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IKEA Makes Rewards a Bigger Piece of the Engagement Puzzle

How does a global business provide a total rewards value proposition for a diverse and dynamic workforce?

That’s a big question. And that’s the question that multinational retailer IKEA wanted to answer in late 2019, when the company saw some key performance indicators (KPIs) showing that sagging employee engagement and productivity were affecting customer satisfaction with the home goods and services conglomerate.

“We could see that low co-worker engagement and productivity had a negative influence on our happy customer scores,” Kenya Jacobs, CCP, SHRM-CP, PHR, director of total rewards at IKEA, told attendees on Day Two of the WorldatWork Total Rewards Virtual Conference (held Oct. 11 – Oct. 13).

Relying on a combination of data analytics and IKEA employee input, the organization wanted to design a total rewards value proposition that they could communicate in a way that “was void of technical jargon and resonates with the socioeconomic and demographic needs of [IKEA’s] workforce,” said Jacobs.

IKEA partnered with Mercer to determine what those needs were, and how the company could link its total rewards proposition to those needs.

The organization began work with Mercer on a project that had three primary objectives, according to Jacobs:

  • Assess the geographical, socioeconomic context and the company’s internal and external talent pool.
  • Conduct a workforce segmentation analysis based on common characteristics.
  • Develop preliminary insights and gaps in market.

David Kopsch, a principal consultant in Mercer’s career business, provided an overview of the project’s vision, and how Mercer’s analysis helped the IKEA team to understand the characteristics of the talent population in the Baltimore region, where IKEA’s customer service center is located.

For instance:

Among the company’s 424 customer service center employees, the average annual base pay was $46,647. The average tenure with the company was five years, and the average employee age was 38.

Using such data, Mercer developed Workplace Personas, which broke these employees into six groups: Steady Core, Early Career City Residents, New Risers, Second Career Customer Advocates, Long-Term Loyalists and Mission Drivers.

What distinguished one group from the other? Early City Residents, for example, represented the youngest group, with the highest proportion of hourly workers. Meanwhile, New Risers brought in the highest median income, with the highest percentage of promoted workers, with many receiving promotions in the past year. Mission Drivers received the highest annual compensation and boasted the highest population of supervisors.

Creating a Career Destination

In evaluating market data, the analysis also revealed a higher demand than supply for skilled talent in the region, forcing IKEA to focus on the full employee value proposition in order to attract and retain customer service employees, with compensation being a critical piece of that puzzle, said Jacobs.

“We want to make sure that our employees view IKEA as a career destination and that they’re not just passing through,” she said. “And we want co-workers to have one job. As we looked at this data in the Baltimore region, a key takeaway for us was [determining] how to talk to our co-workers so they can grow their career and grow financially.”

To that end, Jacobs and the IKEA team sought to develop a total rewards package that would accomplish three key goals:

  • Enable IKEA to attract, retain and motivate co-workers that will support the customer experience.
  • Provide the necessary training and development opportunities to prepare for the workforce of tomorrow.
  • Ensure that the total rewards offer supports the culture and values of IKEA, while encouraging high performance and achieving business goals.

Taking a closer look at Workforce Personas, Jacobs and company recognized that employees in these various groups have different needs driven by factors such as their tenure, their position and where they live. As such, they identified distinct opportunities that would help IKEA employees in each cohort grow with the company.

For Early Career City Residents, for example, IKEA implemented training tailored around the company’s values, competencies and clearly defined career paths. For the millennials comprising the Steady Core group, IKEA invested in upskilling to meet the needs of the 21st century customer, and tailored communications and training around a pay-for-performance culture and the development of new skills and competencies as work demands change.

These investments have paid off, said Jacobs. For example, IKEA has added as second customer service location on the West Coast.

“So, we increased headcount by 41%, as we recognized this opportunity to service customers in a better way on the West Coast while providing more work-life balance for our employees on the East Coast. For example, they don’t have to work until 9 or 10 at night. Instead, they’re able to have dinner with their families.”

IKEA has also seen leadership scores increase by 23%, with employees answering more positively to engagement survey questions regarding their manager’s willingness to encourage their reports to share new ideas or the type of example their manager sets, for instance.

Engagement scores have gone up as well, with 22% more workers now saying they feel like they contribute to the organization in a meaningful way and that they enjoy their work, for example.

These spikes have translated to an uptick in happy customer scores, and has helped the company improve at making talent and broader business decisions quickly in an ever-evolving environment.

“One thing we know for certain is that transformation and change is the new normal. So, with that, we’re developing frameworks so we can make informed decisions with speed and agility.”

About the Author

 Mark McGraw is the managing editor of Workspan.

About WorldatWork

WorldatWork is a professional nonprofit association that sets the agenda and standard of excellence in the field of Total Rewards. Our membership, signature certifications, data, content, and conferences are designed to advance our members’ leadership, and to help them influence great outcomes for their own organizations.

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