In order to achieve that H&M needs to sustain its very positive brand image and staff that is organized in the best possible way to handle those goals set. In its annual report it is stated that the company’s focus should be on commercial mindset, simplicity, constant improvement, cost consciousness and entrepreneurship. With those aspects in mind, the long term goal being „making fashion available to everyone, giving the customer a fashion experience that strengthens H&M brand“ should be reached allowing the business to further expand and to enter new markets on the basis of a 10-15% growth per year, funded internally.
Over the years, the company has set a strategy which has the three main aspects of price, design and merger &acquisitions. First of all, since H&M always tries to offer their customers the lowest price possible, they need to achieve a competitive advantage to achieve low costs, and sustaining profitability at very low prices. This is achieved through keeping the number of middlemen to a minimum, benefiting of economies of scale, taking advantage of their great experience and selecting suppliers carefully and keeping distribution costs as low as possible.
Designing is completly processed inh-house while all of the production is outsorced but its outcome is tested carefully on a regular basis to ensure high quality at all times. Mergers & acquistions have also been one of the company’s major strategy in the past, especially focusing on acquisitions of small design companies to enrich their product portfolio and being able to offer diversified products worldwide which is an essential part of their international expansion strategy.
H&M’s corporate strategy is to expand on a continuing basis, and as a consequence, employee strength also increases continuously. For 2009, H&M’s The continous expansion means that there is also an ongoing process of recruitment within the company, as additional staff is needed with every new shop opening. Annual increase in the number of employees for the upcoming years is 5000-10,000 people from all different kinds of backgrounds, mostly recruited locally at the place of store opening.
H&M puts a strong emhasis is to maintain their image of being a good employer, which will help them not only to be confronted with a higher number of applicants for job vaccancies, but also reduces staff turnover as well as it increases employee’s satisfaction towards their job and hence, productivity. This also includes making efforts that exceed national requirements of employer’s responsibilities, which are, especially in some of the recently entered asian markets, very low compared to western standards.
This objective is summarized by the HR department as following: “In order to meet people’s expectations of H&M as an attractive employer, the company develops global guide lines on diversity, equal rights and against discrimination” Hennes & Mauritz wants to give every employee the feeling that they are an essential part of the business, constently offering them to develop and giving the positive signals that promotions are within the company are always ahead. The company is very open towards trade unions and is known for its good and close communication on an employee-management level.
Represantitves are being elected which frequently discuss possibilities for improvement with managers, representing the employee’s opinions while at the same time managers are encouraged to actively communicate with employees of all levels as well. This creates a strong feeling of trust within the organization, which is excellent at managing diversity. At times of promotions, managers are advised first to look for the best candidate internally in order to gain advantage of the employee’s experience with the company and encouraging others to work hard and being the best andidate for future promotions. However, the companies philosophy is built among a concept which does not award employees with outstanding job titles but instead continiously increasing opportunities and responsibilities. The fast international expansion of course requires high level of training of new staff. As stated before, internal recruitment is one the main objectives, but since the number of staff is growing so fast, new employees need to be introduced to the job quickly.
This process is being accelerated by on-the-job training in which new staff in new markets is invited to join a co-workers in an established market to be introduced into the philosophies, practices and day-to-day tasks. One of the main characteristics a H&M employee therefore needs to bring is a sense of entrepreneurship, good communication skills and being open to work in different environments. Once being hired by H&M, the employee is offered a huge range of benefits for which the company is well recognized for (a list of possible benefits is attached in the appendix)