Evaluating HRM Practices at IKEA: A Comprehensive Case Study

This case study provides an overview of Human Resource Management (HRM) practices at IKEA, focusing on their effectiveness in achieving business objectives. It begins with a company overview, highlighting IKEA's global presence and revenue. The study then explains the purpose and scope of HRM in resourcing talent and skills, detailing operational and managerial functions such as training and development, compensation, legal compliance, and performance management. It evaluates different approaches to recruitment and selection, including internal and external processes, and analyzes their strengths and weaknesses. Furthermore, the case study examines how HRM practices benefit both management and employees, emphasizing training, performance management, and reward systems in fostering a positive work environment and enhancing organizational productivity. The report concludes by underscoring the importance of HRM in achieving organizational goals and maintaining a competitive advantage.

HRM Case Study Review
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Table of Contents
Introduction...................................................................................................................3
Company Overview......................................................................................................3
LO1 Explain the purpose and scope of Human Resource Management in terms of
resourcing in your chosen organisation with talent and skills appropriate to fulfil
business objectives.......................................................................................................4
LO2 Evaluate the effectiveness of the key elements of Human Resource
Management in an organisation...................................................................................5
LO3 Analyse internal and external factors that affect Human Resource Management
decision-making, including employment legislation.....................................................6
LO4 Apply Human Resource Management practices in a work-related context.........7
Conclusion....................................................................................................................8
Reference List...............................................................................................................9
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Introduction
Human Resource Management is the essential body of all organizations, effectively
working to manage the organizational workers in order to improve the productivity of
the organization and gain competitive advantage (Cascio, 2018). Every organization
has HR department whose function is to oversee employee participation and
performance, training and development sessions, offering rewards to the employees,
enhancing employee relation, framing policies, taking decisions for the benefits of
the company, and most importantly making the employees aware of the various
benefits, compensation provided to them in the company. The HR department is
responsible for bringing about change in the organizational structure and polices.
This reports brief about the various HRM practices followed in IKEA, thereby
improving the standard of the company and also developing employee relation. The
government of UK has framed many laws to protect the rights of the employees
which are discussed in this report. Employees develop a healthy relation with the HR
department and assure that the productivity and the brand images reaches to
superior position in the market.
Company Overview
IKEA is known as a foreign based company deals with selling furniture, apparels and
even home accessories. This company was originated in 1943 by Ingvar Kamprad.
The company operates in 411 locations globally with employee strength of about
194,000. Revenue earned by the company is €35.074 billion by the year of 2016
(Ikea.com. 2018).
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LO1 Explain the purpose and scope of Human Resource Management in terms
of resourcing in your chosen organisation with talent and skills appropriate to
fulfil business objectives
Explain the purpose and the functions of HRM, applicable to workforce
planning and resources in your chosen organisation. [P1]
Figure 1: HRM Functions
Source: Created by Learner
Traditionally, HR department only planned after exploiting the staffs but the new
HRM functions operates in three major different types such as operational,
managerial and advisory. Some of them are discussed below:
Operational Functions:
Training and Development: Training gives an opportunity to the employees to
enhance their skills and contribute to the productivity of the organization. Training
creates a pool of talents in the company and brings in innovation in the strategies. As
employees are hired outside the organization, it can be that they may lack some
skills required by the company. In that scenario, training helps to make the
employees up to date to the skills required by the company. Being trained, the
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TrainingandDevelopmentPerformancemanagementLabourRelationsHRPlanningRecruitment,SelectionandIntroductionPerformanceandRewardManagement

employees get the opportunity to develop themselves, promote to an upper position
with better pay.
Compensation and offers: The HR department oversees that each employees are
entitled to certain compensations and benefits to motivate them to strive hard and
acquire organizational goals. The HR department makes the employees aware of the
various benefits offered to them like Medical insurance, working hour flexibility,
maternal/paternal leave, and education reimbursement for children. Rewards are
offered to the employees like incentives, hike in salary, appraisals, promotions which
generate a feeling in the employees that they are assets to the company and being
valued, they work with more efficiency and gain trust for the company.
Legal Compliance: The HR department should follow all the laws and regulations
relating to the rights of the employees for the benefit of the organization. The HR
department should have knowledge about the working conditions, overtime rules,
minimum wages, etc.
Performance management: Performance management helps the HR department of
an organization to interact with the employees and know their skills. This will help
them to select the employees for the appropriate department and enhance
productivity. Appraisals will help the HR department make a note whether the
employees are moving to the correct direction towards the goals of the company.
The company will also be able to understand if the employees require training on
certain fields.
Managerial Functions:
Effective Planning: The HR department has the vital role in setting the objectives of
the organization. The HR department plans firstly for the vacancies in the company,
takes decisions on recruitment sources, and set the job specification and
requirement.
