Importance of HRM Policies on Employee Retention and Performance

Running head: HRM
HRM
Name of the Student
Name of the University
Author’s Note

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Executive Summary
The focus of the report is on the development of the human resource management
policies and its implications in a company like IKEA for the growth and development
of the company. In the modern world, IKEA is considered as a popular furniture
manufacturing company in the world. The success gained by IKEA in the current
years can be credited to the fact that the company aims at providing satisfaction for
the employees. The development of the report is done by the adaptation of a case
study research strategy that analysis the situations at IKEA. The analysis display
information about the effectiveness of IKEA for the growth of its human resource
policies and the manner in which these policies are used for retaining and satisfying
the employees. Along with this, recommendations are provided that includes
recognition of employee talents so that the human resource policies development at
IKEA can take place.

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Table of Contents
Project Outline..............................................................................................................4
Context and Rationale...............................................................................................5
IKEA Overview..........................................................................................................5
Definitions..................................................................................................................5
Methodology.................................................................................................................6
Research philosophy.................................................................................................6
Research approach...................................................................................................7
Research design.......................................................................................................7
Research strategy.....................................................................................................8
Data collection method..............................................................................................9
Literature review...........................................................................................................9
Importance of strong and positive human resource management policies on
employee retention and performance.......................................................................9
Effect of work culture on employee morale and the relationship between culture
and retention............................................................................................................10
The important elements of IKEA’s HRM policy and their effects on employee
morale......................................................................................................................12
Examine IKEA’s employee development and comment on the advantages of the
programmes............................................................................................................13
Important cultural elements that promote employee retention and innovation.......15
Discussion..................................................................................................................17

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Conclusion and recommendation...............................................................................19
Bibliography................................................................................................................21

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Project Outline
The aim of the project would be exploring the importance the employee
centric human resource management policies to ensure high rate of retention and
boost employee morale as well as performance. Collings, Wood and Szamosi (2018)
point out those employee centric human resource management strategies boost
morale of employees which encourages them to attain higher levels of
performances. As far as customer services are concerned, it can be pointed out that
employees directly interact with customers to gain more in depth knowledge about
their needs and expectations of the latter. The employee’s communicate the
information about the needs and expectations of customers to the upper level
management which ultimately leads the latter to take more concrete decisions
regarding customer services.
Thus, it has become very important for business organisations to retain their
employees to ensure delivery of high performance. It can also be pointed out that
acquisition and training of employees attract immense costs. Thus, high employee
turnover actually prevents business organisations from aligning employees with their
respective business requirements and deriving long term profits. Moreover,
employees especially at the managerial level possess skills and knowledge which
they use to serve the company. Thus, losing of talented employees actually leads to
losing of knowledge and skills which business organisations regard as intangible
assets. Kumar and Mathimaran (2017) mentioned that employee centric human
resource management policies and retention of employees enforce positive
behaviour among the employees regarding their employer organisations.
This in turns encourage the latter to achieve higher performance targets which
culminates into high performance of the companies. These high levels of
performances in the market contribute to competitive advantage in the market which
organisations boast. Thus, it is evident that retention of employees is important for
business organisations to gain competitive advantage in the market. The report
would delve into the importance of employee retention to boost the performance of
the company as a whole.

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Context and Rationale
The context of the study would be provided by the retail sector, a sector in
which employee retention is a big challenge. The retail companies set high
performance targets for employees and lack employee centric approach to human
resource management in general. This results in high employee turnover in these
companies which ultimate leads to losing of talent and skills. This losing of talents
and skills hampers the competitive advantages which retail organisations hold by the
virtue of skills and capabilities of their employees. The rationale to conduct the
research would be delving into the advantages which employee retention can usher
in retail companies. The base of the research would be provided by IKEA which is a
Swedish origin retail chain specialising in the manufacturing of premium furniture.
IKEA Overview
IKEA is a multinational retail chain based in Netherlands which specialises in
manufacture of premium and innovative pieces of furniture. The company is a private
limited company with operations in as many as 424 locations all-round the world
(Ikea.com 2019). The company was founded by Ingvar Kamprad who is a Swedish
business tycoon. The company currently operates under the leadership of Torbjourn
Loof serving in the capacity of chairman and CEO. The company has strong base in
markets of Europe, Asia, Australia and North America (Ikea.com 2019).
However, the company has no direct operations in South America and Africa.
The unique selling proposition of the furniture products of IKEA are they can be
dismantled totally and reassembled (Ikea.com 2019). This aids in easy transportation
of the products of IKEA with minimum damage on transit which results in high level
of customer satisfaction. The company has extended its product line to include
accessories like pillow covers and utensils. IKEA is a private company which means
that it does not reveal its financial performance in the public (Ikea.com 2019).
Definitions
The main are the main terms which the report would consider which has
necessitated defining them in order to provide a stronger bases to the paper.
Strategic human resource management