As you probably already know, Swedish home-furnishing retailer Ikea came under fire earlier this week for allegations that its French unit had “spied on” employees who were suspected of wrongdoing. The firm is also accused of spying on disgruntled customers in France.
I’m sure it’s just a coincidence, but there’s no denying that the furniture maker’s timing in announcing a new initiative called “Tack!” should help the retailer finish the week on a more positive note.
In what’s an increasingly rare move these days, Ikea announced plans to provide an annual contribution to the individual retirements accounts of those workers who have been with the firm for five years or more. Ikea is starting with an initial global fund of $137 million, with the first distribution slated for next autumn. Payments are contingent upon certain “pre-agreed public targets” being made.
In January, Ikea will also be increasing its 401(k) match to 100 percent on the first 4 percent and 50 percent on the next 2 percent.
In announcing the lump-sum contribution, here’s what CEO and President Peter Agnefjäll said:
Tack! is the Swedish word for “thank you” and we want to show appreciation and gratitude for our co-workers’ loyalty and contribution. The program is inspired by [Ikea’s Founder] Ingvar Kamprad’s wish to share success with all IKEA co-workers. All of them, no matter what position they hold, contribute and are important for our continued growth.”
Under the program, full-time employees will receive the same amount, regardless of their department, position or salary. Part-time workers will receive a proportional amount dependent on their hours. In the United States, more than 44 percent of Ikea’s employees (roughly 5,700 of them) have more than five years of experience. (Globally, Ikea has 136,000 employees in 26 countries.)
Commenting on the Ikea announcement, Dave Boucher, a partner with Longfellow Advisors in Boston, told me that Ikea’s move is fairly rare these days. “Ten years ago, profit-sharing plans like these weren’t out of the norm, but there’s a reluctance today to bring back employer contributions. So, from at least that standpoint, Ikea is raising the bar.”
But for many workers at Ikea and elsewhere, Boucher added, it could be a case of too little, too late. “Some large employer had to put their foot in the puddle first,” he said, “because we’re heading down a path where pension plans have dissolved, Social Security is under attack and if all I can afford is 3 percent or 4 percent in my 401(k) with an employer match, there’s not going to be enough money to retire on.”
In an era when companies are passing on more and more of the retirement burden to employees, it’s refreshing to see a large employer like Ikea recognize the retirement challenges that lie ahead for its employees and take a meaningful step in a different direction. Time will tell, but I have to think the move could ultimately pay a nice dividend for the organization as far as talent retention is concerned.