Report on Organisational Change and Multiculturalism in IKEA

Report on Organisational Change and Multi culturalism in IKEAThe following is an integrative report on organisational multifariousness brought about by multiculturalism in organisations with peculiar(prenominal) idiom on the concept of diversity management in semblance to organisational culture. With the help of a study on IKEA, the international chain of home and magnate furniture stores, the report will attempt to analyse the ch e actually last(predicate)enges faced by international managers in the process of keeping up with the demands of multiculturalism, a direct takings of world(a)isation. Although the values and practices of IKEAs corporal culture will be discussed in general, in order to narrow the geographic bea of research, the report will focus to a greater extent on IKEAs franchise in Dubai, UAE.The report will make extensive use of relevant literature in order to understand the issues in query by applying the literature to the organisation and by doing so, will attempt to make further recommendations and meaningful conclusions.I.1 IKEA Background IKEA prides itself to be the most conquestful and largest furniture retailer in the world, and boasts provision of everything and anything for a home, having products suited for populate of all ages, and all this at low prices. The connection promises excellent value for money spent with all of their products designed with an emphasis on natural colours to bring a light and airy atmosphere deep d proclaim a home. This concept is based strictly on IKEAs Swedish origins, where mountain pride themselves in living in harmony with nature with simple home designs which offer maximum efficiency in all weathers (http//www.iamaceo.com/marketing/ikea-brand-success-strategy/). IKEAs vision, to create a better everyday life for the many people is reportedly largely aimed at the spheric middleclass which is also observable from their business idea, to offer a wide range of salubrious designed, functio nal home furnishing products at prices so low that as many people as possible will be able to afford them(http//www.ikea.com/ms/en_GB/about_ikea/press_room/student_info.html).With 265 stores worldwide, where 235 are owned by the IKEA radical while the remaining 30 by franchisees alfresco the group, the extent of IKEAs expansion is obvious (IKEA, 2007).IKEAs corporate culture is based on the concept of shared values, some of which, as the organisation proclaims, are togetherness, cost-consciousness, respect, and simplicity. These values catch a very democratic form of lead where considerable freedom is given to employees to contribute to the companys success. IKEA claims to treat all employees, no matter what rank they carry, as partners in the business. The company also boasts no restrictions upon employees in using their own initiatives and offers full support to fulfil separately psyches commands, ambitions and capabilities.I.2 IKEA Dubai and Al Futtaim Trading The IKEA f ranchise in Dubai, United Arab Emirates (UAE) was first initiated in 1991 with the local Al Futtaim Trading Company taking ownership. This collaboration has been, since its inception, a major success story in the UAE and separate parts of the warmness East, as many new IKEA outlets wee-wee been strategically opened over the years by the group and have gived great war-ridden emoluments and overall productivity. The Al Futtaim group was first established in the 1930s as a trading company. Headquartered in Dubai, the group has seen a rapid development in its trading operations not only within the UAE but in more than 65 countries across the Middle East, and in various sectors of business.The group attributes its success to its ability to respond to the changing haves of customers and the societies in which it operates through an entrepreneurial and customer focused approach. Employees of the group enjoy a democratic culture make possible through wakefully defined objective s and values, enabled through clear flow of teaching via a modify structure. Al Futtaim also prides itself for the ability to proactively manage diverseness whilst upholding the values of integrity, service and social righteousness. (http//www.al-futtaim.ae/content/groupProfile.asp http//www.ikeadubai.com/content/aboutUs.asp)Apart from managing many of IKEAs retail operations in the UAE, the Al Futtaim group carry the sole responsibility of recruiting forcefulness for the franchise, and also providing valuable information about intensifys in the local governmental scene, culture, economy and other issues like new technologies, threats of competitors, legal issues etc, in effect conducting inwrought and away analyses (SWOT and PESTEL) for IKEA. This contribution has greatly helped the IKEA group over the years to align their regional operations according to changing purlieus, effectively creating a strategic give-up the ghost between the organisation and the environment (h ttp//www.megaessays.com/viewpaper/16374.html).I.3 The Culture Change Problem For an organisation that boasted fairness in employment and empowerment to employees through a democratic leadership and structure, and flexible organisational culture, IKEA had initially employed an ethnocentric approach of management where only Swedes were recruited for management positions so as to ensure the original Swedishness of the organisation. But this approach in conclusion met with criticism and a temporary setback in IKEAs overseas operations, where the organisation was faced with the task of revising its overseas recruitment policies in order to meet the demands of local cultures and employment laws (Kling and Goteman, 2003 Kochan et al, 2002). According to Bjork (1998), every condemnation IKEA was faced with a struggle due to internationalisation, new cultural management policies would be implemented, the latest cosmos Diversity Management.IKEA is well known for having a rapid internationa lisation process from its Swedish origins as a result of globalisation and its rapid expansion into countries with cultures very different from