Human Resource Challenges of Multinational Companies - Coursework Example

? Project: IKEA Company Business Management Case Study Contents Page Background…………………………………………………… 3 Introduction……………………………………………………6 Problem/Issue………………………………………...………..7 Pre-Intervention Data Collection……………..………………9 Models of Human Resource Management with regard to IKEA…………………………………...……………….....16 HR Model Intervention ……………………………...…...…18 Post-Intervention Data Collection: ……………………..…..19 Conclusion and Recommendations……………………....….20 Works Cited……………………………………………..……23 Harris Kamran Business Management Case Study 16 July 2011 Project: IKEA Company Background: Many factors play a role in the growth and development of a multi-national company, ranging from administrative (Lebrenz) to cultural and socio-economic aspects of an organization. As the company size and scope increases, the issues regarding its management increase in their dimensions, and more complex and advanced models and approaches need to be applied in order to cater to the expanding horizons of the company. Such a company can be viewed as a person; as the person grows and matures, his needs increase both in amount and complexity. Also, due to the interactions with society, which increases in frequency and changes in nature, there is a need for an ever-evolving approach to the changing dimensions of that person. Same is the case with companies. As they expand and especially when they venture towards a multi-national status, there needs and organization evolves radically and quite quickly. Hence, there is a need for a management approach that is open to change and prone to improvement, and that has the flexibility (Lebrenz) to accommodate the different sets of values and methods that become critical to the company’s financial and organizational health. In the absence of such an open-ended approach, there is the dire threat of the collapse of the company, or in the least, a hampering of its expansion, growth, profits and revenues. The kind of methods employed by the company depends upon its administration, that is, the managerial body (Lebrenz) and the other parties that are in authority, such as the stakeholders and partners (Armitstead). This is especially true in the cases of conventional, hard edged companies (Truss) that believe in the dictum of ruling and being ruled (Truss). That is, the management holds the supreme authority, while the workers are answerable to their bosses, and hold limited say in matters (SRDS). For such companies, it is the management (SRDS) that determines the climate and culture of the company, which is essential for its continued success as a business (Lebrenz). This is where human resource management comes into play. This concept is relatively new as compared to the other concepts of company management (SRDS). The need to develop this new field of study was the expansion of companies globally, which was influenced by the sudden bloom in the globalization (Lebrenz) of businesses in the recent years. What was first considered a local or indigenous business was suddenly exposed to the whole world, in a manner of speaking, and suddenly it was not isolated anymore. Many other factors started exerting their pressure on the company, which needed a new approach to handle the radical shift of globalization (Lebrenz). Suddenly, it was not enough to consider the company as a business only, with people working as a resource (VentureOutsource.com). The change in view meant that the company was more humanized in its existence, that workers were considered as humans first and workers second (VentureOutsource.com). Of course, this approach meant that new departments would have to be created in the companies just for the handling of the new entity of human workers. Such a department was that of human resource management (SRDS). The advent of human resource management was of the utmost importance in the large and expanding companies (SRDS) that were to have their offices and flag shops around the world in many different countries, amidst many different cultures (Lebrenz). This is because as the companies grew, they required more staff to manage the new outlets and offices, they were in contact with more people as customers that needed satisfaction, and this level and nature of satisfaction was rapidly changing, and especially since these new workers came from cultures that were markedly different from those of the management (Lebrenz), manning offices in nations that were markedly different from theirs. This was the era of catering to the world, and the world is not alike in its entirety. One such example of a multi-national company is that of IKEA. IKEA is an international, privately owned company (IKEA), which is the largest supplier and retailer of home furniture (Armitstead). It deals with ready-to-assemble furniture (IKEA) that is displayed in showrooms, ready to be picked up. This concept was quite innovative in its commencement, and so it rapidly became very popular. This resulted in an explosive growth of the company, and its expansion around the world (Armitstead). As it grew, it hired more workers, and dealt with more customers from varying backgrounds (IKEA). This was especially true as the ideology of IKEA was to cater to customers from all walks of like by keeping the costs minimal (IKEA). All these strategies went in favor of the company, resulting in a growth spurt (IKEA). As a result, human resource management became all the more important and relevant to the functioning and continued managerial health of the company. However, as