IKEAs Secret to Managing a Successful Organisation - Essay Example

IKEA’s Secret to Managing a Successful Organisation Managing organisations and people is both an art and a science. Successful organisations are mostly headed by effective, insightful and sensitive leaders who put their people’s well being as a priority. IKEA is an example of such. IKEA is the worlds largest supplier and manufacturer of furniture. The major products being flat pack furniture and home accessories. These are simple, high quality and Scandanavian-designed and relatively low-cost, selling 25% to 50% below those of its competitors. They employ the flat pack style because it is cost effective. This means that most furniture is not assembled by IKEA and the customer goes home to assemble it for themselves. There is a certain fulfillment in taking part in the creation of something. IKEA’s goal to mobilize customers “to do easily certain things they have never done before. Put another way, IKEA invents value by enabling customers’ own value-creating activities” (Normann & Ramirez, 1993). The appeal of “do-it-yourself” furniture has attracted troops of customers to IKEA, in all their branches the world over, necessitating the employment of highly skilled workers to meet their needs. These workers need to be trained to meet customers in accordance to IKEA’s values and with the competence expected of the company. Much of the motivation of employees stems from effective leadership. IKEA’s CEO, Anders Dahlvig describes that IKEA’s leadership needs to reflect the company’s values, culture and image. Leadership has to do with motivation, with how well leaders can energize their people. He believes that the way to motivate people is to make sure they have a clear idea of where one is heading and how to contribute to the company’s goals. Trust is essential as well as a very open climate and a lot of freedom. (Kling & Goteman, 2003) Albert Martens, HR leader at IKEA agrees. He says he doubts that building a strong in-house payroll staff does anything to improve the motivation of a cashier whose customer-focused attitude is more important in building repeat customers even than the quality of IKEA’s furniture. “If that cashier in Taipei, China, or Amsterdam or Elizabeth, New Jersey, is not motivated,” he emphasized, “the customer simply will not come back. So, HR is all about delivering motivation rather than administration.” (Whitehead, 2006) At IKEA, Marten says, “Our CEO and founder says there is nothing more important than people development because people are our connection with our customers.” (Whitehead, 2006, n.p.) Spending 50 to 100 percent more on training and getting co-workers more motivated to serve customers is acceptable, as there is no limit in spending just to help their employees to inspire customers to return for all their home furnishing needs. Martens claim that developing people is a long term investment. If their competitors spend on investor relations or some other capital market efforts, IKEA would rather spend on their people, as it allows them to be more focused. If an employee is dissatisfied, it will show up in his customer interaction, and that is unacceptable. IKEA is in the belief that they have invested on employee motivation and loyalty and are in a better position to attract and retain customers. Martens shares a formula for success with their employee relations: (Whitehead, 2006). OO + NT = EOO This formula simply means, “Old Organization plus New Technology equals Expensive Old Organization”. Marten always keeps in mind that technology comes and goes, and is not the full answer to success. It is the organization around the technology that truly matters, so people should not be forgotten as part of the equation. Keeping in mind that for some employees, rewards do not necessarily come in form of money, benefits such as scholarships for further studies, promotions, work-life balance and a more flexible work schedule may be enough to motivate them to maintain their good work. “Scheduling is always right at the top of the list of challenges that employees name,” Marten says. “You cannot have someone work only when it is convenient for us—say two hours in the morning, then two hours at night—and expect them to be happy with that. So scheduling really matters a lot.” (Whitehead, 2006, n.p.) In every employment, employees consciously or unconsciously expect a kind of “psychological contract” apart from the expectations the job usually presents – benefits and compensation for a particular job description. This psychological contract usually includes open and honest communication, managerial support and challenging and interesting work. Employees are becoming increasingly aware of the non-monetary rewards that companies can provide them. It is generally important that the job not only fulfills their economical needs, but their socio-emotional needs as well. “This implies that recruiters need to go beyond a discussion of compensation and benefits and highlight aspects of their organization that job candidates will find intrinsically satisfying.” (Lester, Clair & Kickul, 2001, n.p.) Alfie Kohn (1999) theorized that rewarding people with money and other status symbols such as titles, promotions, larger offices, etc. actually reduces motivation. This seems counter-intuitive, however, Kohn explains that every time people are rewarded for doing something, they are motivated externally. In doing so, it inevitably reduces people’s inner motivation – and it is this motivation that eventually guarantees quality and performance (Kjerulf, n.d.). Employers must be cognizant of and responsive to their employees’ perception of their psychological contracts with the company. Things such as meaningful work, recognition, creative freedom and opportunities for personal growth are desired by all employees. Management must maintain open and honest communication with employees, bearing in mind their socio-emotional needs and concerns, and being encouraging enough to boost their self-esteem. Lack of communication is ultimately problematic because it suggests to employees that management may be susceptible to perceived psychological contract breaches across a variety of areas because the basic issue of communication is not met. Employers must be able to invest more time developing and strengthening healthy relationships with their employees in various districts so they are kept abreast of their progress in both personal and professional areas. Being aware of employees’ gripes and complaints as well as constructive suggestions may be brought up to the proper authorities and dealt with seriously. Regular evaluation of company performance should include the assessment and feedback of employees of their employers and employment. Managers should not be remiss in this duty of bridging communication or else employees may perceive management to be incompetent. “This negative perception could also lead to widespread problems satisfying other psychological contract obligations. This may be particularly troubling because it may often be the responsibility of an employees manager (acting as the organizations agent) to see that the individuals psychological contract is fulfilled.” (Lester, Clair & Kickul, 2001, n.p.) Leaders of organisations should keep in mind that careful and efficient management of their organisations and people is central in the well-being of their employees as well as their contribution to the company and the maintenance of harmony among all members of the organisation. They should follow the example of IKEA whose leaders know how to uplift the morale of their people, thereby making them perform better in their jobs and instill loyalty to the organization. It is truly a huge responsibility for leaders, and the fulfillment of their several goals and tasks for the organization may determine the success or failure of a whole establishment. References Kjerulf, A. (n.d.), “Happy Hour is 9 to 5: Learn How To Love Your Job, Love Your Life and Kick Butt at Work” Retrieved on Feb.3, 2009 from http://positivesharing.com/happyhouris9to5/bookhtml/happyhouris9to56.html Kling, K. & Goteman, I. (2003) “IKEA CEO Anders Dahlvig On International Growth And IKEAs Unique Corporate Culture And Brand Identity.”Academy o/ Management Executive. 2003, Vol. 17. No. 1 Kohn, A. (1999) Punished by Rewards. Houghton Mifflin Lester, S. Clair, E, Kickul, J. (2001) Psychological Contracts in the 21st Century: What Employees Value Most and How Well Organizations Are Responding to These Expectations. Human Resource Planning. Volume: 24. Issue: 1. Normann, R. and Ramirez, R. (1993) “From Value Chain to Value Constellation: Designing Interactive Strategy.” Harvard Business Review, July-August, 1993 Whitehead, J. (2006) “Furnishing IKEA with HRO”, HRO Europe: December 2006/ January 2007. Available at http://www.hroeurope.com/Magazine.asp?artID=1571 Read More