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Discuss about the International Relations for Performance Appraisal Practices.

This report presents a literature review of the research related to the international human resource management practice areas of well-known company IKEA. It includes the operations and corporate strategies of the company along with its workforce management practice. This report will focus on identification of the firm’s expatriation practices that are required to be improved for sustainable and successful business operations of IKEA in the market of China and Australia. IKEA Company maintains their operations in the diverse market due to which they might face different cultural contexts. Along with this, managing the business in different countries might leads to tension for the multinational company while adopting standardize the global practices versus localized practices in the IHRM.

The report includes the research based on the scholarly literature and articles which guides an effective way to IKEA’s e to improve its expatriate management practices in Australia and China. The three major aspects of management of expatriate employees that are discussed in the report include sourcing, development and performance management. These aspects are IHRM practices performed by the company in the two host countries. Therefore, these practices are considered for analysing the areas of improvement in workforce management. Along with this, these practices help the company in generating the competitive advantage in these countries.

IKEA is a Swedish founded group. It makes life easier by designing home easier and comfortable. IKEA provides ready to assemble furniture, kitchen assembles and home accessories. It is one of the largest furniture retailers since 2008. The company is best known for the unique designs for appliances and furniture (Sarstedt, Neubert & Barth,  2017). The company relies on the principle to grow by using it’s own resources. The vision of IKEA is to create a better everyday life at home. The company reinvests it’s profits in the stores, product development, sustainable solutions and in lowering prices for customers. The company focuses on the sustainable growth by spending before earning money. It makes sure that the company is accessible to make every day better.

The corporate structure of company is divided into two parts, operations and franchise. The management, design and manufacturing of furniture are overseen by INGKA holding which is a Dutch profit making company. IKEA owns 415 stores in 49 countries. IKEA is engaged in the retail distribution of furniture. IKEA is the most frequent furniture retailer in Australia. The company owns the exclusive range to develop product range of IKEA in Australia (Daunfeldt, Mihaescu, Nilsson & Rudholm, 2017). IKEA entered in China in 1988 with it’s first store in Shanghai. It brings unique style and sales model to China. The company implements it’s criteria by considering good design, functionality and low price. IKEA faces challenges in the both countries Australia and China. The company faced challenges in relation to workforce management of company in Australia. It faced problem for the prices of furniture in China. The challenges faced in Australia are less than China. It comes across to greater challenges in China. China is a complex country due to the population, infrastructure and culture. To meet these challenges China has made changes in it’s market activities (Laurin & Fantazy, 2017).

Discussion

The HRM practices are addressed to deal with the expatriate employees:

The expatriates are hired by IKEA for the international assignments. There are some factors which lie among management of expatriates particularly in Australia and China.

The workforce planning is used by IKEA to antedate labour needs. It is helpful in deploying workers more efficiently and usually with the advanced human resource technology. It is a software base human resources and enterprise resource planning systems. The challenges of workforce management of company are less in Australia as compared to China. IKEA is present in China since 1988 and has encountered greater challenges since then. China is a complex country due to it’s population, competitors and infrastructure (Jeirud, Helgeson, Berndt & Feng, 2015). The tradition and culture also varies region to region and there are more than one language spoken throughout the country. Such circumstances make operation of company complex. If we compare Australia and China then Australia is a better and successful location for company in terms of freedom and facing challenges.

According to Ngai & Falkheimer, 2017, IKEA identifies some major workforce challenges in Australia related to diversity, talent, gender pay and generational change. It is to be observed that the leadership team in Australia is fairly diverse and sits at 45% women and 55%. The company in Australia employs the right candidate for the right role. For this the country engages right candidates with core competencies. It also employs expatriate employees to bring likelihood of success. The company takes real actions to improve diversity and gender gap in Australia (Ngai & Falkheimer, 2017).

The other challenge faced in workforce management is location and store formats. For example, the IKEA stores are positioned near the city centres in China whereas; the stores in Australia are outside the city centres (Helmefalk, 2016). It should be noticed that the consumers are more flexible to the public transport than the private vehicles. So the company should allocate itself close to the public transport lines. IKEA changes it’s format of store in order to suit the Chinese culture. The most disturbing element founded by the China is advertisement and promotions.

