Organizational Behavior as an influencer on Organizational Change: A Comparison

between CAPCO and IKEA

Table of Contents

No. Title Page

1 Introduction 1-2

2. What is Organizational Change 3-5

3. Causes of Organizational Change

4. Organizational Behavior in IKEA and CAPCO that causes Organizational 6-9

Change

5. Recommendations 10-11

8. Conclusion 12

9. References i
Introduction -IKEA

IKEA was founded in 1943 by Ingvar Kamprad, who was born in southern Sweden.. The name
of the company is formed based on the initials of Ingvar Kamprad (I.K.) himself, and the initial
alphabets of the farm and village in which he grew up, which are Elmtard (E) and Agunnaryd
(A) respectively. Initially, IKEA was involved in selling products such as wallets, pens, watch to
meet people needs. In 1958, IKEA had set up its first store in Älmhult, Sweden. At that time, it
was the biggest furniture display in Scandivania as it had a home furnishing area of 6,700 m 2. In
later decades, IKEA expanded its business by opening more stores in other countries including
Japan, Singapore, Australia, France, Hong Kong, Spain, Canada, United States, United
Kingdom, Belgium, Italy and more. At the end of 2017, there are a total of 412 stores owned and
operated by IKEA in 49 countries.

IKEA’s vision is: “to create better daily life for people”. In order to support this vision,
IKEA’s business idea is “to offer its customers with wide-ranged functional home furnishing
products with good design and the price is very low so that most of the people will be able to
afford them”. IKEA does not sacrifice product quality to achieve low-price products offerings
but the company works hard in developing cost-efficient and innovative production methods.

To support the idea of offering low-price products, IKEA usually conducts price tag
designs which are then followed by product development to ensure that products can be well-
suited to the price consumers are comfortable enough to pay. Besides, product designers and
developers will directly communicate and deal with suppliers so that lower prices can be created
at the initial point of production. Other than that, IKEA’s highly effective innovation was to
introduce the concept of flat-packing and self-assembly for its products, by which all IKEA
products are unassembled and packed flat in packaging boxes for customers to take them home
and assemble them. A key part of IKEA’s business concept requires customers to purchase and
assemble the products by themselves. Not only this fosters a sense of achievement in customers
due to its do-it-yourself (DIY) spirit, it also helps the company reduce its many costs like labour
costs, storage costs as well as shipping costs. With these cost reductions, products are able to be
offered to customers at lower price than many furniture retailers, thus ensuring IKEA’s place as
the largest furniture retailer on Earth.
Introduction –CAPCO

CAPCO, which was formerly known as The Capital Markets Company N.V., is a company
dealing with consultancy services for businesses and technology worldwide. They have 28
offices across four continents: Europe, North America, South America and Asia. Founded in
1998, CAPCO provides consultancy services for financial services, banking and payments,
capital markets, and wealth and asset management. In 2010, CAPCO was acquired by Fidelity
National Information Services (FIS). The acquisition was terminated in 2017 when FIS sold its
majority stake in Capco to Clayton, Dublier and Rice (CD&R), making Capco independent.

CAPCO’s staff uses innovative thinking with industry and domain expertise to offer
clients consulting expertise, complex technology and package integration, transformation
delivery, and managed services, to assist their organizations. Their consultation services utilizes
a friendly collaborative approach, which helps clients to innovate, deal with changing situations
and ultimately increase revenue. CAPCO is well placed in this regard as they have offices in We
serve leading financial centers across the Americas, Europe, and Asia Pacific.

CAPCO’s has managed to persevere and succeed over the past 20 years due to its
emphasis on its core values, namely, respect, integrity, excellence, commitment, knowledge. The
consultancy teams at CAPCO tries their hardest to deliver effective solutions from front-line
experience, distinctive insights, and a total commitment to success.
Organizational Behavior influencing Organizational Change in IKEA

IKEA’s Organizational Culture

IKEA’s organizational culture is an important facet in sustaining its reputation worldwide in

providing furniture in such a distinctive method over the last 70 years. IKEA’s management
team has focused on building an organizational culture that is egalitarian and non-discriminating
to its many employees not just in Sweden, but also in places around the world, ranging from
America to India. In that, IKEA makes it company policy that employees are treated equally
irrespective of management level and race; for instance, employees are required to address each
other as colleagues. This is carried out to IKEA’s other outlets like in IKEA US, only a few
executives have business cards and everyone sits side by side (Dudovskiy, 2017). This sense of
equality is also carried out in decision making, where everyone is encouraged to think on how
they can improve the company and be innovative at all times regarding IKEA’s customer service
and products.

