IKEA - International Human Resource Management and Organisational Behaviour - Case Study Example

International Human Resource Management and Organisational Behaviour Introduction The growth of businesses and the liberalization of markets have led to the emergence of global business empires that serve markets located far away from the home country of the companies. Such companies operate subsidiaries in the international arena which are used as coordination centres for the operations of the multinationals. However, efforts of globalization are faced with significant challenges which arise from the difference in work environments and the cultural variations in the countries (Bartlett & Ghoshal, 2008). The management of people in a multinational setup differs as compared to a domestic market and this has led to the emergence of a new branch of human resource management known as international human resource management (IHRM). Through IHRM, global organisations manage their international workforce which is diverse in culture, knowledge and ideologies. Created in 1943, IKEA is a Swedish multinational dealing in the manufacture of furniture and ready to assemble items such as beds and chairs. The growth of IKEA has enabled it to enter into the global market and exert its force as the leading manufacturer in furniture in the world. By 2008, IKEA was considered as the largest furniture retailer in the globe with massive influence in different part of the world. The company operates in over 30 countries and has over 300 subsidiaries operated independently in these countries. This has led to a massive growth in its total revenue with the company amassing over $23 billion in sales in 2010 alone, an increase as compared to the previous years (Bartlett & Ghoshal, 2008). As a company with global operations, IKEA has the challenge of managing multicultural workforce in the global arena and this creates room for the development of different organization behaviours within the company. In this paper, the international human resource approaches adopted by IKEA in its global operations will be discussed to create a picture of the organizational culture within the organization. International human resource approaches at IKEA The development of human resource management across the globe has led to the development of a field that requires strategy and integration with other services in order to succeed. This has been more essential in organisations with cross border operations where cultural difference exist which affect the adoption of the home country practices. According to IKEA founder, Ingvar Kamprad, the development and maintenance of an IKEA culture has remained one of the crucial factors in the success of the organization (Bamber, Lansbury & Wailes, 2011). The company has therefore adopted a number of approaches to human resource management both in the Netherlands or Sweden and also in other subsidiaries operated in other parts of the world. To improve their international presence, IKEA has adopted a number of management strategies which has created room for the convergence of their products and strategies. This has been supported by the development of flexible structures, cost effective management, marketing and production process and the adoption of spill over approach in spreading its organizational culture (Edwards & Rees, 2011). The organization and implementation of human resource practices beyond the borders of the home country faces a number of challenges and this arises from the difference in business and legal environment. The political and economic system of Netherlands and Sweden differs significantly from that of china and the United States. This makes it essential for the organization to adopt approaches which are informed by the political and economic systems of the two countries (Bartlett & Ghoshal, 2008). Legal frameworks and environment also affects the operation of multinationals and create the need for adopting approaches which are reflective of the legal environment and cognizant of the labour laws in the country. Culture also plays a significant role in the determination of management approaches that an organization adopts and this has influenced the policies of IKEA beyond the borders of the home country (Bamber, Lansbury & Wailes, 2011). Despite posting massive success in other parts of the world that IKEA opened its operations, the management of human resource and the integration of culture at the Chinese markets offered significant challenges to the organization. This reflected the challenges associated with culture and legal environment that other organisations face in their pursuit for expansion and international presence. However, the culture of the organization and its approach to management enabled IKEA to strengthen its subsidiary in china post significant success after a short time (Bartlett & Ghoshal, 2008). The human resource approach that IKEA has continued to adopt has been borrowed from the structures available in the home country and this has enabled it to adapt faster to the new environments. Based on the rules documented by the founder under the book ‘the testaments of a furniture dealer’, the company has adopted a nine principle approach in its operations both at home and beyond (Briscoe & Schuler, 2008). Despite opening branches in markets with varying market structures and cultures, the organizational culture of IKEA has been maintained in all the subsidiaries that the multinational has opened in other parts of the world. In most organisations, the maintenance of organizational