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Ikea\u2019s workers were quitting in droves in the US. In the UK and Ireland, half of all new hires were leaving before their first anniversary. Globally, each departure cost Ikea $5,000 or more to replace.\u00a0<\/p>\n
To stem the bleeding, the Swedish furniture behemoth needed to figure out what was making its store workers so unhappy \u2014 and fix it fast. By 2022, more than\u00a062,000<\/a>\u00a0employees were departing a year for various reasons, equating to about a third\u00a0of its workforce, and the pandemic-era labor shortage made it difficult to replenish its ranks.<\/p>\n Workers \u201csuddenly became very scarce,\u201d said Jon Abrahamsson Ring, chief executive officer of Inter Ikea Group \u2014 the umbrella entity that oversees Ikea\u2019s store franchising,\u00a0product design and supply chain \u2014 in a recent interview in New York. Ikea focused on things that many businesses talk about doing but struggle to actually implement:\u00a0 Boosting pay, increasing flexibility for frontline employees and using emerging technologies to make things easier on workers and their customers.<\/p>\n The results were stark: Voluntary turnover in the US dropped to about a quarter of employees by the end of 2023, from a third a year earlier. Globally, across the parent company\u2019s more than 600 stores and warehouses, the quit rate\u00a0fell to 17.5% in April from 22.4% in August\u00a02022. While\u00a0voluntary attrition has\u00a0fallen<\/a>\u00a0in many\u00a0white-collar occupations as hiring\u00a0has slowed, employment in the retail sector has continued to\u00a0trend up<\/a>\u00a0in recent months, making Ikea\u2019s progress\u00a0notable.<\/p>\n Retail jobs are often marked by low pay, erratic schedules and irate customers, which helps explain why the quit rate for retail workers is more than 70% higher than in other US industries, according to a 2022\u00a0report<\/a>\u00a0by McKinsey & Co. Half of them are considering leaving their job, McKinsey found, and of those, half want to ditch retail entirely. The situation isn\u2019t better in other parts of the world: UK retailers typically need to replace one out of every two workers each year.<\/p>\n \u201cAttracting, developing, and retaining frontline talent must become a top agenda item for retail CEOs,\u201d the McKinsey report said, noting the challenge has only grown amid inflation and an environment where labor unions are increasingly flexing their muscles.<\/p>\n Privately held Ikea, whose 473\u00a0stores in 63\u00a0markets employ nearly 200,000\u00a0people, historically lost fewer workers than its industry peers, thanks in part to a Nordic corporate culture that\u2019s known for being warmer and fuzzier than, say, US discount giants\u00a0Dollar General Corp.<\/a>\u00a0or\u00a0Walmart Inc<\/a>.\u00a0But managing a sprawling, global workforce in an era where work-life balance\u00a0has\u00a0become mandatory for many people\u00a0isn\u2019t easy, and signs emerged that it wasn\u2019t all Swedish meatballs and bliss amid Ikea\u2019s endless aisles of Billy bookcases and Stockholm rugs.<\/p>\n In 2018, a coalition of unions accused local Ikea managers of quashing organizing efforts at stores in the US, Ireland and Portugal. They\u00a0filed a\u00a0joint complaint<\/a>\u00a0with a branch of the Organization for Economic Cooperation and Development alleging that senior leadership \u201cignored red flags\u201d about claims that workers\u2019 rights were being trampled. \u201cI never thought that Ikea\u00a0would allow supervisors to intimidate and interrogate us,\u201d\u00a0Nancy Goetz, a worker in Ikea\u2019s Stoughton, Mass., store, said at the time.\u00a0\u201cI expected more from Ikea.\u201d<\/p>\n A wave of worker protests ensued. In Poland, employees were\u00a0peeved<\/a>\u00a0that a wage hike was pegged below the rate of inflation. In South Korea, unionized workers said\u00a0they received subpar treatment compared with their peers in other countries.