Employment Relations for IKEA Company
Introduction
The purpose of this portfolio is to comprehensively showcase employment relations for IKEA Company. Originating from Southern Sweden and led by its founder Ingvar Kamprad, IKEA transformed into a from a mail order business to a furniture company in the 1940s. The brand pioneered several elements of modern furniture retailing such as minimalistic and practical design and self assembly. The company witnessed significant expansion in the 1980s by entering dynamic new markets such as the U.S, UK and France and commenced operations in Russia and Japan by 2000s. At present, IKEA is a globally recognized brand which offers a complete furniture solution for the entire household at affordable and budget friendly rates without compromising on the quality. The components of this portfolio consist of highlighting the philosophy and understandings of employment relations, objectives for effective employment relations at IKEA, the legal obligations that the organization must adhere to, organizing and unions, individual contracts and collective bargaining, equal opportunities for staff, unfair dismissal, conflict management, casualization and elements of comparative ER that are useful for the firm.
Personal Details
Name: [Enter Name Here]
Organisation: IKEA Company
Designation: HR Manager
Philosophy and Understandings of Employment Relations for IKEA
Employment relations addresses rules and regulations that control employment relations and the underlying processes through which these rules are implemented. These rules are enforced when an employee provides his or her services to an employer to fulfill responsibilities and roles that are devised by the latter. Understanding employment relations is essential for both workers and organizations or the management of a company. Therefore, from a philosophical perspective, employment relations aim to safeguard the rights and interests of both employees and employers (Kalleberg, 2009). For example, employees should have awareness about standard and fair market wages, working conditions and the level of autonomy that they have in an organization. Similarly, employment relations are important for employers to address areas such as legal compliance, employee performance and conflict management. The employment relations approach to the employee-employer relationship is pluralist whereas the HRM approach is rooted in understanding leadership policies which can support the psychological well-being of employees. This is known as a unitarize perspective. IKEA adheres to this perspective because the human resources department has a significant role to play in managing employment relations at the organization. Moreover, internal HR policies are rigorously implemented at the company to handle employ grievances and manage conflicts in addition to managing other aspects of employment relations.
Goals and Objectives for Effective Employment Relations at IKEA Company
According to Conway et al (2016), the primary goal of effective employment relations is to ensure that the a set of effective rules and regulations are put into place in the organization to ensure that employees’ rights are protected and that they are able to work in a positive and nurturing work environment. In addition to benefiting the employees, the employment relations framework supports organizations in increasing productivity and reducing turnover. The IKEA Company seeks to become an organisation that is ‘people positive’ in addition to promoting sustainability. Therefore, the goal of employment relations in this context is to ensure that its employees can work in an environment that promotes fair practices and justice. In addition to this, the company also seeks to make sure that its employees are not subjected to exploitation or face any treatment that breaches their rights.
Legal obligations, the Fair Work Act, policies, standards, and relevant award/s for IKEA Company
As a responsible organisation, IKEA has its own code of conduct known as the IKEA IWAY which was launched in 2000. The IKEA IWAY outlines a set of regulations that IKEA suppliers should adhere to when developing products for the company. This code of conduct has been developed in alignment with international conventions and policies related to fair work and best labour practices (Lindgreen et al., 2009). IKEA extends the implementation of these rules to both first and second-tier suppliers (Laurin and Fantazy, 2017). The legal obligations that the company follows includes; having a no child labour policy, enforcing minimum wage as per regional legislations, complying with safety and health standards for workers and covering employees through accident insurance (Ivarsson and Alvstam , 2010; Jiang, Jia and Gong, 2018).
Organizing and Unions
Trade unions are an important element within the broader context of employment relations. The objective of trade unions is to engage in collective bargaining in a bid to protect the rights of employees and present their stance to the employer. The process of collective bargaining involves negotiating with the employers to fulfill a specific demand raised by employees. As voluntary organizations, trade unions perform collective bargaining by representing all of the members who are a part of the union. The negotiation process cannot commence if an employer does not recognize the trade union henceforth, it is important for the trade union to have a legal standing. IKEA recognizes several trade unions that have the power to officially engage in negotiations with the company. These trade unions represent employees from various divisions of the company such as retail. The IKEA Company has a long-standing collaboration with Building and Wood Worker’s International which represents more than 12 million workers around the world.
