Human resources management (HRM) has evolved over the decades to become a strategic, integrated and coherent approach to the employment, development and well-being off the people working in an organisation. Duncan (2001) has highlighted that the evolution of HRM impacts on the management of intellectual capital with organisations making them a source of competitive advantage. The existing literature also highlights the importance strategic human resource management (SHRM), to create organisational potential by ensuring that the organisation has all its needs to attain sustained advantage. However, it becomes a value adding function leading to integration and adaptation.
“Maintaining a strong IKEA culture is one of the most crucial factors in the continued success of the concept” – Ingvar Kamprad, Founder of IKEA
IKEA’s Innovative Human Resources Practices and Work Culture have focused on key positive human resources management initiatives and their evolution to achieve strategic objectives and goals of the company. Of note, the history of IKEA can be traced back to 1940’s when Kamprad formed IKEA on the basis of contemporary business model of the company thus engaging in retail of flat packed home furniture (best and most successful innovation) and other house wares. The IKEA case study shows how human resource management (HRM) approach that focuses on nurturing and developing staff as a means of achieving corporate aims has led to growth, success and creativity of the company
A key description of IKEA HR style of management is that a strategy for HRM is included largely in its corporate strategy.. Notably, the IKEA business strategy has evolved over a number of years comprising of creative and innovative designs at affordable cost. In 1955, IKEA created a bridge between itself and its competitors through the introduction of furniture that could be dismantled and packed into flat packages thus making it convenient for buyers to carry and easily transport furniture to their respective home and also reducing the cost of the furniture as the buyers could assemble the items themselves with use of company instructions. One cannot contend the facts that IKEA has aligned it organisation as a low cost producer of a standard “no frills” product. Notably, IKEA adopts cost leadership and also known to have differentiated it products.
What is Employee Engagement?
While each company may assign different meanings to employee engagement, the most common key to effective engagement will be embedded in the flexibility of approach most appropriate for each individual firm. For example, the company may consider a ‘best practice’ and then establish the likely result of this practice in its workplace.
Kahn (1990) described engaged employees as being fully physically, cognitively and emotionally connected with their work roles. However, Macey et al (2008) defined employee engagement as a term used to depict the degree to which employees are concerned with, dedicated to, enthusiastic, and passionate about their work. William Kahn’s landmark study on engagement did not however have a direct focus on the person; Gubman argued that where the person works and what the person does is a major component of engagement. Kahn did however acknowledge that individual differences might influence the kinds of roles employees’ find engaging or disengaging as well as personal experiences of meaningfulness, safety and availability of resources. Moreover, engagement has been seen to involve dynamic use of emotions and behaviours, with cognitions. Finally, engagement may be considered as an antecedent to job involvement in that individuals who practice deep engagement in their roles should come to classify with their jobs.
Why is engagement an important issue in the organisations todayFor any organisation to be successful, it must have an engaged employees. Disengagement of employees affects business success. Research done by Towers Perrin, shows the organisations with higher levels of engagement outperform their competitors in terms of performance and profitability on aggregate by 17%. In 2002 Watson Wyatt found that the high commitment organisations outperformed those with low commitment by 47%. According to a survey conducted by employee Benefit research (2008) dissatisfied employees decided to retire because they had felt undervalued, in order words employees who choose to retire had not been highly engaged in their work Kahn in his concept of engagement points out that lack of commitment, motivation can affect organisations performance. To this, Seeman (1972) added that restoration of meaning at work can help enhance employee’s motivation and attachment to work. Employees’ survey can be used effectively to measure an organisation engagement levels.
The key components of Positive Human Resources Management and Culture that have been mentioned in the case study have been discussed in the following discussions:
The link between organization culture and HRM is clear. HRM activities contribute to the development of an organization’s culture and provide it with a competitive edge by stimulating and reinforcing the specific behaviors needed to achieve the organization’s objectives
“Maintaining a strong IKEA culture is one of the most crucial factors behind the continued success of the IKEA concept’ from the founders style it is evident that, IKEA treasures the organizational culture as one of the key Strategic Human Resource Management (SHRM) elements that have led to the creation of an effective and efficient workforce
It may not be possible to define an ideal culture or to prescribe how it can be developed but one thing is certain; the embedded culture of any organisation can exert considerable influence on organisational behaviour thus leading to increased performance. In IKEA positive HR policies were supported by a strong and nurturing culture that promoted diversity and creativity. According to Spiers Lopez, Ikeas culture promotes family like quality that made relationships between employees strong and open thus leading to creativity and innovation as the diverse backgrounds and perspectives of employees mimic the diverse workplace. IKEA beliefs that a diverse workforce will help improve business results, strengthen its competitiveness and make IKEA a better place to work for it co-workers and this promotion of diversity can be a source of employee engagement. In order words it can be noted that IKEA HRM has being linked with its culture and notably this has help the organisations performance.
