Human
resources management (HRM) has evolved over the decades to become a strategic,
integrated and coherent approach to the employment, development and well-being
off the people working in an organization. Duncan (2001) argued that the
evolution of HRM impacts on the management of intellectual capital with
organizations making them a source of competitive advantage. The existing
literature also highlights the importance strategic human resource management
(SHRM), to create organizational potential by ensuring that the organization
has all its needs to attain sustained advantage. However, it becomes a value
adding function leading to integration and adaptation (Rodrigo, 2012).
“Maintaining
a strong IKEA culture is one of the most crucial factors in the continued
success of the concept” – Ingvar Kamprad, Founder of IKEA
IKEA’s vision of “creating a better everyday life for
the many people” is reflected by their high quality, well designed and
functional products, in affordable prices and great variety. This philosophy of
doing things in a cost conscious and environment friendly way is embedded in
all of their activities. The use of flat packaging and ready to assemble
products, as well as the use of product communality reduces their
transportation, inventory and manufacturing costs (IKEA USA, 2014). However,
their cost-conscious approach is not just limited to that aspect; employees and
managers are encouraged to be economical as well. It all begins from the top
management; founder Ingvar Kamprad who believes in leading by example, stays in
inexpensive hotels and flies in economic class. This mindset diffuses through
the organization’s pyramid to all employees. “We do our part, you do your part”
on the one hand, incorporates IKEA’s strategy of reducing costs while adding
value to their supply chain through innovation and creativity, while on the
other hand it encourages customers to get involved and be part of the IKEA
family (Kats, 2014).
The IKEA Group - The Story of How We Work
IKEA Vision was to create a comfortable place for its co-workers; in Spiers-Lopez statement “IKEA values the individual. We make people comfortable here and enable people to grow”. Motivation is the force that causes people to do things as a result of individual needs being met. Steers and Porter (1991) defined Motivation as set of forces that cause people to behave in certain ways, however Mitchell (1982) states that motivation is the degree to which an individual wants and chooses to engage in certain specified behaviors. It should be noted that the key role played by SHRM has been in attracting, keeping and motivating high performers in the contemporary business environment (Kats, 2014).
Kahn
(1990), defined engaged employees as being fully physically, cognitively and
emotionally connected with their work roles.
However, Macey & Schneider (2008) argued, employee engagement as a
term used to depict the degree to which employees are concerned with, dedicated
to, enthusiastic, and passionate about their work. Gubman stated that, where
the person works and what the person does is a major component of engagement.
William Kahn acknowledge that individual differences might influence the kinds
of roles employees’ find engaging or disengaging as well as personal
experiences of meaningfulness, safety and availability of resources. For any
organization to be successful, it must have engaged employees. According Towers
Perrin’s researches, organizations with higher levels of engagement outperform
their competitors in terms of performance and profitability. In 2002 Watson
Wyatt found that the high commitment organizations outperformed those with low
commitment by 47%. Furthermore, Thomas & Seeman (1972) confirmed that restoration of meaning at
work can help enhance employee’s motivation and attachment to work.
Motivational techniques used by the IKEA has ranged between Maslow’s hierarchy of needs. Maslow’s hierarchy of needs evidently identifies the responsibility of employers to present a workplace environment that encourages and enables employees to discharge their own distinctive potential. The establishment of such needs will promote individual employee engagement and retention and the organization in achieving its strategic aims (Rodrigo, 2012).
Figure 01: Maslow’s
Hierarchy of Needs
Source: Rodrigo, (2012)
However, In IKEA it is important to note that the need
of an employee varies in psychological makeup, position, experience etc. Therefore,
it is important to integrate non-financial rewards with financial rewards to
achieve greater employee engagement and retention (Rodrigo, 2012).
Figure 02: Application of Maslow’s
Hierarchy of Needs in Workplace
Source: Rodrigo, (2012)
Mentoring
is one of the key techniques used by IKEA in deciding training and development
requirements of each individual. Spiers-Lopez stated, mentoring made employees
feel supported, and helped them grow within the company. Gibb (1994) has
defined mentoring as “a relationship in which an individual takes a personal
interest in another’s career and guides or sponsors that person” (p. 47).
Drawing upon David (2004), mentoring can be linked with career advancements and
mobility, especially for the minorities and women. Therefore, it should be
highlighted that the method is being successfully used within IKEA to wholly
motivate workforce to stay with the company. The ongoing training also helped
employees to stay in touch with the latest within the industry and also to
benchmark their performance against best practices across different industries
(Rodrigo, 2012).
