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Ingvar Kamprad founded IKEA in 1943 when he was just 17 years old (Aaker, 1992). During its early days, the company was dealing with fledging company fish and the sale of charismas cards. The founder of the company conducted these small operations at his small farm in a remote village in Sweden. To maintain his customers and earn new ones, Ingvar ensured that he delivered the goods to the homes of his customers. This strategy was successful, and later on developed to be the tradition of IKEA (Bian and Moutinho, 2009).
In the process of development, IKEA faced a lot of challenges. This included competition from rivals, sourcing for raw materials and manufacturing firms, entry into new markets and maintenance of high quality of its products and selling them at low prices.
Through hard work, strategic planning and determination, the company was able to overcome these difficulties and now it is one of the leading furniture selling companies in the world. At the present moment, the company is operational in over 35 different countries, has over 285 stores and a workforce of 127,800 individuals (Kotler, 1997).
The vision of IKEA is to create a better everyday life for many people (McGinnis, 2008). To achieve this vision, the company has developed and applied a number of strategies, goals and objectives. Some of these have had short-term effects while others have had long-term effects.
The firm has also a strong corporate structure that has enabled its operations to be smooth. This structure is divided into operations and franchising. Operations mainly deal with the running and management of the stores while franchising deals with marketing and expansion of the firm (Miner, 2007).
To ensure that the operations of the company are effective and efficient, the company has maintained a stable organization structure and culture. The managerial strategy of IKEA is formal, non-hierarchical, and based on a teamwork (Peter et al, 2009). This ensures that all the employees have a duty of care and respect for one another. As a result, employees at IKEA do not have titles or get special privileges.
There is also effective communication among the employees. This ensures that the correct information is passed from one employee or department to another. As a result, the efficiency of operations within the organization is maintained (Gofman and Mets, 2010). IKEA also believes in recruiting young employees who are creative and innovative (Egan, 2000).
This not only reduces expenditure on salaries but also ensures that the company remains the best in terms of creativity and innovation (Jugger, 2009). The future goal of the company is to expand its operations into many more countries. It is projected that IKEA will be opening 20-25 stores annually in the near future (Schein, 2005). This will guarantee the sustainability of the company in the long run.
Human Resource Management Strategies
The vision of IKEA has been to provide a better everyday life to many people. To achieve this goal, IKEA has come up with several strategies aimed at improving the effectiveness and efficiency of its operations. Having an effective human resource has been one of the key goals of the organization.
This is due to the fact that an effective human resource will ensure that the workforce of the organization is effective and performs its duties as per the expectation of the company. As a result therefore, the employees are able to meet the goals and objectives that have been set by the company hence they are able to satisfy the needs and desires of the consumers through their services.
For the human resource of IKEA to achieve this, its goals and objectives have been designed in a way to be in line with the overall goals and objectives of the organization. Offering a strong leadership, embracing teamwork and building a strong organizational culture have been the main goals of the human resource management of IKEA (Nicolini, 2000).
These form part of the main goals and objectives that the organization wants to achieve in order to realize its vision. Therefore, IKEA greatly depends on its human resource department to achieve its short-term and long-term goals and objectives (Stone, 2008).
Human Resource Objectives and their effectiveness
The first objective of the human resource management of IKEA is to develop a strong organizational culture. Organizational structure is a framework that an organization uses to run its operations (Wether and Chandler, 2006). It entails the ways and means through which an organization arranges its authority lines, communication, roles, duties and responsibilities of individuals and departments, and how all these components are incorporated into a single unit.
To achieve this, the organization has adopted and applied a decentralized leadership model through its human resource department. With this model, the employees at all levels of the organization are involved in the daily running of the firm. They are always asked to offer their opinions and their views are always respected. In addition, they are also involved in the decision making process. This not only motivates them, but it also enables them to work in an effective and efficient manner (Hannagnan, 2007).
