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Analysis of H&M HR strategies

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HRP010N: Hennes & Mauritz Case Study Autumn 2011 The case study presents a positive view of the company, covering its strategic position and HRM responses. However, this is a position from three years ago. To what extent has it lived up to its corporate and international expectations, and to what extent has its HR strategy worked, in an extremely depressed, international, retail environment? What suggestions for HR would you suggest now and how would you justify them? This requires an analysis of its stated strategy, the shift in the global economy in which it operates and the effects on the labour markets from which it draws its human resources. You need to consider its ability to position itself for a future of attempting to compete within the mid-market of retail fashion and how HRM can help in this. INTRODUCTION: H&M was established in 1947 by Erling Persson in Sweden with the mission statement Fashion and quality at the best price'. The core business of company is fashion retailing. H&M also deals in cosmetics, accessories and footwear. They have around 2206 stores across the world (AR1 2010) in 38 distinct markets with 87,000 full time employees. H&M continued its expansion with high quality and profit rate in the 2009/2010 financial year with net of 218 new stores and exploring 3 new markets during the year which are South Korea, Turkey, and via franchise Israel where high appreciation were given to newly open stores. In terms of SEK, total sales increased by 7 percent to SEK 127 billions. This show a slight recover in customer demand as compared to 2009 financial year. But research shows that the company still struggling to increase the sale from 10 to 15 percent as targeted. Additional 250 new stores are planned to open along with new markets. Only in UK, where H&M are in operation since 1976, total stores are 192 till November 2010 with 26 new stores in that year with the annual sale of more than SEK 8 billion (AR1 2010). ...read more.


H&M recruit locally when their new stores in operation. According to HR head of H&M, "internal recruitment and job rotation enable the company to grow quickly" (AR1 2008). Here, from statement above it is quite obvious that the company is focusing on internal marketing more rigorously as compare to rely on outsourcing in case of its designing unit. Where as production are totally outsource which is known as 'internalisation of sourcing', one of the various form of retail internationalisation (Bruce et al. 2004) REWARD MANAGEMENT IN H&M: Though the Employee stock ownership plan (ESOP) are not provided in H&M, but it successfully manage the total reward framework including intrinsic and extrinsic rewards. The main relational reward is job satisfaction in H&M which have potential influence in organisation. Reward management practices in H&M also linking people with strategic business needs. Another compelling relation is with labour market and in the form of employee relation and voice. H&M has close relation with trade unions. H&M follows the main objectives of total reward management which are recruitment and retention of employees, motivation to employees, providing financial strength, self-efficacy which ultimately support the overall organisational strategy (Armstrong 2006). OVERALL ANALYSIS OF STRATEGIC HR IN H&M: H&M focuses on experiential self-directed learning which as result created self-managed teams and individuals which H&M claims as entrepreneur (AR1 2010) though they are shop managers or other line manager even. The main themes, which literature pointed out for enhancing the process of learning with in the organisation, may include knowledge diffusion, knowledge capturing and accumulation: are catches the significant importance while HR strategies are being an exercise within organisation. (Blacker 1995) pointed out the five different types of knowledge repositories which helps an organisation to be a learning organisation it includes embrained, embodied, encultured, embedded and encoded knowledge which encompasses the blend of tacit and explicit knowledge altogether. Among these types, embrained and embodied knowledge individually situated explicit and tacit form respectively which enables the individual to participate in overall organisational learning, if knowledge repository properly embraces with enough motivation. ...read more.


On the basis of different business model following tables demonstrate their similarities and differentiate values in terms of low or high for example 'need to overcome the market imperfection' is LOW for H&M because of its outsourcing which leads H&M to select the best market players where as for ZARA it is HIGH, since ZARA concentrates its internal market by controlling almost every step of production. Characteristics Low High Internalisation theory: - need to overcome market imperfection H&M ZARA Need to develop own internal markets to protect a know-how H&M and ZARA Foreign direct Investment H&M and ZARA Transaction cost Analysis: - asset specificity H&M and ZARA Exposed to primary and secondary uncertainty ZARA H&M High frequency of transaction H&M and ZARA Resourced based view - Combining key resources efficiently H&M and ZARA Possible sustained competitive advantage H&M and ZARA Table 01: Chart of Characteristic (Gorranson et al. 2007) CONCLUSION: Overall study shows that H&M successfully managing the current shift in the global economy by utilising strategic HR's tools to keep employees' loyalty and commitment. Their main motive is to achieve the organisational goal via successful motivational practices among employees such as job rotation and job satisfaction are the essential tools of motivation. Furthermore, for the upcoming years, there CSR department is align with each department and region to work in close loop for 'H&M spirit' and 'H&M conscious' goals as stated in annual reports (AR1 2010). As compare to other competitors, H&M are more sensitive to the environment because of their outsourcing strategy in production; this will bring them cheap and up to the standard with state of the art technology stuff. Furthermore, on the basis of study, a theoretical model is presented which demonstrate the framework for over all HR strategy of H&M aligns with business strategy. Model also suggest the reward management, performance management, motivation and training & learning work together as Strategic HR tools to achieve the personal growth which leads the organisational sustainability (as from HR head of H&M), employees involvement, motivation, commitment along with overall progress organisational culture which is highly participative in nature. ...read more.

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