Performance Management of IKEA - Case Study Example

Performance Management of IKEA of the Word Count: Table of Contents Introduction 3 2.Human Resource Performance Management by Ikea 3 2.1 Ikea’s performance management using 360 degree feedback process 5 3.Organizational Culture of Ikea 5 3.1 Analysing Ikea’s organizational culture using Schein’s Model 7 4.Conclusion 7 Reference List 9 1. Introduction Human resource management is a strategy that the company uses to understand the desires of the employees as well as achieve the goals of the organization (Battor,Zairi and Francis, 2008). Human resource management is very important for an organization because it deals with the employees who are considered as the most valuable assets of the organizations (Battor,Zairi and Francis, 2008). It deals with the issues of hiring new employees within the organization. The HR manager has to be extremely efficient in managing the tasks as well as recruiting new employees because the company’s future depends on the performance of its employees (Edvardsson, Enquist and Hay, 2006). The aim of the research is to analyse the human resource management as well as the work culture of the company Ikea. Through this research, the researcher would gain knowledge regarding the organization’s work culture and the ethical aspects as well as the HR management strategy of the organization. 2. Human Resource Performance Management by Ikea In order to deliver high performance through HR management by Ikea, the company divides its strategic plans in five parts (Erez and Gati, 2004). The company at first focuses on the goals then it does the environmental analysis. It then focuses on the strategic formulation, implementation of the strategies and the evaluation of the strategies planned by the company (Erez and Gati, 2004). The vision of the company is to deliver better services to its customers. Ikea takes care of the requirements of customers as well as co-workers. The company aims at delivering the best quality to its customers and producing its goods at a lower cost such that it earns a higher profit (Erez and Gati, 2004). Ikea wishes to position itself as the best producer of home furnishing and retailer and hence, it trains its employees in the best possible ways (Hambrick and Fredrickson, 2001). Researcher has analysed that Ikea not only hires employees based on their qualification but the hiring managers are highly skilled and well experienced in hiring candidates for its departments (Hambrick and Fredrickson, 2001). The managers check out for the personal skills and talents of the candidates who are to be hired. The recruiters in the company make sure that the candidate hired is fit to deliver well to the organization. The company focuses on the personality traits of individuals other than work related skills and experience because Ikea believes that skills can be developed later but the personality of an individual represents their behavioural skills (Hambrick and Fredrickson, 2001). The candidates’ responses to questions related to the values and beliefs comprise hiring criteria for the company. The employees within the organization also apply for higher position and the hiring criteria for the already existing employees for higher posts also depend on the personality of the candidates.. Ikea is considered to be one of the best furniture manufacturers and it has positioned itself with around 84,000 employees (Holmberg, 2000). The company conducts its business with 179 stores across 23 countries (Holmberg, 2000). One of the major costs that the company has to bear is that of paying salaries to the employees. Although the company does not aim at cutting the wages of the employees, but the company has created its new policies of making the services self service oriented such that the company need not spend large amounts in hiring new staff (Holmberg, 2000). 2.1 Ikea’s performance management using 360 degree feedback process In order to review the performance management, the company follows a particular process known as the 360 degree feedback process. The process comprises of preparing a questionnaire on a 4 to 7 point scale on the basis of various aspects of job performance (Luthans and Peterson, 2003). The questionnaires may include open ended questions where the employees can share their views and experience with the company. By following this process, Ikea tries to analyse the different perspectives of its employees and what other strategies that the company will undertake to improve the employees work performance (Sharma and Gadenne, 2002). The company conducts this 360 degree feedback process for the managers and the team leaders as well. The feedback given by the managers helps to analyse the various strategies that the company undertakes to overcome challenges and satisfy the customers’ demands (Talke, Salomo and Rost, 2010). The feedbacks from team leaders are also considered in order to understand the potentiality of the teams and the characteristics of team members. However, the company ensures that team leaders’ responses are such that they motivate the employees to perform well. A motivational feedback encourages the employees to perform well on time and even under pressure (Holmberg, 2000). 