its original Swedish national culture (Hol crystalline lensen, 2007). Although owned by franchisees in some countries, like the UAE, the IKEA concept and trademark are solely owned by Inter IKEA Systems B.V in Netherlands, giving the group considerable post over franchises. This way Inter IKEA Systems B.V is the franchiser for all IKEA stores within or outside of the IKEA group, ensuring consonance of corporate values, and the IKEA concept of self assembled furniture right from the centre (IKEA, 2007).IKEA has had to rapidly transform itself from an ethnocentric corporate culture to an organisation that embraces people of all backgrounds, and has in many communiqus expressed the importance of having a culturally diverse workforce in order to obtain competitive advantage on the global scene. This is evident from the organisations recruitme nt websites in various countries, where emphasis is given for potential employees to be themselves, but at the same time adhere to shared corporate values such as simplicity, cost-consciousness, hard work etc, but almost all of the websites show a picture of a man and woman of Norse origin (Bjork, 1998). This has created a paradox within the IKEA Groups event values, where in that respect is still a strong emphasis on the companys Scandinavian background.Setting up operations in multicultural societies like Dubai meant the IKEA group has had to go through a rapid process of internal culture-change. This means a complete internationalisation of organisational culture, where pick up positions are not restricted to Swedish nationals, and communication systems had to be wrapd to break geographical and cultural barriers. The partnership with Al Futtaim has played a major portion for IKEA in achieving this change. In the following sections literature related to organisational cultur e-change, international recruitment processes and the inevitable resistance to culture will be studied and analysed.II. LITERATURE brushupThe purpose of this section is to acquire a deeper understanding of culture and its characteristics by means of metaphorical representation of organizations with the help of relevant literature. This may help us understand the significance of culture change, not just to gain competitive advantage, but for the very survival of an organization in an ever-changing environment.II.1. Organization and familiarity Drawing the ParallelsWithin the process of cultural evolution there is a significant amount of similarity in the manner in which culture is manifested in business organizations and in union in general (Rollinson, 2005 Morgan, 1998). To understand cultural diversity in organizations, it would be helpful to understand its roots at a sociological level. Cultural diversity at the workplace is a direct result of multiculturalism in the society. A multicultural society simply denotes a society in which there exist several cultures (Watson, 2002). Culture is defined as,A pattern of shared assumptions a group learned as it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way you think, perceive, and feel in relation to those problems (Schein, 2004).The preceding(prenominal) definition suggests that culture is a shared activity of overcoming external and internal itemors through methods that have been taught down to the group as acceptable and functional. A general view of cultural differences is that they affect intercultural encounters, usually by leading to misunderstanding or conflict, at both the individual and group levels (Larkey, 1996). Larkey explains that at the individual level, as different values, beliefs or worldviews are manifested in communication behaviours and as culture creates di ffering expectations and differing styles or patterns of speech, inter individualized misunderstanding and conflict can arise. At the group level, inter-group processes can be triggered by, for instance, an individuals non-verbal behaviour or ways of speaking which stereotypically represent a group (1996). It then becomes the responsibility of the leadership of the core society to introduce a culture and/or change its existing core culture to accommodate the various differences brought in by the subcultures in an integrated manner, where these differences are adjudge and valued (Neuliep, 2008).When the higher up sociological aspects of culture are compared to a business organization, the organization is the core society, and its culture, the core culture. We all refer to this as organisational culture. Analogically speaking, the organizational (core) culture should be designed in such a way that the employees of the company share a basic set of values and assumptions, which tie th em to that feature organization. But, on the individual or group levels, each employee has his/her own cultural norms and practices beyond those they share with other members of the company, which can be safely termed as the subcultures within the organization (Bate, 1995).II.2 Cross-Cultural intercourseWe all have an internal list of those we still dont understand, let alone appreciate. We all have biases, even prejudices, toward specific groups (Lantieri Patti, 1996).The above phrase sums up the main challenge in cross-cultural communication, the fact that we still dont understand the people we talk to on a daily basis. Communication is an intrinsic part of our daily lives, whether it is at our homes, at the workplace, in the groups we belong to, or in the community, and we can identify that its hard (DuPraw Axner, 1997). According to DuPraw and Axner (1997), culture is oftentimes at the root of communication challenges, and our culture influences how we approach problems and participate in groups and in communities. Anthropologists Avruch and Black expand the above views and argue that Ones own culture provides the lens through which we view the world the logic by which we order it and the grammar by which it makes sense (1993).DuPraw and Axner (1997) suggest that, becoming more aware of our cultural differences, as well as, exploring our similarities, can help us communicate with each other more effectively, and