Expatriates are important for the company in having international operations. It is necessary that the recruitment and selection procedure need to be done by a well-structured mechanism which can analyse the cultural understanding and adjustment skills. The expatriate has certain traits and qualities and is likely to perform effectively in the foreign environment (Sarstedt, Neubert & Barth, 2017). As per Vahlne & Jonsson, 2017 selection of proper expatriates means half work is done for firms operating globally. The recruitment process approaches a systematic mechanism to minimise premature return of expatriate (Vahlne & Jonsson, 2017). The recruitment process also analyses the skills of expatriates such as learning skills, adaptability, interpersonal skills and intellectual abilities. The expatriates are ready to learn new things and adapt new environment. The expatriate is unsuccessful only in case of premature return of expatriate. The failure of expatriate signifies the selection error and ineffective expatriate management policies (Brown, et. al. 2016).

The talent pool of company is getting smaller each year. The company considers that talent is required to accomplish mission, vision and values. However the company faces challenges to attract and retain the right aptitude. It is due to the expatriate turnover that company fails to offer corporate development activities. The ease of doing employment in Australia is quite high which can also be the reason to find out talent. IKEA assembles employment benefits by dominant practices like twenty six paid maternity leaves and four weeks paternity paid leave. The workforce challenges in China are different from the operations of company in the whole world. China demands the adaptation strategy while the standardisation is used globally. The country has made changes in the marketing activities by lowering prices of products to meet the demand of market. For instance, IKEA China has majority in designing chopsticks and special set of teacups and have dominance in deciding prices (Bain, 2017).

There are various things which can enhance the productivity and quality of expatriates by carefully planned training and development activities. The reasons for the expatriate training are organisational reasons and personal reasons. The organisational reasons are to overcome ethnocentrisms which mean to believe that the way of doing things is superior to others. According to Frixione & Lombardi, 2015, organisational reasons are to improve flow of communication and increase overall efficiency and profitability (Frixione & Lombardi, 2015). The personal reasons other than the organisational reasons are to improve interaction of managers with the local people in general and personnel (Baier, Rese & Schreiber, 2015). The interaction includes the factors like personal shortcomings and criticism by mangers. The personal reasons include improving management style and focusing on dispelling myths. There are two types of training which is needed by expatriates:  

  • Hard skills: The hard skills are specific to the one’s job and are technical areas. For instance, computer programs kike PowerPoint or excel are part of hardware skills.
  • Soft skills: The soft skill training for expatriates id more critical. In order to move from one country to another an employee is required to learn basic of that country’s language. As per Patompak, Jeong, Nilkhamhang & Chong, 2017, it takes a long way to build comfort level socially and professionally and is helpful in cultural aware interaction (Patompak, Jeong, Nilkhamhang & Chong, 2017).

The expatriates need to be educated about the culture and values of country where he is moving. The expatriates also need to have some knowledge about exchange rates and currency of that particular country. It is also noticed that a large number of expatriates are unproductive just because their partners are not happy in the adopted country (Garvey, 2017). There are some factors which should be considered in the training initiatives by expatriates:

  • Language can be formal, informal and regional different.
  • Culture such as food, dress and holidays.
  • Currency and exchange rates
  • Social etiquettes and business etiquettes
  • The professional expectations such as interaction with low and high level staff.  

According to Gruman and Saks, 2011, performance management is the practice of IHRM through which the manager of IKEA and employees work together to plan, monitor and review an employee’s contribution in achieving the goals of an organization. The aim behind the performance management is to promote and enhance the effectiveness of employees. On the other hand, Ceil, 2016, said that the role and responsibility of the international managers of the IKEA are increasing because the company is willing to expand their business across the world. Along with this, the role of IHRM increases and they have to regulate the human resources organization and HR practices which include expatriate nationals and host country national’s employees. This is said by the researchers that understanding and measuring the performance of the expatriate employees of IKEA in Australia and China leads to many challenges.