culture and practices in subsidiaries is achieved through the use of expatriates who are more aware of the operations and culture of the organization. The use of expatriates to manage head offices has posted mixed results for a number of organisations due to the challenges that it is bound to encounter (Edwards & Rees, 2011). Expatriates lack proper knowledge on the culture, political and legal business environment of a foreign market and this exposes them to misjudgement and the execution of decisions which are based on the norms practiced in the home country as opposed to the needs of the market. To eliminate this, IKEA has adopted the approach of recruiting locals to manage their subsidiaries and integrate the foreign country’s culture with the organizational culture of IKEA. Local managers and head of subsidiaries presents a number of opportunities to organisations and this explains the growth that the company has continued to witness despite the competition in the global market (Beardwell, Holden & Claydon, 2004). With local managers, the challenge of understanding the cultural, legal and political environment of the foreign country is eliminated and the business operation is not hampered by wrong judgment as is the case with expatriates. However, IKEA has the desire to develop and build its organizational culture in the management and operations of the foreign subsidiaries despite using local human resource to manage their operations. To achieve this, IKEA has adopted the use of common training manuals developed by the founder of the organization to train subsidiary managers about the culture of the organization (Bamber, Lansbury & Wailes, 2011). These managers are then designated the position of spreading this culture to the co-workers who most of the time are locals in the country of operation. However, the company has created the position of Swedish ambassadors, Swedish nationals who are not involved in the direct management of the subsidiaries but are used for the training of the managers and local employees on the culture and practices of the organization. This has enabled the organization to produce homogenous products despite the fact that it operates in different parts of the globe with a large number of employee population (Edwards & Rees, 2011). As a way of advancing its culture and principle of equality in as captured in the book authored by the founder, IKEA adopts a policy that advocates for equal employment opportunities for both genders (Scullion & Linehan, 2005). This approach has enabled the organisation to win the trust of both the women workers and women customers who consider its fair policy and embrace its products. Today, the Chinese subsidiary has more women working in the sales floor as compared to the men and the number of women currently assuming the management roles in the organization continues to raise, a demonstration of the attempts of the organization to preach equality in its human resource management across the globe (Beardwell, Holden & Claydon, 2004). Despite the presence of the different levels of leadership in the organization, IKEA has a lack of formality culture that makes it difficult to differentiate casual employees from managers based on their dressing. To emphasise the importance of every employee in the organization, titles are rarely used to refer to the employees and the ‘co-workers’ phrase is more common. This culture has motivated the employees of the organization to embrace each other and work towards the objectives of the organization irrespective of their positions of leadership and influence in the organization (Harzing & Pinnington, 2011). Culture diversity management at IKEA The globalization efforts of IKEA have encountered a number of challenges but the organization has placed massive efforts to manage the differences that exist between the different job markets in world. One of the challenges facing multinationals in the global market is the management of cultural diversity and the differences associated with practice and legal environments. The proper management of culture dictates the ability of an organization to succeed in the foreign market and make significant impacts. IKEA is the only furniture distributor that has manages to become a global distributor and post significant success despite the challenges presented by the difference in the market. Analysts argue that the success of IKEA has been as a result of its ability to manage and integrate diversity into its operations in the foreign market. Instead of making diversity a challenge to its operations, the company has integrated diversity and developed strength in diversity, a process that has eluded a number of multinationals (Briscoe & Schuler, 2008). According to most non-Swedish members, the IKEA management approach is seen as being informal, caring and open, one that allows low level employees to interact with their bosses and discuss the challenges in their posts. Hierarch is not a major structural arrangement in the company and this has resulted into the development of only three management levels from the top to the lowest co-worker. This has helped the organization to eliminated bureaucratic challenges that have affected a number of multinationals with operations in other parts of the world. By encouraging co-workers to take initiative and invoke their innovative powers, the company has adopted an attitude of empowering the people and making them feel part of its products (Harzing & Pinnington, 2011). The successful operations of IKEA in china despite the strong cultural differences