The main benefit of such an organizational culture is that IKEA has managed to retain its
competitive advantage within an ever-changing world situation. For instance, IKEA's goal is to
achieve an equal amount of female and male managers by 2020, and helps bring about the
necessary organizational change by implementing the IKEA Diversity & Inclusion Approach,
introduced in 2013. This program aims to let managers create a diverse and inclusive workplace
that allows employees room to promote their personal characteristics for the benefit of the
organization (Ericsson, 2018).

According to Laroche, Kalamas, and Cleveland, globalization does not eliminate cultural
differences across countries, products, and promotions while adaptation to cultural variances is
crucial (As cited in Khare, 2013). IKEA is well poised to deal with the cultural changes in its
many overseas outlets by its management structure. IKEA’s management structure is less
hierarchical and more flat, which encourages and motivates employees from all levels to
contribute towards company policy. Not only that, IKEA also promotes it openly as a tool for
attracting new talents. This helps to bring in people with wide-ranging experience and new ideas
that helps IKEA to deal with customers and their buying trends worldwide.
IKEA’s Leadership

Leadership by Example

As a world renowned furniture retailer, IKEA does not use a single leadership style in directing
and guiding its employees. However, the type of leadership associated with IKEA is the leading
by example method. IKEA founder Ingvar Kamprad famously commented that “if there is such a
thing as good leadership, it is to give a good example” which sums up how employees in IKEA
are treated (Dudovskiy, 2017).

Managers at IKEA take on a paternalistic approach towards their subordinates by guiding

and mentoring them, like in most organizations, but IKEA takes this role seriously by also
allowing employees to voice out their own views. This generates creativity and gives employees
a sense of empowerment which goes a long way in making IKEA a satisfying place to work in.

Laissez-Faire

In IKEA, leadership follows an egalitarian approach of being informal, open and caring
towards employees (Ericsson, 2018). Its style is often described as a Swedish management style,
partly as a tool to stress its uniqueness and competitive advantage, and partly because of the
founder Ingvar Kamprad’s own convictions that putting the wellbeing of employees first is
important in the success of IKEA itself. The working environment in IKEA tends to be freer,
more open-minded in order to foster co-workers to continually learn. This helps spur on positive
organizational change as employees find it easy to turn to their superiors for guidance and
suggestions.

Although IKEA does use traditional hierarchical leadership, it always stresses that a
consultative type of leadership can lead employees to relax better during work. (Management
Ikea, n.d.). IKEA’s famous flat-pack legacy was formed by just a style of management; one day
a team was packing away some furniture and a casual remark about how much space a pair of
table legs took up led to the flat-pack idea (Jarrett & Huy, 2018). This leadership style results in
improved performance because it increases employees’ confidence, lowers job stress and
improves relations and trust between employees and managers.
CAPCO’s Organisational Culture

In general, CAPCO is supporting entrepreneurial organisational culture and encouraging

independent thinking among the employees of the company. CAPCO is operating under little
hierarchical structure where less emphasising on organisational charts and layers. The purpose
for this is the company wants its employees to have feelings that CAPCO is a company where
the employees to own and operate. There is only little bureaucracy exists for the entire
organisation which has provided the workers more opportunities to cross - learning for working
out the company’s projects. This is contributing the growth and development of company’s
businesses as CAPCO believes that successful employees are helping their clients to be
successful as well (Capco.com, 2018).

Besides, CAPCO’s organisational structure has supported innovative culture within the
firm. This innovative culture has encouraged individuality, integrity and accessibility among the
members in the organisation. By doing so, all the workers are free to achieve their aspirations.
Other than that, the organisational culture of CAPCO is promoting flexibility, creativity and
element of adventuring. Combining the culture with company’s strategic visions, CAPCO
expects that the workers are possessing ability to achieve most of changing and challenging
requirement within the industry of financial services (Businesscasestudies.co.uk, 2018).