Direction: The HR department oversees that all the employees are properly directed
to the organizational goals. The HR enforces in keeping the vision clear to the
employees and enhancing their performance
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IKEA organizes quarterly training program to educate the employees about
innovative technologies, so that it enhances the productivity of the organization. The
HR manager takes care of the policies being properly implemented in the company.
Quarterly training sessions are arranged by the HR manager of IKEA to increase the
competencies of the workers and improve their skills.
Workforce planning- The HR department of IKEA aims at hiring the right
candidates for achieving the goals of the organization and timely deliveries of the
products to the customer through proper distribution channel. The HR department
analyses the importance of recruiting staffs for the organizations as there is an
increasing demand of manpower.
Best Practice Approach: The model aims at reducing the number of absenteeism
in the company by maintaining healthy relationship with the employees. Sound and
effective communication develops between the employees and the departmental
heads including the HR department.
Resource Planning- It is the systematic planning of the approaches to achieve the
best outcome in productivity. The company aims at having the best employee for the
organization and ensure to give training, conduct seminars to improve the skills of
the employees.
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Figure 1: Steps in Human Resource Planning
Source: Created by Learner
Using examples from your chosen organisation, explain the strengths and
weaknesses of different approaches to recruitment and selection. [P2]
Recruitment can be conducted in companies in proactive or reactive attitude, either
immediately responding to the job vacancies available in the company and takes
time to create a pool of talents in the organization by recruiting educated and skilled
candidates. Approach to recruitment starts by having a proper job description,
consisting detailed information of the requirements of the jobs along with the offered
salaries, types of tasks to be performed (Armstrong and Taylor, 2014). By having job
specifications, the candidates can show their interest in different positions vacant in
the company. To hire suitable candidates, a comprehensive set of skills is framed
by the HR manager of the company regarding selecting the candidate. The positions
vacant in the company depend on the strategy developed to have a correct posting
medium of the vacancies (Sparrow et al., 2016). For example, posting vacancies in
outlets or advertisements in magazines can increase the promotion of the company
and the vacant positions.
However, there are two types of approaches of recruitment followed in every
organization, internal and external recruitment process (Gatewood et al., 2015).
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AnalysingOrganizationaObjectiveInventorypresentHumanResourcesForecastingdemandandsupplyofHumanResourcesEstimatingmanpowergapFinalHumanResourceActionPlanMonitoringControlandFeedback

Internal and External recruitment process has its own merits and demerits as
discussed below:
Internal Recruitment Process
Merits- Internal recruitment process is less time consuming as there is no
requirement of advertising the vacant positions in the company since the existing
employees are offered promotion. It is cost effective as there is no incurring cost of
conducting interviews, or promotions through newspaper or outlets. Since promotion
is given to the existing employees it is less time consuming as there is no
requirement to provide training on the behaviours of the company.
Demerits- However, the process debars the process of creating pool of talents as
fresh talents do not get the opportunity to explore their unused talents. On the other
way, innovation is not incorporated in the strategies of the companies and in the
creation of the products.
External Recruitment Process
Merits- External recruitment process contrarily hires candidates from outside the
organization through advertisements. New talents receive the opportunity to explore
their talents and gain competitive advantage by incorporating innovation in
technology and production. The HR department can hire candidates according to the
requirements of the company and according to the skills of the candidates.
Demerits- External recruitment process incurs cost spend on advertising about the
job vacancies through various mediums (Bratton and Gold, 2017). The process is
also time consuming as recruitment of staffs takes a long time going through
processes like interviews, screening, selection of candidates, induction, training of
the new employees. There are possibilities that the newly appointed staffs may lack
some of the behaviours and skills required by the company.
IKEA follows both internal and recruitment process effectively to retain the existing
employees and improve the productivity of the company. Through internal process
IKEA encourages the existing employees to work hard and attain the organizational
goals while external process helps the Company to incorporate fresh talents and
innovation in the Company, thereby gaining competitive advantage.
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LO2 Evaluate the effectiveness of the key elements of Human Resource
Management in an organisation
Explain how different HRM practices benefit the management and employees
of your chosen organisation [P3].
IKEA follows training and development session to garner the skills of the
employees and making them up to date with the trends in the markets. Training
imparts knowledge about many innovative technologies which fosters productivity,
thus improving the market share of the company. IKEA with the help of training nd
development enriches the skills of the employees, thereby increasing the productivity
of the organization overall. Training and development This HRM practice fosters
better labour-management relationship; the communication of the organization
improves to an enriched level (Marchington et al., 2016). Training improves the skills
thereby the employees can recommend necessary change in the management
program helping indirectly the productivity of the company. IKEA adapts training and
development to resolve conflicts in the organization. Employees of IKEA are
benefited by having self confident and self development. Employees gain the ability
to handle stress and conflicts in better manner. Motivation is integrated through
training to the employees of the IKEA. Training garners the knowledge and increases
the probability of taking future responsibilities.
