H&M Company Ethical Culture Analysis

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Introduction

H&M is a multinational company that operates in the retail clothing industry. The firm was founded in 1947 in Vasteras, Sweden. Currently, the firm is well recognized for its high quality clothing for children, women, men, and teenagers. The firm ranks second amongst the largest global cloth retailers, which include the US-based firm GAP Incorporation and Inditex. Since its inception, H&M has managed to develop a strong market present in over 53 countries.

By the end of 2013, H&M had a total human resource base of over 116,000 employees. Furthermore, H&M has developed a comprehensive distribution network by establishing retail stores (H&M 1). By August 2012, the firm had established 2,629 retail stores. In addition to retail stores, H&M has also adopted online marketing in an effort to increase its rate of market penetration. Its online stores are mainly active in Denmark, the Netherlands, Norway, Sweden, Austria, the United Kingdom, and Germany.

H&M also established an online store in the US in August 2013. In April 2014, the firm established an online store in Australia. The firm is focused at achieving sustainability and high level of profitability. It intends to increase the number of its retail stores by 10% to 15% annually. Additionally, H&M is focused at increasing its sales revenue with the same margin.

In 2014, H&M intends to establish additional 375 retail stores. Subsequently, H&M has adopted a comprehensive global expansion strategy by venturing into new markets. Some of the markets that the firm has targeted include Russia, Poland, and Italy. The firm’s expansion strategy is solely financed from its own resources (H&M 1).

H&M has established a number of well-recognized brands, which include H&M Home, Other Stories, H&M, Monki, COS, Cheap Monday, and Weekday. The firm’s product portfolio is comprised of different clothing products such as sportswear, underwear, and footwear. Additionally, the firm has also integrated cosmetic products, home textiles, and accessories in its product portfolio.

H&M has adopted an effective business concept, which is based on giving customers fashionable and high quality products at the most attractive price. The firm’s product designs, sustainability, and quality are not based on price, but on enhancing the level of customer satisfaction.

The success of the firm’s business concept arises from the adoption of various operational strategies, which include adopting an in-house design strategy, elimination of intermediaries, purchasing high quality raw materials, purchasing the raw materials in large volumes, cost-consciousness, and integration of efficient logistics. Furthermore, the firm is committed to improving the level of customer satisfaction through the adoption of long-term improvement in its product lifecycle and supply chain (Johnson 56).

H&M is cognizant of the importance of developing a strong workforce. In order to achieve this objective, the firm has established a clear set of organizational values that guide employees in the course of executing their duties. The organizational values are based on the belief that employees are an important organizational asset. Some of the organizational values that the firm has adopted entail constant improvement and teamwork.

The organization also provides employees with a wide range of unique opportunities such as employee training and development. H&M has also developed a culture of inclusiveness in its operations by adopting the concept of diversity in its operation. Subsequently, the firm has successfully been in a position to eliminate discrimination in the workplace.

The above analysis shows that H&M is a dynamic organization that is likely to experience a high rate of growth. The firm has adopted effective strategies such as inclusiveness, employee training and development, diversity, and an effective employee reward system in an effort to develop a strong and ethical organizational culture. My interest in H&M Group is motivated by the need to understand the extent to which the firm has succeeded in nurturing ethical organizational culture.

H&M response to antisocial behavior

Firms in the fashion industry are experiencing a challenge arising from increased pressure from human rights and environmental activists regarding their operations. One of the main issues of concern relates to their production. Siegle argues, “Fast-fashion’s rapid response production system and reliance on low-wage production in some of the poorest countries on earth are some of the issues that clothing multinational firms should address” (par.2).

Moreover, Siegle (par.4) asserts that the fast-fashion firms are responsible for the high rate of environmental pollution and social degradation. In 2012, H&M announced its intention to position an audacious intention to ensure that all its operations are ethical.

Subsequently, the firm intends to make fast fashion and ethics synonymous in its operation. H&M has integrated ethics as one of its concepts in its quest to achieve sustainability. One of the aspects that the firm has taken into account relates to Corporate Social Responsibility (CSR).

Ethical

Since its inception, the firm has succeeded in its market penetration by adopting ethics in its operation. H&M has formulated a code of ethics, which guide employees in executing their duties. Some of the aspects that the firm advocates include respecting all individuals.

