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IKEA Workers to Reap What They Sell in Unusual Bonus

TIMES STAFF WRITER

Here’s an interesting twist on the annual bonus: European home furnishings retailer IKEA plans to give its more than 40,000 worldwide employees all the money that customers spend in the chain’s 152 stores Saturday, Oct. 9.

“Ingvar Kamprad has always found his own way of doing business and his own way of rewarding workers,” said spokesman Joakim Gip of the eccentric entrepreneur who founded the build-it-yourself furniture retailer 56 years ago as a mail-order operation in a shack on Kamprad’s family farm in a small Swedish town.

IKEA, which operates 13 stores and employs about 4,000 in the United States, already has a performance bonus plan that rewards U.S. employees based on sales and cost savings at each store, Gip said.

In a tight labor market, companies are hatching various schemes to hold on to their employees. Stock options to boost employee production and morale or annual bonuses to keep workers coming back for more are becoming increasingly common, said Luellen Lucid, who heads the Southern California compensation practice at consulting firm Watson Wyatt Worldwide.

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“Companies are looking at what will give them a competitive advantage, or they’re sending a really strong message to employees,” Lucid said. “They’re giving employees a stake in the success of the company.”

IKEA’s plan, which could put more than $1,500 in each worker’s pocket, would provide a smaller return per employee than the famous five-digit windfalls that workers at Fountain Valley-based Kingston Technology Corp. have enjoyed for the last three years, and it pales in comparison to the huge payoffs that fast stock run-ups have earned workers at some technology start-ups.

But IKEA’s bonus program is unusual because it directly distributes a day of gross sales to employees. The aim is to thank employees for another successful year and whip up employee enthusiasm as the company expands, Gip said.

Privately held IKEA has not finished tabulating sales figures for the fiscal year ended Aug. 31, but the total will “dramatically” surpass the $7 billion in worldwide sales in the previous fiscal year, said Gip, external communications manager for IKEA’s North American operations.

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“It’s been a very, very good year for IKEA,” he said. New stores are planned in Orange County, San Diego, the San Francisco area and several other cities.

For its “Big Thank You” event, IKEA picked Oct. 9, which is part of the Columbus Day shopping weekend in the United States, and will run special promotions in each country to hike sales. The company initially estimated that it would be dividing $65 million among about 43,000 workers, but now “the only goal is to make it the best Saturday ever.

“I have probably never seen the organization so focused on trying to get the sales on one day,” Gip said. “I was going to redo my daughter’s room, but I think I can hold off a few weeks.”

IKEA’s move also reflects the company’s egalitarian philosophy that avoids fancy offices--even the chief executive at headquarters in Humlebaek, Denmark, decorates his office with the company’s low-cost products--and dubs every employee “co-worker.”

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The special bonus “gives an impression of IKEA as a good place to work,” Gip said. “We’ll take the sales of all 29 countries, put it in a big bucket and divide it equally. A co-worker in a warehouse in China will get the same amount as I will or the CEO of North America.”


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