Considering the views of Rose, et.al, 2010, IKEA faces huge challenges related to workforce management in China instead of Australia. China is very complex country as different people speaks different languages according to their culture, regions, and traditions. On the other hand, in Australia, the company don't find any such issues of language. These cultural issues make the employees feel discomfort and organization face issues in performing IHRM practices. The company also faces these issues in the performance management of the employees of IKEA (Cosmo & Yang, 2017). Considering the international context, IKEA follows different steps for expatriate performance management which include: -

  • Linkage with the strategy of a company
  • Setting the performance goals
  • Identifying variables that impact the performance of employees
  • Appraising the performance
  • Sharing the feedback
  • Proving the opportunities for improvement
  • Linking the results with rewards

Agreeing to the views, Kang and Shen, 2016, states that the performance management of the expatriate in Australia and China is essential for the company. The company follows these steps while measuring the performance of expatriate employees. Though, the company faces some issues like employee resistance. The employees of China feel uncomfortable at the time of review process of performance. The employees of Australia don't find any problem with the review process of performance as they treat it a positive aspect of the company. Some of the employees faced the problem because of unintentional bias that has been done by the company from other countries employees including Australia and China.

  • Host nation get biased by a cultural frame of references
  • Home-country biased by distance and the lack of knowledge working abroad

This creates the impact on the performance management of the employee’s expatriate that is done by the IHRM of IKEA (Cascio and Boudreau, 2016). Moreover, the manager of the expatriate found that the headquarters of company unfairly evaluated and under appreciate them due to which the appraisal activity is not done by them effectively in both the countries.

According to Reiche, et.al, 2016, the international HR manager of IKEA should agree the 3 significant areas while evaluating an expatriate’s performance that is specific performance criteria, recognizing the appraisers and determining on the occurrence of the appraisal. Moreover, the author shared the view through which the IKEA Company can resolve its issues for which they can support and offer them moral courage to expatriate performance.

In relation to the sourcing expatriates it is found that culture and varied language in different regions reflects challenge in front of workforce management. IKEA faces challenge to attract and retain right aptitude for the organisation. The expatriate turnover fails to deal with corporate development activities. It is found that the ease of doing employment in Australia is relatively high which the reason to find talent is. The development of expatriates enhances the productivity and quality of expatriates (Baxter & Landry, 2017). It improves flow of communication and overall efficiency. The expatriates are required to be educated about the culture and values of adopted country. The training of expatriates includes the language, culture, exchange rates, social etiquettes and professional etiquettes. It takes a long way to build comfort level for employees. Considering the performance management of expatriate employees it is found that the company faces numerous issues due to the change in culture and region differences in the country. IKEA found more issues in China than Australia because the culture of a country is very rigid. Moreover, the employees of Australia and China feel uncomfortable while appraisal process because of the behaviour of the head office towards the performance management of the expatriate employees (Müller, 2016).

It is recommended to IKEA to update human resource technology to array workers more efficiently. The tradition and culture of adopted country should be given preference in order to overcome challenges of workforce management. The location format of stores can help China to overcome workforce challenges. The stores should be located near the public transport lines. IKEA is also recommended to work on the development of expatriates by enabling updated technology and skills. They should be properly guided before leaving to the adapted country. It is also suggested to make changes in the performance management program in which the office of Australia and China should get the authority of managing the appraisal of employees from their end (Yu, 2017). This will eliminate the role of the head office and also make the employees feel comfortable with the process. Along with this, the international human resource manager should focus towards the specific performance criteria. 

References 

Baier, D., Rese, A. and Schreiber, S., 2015. Analyzing online reviews to measure augmented reality acceptance at the point of sale: the case of IKEA. Successful Technological Integration for Competitive Advantage in Retail Settings. IGI Global, pp.168-189.

Bain, M.J., 2017. Russia, Cuba and colonial legacies in the twenty-first century. Journal of Transatlantic Studies, 15(1), pp.1-17.

Baxter, M. and Landry, A., 2017. IKEA: Product, pricing, and pass-through. Research in Economics, 71(3), pp.507-520.