A
strong leadership along with a shared value vision is important to create an
entrepreneurial and innovative work place where people would love to work, and
develop their potential, and ultimately grow with the organization (Kats,
2014).
References,
Duncan, C (2001), The impact of two decades of
reform of British Public Sector industrial relations, Public Money and
Management, Jan – March, pp. 27-33
IKEA USA (2014), The IKEA Group – The Story of How We Work; https://youtu.be/1jn2_nZrivQ
Kahn, WA (1990), Psychological Conditions
of Personal Engagement and Disengagement at Work
Kats, C (2014), What Management Lessons IKEA’s HR Strategy can teach us
Macey, WH and Schneider, B (2008) The Meaning of Employee
Engagement. Industrial and Organizational Psychology, 1, 3-30.
Mitchell, TR (1982), Motivation: New
Directions for Theory, Research, and Practice
Rodrigo (2012), How has Human resources management (HRM)
evolved to become a strategic, integrated and coherent approach to employment.
Steers, RM & Porter, LW (Eds.) (1991). Motivation and
Work Behavior (5th ed.). New York: McGraw-Hill.
Thomas,
M & Seeman, J (1972). Personality integration and cognitive
processes. Journal of Personality and Social Psychology, 24(2), 154
161. https://doi.org/10.1037/h0033396
Wyatt, W (2002), Human Capital Index and Company Performance:
A definite impact on shareholder wealth
According to some, Maslow's hierarchy of needs makes intuitive sense. He viewed people through rather idealistic lenses and not as we really are. If we think about what people want and need it makes sense that the fundamental layer is that of psychological needs. Maslow's hierarchy of needs fails at being a comprehensive framework of human needs and motivations because it ignores the mechanisms behind covering the basic needs. What motivates humans, our behavior and overall psychology is a lot messier than the Hierarchy of Human needs suggests.
ReplyDeleteI hear where you coming from, but I don't completely agree with your perspective. Maslow (1943) initially stated that individuals must satisfy lower level deficit needs before progressing on to meet higher level growth needs. However, he later clarified that satisfaction of a needs is not an “all-or-none” phenomenon, admitting that his earlier statements may have given “the false impression that a need must be satisfied 100% before the next need emerges” (1987, p. 69).
DeleteIKEA organizational culture plays an important role in maintaining cost-effective business operations to sustain cost leadership business strategy of the furniture giant. In other words, due to its cost leadership business strategy, IKEA does not offer the most competitive financial compensation to its workforce. Instead, the home improvement and furnishing chain attracts employees with intangible benefits that are deeply integrated within IKEA corporate culture(Dudovskiy 2019.
ReplyDeleteIKEA organizational culture is based on the following principles:
1.Simplicity and high level of informality.
2.The value for teamwork
3.Embracing diversity among employees and different ways of doing
things
4.Frugality.
When it comes to IKEA, it is one of the leading organizations which practice the 'Best Fit' approach. According to Duncan (2019), there are 7 steps which IKEA has been following to keep their identity intact.
Delete1.Create an Experience, Not Just a Product
2. Have Strong Brand Identity
3. Invest in Content Marketing
4. Make Use of Your Social Media Channels
5. Get to Know Your Customers
6. Keep It Fresh
7. Don’t Take Yourself Too Seriously.
Hi Malithra, I would like to add some facts of the IKEA, An example of an organization that aligns compensation practices with competitive business strategies is IKEA, which manufactures and sells Scandinavian furniture at low prices. The company's first showroom opened in 1953 in Sweden. Today, IKEA has grown to become a global retailer operating in 37 countries. Total sales exceed $ 22 billion a year.
ReplyDeleteIKEA's competitive strategy is to reduce costs. The company's founder, Ingvar Kamprad, was born in a relatively poor country in Sweden. He grew up in a thriving community with limited resources. This growth helped set his entrepreneurial goal of providing functional furniture at a very affordable price. . As many people as possible can afford it. (Strewart and Brown, 2011).
Since 2000, IKEA has cut its prices by more than 60 per cent. For instance, the price of its "Lack" table has dropped to $6 (less than five euros at current exchange rates) from $18 when IKEA first came to the Chinese market. The company plans to reduce prices further, helped by mass production and trimming supply chain costs (Chu, el at., 2013)
DeleteI thought it would have been perfect if you start with a introduction to what IKEA is. IKEA is a multinational conglomerate, that designs and sells ready-to-assemble furniture, kitchen appliances and home accessories, among other useful goods and occasionally home services. Founded in Sweden in 1943 by 17-year-old Ingvar Kamprad, IKEA has been the world's largest furniture retailer since 2008.
