Starting in 2014, Ikea will add an annual bonus contribution to its employees’ retirement accounts—including 401(k) plans in the U.S. and similar defined contribution plans in other countries—if pre-agreed-upon global targets are reached, the Swedish-based home-furnishing giant announced in December 2013.
The profit-sharing contribution is in addition to the company’s existing 401(k) match. For the first year, Ikea said globally it will contribute $137 million (€100 million) to this program, called “Tack!” (Swedish for “Thank you”).
Under the new rewards program:
- All full-time workers will receive the same amount, regardless of their department, position or salary.
- Part-time workers will receive a proportional amount based on their hours.
- The annual payouts will go directly into employees' retirement plan accounts.
- Full-time and part-time workers must be employed by Ikea for five consecutive years to receive a contribution.
- Funding will be decided annually with a prerequisite that goals set by Ikea Group's executive management are reached, and will be implemented with respect to local country laws and regulations.
“We want to show appreciation and gratitude for our co-workers’ loyalty and contribution,” said Peter Agnefjäll, CEO and president of the international Ikea Group. Added Mike Ward, president of Ikea US: “We feel confident that the Tack! program will be an incentive for co-workers to stay and grow with Ikea.”
Tack! is being launched only a few months after the announcement of the One Ikea Bonus Program, a performance-driven bonus system for hourly and salaried full-time and part-time workers, paid annually when set goals are achieved.
By providing incentive-based bonuses as both direct compensation and as retirement account contributions, “We believe that these two programs will strengthen the Ikea Group as a great place to work, today and in the future,” said Agnefjäll.
Ikea employs 136,000 workers in 26 countries. In the U.S., more than 44 percent of Ikea employees have five-plus years of service. As a result, nearly 5,700 could be eligible for the first Tack! payout.
Stephen Miller, CEBS, is an online editor/manager for SHRM.