is true about most of the companies that have faced a rapid increase in their business, with the growing size came growing problems, especially regarding the most dynamic, potent, and vulnerable sector of organization; that of human resource. Such a problem often spans the entire breadth of the organization, from the management down to the most lowly paid workers. Introduction: This paper concerns with the discussion of such a human resource management problem with the IKEA company. It starts by identifying the problem, followed by a description and discussion of that issue. This discussion if followed by the discussion on data collection and analysis in order to quantify this problem as faced by the company. This is important because a concrete data set concerning the pertinent issue would be helpful in establishing a solution, and in the implementation of that solution. Once the data has been theoretically collected and analyzed, we will discuss the various models employed by companies in regard to human resource management, their pros and cons, and will submit the model that best suits the needs of the IKEA company. This will be followed by another set of data collection, along with the discussion of its technique, in order to theoretically quantify the improvements, if any, in the system. The analysis of the data will follow, and in the end the paper will present conclusions and recommendation for the IKEA company to better its human resource environment. Problem/Issue: IKEA is a company that has always been closed when it comes to sharing statistics about its growth and expansion, and other facts and figures concerning its business and administration (Armitstead). This involves but is not limited to the annual revenues (Armitstead) that it collects, the strategies for its expansion, the funds in liquidity and in reserves, the statistics about its workforce, offices, partners, coworkers, shareholders and stakeholders, and much other statistical data (Armitstead) that, for other companies, is public record and information. If not entirely public, then at least most of this data should be available to the workers and the members of the managerial body at large. Another branch of the issue that stems from this problem is the nationalistic approach that is so thoroughly ingrained in the administration of the company (Lebrenz). IKEA is a Swedish company and it prides itself over its nationalistic roots and ideology (IKEA). The names of its designs are Swedish in their roots (IKEA), the design themselves are inspired from Swedish manner of thinking (IKEA), the stores are painted according to the Swedish flag colors (IKEA), the shops and stores of the company house restaurants that serve Swedish food (IKEA), and the company strives to maintain a Swedish managing body and a culture that is adherent to the Swedish set of values (Lebrenz). The culture of a company dictates much of the manner in which the workforce operates and views the company (Lebrenz), and it the belief of many experts that it is vital for the workforce to feel a connection with their companies (Lebrenz); the relationship between a company and the employees determines the hard work and the effort which the employees would out into their jobs (Lebrenz). The fact that the company has been expanding in new territories and dealing with a workforce that comes from cultural background quite different from its own means that there could be conflict between the ideology of the company and that of the employees (Lebrenz). Many of the employees might not be comfortable with such a secretive approach to management (Armitstead), especially when it strives to maintain such a nationalistic approach to it (Lebrenz); indeed, they might feel alienated from the company, and this could seriously effect their efficiency and relationship with the company. It also poses a more practical constraint over the company. New nations mean a different mind set; it is not always easy to maintain the nationalistic approach (Lebrenz) that started out in the home country with the same zeal and rigor in the other countries to which the country is expanding. There could be a problem of Swedish personnel as administrators (Lebrenz) in the new offices many thousand miles from their homes. This means the company would be forced to hire outsiders for administrative positions (Lebrenz) , and so will have to act so flexibly. A method to quantify the results of this problem could be through surveys and interviews. It is important to integrate both these approaches to data collection, as some employees might not be comfortable in expressing their views about their companies when interviewed directly. Hence, it is for their benefit that surveys should be conducted. Surveys have the added advantage of being easy and quick to solve, so they will not take up much of the time and effort of the employees. Also, the results of the surveys are easier to quantify, classify, and analyze than those of the interviews because interviews tend to be more subjective while surveys are often more objective in nature. After both the methods have been employed, the data set obtained should be analyzed for results. It is expected that the majority of the opinions would be to the end of dissatisfaction with the company HR policy, especially in the new offices in more underdeveloped countries of the world. This is because there are more insecurities about jobs in the economically unstable nations, and workers want to be sure about the nature of their jobs, their pay-scales, their bosses, and the