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Inside the Psychology of Ikea HR

February 19, 2011

IKEA Italia Retail

Store Organization

1 Introduction

The Ikea multistory car park at Ikea, Birstall...

1.1 Goals of the Store Organization plan

1. To guarantee high and uniform quality standards in human resource management, in order to support IKEA Italia Retail future business and developmental challenges.

3. To identify a management organization structure, common to all stores, that reports directly to store management, in order to guarantee consistent human resource management processes, while at the same time preserving each store’s freedom to seize commercial and/or cost/sales ratio opportunities, by adjusting the organizational structure from second to lower levels reporting to store management to local requirements.

1.2 The process

…. function-specific workshops, the new working practices which have emerged in each area, in order to streamline and improve existing procedures and meet new challenges derived from increasing store empowerment and local leadership expectations.
The outcome is the result of a joint effort of many of our local DHs and GLs who participated in the various workshops. This outcome was then illustrated by individual operational managers, who also gave more details about job profiles, skills required by the new roles and the structure of the sub-tasks of the respective new department organization, according to the organizational model of the matrix.
The final output is an organizational structure which will contribute to enhance overall skills, and as a consequence IKEA Italia economic performance, by promoting succession planning strategies as much as possible by means of career guidance services and overall increased delegation and responsibility to the lowest levels of the organization.

1.3 The evaluation of positions
The evaluation of each position has been reviewed taking into consideration the job profiles for each role contained in the present document.Since the organization by processes was one of the fundamental aspects in defining the final organization structure, position evaluations might develop in the future according to the importance and the level of responsibility that each role will actually acquire within its framework of competence.During the review of the “wage policy guidelines” document, Human Resource Service Office will monitor and re-examine any possible change or development in the current evaluation of the positions.
1.4  An investment, not higher labour costs

 

In light of the objectives mentioned in the previous pages, such as an overall increase of the level of skills in the organization, more flexibility and, as a result, a more efficient organization, maximising the development of our resources, and finally more store empowerment on one’s own local market, any possible increase in the number of employees should be considered as an investment which will result, in the final analysis, in an increase in turnover for IKEA Italia.We estimated that in an average store, with turnover remaining unchanged, this new organizational structure and the said evaluation of the positions, currently under review, will bring an increase of labour costs on store turnover by 0.18%.
Please Note: to calculate this percentage, a comparison has been made between the current management staff costs (up to the second level reporting to the Store Management) of a store currently producing a turnover of about 90 million euros and a comparable store showing the likely effect of the implementation of the new organizational structure. An additional cost variable (which was not taken into account since this area remains at the discretion of the individual store) is the number of shop support staff and not sales area support staff, which each store will consider necessary to have.
1.5  Store Management
By “store management” we mean the guidance and the management that the Store Manager and the Deputy Store Manager will provide together to their store. The division of responsibilities was made taking into account the analysis of the processes. Store Managers mainly focus on core processes, while Deputy Store Managers mainly work on support processes.This division should improve the organization of the store management in order to work as IKEA Italia with a common reference framework. The organizational expertise of the store management will then identify different levels of responsibility between Store Manager and Deputy Store Manager in each store, to organise individual projects and activities, so as to guarantee both an added value for the store itself, using each individual’s potential to the maximum, and a professional development for the Store Manager and Deputy Store Manager themselves. In particular, bearing in mind that the latter is a developing position in IKEA Italia, in the context of this reference organizational framework, it will be the responsibility of the Store Manager to integrate the skills profile of his/her own Deputy Store Manager, by means of appropriate training and by delegating suitable areas of responsibility of specific projects and activities.
1.6 For a better interpretation of the new organizational structure

1. The titles of the positions are all in English.

2. By Store management we mean Store Manager and Deputy Store Manager.

3. By Management team we mean the first level reporting to the store management.

4. The role of “Department Head” has been replaced by the title “Manager” together with the relevant function (e.g. In-Store Logistic Manager, HR Manager, ComIn Manager,…).

5. The role of “Group Leader” has been replaced by the title “Responsible” (e.g. Warehouse Responsible instead of Warehouse Group Leader, meaning that they are responsible not only for the group of co-workers working in the warehouse, but also for all the activities taking place in the warehouse area).

6. The role of “Co-ordinator” has been replaced by the “title” of “Support”, in keeping with what has already been implemented in the sales area (e.g. Warehouse Support instead of Warehouse Co-ordinator).
2 Organization Chart

3  Sales

3.1  ORGANIZATION STRUCTURE

Full document insight available on request.

