IKEA's Innovative Human Resource Management Practices and Work Culture

 
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Case Details:

Case Code : HROB066
Case Length : 15 Pages
Period : 1953 - 2005
Pub Date : 2005
Teaching Note : Available
Organization : IKEA
Industry : Furniture Retailing
Countries : Sweden

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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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.

Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

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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