It should be noted that it is the existence of organizational culture that induces a collective sense of belonging across the organization at every level can be seen in IKEA.
Cost awareness and consciousness is another IKEA values that goes in hand with its business. It can be seen in the case study that in IKEA this leads to overall cost reductions and duplication of tasks is reduced creating a lean operational base, thus strengthening the key strategic goals. In IKEA constant openness and adaptability to Change is encouraged and stressed as it leads to creating agile workforce which can work under the stress of changing and turbulent market place. Of notes IKEA foundations of openness to change was the key to contiguous success and employees were encouraged to keep coming up with new idea and methods to do things. Zero Error that leads to low rework and achieving the aims in one cycle rather than deploying more resources and time to finish the same task is another important factor IKEA values.
POSITIVE HUMAN RESOURCE PRACTICES AND CULTURE IN IKEA
IKEA Vision was to create a comfortable place for it co-workers in Spiers-Lopez statement “IKEA values the individual. We make people comfortable here and enable people to grow”. Motivation is the force that causes people to do things as a result of individual needs being met. Steers and Porter (1991) defined Motivation as set of forces that cause people to behave in certain ways, however Mitchell (1982) states that motivation is the degree to which an individual wants and chooses to engage in certain specified behaviours. It should be noted that the key role played by SHRM has been in attracting, keeping and motivating high performers in the contemporary business environment. Depiction from IKEA case study highlights that the IKEA’s SHRM policies have led to significant fall in employee turnover, i.e. from page 10 of the case study given, fall in employee turnover to 6% in 2001 to 56% in 2002, and only 35% in 2003, thus prominence rise drift in motivation of the employees to be a part of the organization above longer durations than before. The costs of turnover can be notably high which involve both explicit and implicit costs.
Maslow hierarchy of needs
Application of Maslow’s hierarchy of needs in workplace
In the light of data provided in the IKEA case study it should be noted that motivational techniques used by the company have ranged between Maslow’s hierarchy of needs i.e.: psychological, safety, love, esteem, and self-actualization.
Maslow’s hierarchy of needs evidently identifies the responsibility of employers to present a workplace environment that encourages and enables employees to discharge their own distinctive potential. The establishment of such needs will promote individual employee engagement and retention and the organisation in achieving its strategic aims.
However, In IKEA it is important to note that the need of an employee varies in psychological makeup, position, experience etc it is therefore important to integrate non financial rewards with financial rewards to achieve greater employee engagement and retention.
The design of work environments that provide a sense of challenge and meaningfulness for employees has become a priority for the managers of IKEA. Drawing upon Kelly and Albert (2005), it has been highlighted that individuals are in diverse stages of their psychological increase and have different unmet needs, therefore highlighting the diversity of motivational factors that are fitting for each individual. For this reason IKEA then dropped their application of traditional standardized policies to make an effective use of resources being allocated for the purpose of motivating individuals; as IKEA’s vision was to “create a better everyday life for the many people” which include the employees, customers and community at large.
IKEA has invested so much on motivational approaches resulting in substantial cost for the company; however it should still be noted that the company should streamline its motivational offerings. It is suggested that the company should analyze the techniques based on their integrative nature and should put aside techniques that are either unpopular or have other similar techniques in practice. It is evident that IKEA will go extra mile to satisfy its employees need in order for them to gain their engagement i.e. IKEA shift from the standardised and uniformed policies to a set of initiatives that supports life balance and diversity and this will not only motivate employees but also promote employee engagement.
Flexibility and Work Life Balance in IKEA:
Flexibility was the cornerstone of IKEA’s human resource management. With flexibility IKEA gave due importance to the fact that employees had a life beyond work; therefore incorporated policies that would help employees achieve life balance.