Please Note: Each store will identify the appropriate number of shopkeepers for its own structure and for the local market, bearing in mind the minimum number indicated above. Similar criteria of business opportunity will be used by individual stores to define BAs grouping and to share responsibilities for the various BAs between Sales Manager and Deputy Sales Manager.
3.2  PROCESS
TYPE OF PROCESS SALES MGR. – STORE DEPUTY S.M. – STORE SHOPKEEPER SHOPSUPPORTSales Responsible for development Responsible for the development of the allocated areas. In charge of maximising sales in his/her own BAMargins Responsible for development Responsible for the development of the allocated areas. In charge of maximising profits in his/her own BABudgeting Sharing with STM Collect input and share with SM First estimate budget on sales and hours Price deviations Elaborates UTG disposal strategy and monitors performance Elaborates the disposal strategy with SM UTG Manages those allocated  to his/her own areaMarketing mix Supervises order processing and correct implementation Supervises order processing and correct  implementation Implements activities Supports Shopkeeper in implementing activitiesCommercial calendar Responsible for its setting up Supervises its correct implementation Actively participates in defining the calendar and its implementation Supports Shopkeeper in planning and implementingCompetition Analyses competition and local market trends (soft data). Analyses competition and local market trends (soft data). Analyses and records competitors’ prices on strategic items (hard data). Records competitors’ prices on strategic items (hard data).Sales Steering Elaborates a strategy and sees to its implementation. Elaborates a strategy with SM and sees to its implementation. Implements the relevant measures for his/her own BA. Coordinates measures at the product area level Merchandising In co-operation with ComArr plans and implements national strategies for each BA Plans with SM/ComArr the implementation of national strategies for each BA Implements National ones and devises local ones by means of  SWOT Supports shopkeeper in preparing the SWOT analysisRefitting Sets priorities Sets priorities Plans refittings with ComArr   Organises refittings and contacts with ComArr and LogisticsConcept Responsible for the correct use of IKEA manuals (selling the IKEA showroom/marketplace, range presentation,..) Works with SM to guarantee the correct use of IKEA manuals (selling the IKEA showroom/marketplace range presentation,..) Implements the IKEA concept in his/her own areaCommercial review Determines macro objectives Supervises work progress Elaborates the action plan  for his/her own BA and checks results Supports shopkeeper in some areas such as Test buy, 3 aces 1 king, etc.Pricing Decides on lowering prices because of local competition or draws up O extra increase strategies Works with SM on pricing strategy Suggests actions to take Rangemanagement Follow-up Range Management and other KPIs Follow-up Range Management and other KPIs Follow-up “daily” management and liaise with Goodsflow SRS management, EOQ, manual orders, inventories, code activation and cancellation, ABC, overstock, etc.Innovation Participates in national projects and promotes local level ones Participates in national projects and works with SM in promoting local projects Implements local projects And participates in the planningOf new shopsTraining Defines training strategy Works with SM in defining training strategy Identifies co-workers’ training needs Facilitates the introduction in the Company of new co-workersCoaching Works with shopkeepers Works with shopkeepers Works with all co-workers Supports shopkeeper in giving good example of (trasmissione) behaviour Intranet Elaborates the strategy for the use of the local one Supports  SM in defining use Responsible for maintenance of his/her own BA Works with the shopkeeper for the BAMeetings Ensures effective interaction both with shopkeepers and with other departments Together with SM, ensures an effective interaction both with shopkeepers and with other departments Ensures an efficient information flow to and from the department Facilitates the flow of information and communication in the departmentDevelopment Ensures the development of shopkeepers’ and deputy’s skills Ensures shopkeepers’ skills development Ensures co-workers’ skills development

Behavioural Analysis of IKEA

Behavioural Analysis of Organisation

Organizational Behaviour is the study and application of knowledge about how people, individuals, and groups act in organizations. It does this by taking a system approachThat is, it interprets people-organization relationships in terms of the whole person, whole group, whole organization, and whole social system. Its purpose is to build better relationships by achieving human objectives, organizational objectives, and social objectives. In short, organizational behaviour is the study of human behaviour in the workplace, specifically the interaction between employees and the organization.

            Organizational behaviours are a key part of a company’s people strategy. These behaviours are essential to the success of the organization and help form the basis of its long-term growth. Organizational behaviours speak to how the company intends to succeed; they need to be brought to life by each employee incorporating them into his or her daily work and interactions with customers and colleagues. All parties need to be in alignment to achieve maximum business impact.