\u00a0In the US, the company had to\u00a0apologize<\/a>\u00a0for serving fried chicken, collard greens and watermelon at a\u00a0Juneteenth<\/a>\u00a0event for Atlanta employees. (One former Ikea worker\u00a0went viral<\/a>\u00a0by posting videos\u00a0as\u00a0\u201cAngry Retail Guy\u201d that mocked clueless managers and shoppers alike.)<\/p>\n After several years of talks between the union coalition\u00a0and Ikea, the company last year\u00a0agreed<\/a>\u00a0in principle to let workers organize and allow store access to union representatives. Notably, though, the parties couldn\u2019t come to terms on allowing labor reps to enter US stores.<\/p>\n \u201cIKEA respects the rights of co-workers to join, form or not to join a union of their choice without fear of reprisal, interference, intimidation or harassment,\u201d a\u00a0spokesperson said.\u00a0\u201cThe company is committed to maintaining an environment of mutual respect and ensuring all co-workers\u2019 rights are protected irrespective of their preference and choice concerning unionization.\u201d<\/p>\n While the talks dragged out, unhappy Ikea workers started looking elsewhere. Then, the pandemic hit, and labor shortages made finding and holding onto people even more challenging. \u201cThere was a shortage of staff for entry-level jobs,\u201d said Ring.<\/p>\n The so-called\u00a0Great Resignation<\/a>\u00a0impacted all industries, but few gave workers more reasons to flee than retail. Stores had to transform into online\u00a0fulfillment centers<\/a>\u00a0overnight, while\u00a0supply-chain bottlenecks<\/a>\u00a0and record\u00a0inflation<\/a>\u00a0made everyday necessities scarce and more expensive, angering shoppers, who often took out their frustrations on employees. So-called \u201chero\u201d bonuses soothed the pain, but\u00a0didn\u2019t last<\/a>. Workers got\u00a0disgruntled, and started leaving for other gigs.<\/p>\n It was a far cry from when 17-year-old Ingvar Kamprad founded Ikea, using his village\u2019s milk van to deliver bargain-priced pens and picture frames. He began selling furniture made by local carpenters in 1948, and opened his first store in Sweden a decade later. Ikea created a\u00a0frenzy<\/a>\u00a0when it entered the US in 1985, and helped turn Kamprad into the world\u2019s eighth-richest person.<\/p>\n For a service-driven company like Ikea, unhappy workers can quickly lead to unhappy customers. \u201cYou cannot be a great place to shop if it\u2019s not a great place to work,\u201d said\u00a0Philip Moscoso<\/a>, a professor at Europe\u2019s IESE business school who has studied the company.\u00a0<\/p>\n When Ring took the CEO job at Ikea in September 2020, the retailer had an alarming retention problem. In the US, UK and Canada, employee turnover had crept well above 30% and swapping shifts was a cumbersome process. In India, staff quit when they became parents, due to meager child-related benefits.<\/p>\n Ingka Group, the Netherlands-based franchisee that operates and staffs\u00a0Ikea stores in\u00a031 countries that employ more than 165,000 people, embarked on a campaign to lower turnover, targeting the biggest pain points in each market. The approach improved pay and benefits, scheduling, new-hire orientation and in some places included an AI-powered tool that alerts managers when a worker might be in danger of quitting. Even employees\u2019 uniforms were refashioned.<\/p>\n \u201cMany times people come into world of retail thinking that this is a role I will take on until I find something better,\u201d said\u00a0Neena Potenza<\/a>, who oversees HR in the US for Ingka. \u201cBut at Ikea, we want people to grow and develop.\u201d\u00a0<\/p>\n There\u2019s still a ways to go, particularly when it comes to supporting\u00a0employee mental health and workers with disabilities. In Japan, turnover has actually gone up amid a stubbornly tight labor market.