Furthermore, the firm has adopted an effective human rights policy, which is based on the United Nations principles on human rights and business operations. The firm ensures that the employees’ rights are not violated.

Furthermore, H&M also observes this policy in the process of dealing with its suppliers, employees, and other business partners. In an effort to enhance ethical conduct in its operation, H&M supports Transparency International, Sweden branch, whose goal is to ensure that the employees’ rights in both public and private sectors are protected adequately (H&M 30).

Climate smart

H&M considers CSR as the process of incorporating environmental and social issues in a firm’s operations. The firm has invested substantial resources in its sustainability program. The sustainability program is concerned with diverse aspects such as using sustainable raw materials. According to Hutton (7), environmental pollution is one of the forms of antisocial behaviors.

H&M is concerned with environmental protection. This move has arisen from the high rate of climate change that is currently being experienced. The firm has adopted a number of measures in an effort to minimize the rate of climate change. First, the firm has integrated energy efficient measures in an effort to minimize the volume of greenhouse gases such as carbon dioxide emitted from its operations by integrating renewable sources of energy.

A report released by the firm shows that H&M stores account for over 90% of the firm’s energy use. In 2011, the firm announced that it had succeeded in reducing carbon dioxide emission by 5%. According to H&M, the firm intends to “reduce energy consumption in its store by 20% per square meter by the year 2020” (30).

One of the ways through which the firm intends to achieve this goal is by ensuring that all its stores are fitted with efficient lighting. The firm has formulated a long-term goal, which entails utilizing electricity produced from renewable sources. The firm’s ability to reduce carbon dioxide emissions arose from reducing its product distribution through air by 32%.

The firm has also developed a strong working relationship with its suppliers in an effort to ensure that they reduce the amount of carbon dioxide that they emit in their operations.

The firm is also committed to educating its customers on how to clean and take care of their H&M products in order to minimize their contribution to environmental pollution. For example, the firm educates its customers on how to clean H&M garments using environmentally sound methods. The firm estimates that cleaning and caring for its products account for 33% of its total contribution to environmental impact.

Reduce, Reuse, Recycle (3Rs)

Adopting the 3Rs can play a remarkable role in transforming an organization into an environmental steward. H&M has developed a culture of reducing, reusing, and recycling. The firm believes that optimal resource utilization and avoiding wastage in a product’s life cycle can significantly lead to environmental protection.

In 2013, the firm implemented a program of collecting old clothes regardless of their condition from customers in selected outlets in its stores distributed around the world. The old clothes are collected under the watch of its partner, I: Collect, for recycling and subsequently reuse (H&M 30).

Optimal utilization of natural resources

The firm appreciates the prevailing scarcity of natural resources. In order to deal with this challenge, the firm advocates its employees across the world to ensure that natural resources are utilized optimally. One of the natural resources that the firm has targeted is water. The firm calls on employees and customers to ensure responsible use of water in its products’ lifecycle.

The firm has implemented a stringent policy about the use of chemicals in its operations. For example, H&M has restricted the use of per-fluorinated compounds, which makes fabrics water repellent. From January 2013, the firm ceased using per-fluorinated compounds in its production processes. This move has played a critical role in assisting the firm to eradicate harmful chemical wastes (H&M 32).

Strengthening communities

It is imperative for firms to ensure that their success is dependent on the society in which they operate. This assertion arises from the fact that the firms derive profits from the society (Johnson 23). Subsequently, the organization’s ability to achieve economic sustainability is not only dependent on the strategies implemented, but also on the society’s perception.

In line with this argument, H&M is committed to strengthening the society in which it operates. The firm intends to strengthen communities by improving their living conditions. Some of the areas that the firm has focused on relates to education and health. For example, the firm has developed the All for Children program, which aims at supporting children’s welfare.

Moreover, H&M has partnered with the UNICEF in an effort to support children. In India, H&M, in partnership with the UNICEF, has created an environment whereby children in cotton growing areas can attend school. Additionally, the firm has improved access to health facilities within the community.

In Bangladeshi, the firm has partnered with the UNICEF in an effort to provide basic needs such as education, social services, and other life skills to over 40,000 children aged between 3 years and 14 years living in the slum areas around Bangladeshi capital, Dhaka (H&M 31).

