Human Resource Management within IKEA - Case Study Example

Managing people xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecturer xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date Executive summary IKEA is a modern day organization that has sustained profitability and developed a stable competitive edge through proper management of its people. Being a multinational company, the company obviously has a large number of employees. Even so, IKEA has deployed several people management strategies that have subsequently created a motivated and straightforward workforce that is ready to fulfill the company’s visions. Its human resource management is devoted to attracting and inspiring its employees by creating an environment that is friendly and enjoyable to work. IKEA owes it continuous success to its workforce which has become part and parcel of the organization. This report will generally discuss the concept of people management. It begins with a brief introduction about management of people and also gives reasons why it will be fundamentally important to managers. It will then focus on the activities of people management within IKEA, one of the companies which have placed considerable attention to its people. The last part of the essay will discuss pertinent issues underpinning the concept of people management; selection, performance management, motivating people and the learning organization. Table of Contents Executive summary 2 Table of Contents 3 1.0 Introduction 3 1.1 IKEA- Company profile 5 2.0 Human resource management within IKEA 6 3.0 Managing people 7 3.1 Selection/recruitment 7 3.2 Managing performance 8 3.3 Motivating people 9 3.4 The learning organization 11 4.0 Conclusion 12 References 14 1.0 Introduction Organizations whether government, healthcare, entertainment, military, business or educational are made of people. They are the lifeblood of an organization as they provide followership, stewardship and leadership to the organization. It is people who formulate and implement policies and strategies to help the organization achieve its goals. Besides that, people use their knowledge and skills to innovate new ideas so as to place the organization on a competitive edge. To expect success of an organization without understanding how to manage people is like trying to understand how a vehicle moves with no knowledge about an engine. As a matter of fact, organizations and institutions can be defined as the most prominent social units that have been devised or designed to get things done (Armstrong 2008). People can have productive and counterproductive behavior towards the organization which can either lead to its success or failure. Surprisingly, people are the most neglected resources in the organization and managers are more focused on the improving processes and operations to increase productivity (Kelloway 2004). In some organizations, workers are grossly mistreated and even singled out for failure of the organization. Accountability, stewardship and motivation are long forgotten concepts. Apparently, these come amidst the current outburst of employee empowerment, knowledge management and information-based economy. This eventuality therefore, raises the question of how organizations are able to satisfy external customers if they are unable to satisfy internal customers. People have feelings, faces, and aspirations and would like to be treated unfailingly. As such, paying attention to the working people might just be the easiest way of increasing an organization’s profitability (Kline 2007). This report attempts to shed light into critical issues underlying people management. It is intended to serve as a reference material for managers and other leaders within organizations who intend to attain success through proper management of people. The report makes reference to IKEA, a company that has demonstrated outstanding and exemplary people management skills over the years. Right after reviewing IKEA’s company and people management profiles, the report will discuss pertinent concepts underlying people management. 1.1 IKEA- Company profile IKEA (Ingvar Kamprad Elmaryd Agunnaryd) is a worldwide furnishing company with over 42 operations across the globe. The company has employed over 70, 0000 workers with over 60% of them working in Europe. It was started with the intention of producing a wide range of home furnishings at the lowest prices possible that will be affordable to a vast majority of customers. The company was started in the 1940’s under the control of the INGKA foundation. A great bulk of the company operations lies in retail business with the company owning about 165 retail stores in 22 countries. This retail business holds about 75% of the total employees. Although the company purchases goods from other suppliers, it does produce some of its own through the IKEA industrial group. The business strategy of IKEA is to ensure that its proximity to customers is enhanced; stores are where customers are. In addition, the company strives to establish cost-effective and joint design distribution processes that will enable customers to receive goods in a timely manner and in good condition. Management within IKEA emphasizes on maintaining organizational culture, which is, not just focusing on external markets but also ensuring that all external activities are aligned to the company’s internal actions. Part of the company’s mission is to ensure that IKEA remains one. One of the strategies to achieve this goal is to engage all employees in the running of business. As such, there are employee representatives at all levels of the organization and management emphasizes less influence form external forces especially with respect to financial and economic matters. According to the company, engaging employees will make them aware of the company’s mission, goals and strategies (Tengblad 2004). 2.0 Human resource management within IKEA Simply put, human resources are the most important and treasured assets of every organization. Human resource management has been viewed as a duty for human resource department, but its literary the responsibility of every manager within the company. being the world leader in home furnishings, IKEA`s good human resource has played a vital role and acted as lifeblood for the organization`s development in over thirty countries. IKEA`s vision "To create a better everyday life for the many people" has gradually come to pass day by day. The company owes the great success to its innovative workforce well known as co-workers. Several strategies have been employed at this department to accomplish the company`s vision. To begin with, IKEA adopted a paternalistic stance to words the co-workers needs and empowerment. This included certain benefits and flexibility to employees. IKEA work culture is another way of workforce management at IKEA. This is characterized by a family- like structure. The department trains and encourages co-workers to look and take care of another just like they do