Performance Management in Pepsico

IKEA - Company Overview

The company chosen for this analysis of performance measurement and management system is IKEA in Älmhult, Sweden. This is the very first company where the name IKEA started before it grew into a big organization with several companies operating within its network. IKEA is now under the ownership of IKEA Group. The company mainly provides business shared services for the other companies within IKEA Group, including human resource, finance and meetings and facilities services. Because all shared services are centralized to be handled by IKEA AB, the group can have experts and professionals in various fields within HR or Finance to assist the remaining companies with very specific problems. As part of the IKEA Group,IKEA AB follows the vision and mission, key success factors, organization structure, strategies and plans set out on the global level and applicable to all companies under IKEA Group. (S Knutsson2017, interview, November 24).

The IKEA’s vision is “to create a better everyday life for the many people” and the vision goes in tandem with IKEA’s business idea, where the company commits to offer a wide range of well-designed and functional products with affordable prices so that many customers can buy them. To IKEA Group, the largest franchisee of the IKEA concept, the vision and business idea means making sure IKEA products are accessible to customers through the system of existing and new IKEA stores around the world.In order to support growth, IKEA Group principle is to grow with their own resources by reinvesting a majority of profits in product development, ensuring that it can offer quality products at low prices; in sustainable solutions to support its people and planet positive strategy and in co-workers’ personal development.

Key Performance Measures

According to the information acquired during our interview, it is specifically stated that IKEA  have more non-financial KPMs than the other companies in the group. The reason for this is explained by the nature of responsibilities that the company mostly deals with, including people and services in support to IKEA retail companies. Thus, these retailing companies put a stronger emphasis on financial indicators, whereas IKEA AB can focus more on non-financial KPMs. Even though the full list of KPMs could not be retrieved from the interview due to company policy, two measures were mentioned as examples of the most important non-financial to IKEA: customer focus and working environment. It can be clearly seen that people is one of most important part of Ikea's strategy. The vision of making better everyday life is not only confined to customers, but it also expands to all  people  and businesses that 

organizational objectives. The company also applies informal communication of strategies  and  plans in forms of launch parties, where top management is invited to convey the message of strategy . This interaction helps create involvement through out the organization between managers and employees. Although our data does not reveal the dimension of strategic renewal and how co-workers are challenged to new ideas and initiatives as well as how action plans are revised (bottom-up or top-down), there is sufficient evidence to conclude that in IKEA AB indicators exist for an interactive PMS use in certain control mechanisms.

Decision-making process, so the company makes effort Inter to include employees in the decision-making process as well. Therefore,

it is possible to assume that IKEA can adapt “to its external environment

 All in all, IKEA’s performance measurement system is considered coherent in itself and within its environment. The system is strong but not insusceptible for failure.

Limitations

The evaluation of IKEA AB performance measurement and management system is not entirely comprehensive due to several inherent limitations. First, as there was only one participant from IKEA  taking part in the interview, information collected can be subjective to personal opinions and different facets of the answers could be incomplete because the participant was not allowed or able to answer them. Thus, the  possibility of this report to explains IKEA PMS on a global level is limited. Second, due to confidential policy, the interview did not acquire a full set of  KPMs  for analysis. Also, the horizontal link between IKEA  and other companies within the Group, as well as the link between IKEA companies with its value chain constituents were not thoroughly explored due to time limit of the interview.These limitations are seen as opportunities to further analyses that could cover the rest of the companies under IKEA Group to compare their different which could be explained by the type of  tasks prominent in each company. Further studies can also include studying IKEA PMS over thecourse of time to better observe how the system has changed or remained the same over the years.

Conclusion

The  analysis of IKEA AB performance measurement and management system provides a lot of insights into the world’s largest furnishing company.

These insights are valuable because we assume IKEA as a group has had years of learning to be able to arrive with the current system of performance measurement. Thus, it certainly has strong points that can be learned from.Throughout the years, IKEA has shown to be a pioneer in leveraging their human capital towards achieving a work culture, which is a pillar to their ongoing success, and the analysis conducted is proof. Apart from the obvious focus on non-financial aspect of the system by implementing customer index and co-worker survey to monitor growth factors, it is clear that the all-round involvement of employees provides the management with valuable information to guide their decision-making and evaluations when implementing changes or achieving goals. Elements of the performance measurement and management system are aligned with each other and each has a specific purpose of motivation and control. The unique approach in valuing each individual employee enables a sense of transparency and a dynamic flow of information throughout the various hierarchical levels. It becomes clear that to IKEA, reward system is built to enhance employee’s intrinsic motivation, not diminishing it. The matter of monetized rewards is considered thoroughly and distributed fairly. By encouraging participation and focusing on team-based rewards, IKEA  successfully eliminates the deterring possibility of inter-firm competition,conveying a long-term approach to build on their vision and reflecting ethical practices from society’s viewpoint.Performance evaluation is also used for personal development rather than placing threats or constraints towards employees. Nevertheless, due to recent failure by setting unrealistic goals, IKEA can’t always achieve the transparency and motivational impact that it is aiming for.