Components of ethical culture

The significance of developing an ethical culture has increased significantly over the past few years. Timmons (203) defines culture as “a historically transmitted pattern of meanings embodied in symbols, a system of inherited conception by which people communicate, perpetuate and develop their knowledge and attitudes” (p.10). On the other hand, ethical culture is defined as the degree to which an organization takes into account its values.

Focusing on ethical culture ensures that an organization focuses on top priorities in its operation. An organization’s commitment to develop an ethical culture is illustrated by its code of conduct, which outlines how employees should operate and relate with internal and external stakeholders. Some of the aspects that the firm has taken into account include observing integrity, transparency, respect, and honesty.

Transparency and integrity

H&M has integrated an effective communication strategy by developing a comprehensive external communication program through the company website and press releases. Stakeholders can access diverse information regarding the firm’s operation such as annual reports, presentation, and financial reports.

Additionally, H&M is in a position to disclose information regarding its ownership structure, trends in its share price, and insiders. This aspect has played a critical role in improving the firm’s effectiveness in disclosing material information to the various stakeholders (H&M 1).

Leadership

The effectiveness with which an organization achieves success in its leadership is subject to the leaders’ commitment in acting as role models. Subsequently, H&M’s management team is cognizant of the role of leadership in nurturing a strong ethical culture. The firm’s leaders are committed to leading by example by depicting personal integrity in the course of executing their duties. The organization’s leaders are faced with the obligation of encouraging their subordinates to behave ethically.

Additionally, the leaders take effective measures to counter unethical behaviors. One of the aspects that the leaders take into account entails desisting from conflict of interest and recognizing employees who portray positive conduct. Furthermore, the leaders ensure that unethical conduct is discussed openly in order to discourage employees from such behaviors (Johnson 46).

Enforcement

It is imperative for organizations’ management teams to ensure that employees adhere to the set code of conduct. For example, H&M prohibits employees from colluding with other business partners such as external auditors and suppliers in its operation. The firm’s ability to enhance ethical conduct arises from the integration of effective internal controls.

For example, the firm informs employees of the consequences of their behaviors. Failure to comply with these ethical aspects results in severe consequences as outlined in the firm’s reward and punishment policy. This aspect plays a critical role in nurturing ethical organizational culture.

Inclusiveness

Incorporating employees in the decision making process is an important element in promoting ethical corporate culture. This assertion arises from the view that employees develop a strong degree of organizational identification, which makes employees adhere to the set rules and regulations. H&M delights in its employees. The firm believes that providing employees with a high degree of autonomy in executing their duties can enhance their productivity.

H&M prohibits employees from engaging in any form of discrimination. Moreover, employees have the right to form a workers’ union. Adopting a culture of inclusiveness has played a remarkable role in enhancing the effectiveness with which the firm provides employees with an opportunity to grow.

Ethical theories

Diverse theories have been formulated in an effort to explain ethical culture. One of these theories is the Kant’s moral theory. This theory underscores the importance of justifying one’s actions with regard to moral judgment. Subsequently, the objective of moral theory is to provide individuals with guidance in areas where they are not sure of what to do.

By taking into account the fundamental moral principles, one is in a position to determine the best course of action. Timmons (205) argues that Kant’s moral theory emphasizes the importance of observing moral obligations such as doing justice to other human beings and not lying.

Previous scholars have led to two main enlightenment of the Kant’s moral theory, which has led to the development of the concept of utilitarianism and Kantianism. The theory of utilitarianism asserts that it is essential for one to respect the wellbeing of other individuals regardless of their national boundaries, gender, race, or sexual orientation amongst other demographic characteristics.

Furthermore, the theory underscores the importance of an organization promoting the well-being of other people by attaching high value to their suffering or welfare. On the other hand, the theory of Kantianism argues, “Human dignity is grounded on rational autonomy” (Timmons 205).

This assertion means that individuals’ ability to govern themselves depends on the extent to which they are rational in their judgment. Moreover, it is also important to respect and honor an individual’s dignity. H&M has integrated the aforementioned theories in its operation, which is well illustrated by its organizational values such respect, honesty, and diversity.

The application of the Kant’s moral theory in H&M is well illustrated by the firm’s code of ethics. H&M has implemented a comprehensive code of ethics, which addresses various areas such as the working environment, employees’ health and safety, and desisting from illegal labor practices such as child labor. Furthermore, the firm ensures that the employees’ rights with regard to working hours, leave, wages, benefits, and housing are provided adequately.