to their own family members. In this regard, strong and open bond between employees has been enhanced. This practice has in turn contributed to great creativity and diversity within the company and has sustained its growth (Aditya 2012). Thirdly, IKEA`s recruitment is based mainly on value. Their typical employment questionnaire downplays intellectual identifications, skill or even experience and majors values and beliefs (Brokaw 2012). Internal promotions are as well part of the human resource department strategies at IKEA. The company has developed a one year employee development program where by a potential co-worker can apply at the beginning of their career. These employees get a chance to travel and work to 2 different countries. They stay for 6 months at each place and work in a different field from what they have been working on. They are encouraged and entitled to leadership positions during the one year program. At this juncture, IKEA prepares and adds into it pool the future managers of the company. Also, the department uses an advanced grievance procedure known as the VOICE. Through it co-workers can send their view on certain aspects of their work. IKEA intranet is a channel to keep co-workers informed. This is through newsletters, notice boards, and a closed circuit radio. Companies magazine called readme is accessible in 19 languages and is distributed to all co-workers. IKEA`s internet service reaches every employee at in and out of work. An inclusion in the company called Supporting Work-Life Balance enables co-workers do activities that are convenient at their age and stage in life. Flexi Time monitors co-workers flexible timings as per individual need and IKEA leadership index, helps co-workers monitor their managers. At IKEA, the human resource department constitutes an IWAY Standard. This constitutes principles governing the organization. This includes corruptions prevention policy for co-workers, rights to dialogue and join co-workers unions, all co-workers also go through training at beginning of their work (Aditya 2012). At IKEA, Come Be Yourself With US team leaders are part of the human resources management. These leaders work hard in hand with departments` managers. It is a position for good and quick decision makers and good solvers of work related issues. The team leader will also teaching other co-workers on how to relate with one another as well as keep check and organize the flow of goods at your area entrusted to you within the store among other duties. 3.0 Managing people 3.1 Selection/recruitment The most fundamental part in management of people is the selection of people to work for the organization. Hiring the wrong people is certainly the starting point to uttermost failure. Rigorous selection processes are fundamental as they imply that only individuals with the right competencies, abilities and skills are hired. Besides that, the process sends a crucial message to the newly recruited employees; that they have been hired for their qualifications and that this is important to the success of the organization (Kelloway 2004). Effective hiring decisions should first address the question of “who” then proceed to answer the question of “what”. According to Collin (2001), selection processes should focus on hiring outstanding people and later placing them in their right positions. Although cognitive abilities are the best indicators of good performers, they are rather costly and thus companies across the globe have focused their selction procedures based on behavioral interviewing, screeing and job analysis. Collins (2004) asserts that the most crucial aspect in hiring is to know yourself first and the requirement for the given vacancy. In relation to this, job analysis basically means defining the duties of the job and characteristics of the candidate to take up the job. Job analysis sheds light into the most appropriate criteria to select applicants. Screening is done in the initial stages of the selection process and its purpose is to verify and assess if the candidates’ skills and qualifications are worthy of progressing to the interview stage. It prevents mistakes from being done during the interview and reduces the cost of conducting interviews with the wrong people. Amongst other types of interviews, behavioral interviews have been appraised for their ability to predict the future behavior of a candidate. For instance, the panel might ask “tell us about one of the most memorable instances when you had to deal with a difficult customer”. By posing such questions, the panel is able to assess the ability of the candidate in dealing with similar incidences in future. 3.2 Managing performance Perfromance management is based on two key propositions. In the first proposition, people now and understand what they are expected to do and have actually taken part in defining their expectations. In the second proposition, the ability for people to meet these expectations is based on the degree of competency, skills, knowledge, motivation and leadership support (Armstrong 2008). Performance management is inherent within an organization; it does not traslate to the appraisal systems imposed by human resource functions. It is a cycle that involves planning, acting, monitoring and reviewing. Under planning, the entire organization comes into agreement about the objectives and standards to be applied so as to achieve the set level of competence, personal development plans and helpful ways of improving performance. Action entails actual implementation of plans through the day-to-day work of employees with the support and guidance of their leaders. Monitoring should be continuous throughout the process of performance management. It is particularly important in identifying improvement needs that might arise and subsequent formulation of development and improvement plans. Review of performance is a platform in which individuals get an opportunity to give feedback. Essentially, reviews should take place in dialogue where employees and managers exchange comments and ideas over proposed plans. Review can be conducted during performance review meetings (Bacal 2004). 