expectations that their bosses hold of them (Lebrenz). Pre-intervention Data Collection: The collection of data is a systemic process in which cognitive approach has to be utilized in order to produce the best results possible. Also, this set of data collection is concerned with the pre-intervention analysis; that is, the organizational climate of the company has not been altered, and the employees are exposed to the same schemes of human resource management. The aim of this set of data collection is to verify the expected results of the problem, and to devise ways to overcome those problems by putting in place the different models of human resource management. This set will be followed by another series of data collection, the post-intervention data set, that will be conducted once the intervention has been set in motion. The aims of that data set and its analysis will be discussed later in the paper. The general consensus is that workers in the IKEA company are dissatisfied, or will be dissatisfied, by the progressively reclusive nature of the administration (Armitstead). Also, the struggle of the management to maintain a rigorous Swedish environment in the company regardless of the cultural differences in the place of its operation (Truss) would not be fruitful, and would pose serious problems on the loyalty, efficiency and satisfaction of the workers, ultimately effecting the growth and revenues of the company (Lebrenz). The data collection systems of surveys and interviews should be designed with this target in mind; that is, the questions should be so formed that they should extract the most information from the employees regarding their views about these issues. For this purpose, professional help can be contracted. Human resource management instructors and analysts could be employed and given the task to design questions best suited for this data collection. This is a very important step of the intervention, because the analysis and the subsequent interventional schemes would only be successful if appropriate and adequate information is obtained; any flaws in this procedure would reverberate throughout the process. The design of surveys is expected to be relatively easier than that of the interviews. This is because the surveys can ask questions directly and straightforwardly since the target employee is not being confronted personally. This is the same reason due to which the employees would feel more comfortable and open about the process, because they would not be directly approached by human resource personnel. Hence, the designers can afford to ask the questions blatantly, so the questions can be more bold in nature. Similarly, the replies are expected to be bolder, too. It should be noted here that the purpose of the surveys would not be to accumulate data for statistical aims, or to design charts and figures in order to produce an annual report, but rather to find the cause of a problem and to solve it. To that end, it is preferred that the questions be open-ended so that it gives the employees a chance to fully express themselves. For this reason, there should be no multiple-choice type question-option sets; instead, blanks should be left for the employees to fill in themselves so that there exact views, and not the views of the designers, could be analyzed. IKEA is the largest retailer of prefabricated furniture in the world (Armitstead). Simply put, it is a massive company. Estimates put the number of employees at 127,00 spanning across 41 countries across the globe (IKEA). These statistics can pose serious problems and hindrances in the smooth conduction and progression of the process of data collection. The most obvious cause for this apprehension is the geographical distance between the head offices and various stores around the world. Then there will be communication gaps, language differences, cultural differences, and differences in the thinking patterns across the different stores of the company. Hence, the following methods should be undertaken to prevent such hindrances. The survey parameter should be divided into several sectors. These sectors should be geographically constructed. This is an important aspect of the process because the whole point of the data collection is to pinpoint the challenges faced in the different cultural settings in which the stores are operating. There should be one head of operations; the leader of the team as a whole who would be heading the whole process. He should be based in the central head office of the company in the hometown. Then, the team should be divided into groups based on the general regions of the world in which the company operates, such as Asia, Europe, North America, and others. After this regional division, there should be a country-wise breakdown of the team. Each of these divisions should be headed by a supervisor who should be directly in contact with the head one step higher in the tier of divisions. Then, in each country, in each store, there should be an overseer who should manage the process of the distribution of surveys and their collection. It should be noted that this manager of the human resource department should be different from the manager of the store, because the store manager falls under the category of the administration of the company, and the aim of the data collection process would be analyze the effects of that very administration on its employees. Hence, the data collection team manager should be independent and not under any obligation to answer to the company store manager. The store overseer of