IKEA Organizational Culture: simplicity, teamwork and diversity
IKEA organizational culture plays an important role in maintaining cost-effective business operations to sustain cost leadership business strategy for 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.
IKEA organizational culture is based on the following principles:
1. Simplicity and high level of informality. It has been noted that “humbleness in approaching tasks and simplicity in the way of doing things are cornerstones of the IKEA culture”.[1] For example, in IKEA US only a few executives have business cards and “everyone is on a first-name basis and sits side by side at IKEA desks and if you have an ego that needs stroking, IKEA is not the workplace for you.”[2]
2. The value for teamwork. Executives who prefer to manage as one-man show do not fit into IKEA organizational culture. The Swedish furniture chain wants to ensure that it employs only individuals who share its values and appreciate its culture. For this reason, individuals wishing to join IKEA are offered to take an online test which poses a series of 10 work-based scenarios with a choice of actions. The outcome of the test advises applicants if they are likely to ‘fit’ into IKEA organizational culture.
3. Embracing diversity among employees and different ways of doing things. Diversity among the workforce in terms of gender, race, age, ethnicity and sexual orientation is an important element of IKEA corporate culture. As illustrated in table below, there is an adequate level of women representation among across franchisees in floor level workers, as well as, management.
IKEA employee gender diversity in FY21[3]
Furthermore, the furniture retailer supports the rights of its LGBT+ employees to be themselves. The company also aims to increase the representation of various minority groups among the workforce. The world’s largest furniture retailer believes that recognizing differences among its employees contributes to creativity and supports the growth of the business.
4. Frugality. Late IKEA founder and long-term leader Ingvar Kamprad was famous for his frugal money habits such as driving a 1993 Volvo 240 GL for two decades, purchasing clothes from the flea markets and getting haircuts when travelling in developing countries to save money.[4] High level of frugality of founder has reflected on IKEA corporate culture to a certain extent in a way that managers at all levels are encouraged to cut costs in all areas of the business.
5. Recruitment through values. During the hiring process The Swedish furniture chain invests a lot of time and energy to understand personality, values and attitudes of candidates to only recruit people who fit IKEA corporate culture. In other words, the personalities of candidates are as important as their skills and competencies. [5]
IKEA Group Report contains the above analysis of IKEA organizational culture. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on IKEA. Moreover, the report contains analyses of IKEA leadership, organizational structure and business strategy. The report also comprises discussions of IKEA marketing strategy, ecosystem and addresses issues of corporate social responsibility.
[1] Heritage (2017) Inter Ikea Group, Available at: http://www.inter.ikea.com/en/about-us/heritage/
[2] Kowitt, B. (2016) “At Ikea, Everybody Is Equal” Fortune, Available at: http://fortune.com/2016/03/10/ikea-corporate-culture-best-companies/
[3] Sustainability Report FY 2021, IKEA
[4] Martin M. (2018) “4 unusual ways self-made billionaire IKEA founder Ingvar Kamprad insisted on saving money” CNBC, Available at: https://www.cnbc.com/2018/01/29/money-habits-of-self-made-billionaire-ikea-founder-ingvar-kamprad.html
[5] Werber, C. (2022) “How IKEA maintains culture for 170,000 global employees” Quartz, Available at: https://qz.com/work/2113323/how-ikea-maintains-workplace-culture-for-170000-distributed-employees/