International Human Resources

International Human Resource Management (BUSM 2449):

Assignment 1 Ikea in Germany and India

Thomas Batarilo (group leader) s3509613
Harrison Sullivan s3489100
Fan Ka Man s3590413
Khalia Chikulin s3486801

Contents

Executive Summary→                Page 3

Part A→                                        Page 4 and 5

Part B→                                         Page 6 and 7

Part C →                                Page 8,9 and 10

Conclusions→                         Page 10

Executive Summary:

In this report an analysis and evaluation of Ikea in Germany and India was undertaken to determine the success of human resources within these countries. Methods of analysis include the similarities and differences of the two countries for sales and revenue and the way in which these countries cultural differ in terms of human resource management. Results of data analysed show that Germany and India significantly differ from one another in terms of management and commitment to their employees. The report finds Ikea very successful in terms of the success of Ikea and the way in which human resource management is conducted compared to India.

Part A

Ikea is ultimately the ‘perfect’ multinational company in modern day perspective, a world-renowned company and a world leader in the human resource sector. The Swedish based chain has consistently been bestowed with high business honours such as being voted in the “top 20 world's” most attractive employers, the “top 100 companies that excel in at human capital development” (B, IIS.2005) Moreover this underpins the positive environment that Ikea places on the people surrounding Ikea. According to the company’s mission statement on Ikea’s website, “it’s the people who make the company”. This is Ikea’s biggest strength and asset is its people within the company. According to (Mendenhall 2015) Employing 160,000 people globally Ikea is one of the leading employing services around the world.

Germany is one of Ikea’s biggest markets totalling 44 stores and one of Ikea’s leaders in terms of total sales. According to Ikea’s sustainability report 2014 (Baldwin S), it’s 44 German stores generated 14% total sales ahead of other countries such as the United States and France with 12% and 9% respectively.  Also with Germany being one of the top 5 purchasing goods and services at (4%) and selling (15%) of Ikea good in the world.

The company moved its headquarters and operations to Denmark in 1975. According to the Ikea website since 2001 the Ikea systems, the owner and franchisor of the ikea concept has been based in Amsterdam, Netherlands. The Headquarters is responsible for all internationalisation ideas and models more importantly the process of how the businesses are conducted and the view that Ikea has an ethnocentric internationalisation approach model.

When looking at Ikea in terms of human resources is their commitment to their employees. They strive to provide an environment, which fosters a sense of community and awareness not just for individual sites but globally. The organisation places a large emphasis on decentralizing its operations in order to give their employees more responsibility and accountability in the workplace.

IWAY is the code of conduct set out by IKEA and is applicable to all stores globally. This document sets out the guidelines for everything from treatment of general conditions to harassment, abuse and disciplinary actions. This document is therefore heavily used and may need to be altered in order to meet individual nation state standards.

In a political sense Germany doesn’t have much autonomy when compared to other countries operations; as Ikea’s policies, laws and processes are quite similar in all stores and countries throughout the world. “According to the Ikea website is states that “we are from all over the world but share the fundamental humanistic values that our culture is built upon togetherness, simplicity and cost consciousness”.

Ikea’s policy on recruitment, the development of professionals and employees are very similar within all markets. Effectively Ikea in Germany employs a Host Country National System as it’s go to approach, its easy, cost effective, and moreover avoids the battles with language barriers. For the company to achieve it’s vision that is “to create a better everyday life for the many people” all of the employees of Ikea in Germany are recruited on this philosophy. Thus signifying that the recruitment of its employees doesn’t despite the culture differences that may occur.

Germany is a country with many stringent employer and employee relation’s regulations.  Laws in Germany are often referred to as “Employee Protection Laws” as they are written to preserve the rights of the employee. According to the International Labour Organisation the most key acts relating to employees in Germany are The Civil Code, The Works Constitution Act and The Act on Collective Agreements. Under German law no employee is allowed to enter the workforce without a written contract. This type of formal employment helps to eliminate the exploitation of workers and increases the ability of an employee to ensure they have safety in the workplace.

A number of ways employees are protected within Germany are:

Parental leave is available for a maximum of three years, with reimbursement being 67% of net earnings paid over 14 months. This amounts to a threshold minimum of 300 Euros, and maximum of 1,800 Euro and is all paid by the Social Security System.

Sick leave - in case of sickness leave the employer is obliged to pay the full wage for

up to six weeks. The worker must have been employed for a minimum period of at least four weeks for this to apply. After six weeks, the health insurance covers 70% of the gross salary in case of long-term sickness. Termination of an employment relationship while a worker is on sick leave is prohibited unless unlawful conduct is detected.