the process should report to the country head, the country head should report to the regional head, and the regional head should report to the leader of the whole team based in the head office. The flow of surveys should be similar in progression, from one manager to the other across the tier. The final analysis of the surveys should be carried out in the central head office under the supervision of the project leader. The flow of information should be as follows: This procedure would solve the problems of geographical distances and barriers and delays in communication among the different levels of management. This would also ensure the authenticity of the data collection process, minimizing any adulteration in the procedure. The problem of language barrier remains. For that purpose, a model survey should be designed in any one language that is suitable for the head office. It could be vernacular of the region in which the head office operates. Then, copies of the surveys should be drafted in the different languages of the countries in which the stores around the world operate. This is important so that the employees can easily and completely understand the questions and answer them. To achieve this aim, there should be interpreters and translators of the different languages who should be employed by the company in order to work with the human resource management intervention team. It is better to draft the original survey, or to translate the original survey, into English, and make that a model survey, so that translations into other languages would be easier to carry out. Similarly, when reviewing the answers, the translators would be employed to translate the answer sets into the central language of the program so that an adequate analysis can be conducted. However, the sentiments of the workers might bet abridged or misinterpreted during translation. To nullify this effect, it is important to carry out a certain degree of data analysis at the country level and then at the regional level, and to send this analysis along with the survey answers to the central head office. In the head office, under the supervision of the translators, the analysis should be conducted once again to verify the results and to minimize any chance of adulteration in the procedure. The result of the analysis should be prepared in regional and national sub-divisions. This is important so that cultural and regional discrepancies can be pinpointed, and any problems stemming from these differences could be rectified in the light of the answer sets and by applying the improved and customized models of human resource management, which would be discussed later in the paper. The conduction process of the surveys lays down much of the ground work for the conduction process of the interviews. All the geographical limitations and other potential barriers that have been discussed before must be kept in mind when planning for interview conduction for IKEA. The expanse of the company and the sheer number of employs means that the process of interviews would be a long and tedious procedure, which would take up quite a lot of the human resource if it needs to be expedited. Let us examine the need for pre-intervention interview conduction. Although the surveys would fulfill much of the need of the process by supplying the team with a raw set of data that would be reflective, quite adequately, of the views of the employees across the various stores of the company, they would still leave quite a gap in the proper representation of the feelings of the employees that needs to be attained in order to devise a well-suited and most effective intervention in the company. The pre-designed survey question, though open-ended, would still provide a rather restricted parameter to the employee in which he can express himself. The design of the questions would be based on the assumptions of the human resource management team; it might be that some of those assumptions are wrong or that the employee feels differently or wants to express himself to a certain issue differently from what the survey form permits him to do. To overcome this limitation, it is important that employees be given a chance to freely express themselves by the means of interviews. Given the magnitude of the procedure due to the huge number of employees, it can be maintained that it will not be possible or feasible for the company to conduct interviews of each and every worker across each and every store. It could be done, but either it would take up an unaffordable high ratio of the human resource team members, or, if that is countered, it would take quite a long time for less personnel to carry out all the interviews. For this purpose, it can be suggested that interviews be conducted of only those workers who show an interest or a desire in the procedure; that is, those who make a specific request to be interviewed. The interview teams would be designed along the same pattern as those of the survey conduction, and the results of the interviews would be analyzed by employing the same or similar procedures. It should be noted that this paper is entirely theoretical in nature, hence, no actual data set has been collected, presented, or analyzed. The discussion will be based in expected results of the data collection process, and the conclusions will be made likewise on these expected results. Models of Human Resource Management with regard to IKEA: A discussion of the different models and approaches concerning human resource management is due. There are many different methods of viewing