H&M Company’s Change Management

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Introduction

The modern business environment is increasingly becoming more complex and dynamic, which forces organizations to adapt and adjust to remain afloat. The competitive landscape is also changing as new technologies, and trends change how firms deliver value and how customers make their buying decisions. One of the recent trends is a shift from traditional business models to e-commerce, which has seen many traditional firms struggle to compete with modern high-tech establishments. It can be argued that online businesses have become more competitive and desirable to users than physical facilities.

This argument is based on the assumption that modern generations are tech-savvy and seek to exploit the conveniences offered by online shopping. For physical businesses, the transition to online models has not been easy, which has detrimentally affected their ability to compete. This paper focuses on the case of H&M, one of the largest fashion retailers in the world. The problem identified is its slow transition to e-commerce, which has drastically reduced its profitability. Kotter’s 8-step model is applied to support the change at H&M.

Company Overview

H&M is a global retail brand based in Sweden that deals with fashion clothing. The company has grown to become one of the largest firms in this sector, where the focus is on trending clothes sold at affordable prices. The diverse customer base comprises men, women, and children, which is served with apparel and accessories. In addition to clothing, which is the main product line, H&M has also ventured into home furnishing and beauty cosmetics to diversify both the products and consumer base. Founded in 1947 by Erling Persson, H&M’s first shop was opened in Vasteras, Sweden, which exclusively sold women’s clothing (SuccessStory, n.d.).

Persson acquired the brand Mauritz Widforss and changed the company’s name to Hennes & Mauritz to denote the inclusion of menswear in the product line. The official rebranding was H&M, which has persisted until now. H&M began its gradual expansion beyond Sweden’s borders, with the first branches established in the neighboring Nordic countries, Denmark and Norway. Today, the company employs over 153000 people in over 5000 stores globally (Pitchbook, n.d). The company’s expansion is still ongoing, with new stores opening every year.

Diagnosis

H&M has acknowledged the need to establish online stores after facing stiff competition from e-commerce businesses. According to (Charlton, 2020), the company has been slow in adopting online stores, which can be attributed to the recent dip in profits. For example, H&M sells online in 47 of the 71 markets it serves globally, and four were also added in 201. In this case, it can be argued that the firm fails to appreciate the full potential of online business. It is difficult to explain why the slow shift since the company’s online sales rose by 30% in 2019 (Charlton, 2020). Under normal circumstances, such a trend should be used as a clue of the online potential, which H&M should fully embrace.

For a business that seeks to remain competitive in the future, the e-commerce model is a necessity, which means going beyond mere online presence. As will be highlighted in the section below, the company’s online selling activities should be expanded to mirror those of exclusively online firms. The success stories of such companies as Amazon or even such fashion retailers as COS should inspire H&M to expand online (Cheng, 2018). However, some observers claim that growing online sales will hardly solve the company’s problems (Cheng, 2018). The argument is that H&M has lost its appeal to its online competitors, which means it has to find means of growing its online brand to match and surpass those of competitors.

Kotter’s 8-Step Approach

Change management models have been used as frameworks for facilitating change. Kotter’s 8-step model is one of the most common models used across all industries and sectors. It offers a nonlinear sequence of processes or steps through which change takes place. According to Carman et al. (2019), the model holds that psychological and situational aspects of change can be addressed using a series of nonlinear and dynamic steps. Additionally, there are three key elements of Kotter’s 8-step model: creating a changing climate, enabling and engaging the company, and implementing and sustaining the changes made.

In the case of H&M, the need for change has been expressed in the diagnosis section above. Using these three elements, the company needs to acknowledge this need and create an environment through which change can commence. However, change is impossible to implement without the organizational members. Engaging all stakeholders in the process will be critical if any major change is to be successful. Additionally, the size of the company means a high number of people are engaged. In this case, the simple recommendation is that all stores manage online sales platforms semi-autonomously.

Step 1: Creating a Sense of Urgency

The first step in Kotter’s 8-step model is the creation of a sense of urgency. Many change attempts tend to fail at this level if all stakeholders are not engaged. As explained by Laig and Abocejo (2021), the need for change can emerge and be determined by several factors. Therefore, the first initiative should be to give all stakeholders an instinctive-level desire and determination to move forward and win in the change process. At H&M, it can be argued that some branches have acknowledged the need to move sales online. In the markets where this model has been implemented, sales have grown significantly, as mentioned earlier. With this model of implementation, it can be argued that H&M’s failure to exploit its online potential emanates from most of the stakeholders not making the necessary efforts. The operational headquarters of the company should lead the change process since the policies made at this level trickle down to all stores and the line managers and employees. To create a sense of emergency, the company should create and distribute a strategic level change map across all stores to harmonize chance across all stores.

Step 2: Creating a Guiding Coalition

The second step involves creating a guiding coalition, which includes building a change team tasked with creating direction and vision for the change. Laig and Abocejo (2021) explain that this step works because the change is communicated to the vast majority of the organizational members. As mentioned above, a strategic map for the change should be distributed across all stores, which is the first step in H&M’s change communication. The idea is to gather the support needed to make the change successful since failure to involve stakeholders could lead to failure. In this case, the stakeholders comprise the change agents, management staff, and employees (Errida & Lofti, 2021).

Assuming the change leadership comes from the top of the organizational hierarchy, the regional, local, and store managers should be the key targets when building the coalition. The vision and direction are communicated to them so they can relay the same to the frontline workers. A harmonized change means that all branches across the world follow the same path and share the vision considering that the result of the change process is a universal online brand for H&M.