Individual Contracts and Collective Bargaining
Individual contracting is a recent phenomenon in the realm of human resources and employment relations which has emerged because of an increase in individualism and a loss of collectivist ideas within society. Owing to the rise of this concept, the role of trade or labor unions has declined and so has the presence of collective agreements between employees and employers. Individual contracting occurs when employment terms are established between an individual and the company. The IKEA company does have an individual contracting policy for workers that are also hired via the sub-suppliers of the company. This implies that there is a distinction between first and second-tier suppliers.
In contrast with individual contracting, collective bargaining represents a more pluralist approach where trade unions negotiate for wages and rights on behalf of employees. IKEA has had collective bargaining agreements with various officially recognized trade unions (Tommassetti and Anthony, 2019). Under the IKEA IWAY code of conduct, an important consideration for the company’s suppliers and sub-suppliers to follow is that they cannot hinder employees from engaging collective bargaining (Hennebert, 2011; Hahn, 2015; Laurin and Fantazy, 2017).
Equal Employment Opportunities for Staff
Equal employment opportunity is a concept which states that every individual should be treated fairly by the employer when taking employment decisions such as recruitment, promotion, giving increments or dismissals. An organization practices equal employment opportunity when it does not exercise any bias or prejudice when taking employment decisions. This implies that factors such as gender, religion, ethnicity, sexual orientations and race should not be considered when making employment decisions, but it should be the merit, skills, capabilities and knowledge possessed by a candidate which should impact the decision (Bishu and Headley, 2020). IKEA believes in promoting diversity, inclusion and equality during its hiring process and when creating teams across various channels of the company. A testament of the company’s commitment to equal opportunity employment is reflected in the fact that it has successfully achieved gender equality with reference to the composition of its leadership. This is reflective of the company’s commitment to move ahead towards providing equal employment opportunities and creating a fair and equitable workplace for all.
Unfair Dismissal – Approaches and Ways to Mitigate
Unfair dismissal refers to the when an employee is fired from employment without any valid reason and without granting the employee an opportunity to pursue procedural justice (Southey, 2015). Another ground for unfair dismissal is when the employee’s termination from the job goes against the local laws and regulations set in the country where the company operates. Australia has a set of laws and regulations that moderate unfair dismissal cases (Howe, 2013). For example, employees that have been dismissed because of the reason that their behaviour is inappropriate can pursue a case against the employer’s action (Southey, 2010).
As stated previously, IKEA holds a pluralist approach with reference to employment relations therefore, HR has a set of internal mechanisms which are enforced readily across the organization. In order to address concerns raised because of unfair dismissal, the company can follow the approach of retraining employees who may no longer be able to serve in one department. By adopting this policy, the company will be able to avoid cases relating to unfair dismissal and utilize existing employees that have pertinent knowledge about the processes, rules, regulations and systems within the company. Another way of addressing a potential case of unfair dismissal is by having a one on one discussion with the employee about their performance and possibly discussing the prospect of putting the employee under probation. This will ensure that the employee has enough time to understand the situation and work towards addressing the concerns raised by the employer before any decision relating to a dismissal is taken or finalized.
Managing Conflict in IKEA Company
The objective of conflict management is to ensure that the positive consequences of the conflict outweigh the negative aspects. Therefore, successful conflict management takes place when a company achieves learning outcomes as a result of conflict. IKEA is a paternalistic company because of its family ownership roots (Alderson, 2015). Conflict management in IKEA involves the HR department which serves as a mediator between the company and the employee. The employee’s grievances are reported to the HR department which serves as the first point of contact for resolving the concerns raised by the employee. The HR department explores avenues for addressing the conflict and successfully manage grievances by adopting a communicative approach and guiding the employee during the course of the process. Managing conflict should be a collectivist approach where the concerns of both the employee and employer are readily addressed.