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The second objective of the human resource department is to develop the spirit of teamwork with all the employees of the organization. An organisation in which the members of staff work together as a team has a higher chance to succeed as compared to that which mainly relies on individual efforts (Thomas, 2002).
Through teamwork, these different groups work together to ensure that the goals and objectives which have been set up by the organization are achieved. This gives different teams an opportunity to make decisions concerning their operations increasing their loyalty to the firm and at the same time, it fosters ownership. IKEA is made of a network of teams that work together to ensure that the entire consumer needs are met.
These teams work hand in hand with each other. The individuals who are in these teams are skilled in their respective fields of expertise. The company also allows for the rotation of individuals from one department to the other, thus workers develop even new skills while they work at the firm (Belbin, 2010). Information Technology is widely used in the operations of the company and has especially improved the communications between various departments in the organization.
The company through its policy allows its workers to further their education and skills to improve the excellence of their work. The company is normally involved in a serious of projects in their stores that are located in most parts of the world. A specific team conducts each project. On its completion, the team is disbanded and rearranged in preparation of a new project. IKEA therefore encourages teams and team working, a factor that has been contributing greatly to the success of the company over the years (Das and Teng, 2009).
The third objective of the human resource department of IKEA is to develop a strong organizational culture. Organization culture is the attitude, beliefs, psychology and behaviour that an organization believes is best suited to follow to accomplish its goals (Schein, 2005). It is through this culture that IKEA has developed the means through which it deals with its members of the staff, stakeholders and other interested parties in general (Black, 2003).
Through its organization culture, IKEA is able to differentiate itself from other organizations that deal with furniture manufacture and retail. The organization seeks to satisfy the needs of its customers first.
There is also trust and respect from the employees to its customers, stakeholders and other individuals who visit its stores. The employees also have trust and respect to each other. This ensures that they more effectively and efficiently hence they are able to meet their personal as well as the organizational goals and objectives (Mullins, 2010).
Issues in Employment Relations and HRM in the Company
Over the years, IKEA has had a strong human resource department. It is through this department that the organization has been able to meet most of its short-term and long-term goals and objectives. However, there has always been a constant issue between the department and the employees. For several years now, most of the employees have felt that the department needs to modify the manner it recruits, promotes and pay its employees (Gitman, 2008).
It has been the tradition of the organization to recruit and train employees from the system rather than employing qualified personnel. Although the HR department views this as a strategy to reduce operating costs, other employees view this move as degenerating since not all the employees are competent enough to hold the position that they are trained for. In addition, this system does not create room for competition among employees that not only improves the operations of the organization, but increases the skills and knowledge of the employees themselves.
In addition, employees have always complained on the low payment rates that they received. It has been the tradition of IKEA to keep employees who have passion to work for the organization rather than making a lot of money. In the process, IKEA has lost some of its best employees to rival companies who have offered them better payment packages (Fontaine, 2007).
Areas of Improvement
With regards to the above problems, the HR department of IKEA needs to improve the manner in which it recruits and trains its staff. For the organization to continue to be effective and efficient, the HR department needs to recruit qualified personnel and, at the same time, maintain internal recruitment and training.
This will ensure that the employees of the organization have the vigour and intensity that is required to keep up with the competition from rival companies. The HR department also needs to improve the methods with which it motivates its employees. At the present moment, the main method that the department uses to motivate its employees is through the provision of a conducive working environment.
To improve on this, the department may increase the payment for its employees, offer job promotions, bonuses and rewards to hard working employees. This will make them work even harder. This strategy will also ensure that there is minimal staff turnover as a result of employees being stolen by other rival companies.
IKEA is the worlds leading retailer of household furniture and fittings. Through its effective strategies and management, the company has been successful for over 8 decades now. Despite this, IKEA has faced a lot of challenges especially in its HR department. To curb this problem, IKEA needs to modify the strategies that it has been employing in its HR department in order to meet the new market challenges and demands. This will ensure that the company’s profitability and sustainability are maintained in the long run.
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