Cross-cultural performance management in China: the case of IKEA

Hello, and welcome to this session. My name is Dr. Tinkuma Edafioghor. I'm a senior lecturer in human resource management at the University of the West of England. In this session, we're looking at the cross-cultural performance management in China and we'll be exploring how IKEA navigated performance management in China. So, I'll talk you through the challenges they faced, what they did about the challenges and what came out of those changes. This is a great case study for you to understand why cultural sensitivity is so critical in international human resource management.

First of all, let's set the stage. IKEA is a Swedish company and its culture reflects that. It has flat hierarchies, there's openness and very direct feedback. So, when IKEA expanded to China in the late 1990s and early 2000, they try to carry those same human resource management practices across, but pretty quickly they realized that what worked in Sweden didn't translate so smoothly into a Chinese context. What exactly was the challenge?

In Sweden, direct feedback is seen as honest and constructive, but in China, communication tends to be more indirect with a strong focus on harmony and respect for hierarchy. That means Chinese employees were often hesitant to speak up in performance reviews, and when managers gave blunt feedback it sometimes created discomfort instead of clarity. This raised risks for motivation, employee engagement, and even basic alignments around performance expectations. There was a real issue here. So, IKEA had to rethink how it approached performance management in China.