By incorporating performance management as one of the HRM practices in IKEA,
the organization benefits as every employee gets an idea of their contribution
towards the success of the company. This HRM practice develops morale among all
employees (Ali et al., 2015). Performance management actually develops the
communication between the employees and the organization, thus the HR
department having a clear idea about the skills of the employee and promoting them
to the department according to their skills to increase the efficiency of production.
The employees of IKEA thriugh performance management understand their
performance on the year by receiving work progress or feedbacks from the HR
department. Degree of empowerment increases and thus the employees are able to
take decisions on their own. As the assessment helps them to identify their faults,
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less chances of repeating the mistakes occurs increasing productivity and
impression of the employees in the company.
Reward management theory incorporates a feeling in the employees that the
organization values their presence and efforts, thus increases their stamina to work
hard and strive to the organizational goal more efficiently. IKEA offers rewards to the
employees which benefits both the employees and the management. The theory
acts as motivation for the employees, and the feeling of being valued increases the
commitment of the employees towards the company. Rewards like appraisals make
the vision clear to the employees and directs them to the objectives in the correct
manner. Rewards like incentives and hike in salary improves the living standards of
the employees, thereby meeting their basic needs of foods and shelters. The
employees generates a feeling that they will be rewarded for their efforts and this
increases their work focus and work efficiency affecting the management overall.
Employee relation benefits the management of IKEA having policy implementation
without any obstacles of the employees. As the employees develop a healthy
relation with the HR, the employees becomes adaptable to changes quickly (Albrecht
et al., 2015). Employee relationship strengthens the bond between the management
and the employees. Employees having the apt knowledge of the products, if given
the freedom to share their views and ideas can bring about changes in the policies
and strategies of the company increasing the quality of the products.
Evaluate the effectiveness of different HRM practices in your chosen
organisation in terms of raising organisational profit and productivity [P4].
Reward management theory focuses on motivating the employees to work hard
and increase the productivity of the company. Employees having the feeling that they
are being valued increase their commitment to the Company (IKEA) and thus work
more efficiently. Rewards fill satisfaction in the employees that their efforts are being
recognised, this leads to an increase in the production and the market share,
benefiting the organization. The feeling that the HR department of IKEA has taken
steps to assure that the basic requirements of the employees are met creates a
sense of responsibility in them towards the company. Being motivated the
employees strive more hard to increase their labour and meet the demands of the
customers, increasing the reputation of the company globally.
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Performance management leads the way to offer training to the employees lacking
skills in certain areas. Training and development garners the skill of an employee in
a product, thus binging innovation in the product, meeting the customers demand
and rise in the market growth. Training opens new horizons for the employees
developing the skills and contributing in gaining profit to the Company. IKEA offers
monthly training to keep consistent reviews of the performance of the employees.
The HR manager of IKEA also keeps record of the requirement of the employees,
thus ensuring healthy employee relation. In general psychology, companies offers
rewards to the employees to increase productivity but IKEA offers to retain the
existing employees having experience.
IKEA develops various HRM practices t gain overall organization profit and increase
productivity. By bringing n innovation and efficiency of the employees, the Company
is able to meet the demands of the customers and enhance purchasing pattern of
the customers. IKEA works to garner skills in the employees through training,
keeping in line with the current trends of the markets.
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LO3 Analyse internal and external factors that affect Human Resource
Management decision-making, including employment legislation
Analyse the importance of employee relations in your chosen organisation in
respect to influencing HRM decision-making. [P5]
Employee relationship is the informal and formal relation between the management
and the employees (Tims et al., 2015). Motivating the employees proves to be
productive for the Company (IKEA) as they are the sole ones having core knowledge
of the products. Employees having the rights to express their views and opinions to
the company help to bring about changes in the strategies of the company. IKEA
works on developing employee relation by giving the employees opportunities to
express their ideas and make recommendations if necessary. The valuable
feedbacks of the employees help in the decision-making function of the HR
manager of IKEA.
The healthy relationship fosters the HR department of IKEA in making policy
implementation without facing any obstacles form the employees. The employees
being satisfied with the policies of the Company help to gain trust and support
between the management of IKEA and employees (Sanders and Yang, 2014). If the
existing employees are satisfied with the policies and rewards of the companies,
they offer referral recruitment in the Company to increase manpower. The existing
employees refer their peers to the Company, thus contributing in increasing the
productivity at larger scale.
Identify the key elements of employment legislation and the impact it has upon
HRM decision-making in your chosen organisation. [P6]
Employees are the sole one who brings about an increase in the productivity of the
organization thus having profits for the company. The UK government has taken
initiatives to safeguard the interest and rights of the employees (Lynskey, 2015). All
companies operating in the demographics of UK are bound to abide by the laws.
Some of the laws and regulations are discussed below:
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