the models that have been designed to manage the most important resource of a company; its workforce. We will discuss them in light of the soft and hard model approach (Truss), with one example of each school of HR management. A soft model (Truss) of management focuses its attention on the human aspect of the workers, and exerts much stress on the importance of the human interaction with the company and the relation between the company and its employees (Truss). To examine it in detail, let us consider one example of this approach, the commitment-based model of HR management (SRDS). This model strips much of the hierarchy from the organization, leaving behind a set up in which the boss and the worker are striving towards a common goal with different sets of responsibilities (SRDS). This means that both are responsible for the actions of each other and for the profit or loss of the company, in which all share equally (SRDS). The problems and issues are dealt with jointly, and there are schemes and workshops in order to improve the efficiency of the worker (SRDS). The other school of HR management is the hard model of management (Truss). It has developed around the idea that the company is the ownership of the management, which is the boss in all matters of all types, and the employees are just workers who are paid for their job (Truss). Let us consider an example from this model to better understand it; the control-based method of HR management (SRDS). This method maintains that there is a sharp distinction between the worker and the administrator; the worker has been employed and is paid for his services, so he should be concerned only with this and nothing else; and that the final decision is that of the boss who is not answerable to the worker but can hold the worker responsible for his actions (SRDS). The profit and loss are not shared, and the employee has no business in the knowledge of the working of the company (SRDS). The human resource management schemes have been evolving to integrate new concepts (Bersin, 2007). This evolution process is shown below: Source: (Bersin, 2007). HR Model Intervention: From this discussion and the analysis of the management of the IKEA company, it is quite clear that the pertinent company has been relying mostly on the hard model (Truss) of control-based (SRDS) HR management in its functioning. This was acceptable up to the time when the company was mostly a national endeavor; however, by stepping into the global market, it has opened its doors to a varied assortment of workforce, and this model is no more appropriate. There is a need to incorporate more elements of the soft model (Truss) of commitment-based (SRDS) HR management school, so that the workers are more connected to the organization, and can take their jobs more personally. An excellent model for IKEA would be the strategic human resource management model (McGraw-Hill), that takes elements from both these approaches and customizes them in order to cater to the specific and exact needs of the company under discussion (McGraw-Hill). Source: (Kane and Palmer, 1995). After incorporating this change in the company’s environment, a series of data collection processes could be conducted once again to analyze the new findings and compare them with the pre-intervention results in order to chart any progress in human resource management and to determine the effectiveness of the intervention. Again, both the surveys and interviews should be integrated into the process. It is expected that this time more employees would be satisfied with the management of their company and with the company’s environment, and would be more passionate about their work, taking it more personally than before. Such a change would be highly beneficial to the company. Post-intervention Data Collection: This set of data collection is concerned with the post-intervention analysis; that is, the organizational climate of the company has been altered due to the utilization of intervention schemes, and the employees are exposed to different models of human resource management than they were used to before. The aim of this data set would be to analyze the effectiveness of the intervention and the new and customized model of human resource management tailored specifically for IKEA. This is important in order to determine if the company will undergo any further changes, and if the intervention would have had any effects on the overall functioning of the company. If the results would be negative or not sufficiently positive, another intervention would be required with a new series of data collection, and a different model of human resource management would have to put in motion. This set of data is in contrast to the pre-intervention data set, since the former was designed to determine the extent and severity of the problem so that adequate measures could be taken to rectify those problems. The details of pre-intervention data collection have already been discussed. The general consensus is that workers in the post-intervention IKEA company would be more satisfied with their work environment and company, and will have a stronger loyalty toward their workplace and their management (Lebrenz). This would result in an overall growth and expansion of the company, with more workers working hard for greater profits and revenues. This conclusion is in light of the opinion of some experts that the bond between the management, culture and workers of a company is of a great importance for the success of the company (Lebrenz). The data collection systems