Cultural change efforts [ethical drivers]

H&M has adopted a number of concepts in its quest to develop a strong organizational culture. Some of these cultural change efforts are explained below.

Teamwork

The firm has integrated the concept of teamwork in an effort to nurture an effective organizational culture. Subsequently, H&M has outlined a clear set of values that guide the firm in its quest to integrate effective teamwork. The decision to adopt this concept is motivated by the need to achieve a high level of customer satisfaction by exceeding the customers’ expectations. Each of the employees has a responsibility to ensure that he or she is focused at meeting the customers’ needs in the firm’s operational processes.

This move has played a significant role in improving the effectiveness with which the firm establishes new outlets in different parts of the world and introducing new and exciting collection. Additionally, the concept of teamwork has enabled the firm to achieve operational efficiency in its distribution network by ensuring that its products are available in the target market at the right time and place (H&M 35).

Teamwork has also contributed to the improvement in the firm’s ability to ensure that customers are served effectively and efficiently. The firm’s human resource base is comprised of employees of different cultural background, age, and experience. This aspect has played an effective role in improving the effectiveness with which the employees share expertise and ideas.

Teamwork has assisted H&M in developing a customer-focused culture, hence improving the firm’s level of its market recognition. In an effort to improve the efficiency of the various cross-functional teams, H&M ensures that conflicts arising amongst employees are solved appropriately.

Emphasizing on H&M spirit

H&M appreciates the fact that nurturing a high degree of organizational identification can enhance the firm’s performance. In an effort to improve its performance, H&M has adopted a culture of inclusiveness. One of the aspects that the firm focuses on entails providing employees with an opportunity to grow. H&M has integrated diverse roles in its retail and online stores. Some of the main roles include interior designing, human resource, marketing, logistics, and information technology.

The firm strives to enhance the level of sustainability in all its areas of operation. Subsequently, the firm has implemented a comprehensive employee-training program, which aims at improving the employees’ skills. Furthermore, the training program is designed in such a way that it contributes to the employees’ effort to progress through their desired career paths.

The firm’s ability to develop the employee-training program arises from the adoption of a culture of openness, feedback, and promoting dialogue. Thus, the organization is in a position to understand the employees’ career development goals. All the firm’s employees are given the opportunity to grow in their respective fields.

Continuous improvement

In an effort to achieve its sustainability objective, H&M has integrated the concept of continuous improvement as one of its cultural change efforts. The firm’s improvement programs focus on different areas, which include the social environment, the working environment, and minimizing environmental impact. H&M ensures that its suppliers are committed to improving the living conditions of all employees in its supply chain.

These aspects are related closely to the firm’s business strategy. The firm’s effort to achieve the desired level of improvement in its operation are enhanced by a team of 100 experts on sustainability who are charged with the responsibility of advising the firm’s management team on the diverse aspects that the firm should improve.

Organizational citizenship/social performance

H&M is cognizant of the importance of nurturing strong organizational citizenship behavior. Organizational citizenship enhances an organization’s psychological and social environment. This aspect culminates in the development of an environment conducive for working. Subsequently, the concept of organizational citizenship has gained significance amongst organizations in their strategic human resource management practices.

H&M has adopted a number of measures in an effort to nurture organizational citizenship behavior amongst its workforce. The firm has integrated the H&M incentive program. The objective of this program is to develop a long-term commitment amongst employees to the firm’s operations. Furthermore, the program aims at supporting the firm’s future recruitment drives.

Previous studies have shown that the success of an organization in its recruitment is dependent on the effectiveness with which the selected candidates are inducted into the organization successfully. Incumbent employees have a role in assisting new candidates to join the organization successfully. This goal can be achieved by assisting the new employees in the process of familiarizing themselves with the organization’s environment (Johnson 68).

The firm’s Incentive Program has also played a remarkable role in nurturing the level of commitment and organizational identification amongst employees. This assertion arises from the view that employees who portray superior performance and conduct are rewarded. Some of the benefits that the firm offers include various work-related benefits such as bonuses and pay increments. H&M is cognizant of the view that a high rate of employee performance can affect the firm’s competitiveness adversely.