Notably, various research beliefs that a flexible working condition is vital to retain employees in the organisation. IKEA introduced flexible working conditions for its employees e.g. creation of quiet rooms for relaxation, prayer or meditation; lactation rooms for the benefits of nursing mothers; and entertainment rooms for receiving friends and family. These initiatives have led to the view of IKEA as a paternalistic company where employees felt a sense of belong and security.
IKEA traditionally observed six holidays every year in the late 1990’s to further enhance flexibility among employees IKEA initiated six holiday schedule, flexitime, and telecommuting. IKEA promoted a range of personal techniques like allowing employees to schedule their work with their spouses’ working hours. Although it should be noted that such personal flexibility provided motivated workforce, i.e. Lori Schilling an IKEA employee from California said the flexibility policy was a major help to her when she adopted a child in 2003 where she arranged to work only on alternate fortnightly however the management of these techniques have been complex. The advantages of the flexible working arrangements presented in IKEA case study includes reduce absenteeism, improve staff commitment, increase retention rates and reduced employers cost that all subsequently turn into better overall performance of the organization. Therefore it shows a positive relationship between the flexible working conditions and the psychological contract between the employees and the employer.
Learning, Training and Development:
According to Armstrong (2006, p. 531), Human Resource development (HRD) is concerned with provision of learning, development and training opportunities in order to improve individual, team and organisational performance.
Training is referred to as planned acquisition of knowledge, skills and attitudes required to perform well in a given role Gunnigle et al (2006), development is the acquisition of skills and abilities that are required for future roles in the organisation. IKEA encouraged its employees to pursue courses that had potential application to retail sector and also gave bonus for employees who stayed with the company for one year.
Mentoring is one of the key techniques used by IKEA in deciding training and development requirements of each individual. Spiers-Lopez said mentoring made employees feel supported, and helped them grow within the company. Gibb (1994) has defined mentoring as “a relationship in which an individual takes a personal interest in another’s career and guides or sponsors that person” (p. 47). Drawing upon David (2004), mentoring can be linked with career advancements and mobility, especially for the minorities and women. Therefore, it should be highlighted that the method is being successfully used within IKEA to wholly motivate workforce to stay with the company. The ongoing training also helped employees to stay in touch with the latest within the industry and also to benchmark their performance against best practices across different industries.
IKEA has used initiatives that lead to unbeaten reflective practice, e.g. the program titled “Paddle Your Own Canoe” is a self assessment tool that trained employees to take responsibility for their own careers and gain knowledge they required to move into higher positions within IKEA system in future ; mentoring is therefore part of succession planning but may require a lots of managers time and effort It should be noted that such reflective practice has led to the development of culture that supports employees in taking responsibility of their own actions and allow them the necessary resources to improve the knowledge gaps that can be the underlying reasons for these lapses. Notably, in IKEA on the job training is a vital tool used by the company in early 2003 and this allowed employees to train actively with the person whose job they would like to hold in the future. IKEA encouraged transfer of employees between departments so that the value creative knowledge is disseminated across the organization to a certain extent than staying with a small group of employees.
Recruitment and Selection:
There has been a strong link between the psychological contract of an employee and the recruitment process that they have been passed through. It should also be noted that recruitment and selection process are very important in keeping the fresh ideas coming into the organization (Rolf, 1999). The case study has highlighted that IKEA has focused at recruiting and selecting new employees that share similar values and beliefs so that they do not have any problem in integrating into the corporate culture of the company and facilitate the process of achieving strategic goals of the company.
While IKEA has promoted the policy of hiring for within, they therefore has developed an “OPEN IKEA” system where jobs are open for in-house employees first. It should also be noted that IKEA furthermore developed another system called ‘Enterprise’, which is aimed at hiring new workforce and this has transferred the recruitment process to internet, where the delays in recruitment process can be minimized and positions can be filled quickly without any loss of valuable time.
How can IKEA promote employee engagement?