(2004) suggests seven critical organizational behaviours that should be a high priority of any organization. These includes demonstrating technical and professional proficiency, focus on customer, drive business performance, show passion in teams, solve problems effectively, plan and organize activities around SMART goals and exhibit  leadership and influence others.

There are four challenges of organizational behaviour as enumerated by  (2005). These are changing social or cultural environment, evolving global environment, advancing information technology and shifting work or employment relationships.

There is a growing body of literature that documents the bottom-line benefits of investing in a performance-oriented organizational culture that focuses, to a large extent, on values and leadership. (2001) extensive research identifies leadership and organizational culture factors that contribute to lasting economic success in publicly-held organizations.  (2001) found that having a sound business model and excellent financial management were necessary for good performance. Yet to achieve economic success, he found that effective leadership and strongly-held organizational values made the vital difference.

(2000) examined case studies of seven publicly- and privately-held companies recognized for superior profitability and found out that common trends related to organizational values, effective leadership, and a focus on investing in employees that translated into the most successful companies. An analysis of these successful companies and their competitors demonstrated that focusing first on alignment of values and strong cultural norms were distinguishing factors with measurable bottom-line revenue and profitability results. With the right organizational assessments and strategic interventions, these results can be translated to the nonprofit and government sectors in terms of productivity, higher morale, recognition, and financial/budgetary support.

Additionally, leadership in an organization plays an important role in the success of the organization. Leadership today means influencing the organization or the followers to face its problems. It also means addressing conflicts in the values people hold, the willingness to expose the internal contradictions with individuals and the organization. Simply speaking, leadership is the ability to influence individuals or groups toward the achievement of goals. Leadership, as a process, shapes the goals of a group or organization, motivates behavior toward the achievement of those goals and helps define group or organizational culture. It is primarily a process of influence.

Moreover, motivation also is one of the key factors of the success of organizations. As a manager, productivity is the main concern. Thus, focus should be on the knowing how to improve the productivity of the employees. This productivity is a human behavior which is influenced by a number of factors. First, productivity is a function of each of the employees’ unique personalities. Second, employees’ behaviors are influenced by the environments in which they find themselves. Finally, an employee’s behavior will be a function of that employee’s innate drives or felt needs and the opportunities he or she has to satisfy those drives or needs in the workplace.

Let’s take for an example the IKEA. IKEA was one of the largest furniture manufacturers and retailers in the world, with operations in 32 countries. The company was well known for its stylish and innovative designs. It was the pioneer of furniture that could be dismantled and packed flat, to allow ease of transportation.
IKEA’s main strength was its committed workforce, which was often the source of the company’s innovative concepts. IKEA adopted a positive approach toward human resource management. In the late 1990s and early 2000s, the company implemented several initiatives that promoted ‘life balance’ and diversity.

In motivating Ikea’s employees, Ikea stresses simplicity and positive interaction among the workforce. Ikea offers a full benefits package for employees working 20 hours or more, tuition reimbursement, flexible scheduling options and many other benefits. Ikea provides maternity and paternity leave, paid time off for adoptions, condensed work weeks, telecommuting options and extensive professional development options. Ikea instituted diversity leadership and culture training programs and expanded its flexible scheduling polices. In some cases, two part-time employees can share one full-time job, dividing the hours as needed.

Ikea designed a program, Partners for Growth, to help the co-workers establish important relationships to support them in navigating IKEA and in pursuing their own personal development goals. Mentoring is the key strategy for meeting IKEA’s needs for leadership and diversity in the future, according to Pernille Lopez, President of IKEA NA. IKEA’s main goal is to help all co-workers to do their job better by empowering co-workers to navigate through the company. IKEA’s program is grounded in the values of IKEA’s culture and also it focuses on personal learning and development.

In Ikea’s motivating its employees, the Maslow’s hierarchy of needs has been considered. In this model, it shows that every person is motivated with their needs that must be meet. The hierarchy of needs has five parts in order. These are basic, safety, social, self esteem, and self-actualization ( 1997).

Basic needs are defined as physiological needs that must be met before a person can focus on any other aspect of their life, such as a social life. These needs are those required for sustenance: water, air, and food are several examples. If an individual is lacking one of these, their behavior will be aimed at obtaining them, whatever the cost. Once the need is met, the need will cease to motivate the individual.

Within the organizational framework, there are several examples of basic needs are rest periods, work breaks, lunch breaks, and wages ( 1997). Ikea’s greatest concern is on its workforce. They give full benefit package on workers working 20 hours and giving them good compensation.

