Importance of Human Resources and Financial Management in IKEA

This report explores the importance of human resources and financial management in IKEA. It discusses the role of motivation, theories of employee motivation, and the significance of financial resources and planning. It also emphasizes the impact of organizational culture on employee productivity.

IKEA

Table of Contents
INTRODUCTION...........................................................................................................................3
Human resources.............................................................................................................................3
Motivational organization culture................................................................................................3
Importance of motivation.............................................................................................................4
Theories of employee motivation................................................................................................4
Financial management.....................................................................................................................5
Importance of financial resources...............................................................................................5
Financial planning........................................................................................................................5
CONCLUSION................................................................................................................................6

INTRODUCTION
IKEA is one of the biggest Swedish founded European multinational retail company
operated in 433 stores worldwide offering customers wide range of products and services
varying from furniture, home decor products and kitchen fitting applications. This report also
explains human resources importance for company and how it enables to motivate employees
and build strong culture in business organization. It also analyses financial management
importance and how it establishes innovative platforms for company to build parameters of
growth.
Human resources
The human resources department importance for IKEA can be understood as the brand has high
vital department which has the function to look after recruitment of skilled employees ad train them with
strong advanced sills. Human resource department has the function to maintain employee productivity,
provide them with proper working standards in production department and look after their grievances.
IKEA gives high importance to all employees, team members and the human resources working in all
departments and management hierarchies of company. IKEA as global brand has large number of stores
worldwide where employees have huge role to play in serving the customers with efficient services and
maintain high quality standards in delivery of products. Leaders have the role to guide employees through
their training session and keep them motivated to enhance their productivity levels with cost efficiency to
reach the set company goals. The leaders should analyze the various parameters where employees can be
courage and use the human resources optimum and build their technical working knowledge of practical
production field (Madura,2020)
Motivational organization culture
Organizational culture has huge role to play in enhancing the productivity levels of human
resources in company as it is imperatively important for companies to build dynamic working culture,
motivate the employees and cultivate the sense of belongingness in them. Leaders and managers in IKEA
have developed dynamic encouraging organizational culture where the operational structure is providing
them with opportunities and platforms to showcase their talents and learn new skills to harness in
production. There is immense importance given to maintain ethical standards in working conditions
provided to employees as friendly and supportive organization culture keeps them retained in company
for longer periods. Organizational culture provides employees with identity and connects them with
company goals along with encouragement to reach self-accomplishment growth targets and the elements
can be categorized into purpose, ownership, community, effective communication and good leadership.
Cultivation of strong interpersonal skills among employees and dynamic leadership enable cooperative
and smooth communication flow among all management heierchries (Brandl,2020).IKEA believes in
building competing values among entire organization culture which can be understood as follows:

 The dynamic, entrepreneurial create culture- Employees are given rights to involve in company
descions and contribute in ideas sharing with brainstorming sessions. This enables leaders to
build strong dynamisms among all employees and motivate them to learn new skills and use
innovative production techniques.
 The people oriented, friendly collaborate culture- Employees are given high importance by
understanding their grievances and feedbacks regarding working environments by leaders and the
collaborative friendly culture keeps their quest high. Training of new employees selected by
HRM should be welcomed with formal orientation and detailed explanation of company goals
and how they can reach the set targets with high efficiency.
 The results oriented, competitive compete culture- Employees in IKEA are given production
targets to complete along with high incentives and performance appraisal benefits which are the
important extrinsic motivational factors (Hastings and Mitchell,2020).Importance of motivation
Motivation is highly important for employees as well as company to enhance their production
goals and the set benchmarks with strong efficiency and also deliver high customer satisfaction services.
There are intrinsic as well as extrinsic factors of motivation which impact employees variably and their
performance standards. Intrinsic motivations are the factors which are driven by individuals which
motivate them to reach self accomplishment and high growth in their performance of company standards.
Extrinsic factors of motivation are the financial rewards and appraisals given by leaders to employees
which motivate them to enhance their skills and learn new capabilities. Leaders use various contingency
theories and situational theories to build strong competitive workforce as an integral human resources
asset for enabling brand to reach long term success in dynamic business world. IKEA management has
built strong employee motivation models implementation of which has benefited the company on large
level cost efficient production standards and efficient completion of targets. Employees and human
resources are the face of brand as they are directly in contact with customers and their product services, in
stores as well as online marketing on websites and advertisements. Training them with advanced skills
and interpersonal skills help employees to learn how to communicate with customers who arrive at stores
for delivering high quality shopping experience.
Theories of employee motivation
 Maslow heierchrial theory- This theory explains the essential needs of employees which drive tier
motivation to enrich their performance into 2 categories which can be analyzed into factors of
Psychotically, safety and security needs which are the lower order needs. The other group are
higher order needs which are socialization, self esteem and self-actualization needs which
ultimately motivate employees to enhance their leaning s with productive skills.
 Herzberg Theory- This theory explains by providing opportunities and giving platforms to
employees to showcase their skills and recognition on their achievements the managers and
leaders can highly motivate employees. It is also important to provide hygienic work environment
in factories and job security to them, along with free flow conversation opportunities with other
team mates and other leaders. They should be given performance appraisals and rewards on high
performance levels completion of work (Srimannarayana,2020).
 MC.Clelland theory is another innovative motivational model theory which explains there is need
of achievement, need for power and need for affiliation among employees which drive their
performance standards and motivate them to improve their skills fundamentally. IKEA gives vital
importance to all employees working in company by giving them decision taking power and