Subsequently, the firm rewards employees based on their length of employment. Additionally, the incentive program is also based on whether the employee works on part-time or full-time basis. Currently, the firm has a total human resource base of 116,000 employees. The firm’s incentive program has played a significant role in promoting its ability to improve the rate of employee retention. Moreover, the firm has been in a position to motivate employees in executing their duties.

The firm’s commitment to creating organizational citizenship behavior amongst employees is also illustrated by its commitment to the development of a strong social capital. One of the ways through which an organization can enhance the creation of social capital successfully is by adopting the concept of teamwork. In the course of its operation, H&M has integrated teamwork as one of its ethical drivers in its quest to achieve competitive advantage.

The firm establishes cross-functional teams, which have been effective in promoting information and knowledge sharing amongst employees. Thus, employees in different departments are in a position to collaborate with each other in executing their duties. This aspect has led to an improvement in the firm’s operational efficiency due to the high level of synergy developed. Furthermore, the concept of teamwork has contributed to the development of a cohesive and cooperative working environment.

Ethical global citizenship and ethical diversity

H&M is focused at positioning itself as an ethical entity in the global market. Its commitment to achieve ethical global citizen status is evidenced by its partnership with various global organizations. For example, the firm supports the human right principles advocated by the UN Global Compact.

The firm’s commitment towards ethical global citizenship arises from the recognition of the consequences of non-compliance with various human rights and labor laws. Furthermore, the firm’s efforts to position itself as an ethical global citizen is illustrated by its membership in other global organizations such as the Amnesty International Group, Business for Social Responsibility, and Fair Labor Association.

H&M ensures that its operations do not affect the global population adversely. One of the ways through which the firm achieves this goal is by being conscious of the materials used in the production of its clothing, footwear, and accessories. Furthermore, the firm has restricted the utilization of certain materials and chemicals that it considers harmful to society. Its ability to entrench ethical standards in its operations is enhanced by its cooperation with its suppliers.

The firm also appreciates the importance of ethical diversity in its operation. Subsequently, it does not discriminate job candidates based on their demographic characteristics such as cultural background, age, race, sexual orientation, and nationality in its recruitment process (H&M 1).

Subsequently, the firm has developed a culturally diverse workforce, which has played a vital role in enhancing the firm’s ability to develop a strong workforce. This decision has been motivated by the recognition of the view that diversity can be a source of competitive advantage.

Conclusion

The analysis above shows that H&M has managed to observe ethics in its operation. This assertion arises from the effectiveness with which the firm ensures that employees adhere to the set code of ethics. Furthermore, the firm collaborates with other stakeholders such as suppliers and customers in enhancing its efforts to positioning itself as an ethical firm.

Some of the issues that the firm has taken into account entail formulating a clear set of values such as adopting a climate smart strategy, integrating the concepts of reducing, reusing and recycling in its production process, ensuring optimal utilization of natural resources, and strengthening communities within which it operates.

H&M has also advocated other ethical values, which include observing a high level of transparency and integrity, ensuring leadership by example, enforcing adherence to ethical standards, and incorporating a culture of inclusiveness. These concepts have played a vital role in nurturing ethical culture in the firm’s operations. Some of the aspects that have greatly contributed to the firm’s ability to develop an ethical culture include teamwork, emphasizing on H&M spirit, and continuous improvement.

In order to improve its efforts to position itself as an ethical conscious organization, H&M should consider conducting a continuous evaluation of its internal and external business environments. This aspect will aid in identifying gaps in the firm’s operations. One of the areas that the firm should focus on relates to corporate social responsibility. Furthermore, the firm should ensure that its quest to achieve profitability does not lead to unethical practices, for example, by charging high prices and exploiting other parties in the supply chain.

One can argue that H&M is an ethically coupled organization, which is evidence by its commitment in creating an ethical organizational culture by integrating diverse strategic human resource management practices. From the above analysis on the firm’s ethical culture, I can work for the firm due to its adherence to ethics and ability to provide employees with an opportunity to progress through their career development path.

Works Cited

Hutton, Barry. Planning sustainable transport, New York: Routledge, 2013. Print. H&M: Annual reports 2012. Web.

Johnson, Craig. Organizational ethics: A practical approach. 2nd ed. 2011. New York: Sage. Print.

Siegle, Lucy. Is H&M the new home of ethical fashion? 2012. Web.

Timmons, Mark. Moral theory; an introduction, Lanham: Rowman & Littlefield Publishers, 2013. Print.

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