of surveys and interviews should be designed with this target in mind; that is, the questions should be so formed that they should extract the most information from the employees regarding their changed views about the company’s human resource management climate. For this purpose, again, professional help can be contracted. Human resource management instructors and analysts could be employed and given the task to design questions best suited for this data collection. This is a very important step of the intervention, because the analysis and the subsequent conclusion would only be successful if appropriate and adequate information is obtained; any flaws in this procedure would result in imprecise conclusion about the effectiveness of the intervention, and so might actually be of harm to the company. Conclusion and Recommendations: In light of the differences in the expected results of the pre-intervention and the post-intervention data collection processes, the analysis of the data, and the study of the different models of the human resource management, it is evident that the IKEA company needs to bring radical changes in its administrative climate and the ideology behind the management. With the increasing globalization and the expansion of the company in countries that enjoy a cultural environment markedly different from the indigenous environment (Lebrenz), it is important for the management of the company to realize that trying to maintain the Swedish touch (Lebrenz) to the company may not be always possible. It is also not practical and advised. This is because the workers coming to work hail from backgrounds as varied as the regions in which those stores operate; to expect them to subscribe to a uniform (Lebrenz) set of values that may be so different from what they are used to is a folly on the part of the administrators, and is asking too much of the workers. After all, the relationship that the workers forge with the company is at the bedrock of the company’s continued progress (Lebrenz). The company does not only exist in legal papers and shares, it is composed of humans at the grass root level. To treat it any less than that would be to dehumanize the organization, and to treat the people as assets rather than as human workers (VentureOutsource.com). This is an example of the control-based (SRDS) human resource management model, which, as discussed earlier in the paper, is not recommended for the kind of company that IKEA is. The ideology of IKEA is to cater to people from all walks of life and of all economic statuses (IKEA); it is rather an irony that such a company would place so much stress on the uniformity of its values and principles (Lebrenz), and expect its customers to adhere to a cultural climate that is alien to them. The ideology of a company and its human resource working should be compatible with each other if the company is to set the model of practicing what it preaches and hopes to achieve it. The control-based (SRDS) model of human resource management is adequate only for those companies which have not yet ventured into the realm of multi-national organizations, but rather exist nationally and make use of the local human resource. It is applicable when the majority of the workforce hails from the same or similar cultural and socio-economic set up, so that they are in tune with the climate of the company and with the social ties amongst themselves (Lebrenz). Even if the company has expanded outside of its national boundaries, this model will only work if the other branches or stores of the company operate in almost the same social set ups, and the human resource environment of the host countries is not much different from the indigenous environment (Lebrenz). IKEA, on the other hand, as already discussed, is a massive company spanning countries across continents. To hope to maintain the same control-based (SRDS) model of human resource management as the smaller, local companies, or as was when it commenced, is to hold back on the future of the company, and to hamper the growth of its revenues. Such a large organization is expected to evolve with its growth and to incorporate new and better suited models of human resource management in its administration. It is recommended that IKEA do not strive for such rigid uniformity in its human resource management (Lebrenz), as it is not feasible and practical, given the varied cultural environment in which its stores and offices are operating. By being more flexible about their approach toward the HR management, they can actually attain a higher standard of employee satisfaction. Works Cited Armitstead, Louise. “Ikea reveals profits for first time to dispel 'secretive' image.” The Telegraph, 1 Oct. 2010. Web. 16 Jul. 2011. Bersin, Josh. “Talent Management Changes HR.” Bersin & Associates, 1 Jun. 2007. Web. 20 Jul. 2011. “Former IKEA exec Goran Carstedt on corporate change and why HR fails.” VentureOutsource.com, 3 Jul. 2008. Web. 16 Jul. 2011. “Human Resource Management-Two Models.” SRDS, n.d. Web. 16 Jul. 2011. Kane, Bob, and Ian Palmer. "Strategic HRM or managing the employment relationship?” International Journal of Manpower 1995: 6-21. Print. Lebrenz, Christian. “Cross-Cultural Management.” Hochschule Augsburg, 2008. Web. 16 Jul. 2011. “The Strategic Human Resource Management Model.” McGraw-Hill, n.d. Web. 16 Jul. 2011. Truss, Catherine, et al. “Soft and Hard Models of Human Resource Management: A Reappraisal.” Journal of Management Studies, 1997. Web. 16 Jul. 2011. “Welcome Inside.” IKEA, 2010. Web. 16 Jul. 2011. Read More