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Success, Scandinavian Style

The product names aren't all that's unusual at Ikea North America. Pernille Spiers-Lopez, the Danish-born president of the mushrooming home furnishings chain, is making her company a hotbed of high-yield humanism.

July 30, 2004
Related Topics: Benefit Design and Communication, Corporate Culture, Retention, HR & Business Administration
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From her office in the leafy suburb of Plymouth Meeting, Pennsylvania, northwest of Philadelphia, Pernille Spiers-Lopez laughs pleasantly but briefly. The president of Ikea North America, the fast-growing arm of the Swedish global retailing giant, confirms that like many of her 7,000-plus employees, she’s read a recent front-page story about her company in The Onion, the oh-so-hip national humor magazine. The article describes Ikea as an "epidemic of self-assembled, clean-lined modernist furniture" that "claimed another 10,000 American lifestyles in 2003." Referring to the fictitious malady, she says, "Oh yes. That’s a very good condition to have, absolutely." Spiers-Lopez adds that she hopes nobody ever stamps out Ikea’s particular strain of "infection."

    Her lilting Danish accent makes it impossible to tell whether the expression is deadpan or earnest, delivering a punch line or a mission statement. Any student of the Ikea phenomenon, or even just a regular visitor to one of Ikea’s huge furniture and furnishings emporiums, inevitably notices a curious convergence of whimsy and hard sell, of a seemingly laid-back sales force and a mazelike floor plan that keeps shoppers captivated for hours, of $3.99 Grunka fish spatulas and $1.99 Vållö plastic watering cans displayed alongside motivational tableaux of moderately priced all-Ikea kitchens, bedrooms, living rooms and home offices. Hallowed company traditions and doctrine are coupled with constant reminders that everyone must continually embrace responsibility, risk and change. Most significant, perhaps, is the fact that the Ikea way of doing business combines a very Scandinavian embrace of paternalistic employment policies and a social safety net with a hard-core drive for profits and market share that bows to no competitor, anywhere, anytime.

    Pernille (pronounced "PEN-Nilla") Spiers-Lopez, a former journalism student, traveling saleswoman and human resources executive, embodies both the rewards and dangers of this idiosyncratic mixture. She is in her mid-40s, married, with two children. After an "epiphany" at a women’s conference in 1997 and her appointment as Ikea’s head of North American human resources in 1998, Spiers-Lopez began radically changing the company’s approach to benefits, corporate culture, chain of command and work/life balance. On top of offering full benefits for domestic partners, in 2002 she initiated full medical and dental benefits for part-time employees working a minimum of 20 hours a week. Ikea only recently began deducting $5 to $10 a month from paychecks for individual coverage of full-time workers and $140 a month for their families. Part-time workers who work less than 20 hours a week pay $64 to $185.

    Staff turnover has decreased from 76 percent to 36 percent during Spiers-Lopez’s tenure as president. She has overseen an increase in the number of stores in the United States and Canada from 18 to 31. Ikea plans to add five new stores per year in North America over the next 10 years. Whether the effort will contribute substantially to its bottom line is uncertain. As a private company, Ikea releases no profit figures, but in her three years as president, while much of the retail industry has been in economic intensive care, Spiers-Lopez has raised total revenue in the United States from $1.2 billion to $1.4 billion.

    Observers like Kurt Barnard, president of a consultancy in Montclair, New Jersey, called Retail Forecasting, are impressed. "Ikea’s past has been brilliant," he says. "Its future here will be the same." David Sievers, a retail expert at Archstone Consulting in Stamford, Connecticut, is less sanguine. "Its [imported] merchandise isn’t as culturally sensitive to low-end or value-conscious shoppers as I’d expect it to be," he says, adding that Target does a better job where the two chains’ product lines overlap. Sievers adds that the lines are long and the service "terrible" at the Ikea in New Jersey near his home, and he suspects that because nearly all of Ikea’s products are produced overseas, the weak U.S. dollar is cutting into Ikea North America’s profit margin.

    But for those who pay attention to human resources, Ikea’s programs are often cited as being well above average. A full-press diversity drive was instituted in 2000, with individual stores’ managers and human resources heads trained intensively in subjects like which organizations to contact to find qualified minority candidates and how to adjust standard interviewing techniques to put job applicants at ease. Managers are then evaluated yearly on how well they’ve met the goal of having their workforces mirror the racial and ethnic makeup of the communities they serve. "We’ve already done it for our hourly workforce," says Sari Brody, Ikea’s manager of leadership and diversity. "In top management we’re about halfway there." Spiers-Lopez credits flexibility and near-constant movement for keeping her "coworkers," as they’re known at Ikea, engaged. Footloose 20-somethings are eagerly accommodated when, for instance, they’d like to spend a year or two working for Ikea in Malaysia or Manchester.

