three issues were particularly stressed in this study - flexible work scheduling, time off for new parents, and childcare facilities.

IKEA's popularity as an employer was noteworthy primarily because of the fact that the retail sector, especially in the United States, was not known for being employee-friendly. Many large retailers paid low salaries and offered negligible benefits while expecting employees to work long hours. This accounted for the fact that the sector had one of the highest turnover rates of all industries. Consequently, it also suffered from high human resource (HR) costs, as companies had to recruit and train replacements at frequent intervals. In this context, IKEA stood out for its employee-friendly policies and generous benefits, which made it the preferred employer in the retail sector.

IKEA was one of the largest furniture manufacturers and retailers in the world and was well known for its stylish and innovative furniture designs. Almost all IKEA's products could be dismantled and packed in flat packages, making it easy to transport them. In the early 2000s, IKEA was one of the largest privately held companies in the world. It was rumored that Ingvar Kamprad (Kamprad), IKEA's founder, was the richest man in the world, beating even Bill Gates, the founder of Microsoft. (This however, could not be confirmed, as IKEA was a private company and so was not required to disclose its financials). Calculating the true value of IKEA was made more difficult by its complicated ownership structure consisting of several holding companies and subsidiaries. IKEA expanded using the franchisee model.

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