that cultural differences do not necessarily have to divide us from each other (1997). In an organisational context, the similarities lie in the core organisational culture that is common at the group level.Morgan (1998) explains the significance of effective communication and concludes that every organization is be of individuals with different cultural traits and individual personalities, and these people are organised in some way or the other through these traits in order to achieve set objectives. Thus individuals are the basic building b locks round which an organization functions, and communication is the effective cement which holds the organization together. This puts forward the importance of an organisational culture that employs clear communication channels to all levels of its structure.II.3 Organization as a Living Being Adapting to Change, by Aligning with the EnvironmentIt can be inferred from the preceding sections that change is necessary in order to promote peaceful existence between different culture groups, in the social realm. Considering this, it may be safe to buy out that similar changes need to be implemented in the organizational realm as well (Robbins and Judge, 2009 Pettinger, 1996). The question that may arise, however, is whether changing the existing culture means changing the entire organization. Culture is such an intrinsic quality of a human being at the individual level, and of a group at the societal level, that even though it may take time to change, it may end up changing more tha n just a few characteristics (Bate, 1995 Hofstede, 1997). This means that changing an organizations culture implies changing the very behaviour in which it expresses itself.Morgan (1998) interestingly likens an organization to an organism, and explains that,The image of an organism seeking to adapt and survive in a changing environment offers a powerful perspective for managers who want to help their organizations flow with change. (Pg 35)He argues that this analogy encourages us to learn the art of corporate survival by developing active organic systems that remain open to new challenges. In other words, as Brooks (2003) says, it helps us form a more proactive organization with a prospector philosophy of operation. Prospectors, he explains, see their environment as ever changing and seek continual strategic and structural adjustments to cope with those changes. These organizations are continually searching for new opportunities and in the process they may create change and hesitat ion for others in their competitive environment. The opposite of prospectors, known as defenders, are more reactive in nature, as they act only when environmental changes force them to do so. This kind always sees stability and continuity all around (2003). Research shows that reactors are more prone to misperceptions of their environment than are prospectors. According to Morgan (1998), this is because different environments favour different species of organisations based on different methods of organising and that congruence with the environment is the key to success. So it is evident that organisations are facing the enormous challenge of changing their internal environments in accordance with the external.II.4 The planetary Human Resources Functionthe International Organisation will be called on to operate across a wide variety of competitive environments and yet somehow balance these diverse social, political and economic contexts with the requirements of the original home con text. (Dowling et al, 2008, pg25)The above statement re-iterates all the topics discussed in this report so far, namely, the task of the organisation to be able to operate in different environments whilst staying true to its original corporate objectives. The international human resources management (IHRM) function, a recent extension to the normal HRM function in an organisation, aims to achieve this global competitive advantage by employing innovative recruitment strategies.The three main issues for IHRM are the management and development of expatriates the internationalisation of management throughout the organisation and, creating a new corporate culture that would reflect on internationalising the whole organisation, by focusing on increasing the international experience of staff, to be able to effectively counter the frequency of cross-cultural interactions as a result of investing abroad (Hendry, 1994). As a result, IHRM covers a much wider spectrum of worldwide management of people (Dowling et al, 1999, 2008), and is concerned with how MNCs manage their geographically dispersed workforce by being able to dispose their resources to obtain and maintain local and global competitive advantage (Schuler et al, 2002).This clearly indicates IHRM as a means of strategic importance for MNCs, as it is a key element in achieving a balance between the need for control and coordination of foreign subsidiaries, and the need to adapt to local environments (Adler and Ghadar, 1990 Milliman et al., 1991, cited in Scullion, 2001, pg5). In other words, the need is for the organisation to implement common practices, like structure and engine room that transcend national differences and form a commonality as to how the business operates across cultures (Kerr et al, 1973 Hickson et al, 1979 cited in Mullins, 1999), whilst not ignoring the essential differences in how these practices are communicated and applied to the local workforce of a given foreign subsidiary (Hofstede , 1997 Keeley, 2003).II.5 apology to Change When a group seeks change in the way they do things, as with culture, there is the inevitability of resistance to this change. Researchers like have identified a few reasons for such resistance fear of the unknown, referring to peoples natural tendency to keep away from un currentty that creates anxiety. Resisting change is one way to reduce the anxiety fear of failure, referring to peoples fear of whether or not they are up to the challenges being brought in by the change disagreement with the need for change, where people genuinely believe that change