Brown, B., Bleecker, J., D'Adamo, M., Ferreira, P., Formo, J., Glöss, M., Holm, M., Höök, K., Johnson, E.C.B., Kaburuan, E. and Karlsson, A., 2016, November. The IKEA Catalogue: Design fiction in academic and industrial collaborations. In Proceedings of the 19th International Conference on Supporting Group Work (pp. 335-344). ACM.

Cascio, W.F. and Boudreau, J.W. (2016) The search for global competence: From international HR to talent management. Journal of World Business, 51(1), pp.103-114.

Ceil, C. (2016) Performance Management and International Human Resource Management (IHRM) [Online]. Available from: https://ssrn.com/abstract=2984094 [Accessed on 13th May 2018]  

Cosmo, D.E. and Yang, K., 2017. A Further Strategic Move to Sustainability-A Case Study on IKEA. Journal of Strategic Innovation and Sustainability, 12(2), pp.39-47.

Daunfeldt, S.O., Mihaescu, O., Nilsson, H. and Rudholm, N., 2017. What happens when IKEA comes to town?. Regional studies, 51(2), pp.313-323.

Frixione, M. and Lombardi, A., 2015. Street signs and Ikea instruction sheets: Pragmatics and pictorial communication. Review of Philosophy and Psychology, 6(1), pp.133-149.

Garvey, P., 2017. Consuming IKEA and Inspiration as Material Form. Design Anthropology: Object Cultures in Transition, p.101.

Gruman, J.A. and Saks, A.M. (2011) Performance management and employee engagement. Human Resource Management Review, 21(2), pp.123-136.

Helmefalk, M., 2016. Congruency as a mediator in an IKEA retail setting: products, services and store image in relation to sensory cues. International Journal of Retail & Distribution Management, 44(9), pp.956-972.

Jeirud, A., Helgeson, V., Berndt, A. and Feng, S., 2015. IKEA’s online content marketing-Attitudes and purchase intentions of generation Y. In European Media Management Association 2015, emma, Hamburg, Germany, 28-30 May, 2015..

Kang, H. and Shen, J. (2016) International performance appraisal practices and approaches of South Korean MNEs in China. The International Journal of Human Resource Management, 27(3), pp.291-310.

Laurin, F. and Fantazy, K., 2017. Sustainable supply chain management: a case study at IKEA. Transnational Corporations Review, 9(4), pp.309-318.

Müller, U., 2016. Corruption in Russia: IKEA’s expansion to the East (AD). Emerald Emerging Markets Case Studies, 6(2), pp.1-25.

Ngai, S.B.C. and Falkheimer, J., 2017. How IKEA turned a crisis into an opportunity. Public Relations Review, 43(1), pp.246-248.

Patompak, P., Jeong, S., Nilkhamhang, I. and Chong, N.Y., 2017, June. Learning social relations for culture aware interaction. In Ubiquitous Robots and Ambient Intelligence (URAI), 2017 14th International Conference on (pp. 26-31). IEEE.

Reiche, B.S., Stahl, G.K., Mendenhall, M.E. and Oddou, G.R. eds. (2016) Readings and cases in international human resource management. London: Taylor & Francis.

Rose, R.C., Ramalu, S.S., Uli, J. and Kumar, N. (2010) Expatriate performance in international assignments: The role of cultural intelligence as dynamic intercultural competency. International Journal of Business and Management, 5(8), p.76.

Sarstedt, M., Neubert, D. and Barth, K., 2017. The IKEA effect. A conceptual replication. Journal of Marketing Behavior, 2(4), pp.307-312.

Sarstedt, M., Neubert, D. and Barth, K., 2017. The IKEA effect. A conceptual replication. Journal of Marketing Behavior, 2(4), pp.307-312.

Vahlne, J.E. and Jonsson, A., 2017. Ambidexterity as a dynamic capability in the globalization of the multinational business enterprise (MBE): Case studies of AB Volvo and IKEA. International Business Review, 26(1), pp.57-70.

Yu, Y., 2017. Designing Life: A Socio-cultural Analysis of IKEA Kitchen Planner and UX. Rhetoric, Professional Communication, and Globalization, 1, pp.78-102.

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