demonstrated the strength of its culture and management approach in the international arena. Entry into the market met significant challenges as the market was cautious to receive the culture the Swedish culture and accept their management approaches. However, continued training of the employees and the senior co-workers made it possible for the organization to increase its influence in this market. The company currently operates one of the most successful subsidiaries in the country that serves other Asian markets and spreads the Scandinavian culture in the Asian continent (Beardwell, Holden & Claydon, 2004). To manage the diversity in the different subsidiaries across the globe, IKEA has adopted a human resource management approach within its international operations that borrows from the Swedish style and has Swedish flavours. IKEA believes that people management is not confined to the internal culture of an organization but have international appeal thus defining the approaches adopted by the organization. The recruitment process at IKEA looks for individual capacity, ability to communicate, think positively, and work as a group and possessing the potential to deliver irrespective of the educational levels of the workers (Beardwell, Holden & Claydon, 2004). The employees are also encouraged through the provision of a serene work environment, security of their positions and an attitude that cares for their welfare without regarding their nationality or strength of their culture. Oversees IKEA managers are empowered and given the power not only to run and manage the stores but also to assist other employees and win their hearts and trust to make the management process smooth and resourceful (Scullion & Linehan, 2005). The expatriates are considered as ambassadors and represent the Swedish culture and hospitality in the overseas subsidiaries and this is done through the training and moulding the non-Swedish workers to understand the culture of the organization (Chernatony & Tarnovskaya, 2011). However, the massive expansion of the furniture empire has affected the ability of the organization to send Swedish managers to all its subsidiaries across the world to affect its culture. The Scandinavian culture of equality and co-workers in an organization may work well in Sweden and Scandinavia but is not favoured in the United States and German and this makes it difficult to propagate the culture further with massive expansions currently being witnessed. In German, the use of the co-worker title is perceived as disrespectful especially if used to refer to senior managers in the organization (Harzing & Pinnington, 2011). This has affected the development of reference terms in the organization despite being the first country that IKEA opened its subsidiary in 1974. Swedish has notion of personal responsibility for personal benefit but this has not worked well in German due to the precise discipline culture where employees take instruction from their bosses without questioning their relevance and benefits to individual and organization (Boxall & Purcell, 2007). Despite the challenges met in German and France as far as diversity management is concerned, the company is considered to have made a bold and big gamble when it decided to open a subsidiary in the United States. Most business analysts were sceptical about the ability of the venture and succeed as the business environment and cultures of the two countries were different. Most European firms that have ventured into the American market have failed to make significant progress due to their inability to effectively manage the people and the expectation of the market (Briscoe & Schuler, 2008). The management of culture in the two countries provided significant challenge to the organization due to the attitude of the American people and managers. Comfort is not a common approach used by Swedish managers as every problem is seen to demand an immediate solution leaving no room for enjoying their positions as practiced in the United States. IKEA also had a tradition of posting Swedish manager to all the subsidiaries to assist in the development of the culture of the organization based on the rules documented by the founder. This did not receive the support of the Americans as they wanted to americanise the operations of the furniture giant while the company sought to maintain its culture and tradition (Chernatony & Tarnovskaya, 2011). Conclusion Globalization is an opportunity to enter into new markets and increase the scope of operations for organisations across the globe that has the financial ability to roll their operations in other parts of the world. However, the process is accompanied by a number of challenges that make it essential for such organisations to prepare and handle with integrative approach. IKEA has however demonstrated that an organization can make massive progress through developing approaches that integrate both the culture of the home country with those of the foreign country in their HR management approaches. These approaches have significantly contributed to the success of the organization and supported its expansion program, a feat that no other furniture distributor has ever achieved. References Chernatony, L. and Tarnovskaya, V 2011, Internalising a brand across cultures: the case of IKEA, International Journal of Retail & Distribution Management 39 (8): 598 - 618. 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Scullion, H. and Linehan, M 2005, International Human Resource Management. A Critical Text, Basingstoke: Palgrave Read More