How Ikea successfully managed the staff turnover problem

Staff retention or turnover has been the point of discussion for time immemorial and yet, not many companies have been able to crack the code. While macroeconomic elements like the pandemic, economic growth, and international trade always have had a role to play in employee churn, “fixing the basics” and hearing out the employees, goes a long way in dealing with this issue appropriately.

One company that was able to turn this around through its simple yet exceptional practices was the Swedish furniture behemoth, Ikea. By the end of 2022, approximately 62000 employees had quit, equating to about one-third of Ikea’s workforce. In the UK and Ireland, more than half of the employees exited even before their first year completion. And to help you comprehend the gravity of the situation better, each departure cost them a whopping $5000.

The retail industry has always been accustomed to high quit rates due to unpredictable scheduling, low pay, and tough working conditions but the pandemic made it worse for Ikea, where even replenishing the lost talent across the 473 worldwide stores became a nightmare. Turnover rates were hovering above 30% in stores across the US, UK, and Canada, while employees in India regularly left the company after having children because of lackluster benefits. For a service-driven company like Ikea, unhappy workers can quickly lead to unhappy customers and hence the team immediately got into action to address the grim scenario. Under the guidance of Jon Abrahamsson Ring, chief executive officer of Inter Ikea Group, a razor-sharp focus was brought on things that mattered to the employees - Boosting pay, increasing flexibility for frontline employees, and using emerging technologies to make things easier.

#1 – Boosting pay – Across many regions, Ikea started raising wages, sweetening the bonus pay, and addressing gender pay gap issues. For instance, in London, the base pay was increased from 11 pounds an hour to 13.15 per hour. For part-time staff, who couldn’t make ends meet with the salary, Ikea gave some of them additional hours working remotely, answering customer calls. This move made the jobs more competitive and showed their commitment to well-being and financial security.

#2 – Imparting flexibility – The pandemic helped people pause, reflect, and reset their priorities. Amid this, work-life balance and flexible scheduling came on top, especially for Retail stores. Ikea was cognizant of this fact and made some unconventional changes. For instance, an employee in London who had to commute 2 hours for a 9 am shift, four days a week for a six-hour shift, was allowed to start at 10 am, for a three-day eight-hour shift. “I am now much happier at work” – the employee says

 #3 – Emerging technologies – In the US, where Ikea employs 17000 people, one of the most impactful changes was digitizing the shift scheduling process. So instead of paper forms for shift swapping that had to be signed by both workers and managers, they switched to Shift Project tool, which helped workers swap shifts online without a hassle. This, in turn, had a ripple effect on their income fluctuations, wellbeing and eventually the staff turnover went down

By continuously listening to, and understanding ground-level employee concerns across the globe, the attrition rate went down from 22.4% in Aug’22 to 17.5% in Apr’24. Ikea's achievement in addressing mass attrition serves as a compelling case study. They successfully reduced employee turnover by attending to issues raised by the workers, placing a high value on well-being, and encouraging a collaborative culture. This translated to lower recruitment expenses, a more stable workforce, and an all-around happier workplace. It serves as a strong reminder that the secret to developing a devoted and motivated workforce is to invest in people, not just procedures.

Ikea incorporated a host of benefits and adopted a wholesome approach across various employee touchpoints. It was hard to list all of them in one article so I have chosen the most important ones, but I’d strongly recommend all HR professionals to check out their case study to understand the approach in detail.