    The needs of older workers are also addressed. Spiers-Lopez has initiated flextime, job-sharing and telecommuting programs. When Lori Schilling, head of human resources at the Ikea store in Covina, California, adopted a 3-year-old girl with her husband early last year, she realized that her priorities were changing. She wanted to spend more time at home while keeping her job. She negotiated an arrangement with both her supervisors and direct reports to work seven days a week every two-week period. "Every member of my team has taken little bits and pieces of my job," Schilling says. "They rarely call me at home. At what other company could you do that?"

    It’s become a well-publicized point of pride that each Ikea facility has a "quiet room" where nursing mothers can pump breast milk. New mothers receive six to eight weeks of disability leave plus an additional week of fully paid time off. New fathers and adoptive parents receive the same week of fully paid leave. "This is very progressive, especially for the retail industry," says Ellen Galinsky of the Families and Work Institute in New York.

    Spiers-Lopez has substantially increased the number of women and minorities in management. Forty-seven percent of the company’s 75 top earners are female. The number of women on Ikea North America’s 14-member management board has increased from one--Spiers-Lopez--to five, including Brody, Ikea’s North America’s marketing manager, its head of new business development and the deputy CFO.

An emigrant's tale
    Not surprisingly, Spiers-Lopez thinks Barnard’s sunnier assessment of Ikea is more accurate. She was born in a small town outside Arhus, Denmark’s second-largest city. "Out there in the country, very little happens," she says. "When I was a kid, I thought of America as a big dream, where everything happens." After college she earned her master’s degree in journalism. For her thesis, she spent six months on Long Island researching an article comparing the health-care systems in the United States and Denmark. "I found good and bad things about both of them," she says diplomatically.

    At 23 she joined an older brother who was working in a furniture store in Florida. "And I remember when I lived in Florida, one night I had this dream that one day I would just drive across the country and live in California. And it happened." She opened her own import business in 1980, driving 60,000 miles in her Toyota selling Danish postcards and decorative mobiles to gift shops in the Southeast. She settled in Coral Gables, got a $5-an-hour job with a furniture chain called The Door Store, and soon was supervising its 24 branches.

    She drove to West Hollywood in the mid-1980s to take a job with Stor, a now-defunct Ikea imitator. "I think I learned a lot there. But I think what I learned the most is that you can’t copy anyone else. Because then you really don’t know how to fix things if they don’t go exactly right." She met her husband when he was earning his teaching degree and working part-time for Stor in Orange County, California. Shortly before Ikea purchased the struggling chain, she interviewed for a job at the company her employer was aping, which was just setting foot on the West Coast.

    She was promoted to manager of Ikea’s Pittsburgh store in 1993. Her husband took a job in that city as a high school principal. Her career continued successfully but uneventfully until 1997, when Ikea’s then North American president, a man named Jan Kjellman, asked Spiers-Lopez to attend a businesswomen’s leadership conference in New York City. Inspired by their success stories and encouragement, she then returned to Plymouth Meeting to attend a management board meeting attended by herself and 13 white, mostly Scandinavian men. She said to Kjellman, "We’ve got to do something," and one month later he promoted her to head of human resources.

Mid-career correction
    Ulf Caap, a three-decade Ikea veteran who has lived in Canada since 1979, considers Spiers-Lopez one of the finest executives he’s ever met. "One of the interesting things about Pernille is that she has the guts and fire to go where few people ever go," he says. The Swedish-born Caap, who is Spiers-Lopez’s informal mentor within Ikea, says he’s noticed that she sometimes takes on a heavier load than she can safely carry. It was Caap, then Ikea’s head of global training and development, whom Spiers-Lopez called for help five years ago.


Most significant, perhaps, is the fact that the Ikea way of doing business combines a very Scandinavian embrace of paternalistic employment policies and a social safety net with a hard-core drive for profits and market share that bows to no competitor, anywhere, anytime.


    Ironically, Spiers-Lopez’s new assignment to make major changes to the company’s work/life-balance guidelines pushed her to the brink of disaster. When she was promoted, her daughter was starting grade school and her son was starting pre-school. She and her husband decided not to uproot the family. Instead, she either flew or made the six-hour drive between Pittsburgh and Philadelphia several times each week. In 1999, after struggling through a period of increasing fatigue and decreasing job satisfaction, she cracked. One evening she discovered that one of her arms was numb. At the local hospital’s emergency room a doctor told her that her condition was a reaction to stress.