To promote for high level of employee engagement in any given organisation there is a need to actively manage IKEA organisations culture. Notably, the culture of IKEA values people, by providing enriched job is more likely to promote employee engagement. Consequently, organizations considered as an ‘employer of choice’ are more likely to attract and retain the best talent and have higher levels of engagement. Effective communication is another factor that can promote high level of engagement in IKEA. Different methods of communication can help drive high levels of employee engagement. Of note, Communication played an important role in IKEA. Analysis from the IKEA case shows that with a view to promote open communication, IKEA adopted a flat formation with no hierarchical distinctions. Communication does not only keep the employees in the picture but it also enhance motivation and commitment needed for organisations goal thus it can help improve relationship which can lead to high level of engagement in IKEA. Leadership style has been proven to help promote high level of engagement. In IKEA leaders are expected and encouraged to behave the way they expect their co-workers to behave valuing respect, encouraging initiatives and creating a feeling of well-being.
In conclusion, to achieve long term success of IKEA there is a need to high level of employee engagement. When organisations show that they truly and genuinely care and value employees through it policies they tend to generate and engaged workforce. IKEA has shown several initiatives that promote employee flexibility and well being and thus these initiatives have been proven to promote employee engagement in organisations.
Amstrong, M., (2008), Reward Management: A handbook of Renumeration Strategy and Practice.5th ed, London, Kogan page Ltd: London
Amstrong, M., (2006), Strategic Reward: Making it happen. ed London, Kogan page Ltd: London
Amstrong, M., (2009), Armstrong handbook of Human Resource Management Practice. 11th Edition Kogan page Ltd: London
Attridge, M., (2009) Measuring and Managing Employee work Engagement: A review of the Research and business literature, Journal of Workplace behavioural health, 24:383-393
Baron A. and Armstrong, M. (2007) Human Capital Management, Achieving Added value Through People Kogan Page Limited London and Philadelphia
B. Corone, Research In Management, Eramus Institute of Management PhD Series, Netherlands
Barney, J. (1986) “Organizational Culture: Can It Be a Source of Sustained Competitive Advantage?” Academy of Management Review, Vol. 11, No. 3, pp. 656-665
C., Sarah, the essential to employee engagement: better performance through staff satisfaction Kogan Page Uk and Philadalphia
Clutterbuck. D (2004), Making the most of informal mentoring: A positive climate is key, Development and Learning in Organizations; Volume: 18Issue: 4; 2004 Viewpoint
Duncan, C. (2001), The impact of two decades of reform of British Public Sector industrial relations, Public Money and Management, Jan – March, pp. 27-33
Douglas, et al., (2004) the psychological conditions of meaningfulness, safety and availability and the engagement of human spirit at work, Journal of Occupational psychology, 2004, 77, 11-37
Gerhart, B. & Fang, M. (2005), National culture and human resource management: assumptions and evidence, International Journal of Human Resource Management, Jun2005, Vol. 16 Issue 6, p971-986, 16p, 2 charts
Gibb, S. (1994), inside corporate mentoring schemes: the development of a conceptual framework, Personnel Review, Vol. 23 No. 3, pp. 47-60
Gunnigle, P., heraty, N., & Morley, M (2006) Human Resource Management In Ireland, Gill & Macmillan, 3rd Edition Dublin
HOFSTEDE, G. (1991), “Cultures and Organizations: Software of the Mind, Intellectual Cooperation and Its Importance for Survival”, Berkshire, McGraw Hill
Kelly D. & Albert J. (2005), Maslow: man interrupted: reading management theory in context, Management Decision; Volume: 43Issue: 10; 2005
Kinne, N. Et al., Satisfaction with HR Practices and Commitment to the Organisation: Why one size does not fit all, Human Resources management Journal, 2005, Vol. 15(4
Lynch, R. (2003), Corporate Strategy, 3rd Ed, FT Prentice Hall
Marchington M. And Wilkinson A. (2008) Human Resource Management at Work, People Management and Development. 4th Edition CIPD London
Rayner. C and Derek A., Smith, Managing and Leading People 2nd Edition CIPD London 2009
Rolf, R. (1999), Workforce of the future, Global Business, December 1999, p. 52-57
Steers & Rhodes (1978), Major influence on employee attendance: a process model, Journal of Applied Psychology, vol. 63, pp. 391-407
Taylor S., (2008). People Resourcing, 4th Ed. CIPD, London.
www.shrm.com leveraging employee engagement for competitive advantage : Hr’s strategic Role (2007)
ww.ICFAI.com / Ikeas Innovative Human Resource Management Practices (2005)