\u00a0In France, a\u00a0push to convert temp workers to full-time status has also led to outsized employee departures. And in Puerto Rico, more than 50 Ikea warehouse employees\u00a0just voted<\/a>\u00a0to unionize over complaints about\u00a0pay and worker treatment.<\/p>\n For one US worker, the changes haven\u2019t been enough. The sales associate, who asked not to be identified, quit recently after a dust-up\u00a0with a colleague quickly escalated into disciplinary action, she said, with managers aligned\u00a0against her. Rigid scheduling rules also forced her to miss critical medical\u00a0appointments. In employee surveys, other workers have complained about poor communication and micromanaging.\u00a0\u00a0<\/p>\n Compensation is often the biggest reason why workers leave, so across many regions Ikea raised starting wages, sweetened bonuses, or closed gender pay gaps. In London, base pay rose from 11 pounds ($14) an hour to 13.15. The UK also added a new starting pay band for a handful of stores outside London where the cost of living was much higher than in more remote areas.<\/p>\n A bigger problem in UK stores, though, was the tendency of new hires to quit within months of joining. The so-called onboarding process was poorly organized, with infrequent feedback from managers and newbies unclear where to turn to for advice. Ikea UK\/Ireland\u00a0strives to hold onto 85% of hires after three months, but that figure had dropped as low as 60%, according to Darren Taylor, people and culture manager for that region, who oversees 9,500 retail workers.\u00a0<\/p>\n \u201cComing out of Covid, people re-evaluated what was important to them, and work-life balance became more important,\u201d he said. \u201cSo it required a big change in terms of how we positioned ourselves to attract people into retail.\u201d<\/p>\n Those people included\u00a0Natasha Williams<\/a>, 22, who got a job at Ikea selling kitchen fixtures last year. Ikea worked to smooth her transition: Getting from her home in Basingstoke to the Ikea store in Reading was a two-hour slog involving two buses and a train. So instead of six-hour shifts across four days, Taylor gave her three eight-hour shifts, and allowed her to start at 10am rather than 9am. \u201cThat changed everything \u2014 I was much happier at work,\u201d Williams said.<\/p>\n Part-time staff, who make up about two-thirds of Ikea\u2019s UK workforce, often don\u2019t get enough hours to make ends meet, so Ikea is now giving some of them additional hours working remotely, answering customer calls. To retain students, Taylor has introduced shifts on weekends only, or just during school breaks.<\/p>\n \u201cSmall things,\u201d said\u00a0Taylor, \u201cmake a big difference.\u201d<\/p>\n In India, the things that matter to Ikea\u2019s\u00a0workers are\u00a0benefits like subsidized\u00a0daycare,\u00a026 weeks of parental leave\u00a0for mothers and fathers\u00a0and a five-day workweek (six days is the norm for many Indian retailers). Those perks are\u00a0a game changer\u00a0for\u00a0Shweta\u00a0Singh<\/a>, a 39-year-old mom\u00a0who was hired two years ago and runs the children\u2019s furniture department in the\u00a0Hyderabad store.\u00a0<\/p>\n And in the US, where Ingka\u00a0employs more than 17,000 people, one of the most impactful fixes was moving its shift scheduling tool online.\u00a0<\/p>\n Previously, inflexible schedules\u00a0didn\u2019t allow for life\u2019s daily hiccups\u2014 a sick kid, a flat tire. Unpredictable shifts can then have a ripple effect on workers\u2019 well-being, leading to\u00a0higher workforce turnover<\/a>\u00a0and\u00a0economic hardship<\/a>\u00a0due to income fluctuations, according to studies by the Washington Center for Equitable Growth and the Brookings Institution.<\/p>\n \u201cThere is this notion that workers\u2019 time is not valued,\u201d said\u00a0Kristen Harknett<\/a>, a professor of sociology at the University of California, San Francisco, who has researched\u00a0unstable work schedules.\u00a0<\/p>\n\u2018Unhappy Workers\u2019<\/h2>\n
Wage Bumps<\/h2>\n