3. Organizational Culture of Ikea Ikea manufactures a wide range of home decor and at a very low price in order to serve the customers with the best quality of products. The company believes in working in a unique way and wishes to gain brand loyalty and earn huge profits. According to the researcher, Ikea’s organizational culture is defined as informal and the company takes care of its employees’ needs (Pheng and Chuan, 2001). The team members are allowed to take various initiatives and making mistakes is considered as a system of ‘learning by doing’ (Ganesan, et al., 2009). The team leaders are very co-operative and they share all the information with the team members and discuss with them the various strategies that can be implemented. The company considers its employees as valuable assets and provides them with ample opportunities to share their views (Holmberg, 2000). Rather than conducting extensive training programs for the employees, Ikea believes in following an easy approach through discussing the projects with their team members. Thus, the company does not pressurise the employees to follow the guidelines and work accordingly. The company relies on the managers to explain its business principles to the older as well as the newly hired employees (Holmberg, 2000). Ikea’s international unit has got Swedish managers who are efficient in handling various issue and challenges that the company faces. The company conducts exclusive seminars for the other newly hired managers who are not well experienced. In Ikea, the managers are responsible and they are strongly dedicated towards the company. Ikea plans its strategies in a different way and there are very few written rules for the employees (Holmberg, 2000). Hence, the managers efficiently discuss the strategies with the employees so that they can work according to the company’s vision. Organizational culture plays a key role in organization’s adjustment with the environmental conditions where the employees and the managers within an organization are highly cooperative. 3.1 Analysing Ikea’s organizational culture using Schein’s Model According to Schein, (2009) the organizational culture model involves time as an important component. There are different phases of an organization’s lifecycle. The first two phases comprises of birth of the organization and its early growth which are characterised by strong leadership by the founder members (Schein, 2009). The next stage is that of the mid-life where the organization struggles to set up its reputation in the market. The subsequent phase is that of the maturity when the culture plays a significant role in performance of the employees and for the organization’s success factor. Schein, (2009) has also highlighted the various changes that the organization undergoes in order to formulate new strategies until and unless the organization attains the appropriate organizational culture. Likewise, it has followed a similar model to maintain its organizational culture. It had started business as a furniture manufacture and it has successfully established itself in 2008 (Holmberg, 2000). Thus, Ikea followed its own lifecycle comprising of various stages. However, it tried to follow its own policies for setting up its business. The employees of Ikea were considered as the jewels of the company who made their valuable contributions in raising the companies brand loyalty. 4. Conclusion The researcher conducts a research on the performance management of Ikea and the various strategies used by the managers to set up its global business. The report suggests that Ikea had started its business as a furniture manufacturer and gradually it has successfully positioned itself as the world’s largest manufacturer of furniture, home appliances and small vehicles. The managers in Ikea are highly responsible and they do not pressurise their employees for being more productive. The issues that the company faces are discussed by the employees through conducting various seminars and the team leaders are highly skilled professionals who are can handle various projects. Through this research, the researcher also analyses the various methodologies that the company uses in managing the organization’s job performance as well as maintaining an ethical culture. It is this culture of the organization that motivates the employees to serve for a longer duration. Although the company has been successful in setting up its business as the world’s largest retailer, yet the company needs to further improve its management system to serve many customers. The company can conduct skill development training programs for the employees to develop further skills as well as efficiency to manage difficult situations. It is highly recommended that the company can create brand awareness for its customers by conducting campaigns for its newly launched products. Thus, the campaigns will help to attract huge customer base and the products can be marketed. Reference List Battor, M. Zairi, M., and Francis, A., 2008. Knowledge-based capabilities and their impact on performance: a best practice management evaluation. Business Strategy Series, 9(2), pp. 47-56. Edvardsson, B., Enquist, B. and Hay, M., 2006. Values-based service brands: narratives from IKEA. Managing Service Quality: An International Journal, 16(3), pp. 230-246. Erez, M. and Gati, E., 2004. A Dynamic, Multi‐Level Model of Culture: From the Micro Level of the Individual to the Macro Level of a Global Culture. Applied Psychology, 53(4), pp. 583-598. Ganesan, S., George, M., Jap, S., Palmatier, R. W. and Weitz, B., 2009. Supply chain management and retailer performance: emerging trends, issues, and implications for research and practice. Journal of Retailing, 85(1), pp. 84-94. Hambrick, D. C. and Fredrickson, J. W., 2001. Are you sure you have a strategy? The Academy of Management Executive, 15(4), pp. 48-59. Holmberg, S., 2000. A systems perspective on supply chain measurements. International Journal of Physical Distribution & Logistics Management, 30(10), pp. 847-868. Luthans, F. and Peterson, S. J., 2003. 360‐degree feedback with systematic coaching: Empirical analysis suggests a winning combination. Human Resource Management, 42(3), pp. 243-256. Pheng, L. S. and Chuan, C. J., 2001. Just-in-time management of precast concrete components. Journal of Construction Engineering and Management,127(6), pp. 494-501. Schein, E. H., 2009. The corporate culture survival guide. Hoboken: John Wiley & Sons. Sharma, B. and Gadenne, D., 2002. An inter-industry comparison of quality management practices and performance. Managing Service Quality: An International Journal, 12(6), pp. 394-404. Talke, K., Salomo, S. and Rost, K., 2010. How top management team diversity affects innovativeness and performance via the strategic choice to focus on innovation fields. Research Policy, 39(7), pp. 907-918. Read More