is not necessary losing something of value, where people fear either losing their dominant positions and/or jobs as a result of the change leaving a comfort zone, in that people are happy where they are and would not want unnecessary disruption of received state false beliefs, where people unrealistically believe change is not needed and everything will turn out fine misunderstanding and lack of trust, where people do not understand the changes being made and/or do not trust the person(s) initiating the changes and the fact that change may require more time and energy from individuals (Robbins, 1999 Mullins, 2003).Many ways to overcome resistance have been suggested, which include effective communication and education including training programmes for staff to make them understand the need for change, and its implications getting people to get involved in implementing the change process, where they can not oppose it later as they were partly responsible for it negotiating with people certain requirements they may have to get the change underway and in many cases imposing the change by force whether the people like it or not, as resistance may mean loss of positions/ jobs etc (Robbins, 2009 Mullins, 2003).III. APPLICATION TO IKEAIn light of the above discussions, the company headed in the right direction in terms of its emphasis on multiculturalism at the workplace, especially amongst its independent franchisees. IKEA in Dubai working along with Al Futtaim has been successful in achieving this objective by recruiting local, talented individuals reflecting the diverse cultural demographics of the United Arab Emirates. This is in line with earlier literature discussion of societal and organisational cultures where the core culture needs to be designed to accommodate individual personal differences, but should also give employees a common framework.III.1 Changing the Organisational Culture, a Project IKEAs efforts to change its internal culture to align with external factors in Dubai have been a major come out management undertaking. This is because the company has had to effectively integrate its centralised and extremely complex organisational structure (although argued otherwise by the group) with the more decentralised and flexible structure of Al Futtaim. This required giving considerable power to the latter group in making decisions regardi ng changes to the way IKEA operated in the Middle East. diminution of organisational levels to form a flatter structure itself is a project with time constraints. Due to the ever changing nature of external cultural factors, and due to the fact that internal cultural change is a slow and gradual process, the project management methodology that IKEA and Al Futtaim may have employed would have been the adaptative Project Framework.The accommodative project framework works on the basis that the scope for change is variable, but within specified cost and time constraints. This gives the company significant flexibility by setting up periodic milestones, where progress is reviewed at each milestone until the ultimate objective is met. The company has full authority in deciding best business value and has the opportunity to change directions at any milestone if it thinks objectives are not being met by the project. The adaptive framework also works because it is based on the assumption that change is inevitable, and is designed to allow for changes accordingly. This is especially vital when seeking culture change (Billingham, 2008).III.2 Resistance within IKEA The initial resistance to the changes in IKEAs culture may have come mainly from the fact that the company has had to tone down its emphasis on Swedish culture at the operational level in Dubai. Changing the organisational structure would have meant losing some key positions along the structure to enable integration with Al Futtaims structure. Focusing on recruiting local personnel would have meant redundancy and/or repatriation for existing Swedish international managers. This would have also meant that existing personnel would have had to adapt to working alongside with local personnel, which may have caused communication problems, friction between personnel etc.The best methods used for overcoming above problems would have been to educate existing IKEA personnel regarding local issues like culture, govern ance etc, educate and train local personnel in return about IKEAs core values and its Swedish roots, and the importance the company places in carrying out the legacy of its founder, provide clear communication between levels, and reducing barriers through effective information infrastructure.IV. CONCLUSIONSIn conclusion, change management can now be safely coined as a field in itself in modern businesses, especially in multinational organisations. Considering the study, more and more organisations would benefit from being prospectors rather than defenders, as this would prepare them to stay in tune with their market environments. It seems the group has lived up to their own professed comments when they say, We see the diversity issue as a matter of creating a more challenging business atmosphere and of course expanding the recruitment base including everyone and not just Swedish men. It also gives us a diverse workforce with a lot of positive business possibilities (Kling and Gotem an, 2003).As far as the project of changing IKEAs culture is concerned, the company has successfully reached its goal of reaching the global middle class with its products. Whether it is through the IKEA group directly, or through franchises like Al Futtaim, IKEA has realised the importance of culture change and has subsequently implemented this change within its infrastructure. The companys extraordinary success, even with a narrow product range, but a range that has been constantly diversified according to the demands of the regions of operation, is testament to the success of the project. Through Al Futtaim, IKEA is now a household name all over the Middle East, thus expanding the range of its brand through undertaking a change in organisational culture.