You knew it wasn't just another day at IKEA Seattle the minute a life-sized yellow, orange, and green parrot greeted you at the door. In the corner, a local radio station was broadcasting live, while bright balloons filled the air, along with the riff of a jazz guitar. Employees in their signature candy-apple-red shirts scurried about, flashing ear-to-ear smiles, handing out hot dogs and cold drinks.
Another surprise: These people were genuinely happy — which is not an adjective most retailers can use to describe their employees. In fact, most of the 425 Seattle IKEA employees showed up June 1 for the store's Excellence Day celebration. They came to stock shelves and bag gifts, to hand out food and do facepainting.
Take business manager Chris Welander. The image of her face, comically squished against a glass partition and blown up into a poster, draws attention to nearby products. Or Amy Luna, sales associate and scheduler. Like her co-workers, the 21-year-old college student is a little antsy today, periodically checking updated store sales posted on a bulletin board.
That's because at the end of the day, there's some extra money for everyone. This day is not only a celebration for customers, but the day that the store's owners, Bjorn Bailey and Anders Berglund, split the sales among their staff.
Like most businesses around the country, IKEA Seattle was reeling last fall from a downbeat economy. On top of that, an almost yearlong store expansion had doubled the size of the store from 150,000 to 300,000 square feet.
IKEA has a companywide Bonus Day program that takes into account annual sales accumulated on August 31, the end of the fiscal year. But the Seattle store chose instead to offer employees an interim, six-month (from November 1 to April 30) goal of $50 million. If the store met its sales goal, there would be a celebration to end all celebrations, to be called Excellence Day.
“If you had asked me beforehand whether there was any chance at all of making it, I would have said, ‘no way,’” says Bailey, who co-owns the independent IKEA franchise with Berglund.
But led by Dixon Mackinnon, an indefatigable assistant store manager, and spirited employees, they made a run for it. Since most people have difficulty getting their arms around $50 million, the managers broke the goal into weekly sales targets.
Because every sale counted, salespeople went to great lengths encouraging customers to consider accessories and other add-on purchases. The same was true for cashiers, who habitually pointed out impulse items such as batteries at the checkout counter.
“You're probably more apt to do something extra because of Excellence Day,” explains Luna. “Maybe I work a little harder, stay a little later, and take on more projects.”
With just a few days before the April 30 deadline, it was hit or miss as to whether they would surpass the sales target. Incredibly, with just a few hours to spare, the goal was eclipsed. The final tally: $50,023,000.
Whoops of joy echoed throughout the cavernous facility. “There was a lot of excitement everywhere,” recalls Tracy Hughes, a sales manager. “But there was also a lot of relief because we worked so hard.”
But there was also some trepidation, since Excellence Day was just a month away and employees had little time to prepare. A quickly formed committee approved, among other things, special T-shirts, pins (which encouraged customers to “Ask Us About June 1”), and colorful posters.
Employees helped their cause by trumpeting Excellence Day outside the store whenever possible. “I would tell friends and customers they should come in on Excellence Day because they could be assured of getting the best service,” says Welander, grinning.
When the store closed at midnight June 1, after 14,000 customers had passed through the doors in 16 hours, IKEA Seattle had taken in almost $900,000. All gross sales were then divided into bonuses for all the workers, leaving one lucky veteran employee $7,000 richer. Luna, a 2½-year worker, earned a cool $2,100 before taxes.
“It's awesome,” says Luna. “I had to take a few quarters off from community college because I couldn't afford to go. So this money really helps.”
When the Bonus Day program was started, bonuses were divvied up based on seniority. However, it soon became apparent that many of the newer, more productive employees were being left out in the cold.
Now, about half of workers' bonuses are based on seniority and the other half are based on performance factors, including leadership, punctuality, initiative, customer service, teamwork, cleanliness and safety.
“It's pretty evenly balanced,” says Hughes. “I haven't met one single person who thinks the current system is unfair.”
“I made a special effort to visit on Excellence Day because I knew it was a reward for the employees working there,” said Megan Knight, a regular customer who convinced a number of co-workers and friends to shop there. “I purposely held off from going there earlier so I could spend more on that day. I figured, why not support something like that?”
As much as they appreciate the bonuses, Luna, Welander, and the others insist that Excellence Day isn't all about money.
“It shows the owners care about their employees,” says Welander, who supervises 11 workers. “It's not like they are annoyed that they're paying this money out. It comes from their heart, and that's something employees value.
“In this day and age, when it seems as if there's a lot of detachment in the world and at your company, it's just so refreshing to feel this kind of connectedness. If I ever run my own business someday, I'm going to remember this.”
Berglund says the bonuses' positive effect is evident in the countless personal thank yous and hugs he receives afterward. And in the occasional worker who proudly points to the parking lot, where his snazzy new car, purchased largely with bonus money, sits gleaming. Perhaps the best proof that there's something special going on is the store's low employee turnover rate: 25 percent, versus a national average of 78.4 percent, according to the National Retail Federation's 2001 survey of specialty stores.
“Companies talk all the time about their people being the most important asset, but when it comes to money, that doesn't always get shared,” says Lynda Ford, a Lee Center, N.Y.-based HR management consultant and author of an upcoming book on building exceptional workplace environments. In her work with more than 100 multisized firms over the years, she says she has never come across another company offering this type of bonus arrangement.
“A great way of getting highly motivated employees is to build trust and loyalty and do what you say you're going to do. This is a definite walk-the-talk type of program.”
It was the IKEA Seattle founders' intent from the start, when they invested “nearly every penny” they had to launch the store eight years ago, to share some of their wealth. Bailey and Berglund, who share a dry sense of humor along with their Swedish heritage, started something called Bonus Day back in 1997. Berglund, who befriended Bailey years earlier when both were executives expanding IKEA's presence in Canada, borrowed the concept from Swedish IKEA stores.
“We knew from the start that if things went well, it wasn't because we were brilliant but because of the efforts of a lot of people,” says Bailey. “If we became a successful business, we wanted to share it in a fun and meaningful way.”
IKEA Seattle's first Bonus Day pulled in more than half a million dollars — far more than expected. That really opened Berglund's eyes.
“Something like this enables you to see what you can do,” he says. “It breaks through walls about what you think you can and can't accomplish.”
After two consecutive years of posting impressive sales, IKEA headquarters jumped on the bandwagon, promoting an employee Bonus Day at all company-owned stores and independent franchisees in 1999. (At last count, IKEA operated 160 stores in 30 countries.) IKEA Seattle alone pulled in about $1.1 million that day, its biggest day ever up to that point. One employee made more than $10,000 that day.
At the same time, Bailey explains, “We don't want people to have the mindset that they can count on Excellence Day as part of their income. They should live within their budget.
“We're trying very hard to make sure this doesn't become seen as the Annual Excellence Day. There has to be a sales goal set and it must be reached, or we won't have the event.”
Both owners believe the event has applications for other retailers, even other industries. Last year, an IKEA store in San Diego conducted its own version of Excellence Day, called Co-Worker Sales Day. Future plans for that store include sharing some revenue with employees, but details are still being developed.
“Maybe you wouldn't have to go whole hog like we do, giving away every penny of that day's sales,” says Bailey. “It could be based on half the day's sales or just on the profit.
“But I don't see why Excellence Day couldn't be done in other industries, as long as you set meaningful and reasonable goals that employees can understand, and you're measuring productivity,” he says. “I think it would be fun for other businesses to try.”
Harvey Meyer is a freelance contributor to CMI. He is based in St. Louis Park, Minn.