increasing their quest to reach high efficient standards of production and increase the profitability
margins.
Financial management
Financial management means planning, analyzing, organizing and directing the implementation
of financial resources available to company in best optimum utilsation to reach the set company goals
and aim for reaching high profititability goals. Strong financial management by leaders and managers
enable efficient business transactions by company into stores and online performance to reach the
customer satisfaction goals for increasing the goodwill standards. Procurement of financial funds are
essentially important for company to deliver high quality performance of products and services to large
customer base in market share. Capital budgeting of the operational structure and directing the
resources to expand IKEA business into new sectors are the key official functions of financial
management. Mangers have the role to deliver financial report to employees and the stakeholders who
have strong role in enabling company to enhance its performance standards and cultivate strong
production standards in products and services (Ikpesu ,Vincent and Dakare, 2020).
Importance of financial resources
 Strong financial reports of IKEA through strategically financial planning have enabled company
to attract large investors and shareholders for investment in company. The financial
management of company has positioned itself as one of the beigest retail brand in world
offering large innovative products and services to customers and maintained strong quality
standards. Shareholders decisions are highly affected by the financial management structure of
company and on the representation of reports about company performance in market share.
 Strong financial management allows top management and managers to procure adequate
resources to bring new technology and production equipments in company which enables to
brig high innovation standards in all products and services. This function by financial
management assist IKEA to position itself as strong competitive brand in the dynamic volatile
business world where there is high threat of new brand entrants. The introduction of advanced
technology scale up production department has largely upgraded to business performance and
also cost effectiveness usage of all resources (Ismail and Hassan,2020, January).
 High financial management has enabled company to build diversification and business
navigation into new sectors and build innovative platforms to enhance customer satisfaction
services. IKEA utilizes large finances to promote its global business on online markets and
websites where customers can easily reach to company services and products. Marketing and
promotional activities are deployed with huge financial resources where company uses large
capital resources to function out its business goals and deliver high quality shopping experience
to all customers who come in stores or on websites.
Financial planning
IKEA lays high importance to financial planning function of management as one of the vital
principle of management which managers need to address to reach the set company goals with high

profitability. The allocation of financial resources and planning of the operational structure which will
enable company to reach a competitive benchmark in industry in high volatile business environment is
extremely important.
The various objectives financial planning by managers can be understood as follows:
 IKEA has large number of stores and branches in many countries constituting the international
market and it has been dominating the goodwill among customers due to the efficient services
and quality standards of all products. Strong financial planning and allocation of optimum
resources of goods and products to all stores globally is highly important for company to sustain
the competitive environment in the digital business world. Advanced financial planning related
 The digital world is highly competitive where promotional activities and online presence of
advertising and partnerships with global brands are highly important to expand. Capital utilization
and expansion funds help the company to build structures in organization for long run survival
and attracting new segments of customers with high innovation standards. It also delivers the
function to maintain reasonable appropriate balance between the outflow and inflow of resources
so that stability is maintained in reaching the company goals with efficiency.
 Finance planning helps in building strong barriers of growth and successful performance in
industry by reducing the hindrances and any negative impact which uncertainties may cause to
company operational structure. Strong quick decisions taken by financial managers and the skills
to maintain capital funds is highly important to introduce new scale of development in market
share by bringing innovative products according to changing demands of customers
 Financial planning enables the utilization of scarce capital left in production or marketing
departments to be deployed in other departments with high efficiency and maintains cost
efficiency among employees to reach the set company goals with high profitability margins.
Procurement, investment and administration of financial funds are effectively addressed by
financial management principle and strong planning to face contingencies arising in company
structure.
 Managers need to have quick decision taking abilities while financial planning and an adaptive
understanding of dynamic business models which can affect the business operation of IKEAthe
business operations and reach new segments of markets. Dynamic preferences of customers and
extensions of business scale to compete with new brands in world has made the procurement of
financial resources highly important for IKEA
CONCLUSION
This report concludes the key areas and theories of human resource development and
how motivation has large impact on employees of IKEA. It concludes that leaders and managers
emphasis in building strong parameters to evacuate employee performance to keep them
motivated in production department and enable strong delivery of customer satisfaction services.
This report also concludes financial management importance for company, the key areas of
investment and allocation of financial resources for reaching high quality standards in products
production, strong marketing and high promotional activities by company. IKEA financial
managers lay high importance in maintain strong capital funds of company which can be accessed
to diversify or modern technological implementation functions.

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