    Ulf Caap says he gave Spiers-Lopez no specific advice but simply guided her toward listening to what her body was saying and asking the right questions. The most basic one was whether she should continue working. She decided she would, reasoning that if she stayed at home, her basic nature would drive her toward becoming something like a golf fanatic or giving so many elaborate dinner parties that her friends would stop coming to them out of sheer exhaustion. Instead, she made a strict rule that her evenings and weekends were reserved for her husband and children. On weekends she enjoys bicycle riding with her family.

    For the most part, she has managed to make this schedule work. She says that her "naturally relaxed" husband and deputized coworkers help her out. "I mean, they make fun of me. We have meetings, and they know that if they don’t say, ‘Let’s take a break,’ they won’t get a break. So they say, ‘Pernille, in order to help you we’re going to all take a break.’ And that way I’m much more conscious about it, but I also realize a part of it is that this is just who I am."

Design for working
    Ingvar Kamprad, the workaholic founder of Ikea, undoubtedly applauded her decision. Now 78, the press-shy and legendarily frugal mogul still immerses himself deeply in the smallest details of running the $12.2-billion-a-year company, which has more than 76,000 employees and 200 outlets from Oslo to Moscow, Shanghai to Burbank. Kamprad has famously proclaimed that by growing as quickly as possible to sell stylish products at the lowest prices possible, Ikea has created "a better everyday life for the many." Spiers-Lopez has conferred with him many times. "He is a wonderful man," she says.

    The influence of Kamprad and Spiers-Lopez can be readily felt throughout Ikea North America. On a recent weekday afternoon at its 13-month-old, 308,000-square-foot store in Costa Mesa, California, the middle-class shoppers are locked in self-service mode, popping small items into bright yellow store-provided carryalls. The bigger items, like Flärke bookcases and Leksvik computer desks, are picked up by the customers themselves downstairs near the loading dock, disassembled inside cardboard "flat packs." A few sales associates stand on the periphery but do not give assistance or advice unless asked. This ensures lower shipping and storage costs for Ikea and adventures in DIY re-assembly for customers. The whole process, invented by Kamprad, is called "automatic selling."

    The store’s manager, Don Collins, is taking his turn flipping burgers at a store-sponsored employee barbecue outside. Asked if automatic selling means less work for his staffers, he glares angrily. "Our people aren’t just standing around," Collins says. "They’re restocking and rearranging their areas, looking for people who need help, thinking about better ways to display the products."

    Like many in Ikea management, Collins, who is African-American, is a veteran of another retail chain. He worked for 20 years as a manager at J.C. Penney and recalls that he spent most of the time carrying out directives from the central office. At Ikea, he says, he has much more leeway to meet his sales targets however he sees fit. "At Penney’s they told you, ‘Here’s what you need to do.’ At Ikea they say, ‘You need to be the best home-service store in your market segment.’ " Another big part of his job is to train, develop and ultimately lose his best managers, who are needed to seed new stores opening elsewhere. Each existing store is required to contribute 15 percent of its managers per year to staff new stores. "This year we hit 18 percent," Collins says proudly.

    He readily admits that there is a trade-off. Non-management employees at the company start at $8.25 an hour at the Costa Mesa store, and only a very few skilled technicians make much more than that. Salespeople do not receive commissions. There are no stock options, of course. Lori Schilling, the Covina human resources chief says, "When I worked for Circuit City there were sales associates who made more money in a year than store managers earn at Ikea today."

    Still, Collins notes happily that he receives from 15 to 20 applications for every managerial opening. The ratio for hourly jobs is about five applicants to one hire. He does very little advertising for new workers, except for signs posted prominently in the store. "We find that people who shop here are the kind of people who want to work here."

    That rule certainly applies to Pernille Spiers-Lopez, with two surprising and perhaps hard-won exceptions. When asked whether she envisions ever working for any other company, she responds, "I never make plans too far into the future." When asked how her home is furnished, she admits that it’s an Ikea showcase--except for her dining room table, a round, thoroughly Danish blond-wood future heirloom. Don’t look for it in her company’s catalog. "I ordered it specially made," she says, a touch of defiant pride in her voice.

Workforce Management, August 2004, pp. 26-32 -- Subscribe Now!

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