ReplyDeleteAlso, Evolution of HRM over the period of time is important for understanding the philosophy, functions, and practices of HRM that are followed in different situations so that relevant HRM practices are evolved in the present situation (Manashree, C)
Duly noted. Since my main focus was on the human resource management perspective, wanted to highlight the fact that the evolution of HRM impacts on the management of intellectual capital with organizations making them a source of competitive advantage (Duncan, 2001), which is IKEA in this context.
Delete‘’The theoretical framework of SHRM and HRM suggests that student motivation to learn includes components such as 'effort', 'goal orientation', 'Focus of control', 'Self-efficacy', 'Sense of self as learner', 'Self-esteem', 'Self- regulation' and 'Interest’' (Muho and Kurani 2013).
ReplyDeleteHi Malithra, a very interesting case study of IKEA. According to Sparrow and Hiltrop (1994), The best-fit model is measured as a variation from standard models of Harvard, Michigan and York and is called “matching model” for HRM. Boxall and Purcell (2003) criticizes that in a changing business environment companies and their strategies are subject to multiple alternating contingences and that it is merely possible to adjust entire HR systems to new challenges frequently. Secondly, as companies move through their life-cycle HR practices have to be aligned which leads to an alternating treatment of employees which can have a demotivating effect and show inconsistency in corporate culture (Boxall and Purcell 2003). The research has shown that the concepts of best practice and best fit have to be analyzed and adapted to suit the localized needs of international subsidiaries in order to pave the way to overall global competitive advantages through HR (Boxall and Purcell 2003).
ReplyDeleteBest practices is defined as ‘any practice or experience which has proved its value or which is used in an efficient way in an organisation, and can be applied in other organisations’ (Chardine-Bauman & Botta-Genoulaz, 2014). Additionally, suitably implemented, best practices can generate considerable profits of performance within a short period of time (Maire, Bronet, & Pillet, 2005). Considering the concept of best practice, IKEA’s approach to successfully incorporating sustainability within its firm and across its supply chain makes a connection between the two
ReplyDeleteBest Practice approach is based on benchmarking, systematic process of comparing organizational performance with the performance of the best organizations in specific sector or region. The purpose of benchmarking is to understand why comparable organizations are better, how they have become the best in their sector or region and then take advantage and implement necessary changes to improve organizational performance according to one’s own conditions (Šikýř, 2015).
DeleteAccording to Jerome (2013), if a man’s physiological needs are fulfilled by only 25% then there will be no sign of emerging the safety needs. But if his physiological needs are fulfilled to the level of 50% then the emergence of the safety needs could be observed. Therefore, an employee can be satisfied in different percentages in all levels of the hierarchy without even a single level is not 100% fulfilled. Maslow (1954), explains that lower levels should always have a higher percentage of satisfaction than the immediate higher level if he is to be satisfied for a longer period of time.
ReplyDeleteThe best fit approach is subject to several criticism. Firstly, Boxall and Purcell (2003) criticizes that in a changing business environment companies and their strategies are subject to multiple alternating contingences and that it is merely possible to adjust entire HR systems to new challenges frequently. Secondly, as companies move through their life-cycle HR practices have to be aligned which leads to an alternating treatment of employees which can have a demotivating effect and show inconsistency in corporate culture (Boxall and Purcell 2003).
ReplyDeleteBest fit may look at others and consider the way processes and policies are formed elsewhere but decides to adapt and customize any of these in a way that fits the business rather than having the business adapt to best practices(Armstrong, 2010).
ReplyDeleteAccording to Hsieh (2011), best HR practices and Best Fit support in creating a strong relationship in between the human resource management and the performances of the organization where it emphasizes the necessity of having a better alignment of the HR policies with the business strategy of the organization. According to Treen (2000), the employers expect the best possible performance from the employees and having best practices will support in fulfilling such expectations of the organization. The best practices enhance the skills of the existing employees of the organization and also it supports in recruiting highly skilled employees (Mullins, 2005).
ReplyDeleteAhmad and Schroeder (2003) examined the relationship between HRM practices and operations management across a number of countries and industries. They found a relationship between Pfeffer's seven best HRM practices and organizational performance across three industries and four countries. This study provided an empirical validation of an ideal HRM system for manufacturing plants and provided overall support for Pfeffer's list.
DeleteHi Malithra, Gunnigle et al (2006) stated that training is the process of acquiring the knowledge, skills and attitudes required for a well-performance and development is the acquisition of skills and abilities required for the future roles of the organization.
ReplyDelete