IKEA Organizational Culture: Strengths and Leadership

Introduction to Organizational Culture

Every organization has a unique culture that dictates how things are done — it defines the organization's social and psychological behavior. Though there is no universally agreed definition, organizational culture essentially refers to the values, beliefs, attitudes, assumptions, principles, habits, and customs shared by members of a given organization (Schein, 2010). These behavioral aspects constitute the distinctiveness of the organization (Jain, 2005). Indeed, organizational culture can be an important source of competitive advantage for an organization, as it determines its strategic orientation, personnel management approaches, and other aspects of organizational behavior (Schein, 2010; Mullins & Christy, 2010).

One organization that has built a distinctive organizational culture is IKEA, a Swedish multinational firm involved in the design and marketing of furniture, appliances, and home accessories. The following discussion covers the strong and weak sides of organizational culture, the internal and external factors that affect organizational culture, and the role of leadership in building organizational culture, before providing a detailed description of IKEA's culture.

Strong and Weak Sides of Organizational Culture

The importance of organizational culture cannot be overemphasized. Organizational culture gives an organization its unique identity — it distinguishes the organization from the rest. Literature extensively demonstrates that organizational culture can be a crucial driver of organizational productivity and performance (Schein, 2010; Mullins & Christy, 2010; Odagiu, 2013). This is because organizational culture determines the type of strategy the organization embarks on, how it treats employees and customers, the kind of employees it recruits, how communication is conducted, how decisions are made, which entities it partners with, how change is managed, the extent to which it pursues social and environmental objectives, and management-employee relationships. These processes create competitive advantage in one way or another — through innovation performance, group cohesiveness, employee morale, employee productivity, and customer satisfaction (Jain, 2005). The positive association between organizational culture and competitive advantage explains why most organizations invest a great deal of time, effort, and resources in building a strong culture, adopting and maintaining values, structures, systems, and procedures that propel the organization toward its strategic goals in an ever more dynamic environment.

While organizational culture is often portrayed as a positive aspect, there are usually negative dimensions as well. First, whereas some aspects of organizational culture may be acceptable within an organization, they may be harmful or destructive (Mullins & Christy, 2010). For instance, some cultures may create a climate of fear and bullying. The management may view such an atmosphere as acceptable, but it may be deeply detrimental to employees. Furthermore, even though an organization may have a general culture, subcultures may sometimes exist within it. Two departments, branches, units, or subsidiaries within the same organization may develop different cultures. These subcultures may conflict with the overall culture, resulting in detrimental consequences such as internal conflicts and inefficiencies in task, process, and strategy execution (Schein, 2010). Another limitation is that organizational culture may change as top leadership and management changes, since different leaders tend to have different styles, which may mean the introduction of a new culture or the abandonment of established cultural aspects.

Impact of Internal and External Factors

Organizational culture does not just happen — it is shaped by factors both external and internal to the organization. External factors denote forces beyond the organization's control, such as national culture, technology, laws, industry dynamics, and socioeconomic conditions (Odagiu, 2013). National culture is a particularly important determinant of organizational culture (Mullins & Christy, 2010). Culture theory generally asserts that each country has its own unique culture, with differences in how societies perceive relationships, power and authority, uncertainty, time, communication, space, and achievement (Browaeys & Price, 2008). In a high-power distance society, for instance, immense value is attached to power, status, and authority, which tends to produce autocratic, hierarchical, and centralized organizational structures. IKEA has a Swedish origin, which, as per Geert Hofstede's national culture framework, is a low-power distance society. As such, it is reasonable to expect democratic or participative management styles within the organization.

Technology, politics, laws, industry dynamics, and socioeconomic factors shape organizational culture by influencing an organization's strategy, operations, processes, and systems (Jain, 2005). For instance, laws mandating workforce diversity may cause an organization to adopt diversity as part of its core values. Increased competition may compel an organization to restructure in order to improve efficiency and effectiveness. Differences in organizational culture across industries also illustrate the impact of industry context — firms in banking, for example, may have a very different culture from firms in the technology sector. Socioeconomic factors such as economic recession and shifting consumer behavior can affect organizational culture by influencing decisions related to personnel management and product offerings.

In addition to external factors, internal factors also shape organizational culture. Major internal factors include leadership and management, the size of the organization, and geographic dispersion (Jones, 2013). Leadership is arguably the most important determinant of organizational culture (Schein, 2010). Based on their personality, philosophy, and experience, leaders choose the kind of culture they desire. For instance, a leader who espouses participative leadership will create a culture that embodies teamwork, collaboration, and inclusion. The size of an organization and its geographic dispersion affect culture by influencing the extent to which values and beliefs can be shared consistently. A small store with a compact workforce at a single location may easily sustain a strong, uniform culture, whereas an organization like IKEA — with hundreds of thousands of employees spread across hundreds of locations in dozens of countries — faces far greater challenges in maintaining cultural consistency.

IKEA's Culture: Mission, Values, and Subculture

With an understanding of what organizational culture entails, as well as its origins and significance, attention turns to the culture of IKEA. Though it is headquartered in the Netherlands, IKEA was founded in Sweden. Originally established as a mail-order business in 1943, the organization ventured into the furniture business five years after its inception. Over the decades, IKEA has grown into a multinational organization with operations across Europe, North America, and Asia Pacific. In addition to self-assembled furniture, its product portfolio includes home accessories, appliances, and a network of retail outlets (Grol & Schoch, 2010). As of 2016, IKEA's global sales exceeded $36 billion — a phenomenal success by any measure. The organization's unique culture, heavily influenced by its Swedish roots and its founder Ingvar Kamprad, is explicitly identified as one of the vital drivers of its long-term success (IKEA, n.d.).

IKEA seeks to provide a better everyday life for its employees and customers (IKEA, n.d.). Driven by the belief that everyone should be able to create their dream home, the organization offers a broad array of creatively designed and affordable home furnishing products. The organization is motivated by not only commercial success, but also a desire for durability and lasting social impact (Clarke, n.d.).

Founded in Småland, Sweden, IKEA has over the years built a set of values that permeate its everyday processes and activities. These include respect for customers, employees, and suppliers; humility and simplicity; leadership by example; a desire to be different; collaboration and enthusiasm; cost-consciousness; willingness to change; and delegation of responsibility (IKEA, n.d.). Rooted in the customs and lifestyle of the region where IKEA began and in the philosophy of its founder, these values are as fundamental at a store in Sweden as they are at a distribution center in China or a retail outlet in the United States. Through these values, IKEA strives to create a better life for its employees and customers.