Future of ER and Casualization
In an increasingly uncertain labor market landscape, the casualization of jobs continues to become the norm and is also highly prevalent in Australia (Watson, 2013). With the increasing casualization of the work, the notions of job security and income stability are becoming compromised which also raises a question for the future of employment relations. In the case of IKEA, the company has a code of conduct that all its suppliers adhere to. This code of conduct also applies to permanent and contractual members of the workforce. Therefore, casualization does not have a significant impact on the company because it maintains a uniform set of standards for its employees regardless of their contractual obligations or affiliation with the company. The IKEA company can continue to abide by the tenets of employment relations owing to the limited impact of casualization however, it would have to uphold the IKEA IWAY across all aspects of its supply chain to ensure that the future of employment relations is secure in the company.
International and Comparative ER at IKEA
The IKEA company can adopt certain aspects of international and comparative employment relations to improve desired objectives such as reducing turnover and increasing employee productivity. Globalization is a critical consideration to address when understanding the implications of international employment relations. The company should therefore have a set of rules and policies that are based on regional and cultural differences owing to its multinational setup. The company would also have to consider whether patterns of employment relations in the country are converging or diverging. For example, in case of a high degree of divergence, it may have to consider having localized adaptations of IKEA IWAY. Being a multinational company, IKEA will have to adopt an institutionalist approach to globalization by acknowledging the variations in local patterns of employment relations and approach each region with a distinct lens. International and comparative employment relations can therefore support IKEA in developing more fair and equitable systems for its employees regardless of where they are located across the globe. In this manner employment relations will serve as a comprehensive approach to safeguard the interests of both the employee and the employers alike.
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References
Alderson, K. (2015). Conflict management and resolution in family-owned businesses. Journal of Family Business Management.
Bishu, S. G., & Headley, A. M. (2020). Equal Employment Opportunity: Women Bureaucrats in Male‐Dominated Professions. Public Administration Review.
Conway, E., Fu, N., Monks, K., Alfes, K., & Bailey, C. (2016). Demands or resources? The relationship between HR practices, employee engagement, and emotional exhaustion within a hybrid model of employment relations. Human Resource Management, 55(5), 901-917.
Hahn, Y. (2015). IKEA and corporate social responsibility: A case study. The Journal of Distribution Science, 13(10), 45-50.
Hennebert, M. A. (2011). Cross-border union alliances and transnational collective bargaining: A case study in a Canadian MNC. Just Labour.
Howe, J. (2013). Poles Apart? The Contestation between the Ideas of No Fault Dismissal and Unfair Dismissal for Protecting Job Security. Industrial Law Journal, 42(2), 122-151.
Ivarsson, I., & Alvstam, C. G. (2010). Supplier upgrading in the home-furnishing value chain: an empirical study of IKEA’s sourcing in China and South East Asia. World Development, 38(11), 1575-1587.
Jiang, Y., Jia, F., & Gong, Y. (2018). IKEA: global sourcing and the sustainable leather initiative. International Food and Agribusiness Management Review, 627-639.
Kalleberg, A. L. (2009). Precarious work, insecure workers: Employment relations in transition. American sociological review, 74(1), 1-22.
Laurin, F., & Fantazy, K. (2017). Sustainable supply chain management: a case study at IKEA. Transnational Corporations Review, 9(4), 309-318.
Lindgreen, A., Swaen, V., Maon, F., Andersen, M., & Skjoett‐Larsen, T. (2009). Corporate social responsibility in global supply chains. Supply chain management: an international journal.
Southey, K. (2010). A typology of employee explanations of misbehaviour: An analysis of unfair dismissal cases. Journal of Industrial Relations, 52(1), 81-102.
Thornthwaite, L. (2013). Social media, unfair dismissal and the regulation of employees’ conduct outside work. Australian Journal of Labour Law, 26(2), 164-184.
Tommassetti, P., & Anthony, F. (2019). Different Legal Systems, Same Normative Contents? Collective Bargaining at Apple, Ikea and Tiffany Stores in Australia and Italy.
Watson, I. (2013). Bridges or traps? Casualisation and labour market transitions in Australia. Journal of Industrial Relations, 55(1), 6-37.