Step 3: Developing a Vision and Strategy

After a team has been created, the following step is to develop a clear vision for the organizational change. The role of the vision is to address the question of how the future will be different from the past or where the change is expected to take the company (Laig & Abocejo, 2021). The key features of a good vision include desirability, feasibility, focus, communicability, and imaginability. H&M and its online stores are something that should capture the attention of everyone involved. The rationale is that every organizational member acknowledges that online retailers are taking the company’s market share and that the H&M brand could die if it fails to adopt. A universal H&M online brand is the vision, where each store or each market can operate semi-autonomously. Additionally, the vision has to outline how each of the stores is affected, and the role each will play in this transition. The vision shows an H&M brand that continues its domination in online platforms.

Step 4: Communicating the Change Vision

As mentioned above, one of the key features of a good vision is that it should be communicable. The fourth step is where this communication takes place to facilitate buy-in (Laig & Abocejo, 2021). The change team develops a communication plan and strategies that can help impart the vision to all stakeholders. Considering the number of the market across the world, it is assumed that a simple press briefing or a set of emails will be inadequate to effectively communicate the vision. H&M’s top leadership should launch a full-fledged campaign calling for all stores across the planet to buy into the idea of a global online store for the company. Effective communication inspires trust, which is needed to get all stakeholders on board. Resistance to change can be expected, especially when there is distrust or when the vision is not effectively communicated. Anxiety, confusion, and anger could also derail the process, which means that the change team should be careful with the messages contained in the communication plans.

Step 5: Empowering Broad-Based Actions

The change will be implemented by the employees, assuming that they all embrace the change vision communicated to them. Therefore, the fifth step involved empowering them to conduct the change effectively. The step also involves removing as many barriers as possible to the change process and unleashing the full potential of the organizational members. Everything that the employees will need is offered to them. In this case, the company needs to have updated communication technologies that allow communication, feedback, and knowledge sharing across all the stores. All the systems needed for this shift, including servers, software, and hardware, are provided across all stores to make the change possible. Leadership support is also critical since it helps to make workers feel engaged and appreciated, which further boosts their productivity. The essence of this step is that there should not be anything or anyone holding back the change initiative.

Step 6: Generating Short-Term Wins

Short-term wins serve as motivators for employees and as an indication of the progress of the change process. The stakeholders are thus persuaded to keep the momentum and sustain the change initiative (Laig & Abocejo, 2021). In the H&M case, the short-term wins include the implementation of an online platform with user interfaces for all stores, authorized access to portals and databases, servers set up for stores or markets, a marketing plan and strategy for online sales, generation of online sales, and a logistics plan for goods reception and delivery to consumers. In other words, all these deliverables can be implemented in an incremental way such that each level completed becomes a short-term win and a motivator to proceed to the next. The change takes the form of a project implementation, where the ultimate end is a fully functional online store with the necessary supporting physical infrastructure. The company can also consider a hybrid model comprising both physical and online stores as long as the online potential is fully exploited.

Step 7: Consolidating Gains and Producing More Change

The short-term wins reflect the changes achieved, which should be consolidated before proceeding with further changes. According to Laig and Abocejo (2021), the change resistance is still significant even at this stage, which means that the change team should continue rebuilding momentum across all stakeholders. At H&M, the progress made with the information systems and the e-commerce platform will not be the end of the change process since workers will have to conduct their sales on a new platform. The tasks may change significantly, which means that the company’s leadership should keep nudging workers to embrace the new systems. Once each change is complete, it should be consolidated to eliminate any possibility of becoming undone, especially if the motivation for continuing with the change is gone.

Step 8: Incorporating the Change into the Culture

A major corporate change can be expected to cause massive disruptions in the organizational culture. A successful change can only be sustained if it becomes part of the culture (Laig & Abocejo, 2021). Currently, H&M boasts of being one of the greatest fashion brands in the world, where their culture involves capturing fashion trends and offering the corresponding products. The online brand should not be anything different from this, which means that the company should incorporate the change into its culture. Culture is created and sustained through such activities as creating stories and reasons for success. Therefore, new narratives for the change are carefully developed and managed to create a lasting effect on the company’s beliefs and value systems.

Conclusion

H&M is a company that has been too slow to go online, which has resulted in many brands overtaking it and amassing market share. The need for change is manifested through the growing online sales and declining sales at the physical stores. The potential of online stores is massive, which should inspire change across all stakeholders. Kotter’s -step model has been used to highlight how H&M should go about this change. The focus has been on making sure that all markets adopt the same universal online brand and systems that could be operated semi-autonomously either by the entire market or individual stores.

References

Carman, A., Vanderpool, R., Stradtman, L., & Edmiston, E. (2019). A change-management approach to closing care gaps in a federally qualified health center: A rural Kentucky case study. Preventing Chronic Disease, 16, 1-6. Web.

Charlton, G. (2020). What’s the problem with H&M’s online strategy?. Knowledge. Web.

Cheng, A. (2018). H&M’s problems won’t be solved by growing online sales. Forbes. Web.

Errida, A., & Lofti, B. (2021). The determinants of organizational change management success: Literature review and case study. International Journal of Engineering Business Management, 13, 1-15. Web.

Laig, R., & Abocejo, F. (2021). Change management process in a mining company: Kotter’s 8-step change model. Journal of Management, Economics, and Industrial Organization, 5(3), 31-50. Web.

Pitchbook. (n.d). Hennes & Mauritz. Web.

SuccessStory. (n.d.). The premier leader of global fast fashion and conscious style: H&M story. Web.

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