3.3 Motivating people Armstrong (2008) defines motivation as the process of influencing people to act in a certain way. In business terms, motivation is moving workers in a given direction in order to achieve the stipulated goals or expected results. Motivated people clearly define their goals and take relevant action to achieve these goals (Arnold 2007). Such people may be self-motivated but majority of others need to be motivated to a lesser or greater degree. There are two types of motivation from the organizational point of view: intrinsic and extrinsic motivation. Intrinsic motivation emanates from the work environment which in turn effects the level of job satisfaction and ultimately the way people behave towards a given direction. Examples of intrinsic motivation include opportunities for advancement, interesting and challenging work, scope to develop and use skills and abilities, freedom to act and the sense of responsibility. Extrinsic motivation on the other hand refers to the things done to employees to motivate them. They are generally rewards which could be positive for example promotions, praise and increased pay or negative for example criticism, withholding pay, disciplinary actions and punishments (Sargent 2001). There is a wide range of theories that have described the concept of motivation of employees in ensuring organizational success. The goal theory for instance states that motivation and performance are high when individuals are presented with specific goals, the goals are accepted by all and there is adequate feedback concerning performance. The expectancy theory on the other hand contends that motivations will increase when there is a perceived relationship between performance and outcomes (Whitley 2002). This is to mean that they are clear about their goals, they believe in their ability to achieve the goals, their efforts will produce some reward and that the rewards will be worth the effort. One of the approaches to motivation is valuing people. It means seeing people as human beings rather than resources, treating them fairly and involving them in making decisions pertaining to the organization. Financial rewards are key motivators. Money is the powerful force that provides the means to directly or indirectly satisfy many needs. There are a number of non-financial factors that also lead to motivations and they include personal development, autonomy, responsibility, achievement, recognition and engagement (Yeo 2003). 3.4 The learning organization In a changing business environment, organization have been forced to redesign their organizational structures in order to remain firm amidst enormous pressures of the environment and at the same time meet the needs of its people. Adapting individuals and business to change is a difficult task. Even so, investments into such undertakings are often taken for granted by many organizations yet it is prerequisite to the success of change processes. Learning is the process in which the organization assimilates the change and becomes complete part of it. Aggestam (2006) states that lack of organizational learning could be tragic to its survival; organizations that fail to learn live for less than half their lifetime. Organizations are therefore required to embrace and integrate learning as part of the day-to-day running of the business. Since learning capabilities are not naturally found in the organization, they need to be established into the systems of the organization. Organizations that learn faster than their competitors do gain a large market share (Cors 2003). Of concern for leaders and managers is how to conceive a learning organization. A visionary management team that is able to see the big picture sets pace for the learning organization. This lays the foundation for prioritization of development and training avenues for both management and workers. In addition, a learning environment can only be achieved when members are emotionally attached to the organization. Such individuals will direct their energies towards development of personal goals whilst enhancing their contribution towards attainment of the organization’s goals. Developing common goal for the future is another way of establishing a learning organization. This essentially means communicating the vision to all members in the organizational structure. Teamwork is imperative in enabling a shared vision. This is because people in one team work towards the same goal and resolve problems in unison as opposed to individual work. 4.0 Conclusion Managing people is indeed a sure way of increasing productivity and winning the battle against rivals. This is because people, being rational beings, have the ability to decide whether to be productive or counterproductive. IKEA exemplifies companies that have attained optimal success through proper management of people. Above other aspects of the organization, the company’s core mission is to remain as one (in unity) by offering everyone a chance to participate in the running of business. The human resource at IKEA is devoted to ensuring that it has the right people and that it treats them fairly. This has been achieved through rigorous selection processes which ensure that the employees recruited into the company have the right skills, capabilities and competencies. Additionally, the company motivates its employees by providing chances for personal development, good compensations and rewards systems, involvement and flexible working arrangements. Rigorous selection processes inform recruited employees that they have been employed for their skills and thus they should devote them fully to the success of the organization. There are various approaches of motivation that can prompt employees to work towards the success of the organization and they include impressive pay packages, promotions, mentoring/coaching and proper communication of vision. Managing performance is also another aspect about managing people that basically involves planning, taking action, monitoring and reviewing the rate of employee performance. It is basically important in identifying need areas within the organization that require improvement. The learning organization is one that is able to learn through its experiences and above its competitors. With proper application of these recommendations, managers can be assured of uttermost success through its people. References Aditya, S. (2012, 05 15). Innovative HR Practices at IKEA. Retrieved 08 22, 2012, from http://www.slideshare.net/adi5500/innovative-hr-practices-at-ikea Aggestam, L 2006, Learning organization or knowledge management- which came first, the chicken or the eggs. Information technology and control, 35(3A) . Armstrong, M 2008, How to manage people. London: Kogan Page publishers. Arnold, J 2007, What is motivation . Retrieved August 23, 2012, from esrccoi.group.shef.ac.uk: http://esrccoi.group.shef.ac.uk/pdf/whatis/motivation.pdf Bacal, R 2004, How to manage performance: 24 lessons for improving performance. New York: Mc Graw Hill. Brokaw, L. (2012, 3 12). IKEA: Hiring on Values As Well as Skills. Retrieved 08 22, 2012, from http://sloanreview.mit.edu/improvisations/2012/03/12/ikea-hiring-on-values-as-well-as-skills/#.UDU5gHqXKHw . Collin, J 2001, Good and Great. New York: Harmper Collins. Cors, R 2003, What is a learning organization? Reflection on the literature and practitioner perspective. Madison: University of wilsconsin. Kelloway, K 2004, HTML: The core principles of managing people. The workplace Review . Kline, J 2007, How to implement chnage in your organization . Armed forces comptroller , 35-38. Sargent, A 2001, How to motivate people. Miami: Jaico publishing house. Whitley, P. (2002). Motivation. Oxford : capstone Publishing. Yeo, R 2003, The tangibles and intangibles of organizational performance. Team performance management, 9(7/8) , 199-204. Read More