The next level of the hierarchy is safety needs, which do not become motivating goals until the basic physiological needs are met. Safety needs are the need for security, protection, and stability in the physical and interpersonal events of day-to-day life (2000). A person must be granted a freedom from fear; only then can they continue to excel. If an employee is working under the constant watch of a critical boss who threatens termination for inadequate performance, the employee will be unable to focus on the task at hand. Examples in the workplace of safety needs are job security, seniority, pensions, hospitalization, and life insurance.

Once the safety needs of an individual have been met, he or she can move onto the next level of social needs. This is defined as the need for love, affection, and a sense of belongingness in one’s relationships with other persons. (2000) Examples of these needs are work groups, teamwork, and company softball outings. ( 1997) Research has shown that promoting social interaction among employees will “increase morale and productivity” (1997).

After the needs of safety have been recognized and achieved, a person can pursue the needs of self esteem. This need is defined as the need for the esteem of others; respect, prestige, recognition, need for self-esteem, personal sense of competence, and mastery ( 2000). A worker appreciates recognition for a job well done. This recognition will motivate them to continue working hard for the company. If the praise is lacking, the worker will begin to understand that doing quality work in unnecessary.

The last level of Maslow’s hierarchy, the pinnacle of achievement, is the plateau of self-actualization. This presents a lofty goal for an individual which is the need to fulfill oneself, to grow and use one’s abilities to the fullest and most creative extent. (2000).

Maslow’s hierarchy of needs if effectively done, the organization can aim towards each individual achieving at maximum potential. The first level of the hierarchy is physiological needs. I worked outdoors, so I had air to breathe. I had food and drink and rest.

During work, I had the time to relax during break time. My safety needs were also met by my surroundings, both during and after work. I had an air-conditioned house to go home to, a house that would be a stable and supportive resting ground after the long day.

The job was also stable; I could count on it to be there every day for me, as we had an infinite list of projects to complete. The third level of the hierarchy is social needs, and these were met in the job. I would work side by side with others my age. Close bonds develop through these associations.

Each day I could look forward to the work, and one reason for this was the people I had the privilege of working with. The job provided a feeling of acceptance and welcomeness that served to meet my social needs. The next item was the esteem level of Maslow’s hierarchy.

As the head, I had the respect of the other workers in the firm. The boss trusted my decisions and judgments. I developed a personal sense of competence as I gained more knowledge of the field, knowing what would work and what wouldn’t. The last step is self-actualization, meaning that I had mastered my field of work. In some respects, I may have approached this level. I was happy to go to work every day, so I had a feeling of fulfillment in my life.

In Ikea’s leadership, the organization is practicing coaching style of leadership. As  (2005) Coaching Style, the leaders help people identify their strengths and weaknesses and tie them to their personal and career aspirations. This style works best when people on the receiving end are open to it.

It is used least often because many leaders feel they don’t have the time in this high-pressure economy for the slow and tedious work of teaching people and helping them grow. 

But actually, after a first session, it takes little or no extra time and has a positive impact on climate and performance.

This style is not effective when employees are resistant to learning or changing their ways and it flops if the leader lacks the expertise to help the employee along. With Ikea’s program, that is the Partners in Growth, the workers are able to learn from their mentors. As what the organization’s main goal is to help all co-workers to do their job better by empowering co-workers to navigate through the company. Help the employees develop their own performance.

Moreover, Ikea also has practice the transformational leadership theory. Transformational Leadership starts with the development of a vision, a view of the future that will excite and convert potential followers. This is what the Ikea stresses out to their employees which are simplicity and coaching them to develop their own potentials.

Ikea’s idea on the motivation and leadership they are practicing has been effective. In fact, Ikea is now one of the largest furniture manufacturers and retailers in the world, with operations in 32 countries. They have been successful in their operations in these 32 countries they’re operating. Their workforce also has lesser turnover today than in the past years of their operation.

In January 2005, Ikea was 62nd and this year (2006) ranked 96th of the ‘100 Best Companies to Work For’ of the Fortune, a prominent business magazine.  A few months earlier, in September 2004, IKEA was listed as one of the ‘100 Best Companies for Working Mothers’, in a study conducted by Working Mother magazine. It was the second time that IKEA was so listed.

Read more: http://ivythesis.typepad.com/term_paper_topics/2009/12/behavioural-analysis-of-ikea-.html#ixzz1W2oLs8lt

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4 Comments leave one →
  1. February 18, 2012 9:18 am

    Reblogged this on Nick Garrett Furniture Designer.

  2. December 1, 2012 3:30 am

    Hi, I log on to your blog on a regular basis. Your story-telling style is awesome,
    keep it up!

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