Leadership in CAPCO
As similar to other organisations, leadership is playing important roles in CAPCO to accomplish
the goal of the organisation. CAPCO has practiced several types of leadership with different
styles. The styles are implemented differently according to the needs of business change and
management practice. This leads to organisational change by switching the working styles of
employees from one to another (Neves and Galvao, 2013). However, the style mostly used by
CAPCO is the autocratic style of leadership.
Autocratic leadership

CAPCO has applied this leadership style to guide the employees and provide them direction for
the purpose of achieving common goal of the organization. CAPCO believes that autocratic
leadership is helping in monitoring the organizational activities more closely in order to improve
the overall performance of the organization (Zoe, 2017). When autocratic leadership is
implemented, the manager of the company is not involving subordinates in decision making. The
reason for this is to convince the staffs to have faith in the manager or leader where they are
having high capability in making productive decision for the organization (Cherry, 2018).

However, this autocratic leadership style is not promising benefits for organization for all
the time. Under this leadership style, there is low flexibility allowed by the manager of CAPCO
to the employees. All important decisions are only made by manager and employees are guided
to work based on the manager’s decisions. As a result, the members for lower level management
are not able to involve themselves in the process of decision making. Eventually, the employees
only work according to any instructions and directions given by the top management of the
organization (Zoe, 2017). For instance, in reviews of the company, employees have mentioned
that their work-life balance there are affected due to the demands of an international business,
and that their entreaties are not being dealt with sufficiently by the management. Besides, the
autocratic style of leadership causes dissatisfaction amongst employees, which results in their
needs being different from those of the management. As a result, staff turnover is high as people
are being fired for not conforming to what the organization thinks they should do.

Due to the drawbacks which has been discussed in the previous section, CAPCO is only
practicing autocratic leadership when the organization is facing critical situations in business.
This is because the features of autocratic leadership is able to help the manager of the company
to make faster decisions. By applying this style of leadership, the manager is solving the problem
according to his/her own observations and experiences. In this situation, CAPCO employees are
not engaged in any of the critical decision making process. On the other hand, the quality and
consequences of the decision made are dependent on the capability of the manager (Andersen,
2006).
Recommendations and Conclusion

As seen in the sections above, organizational change happens more effectively in IKEA
compared to CAPCO. IKEA practices a more lenient and flat culture which allows employees to
participate in decision making and proffer opinions direct to their superiors. This part of IKEA’s
organizational behavior has enabled it to be the largest furniture retailer in the world, as well as
making an icon of its flat-pack way of selling furniture. Leadership too has played important
roles in bringing about organizational change, as seen in IKEA’s consultative type of leadership.
Many staff in IKEA totally buy in and identify with IKEA’s goals as an extension of their own,
as opposed to CAPCO, where at times there are differences between the needs of managers and
their subordinates. Hence, CAPCO needs to redress these issues in order to accomplish positive
organizational change.

Improve Autocratic Leadership Style

In order to improve the current leadership style in CAPCO, it is important for the company to
listen and collect feedback from the employees. Due to insufficient communications between
manager and subordinates, there is situation where the managers might not realize that the
workers are actually struggle to work under autocratic leadership. To identify this issue, it is
necessary for a CAPCO managers to communicate with their subordinates and collect any
feedback or comments from them. It is recommended that CAPCO managers to gather feedback
from employees by using 360 degree feedback. This feedback collection method enables the
employees to analyze managers’ leadership under a safe environment. Under this analysis, all the
reviews from peers of respective managers who have observed their leadership characteristics are
also collected. It is believed that this kind of analysis is helping CAPCO’s managers to identify
their strength and weakness of their leadership style so that the quality of leadership is improved
(Alexandre, 2013).

Apart from that, CAPCO’s managers are suggested that to make adjustments on their
autocratic leadership style. For instance, the managers should adjust their styles to be more
paternalistic as what has been done by IKEA. The managers in CAPCO are encouraged to
emphasis more on coaching, mentoring, guiding and discussing among the subordinates. By
doing so, the managers are having better delegation skills and depend more on their team
members instead of solving all the critical issues by own without any discussion with others.
Consequently, CAPCO’s managers are having the full support from their team members.
Furthermore, the managers tend to become stronger leaders of the organization rather than just
known as autocratic leaders among the subordinates (Alexandre, 2013).

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