Evaluating H&M's Social Responsibility Through Stakeholder Management

This report analyzes H&M's corporate responsibility, focusing on a case where the company faced negative publicity due to its poor management of a social issue involving a controversial advertisement. It examines the ethical issues of racism and the use of children in advertising, evaluating H&M's response through the lens of stakeholder management principles. The report critiques H&M's communication, stakeholder acknowledgment, and the adoption of stakeholder-sensitive behaviors. It argues that H&M failed to adequately consider the interests of its stakeholders, particularly the black consumer market. The analysis concludes by recommending ways H&M could have responded more effectively, emphasizing the importance of proactive communication, cultural sensitivity, and genuine engagement with diverse stakeholders. The report highlights the consequences of H&M's actions, including boycotts and financial repercussions.

Corporate responsibility

CONTENTS
INTRODUCTION......................................................................................................................1
NEGATIVE PUBLICITY OF A COMPANY DUE TO POOR MANAGEMENT OF A
PARTICULAR SOCIAL ISSUE...............................................................................................1
Overview................................................................................................................................1
The ethical issue.....................................................................................................................2
Response of the company.......................................................................................................2
Consequences.........................................................................................................................3
APPLICATION OF PRINCIPLES OF STAKEHOLDER MANAGEMENT FOR
CRITICISING THE RESPONSE OF H&M..............................................................................3
Stakeholder management........................................................................................................3
Application of principles of stakeholder management...........................................................4
RECOMMENDATION ON THE WAYS H&M COULD HAVE RESPONDED...................6
CONCLUSION..........................................................................................................................8
REFERENCES.........................................................................................................................10

INTRODUCTION
For the purpose of running an efficient as well as successful business and at the same
time for maintaining good association with the societies, stakeholders are being regarded as
the vital part. A strong basis is being offered to the company for building their stakeholder
engagement strategy through making investment of time, determining stakeholders and
prioritizing their interest. If the stakeholder management is not planned effectively it might
leads the company to greater risks (Harrison, Freeman and Abreu, 2015). Based on this, the
current research report analyses the case of an organization who has attracted negative
publicity because of poor response to a particular social issue. The report will going to
evaluate the principles of stakeholder management for criticising the response of this
organization on that issue. It will also going to recommend the manner in which company
have responded as per the stakeholder approach to management. The organization chosen for
the current purpose of Hennes & Mauritz (H&M) which is a Swedish transnational cloth-
retail company famous for their fashionable clothing.
NEGATIVE PUBLICITY OF A COMPANY DUE TO POOR
MANAGEMENT OF A PARTICULAR SOCIAL ISSUE
Overview
Hennes & Mauritz which is a famous retailer of Sweden and having more than 500
stores in 74 markets all throughout the world, faced a backlash across the world in the month
of January 2018. The company has displayed on their official website in UK a picture of a
young black boy, Liam Mango, who is a 5-year-old Black male modelling a green hoodie
sweatshirt embellished with the words “coolest monkey in the jungle” in white capital letters.
The term monkey being utilized in the sweatshirt was regarded as a humiliating stereotype of
people of Africa and Liam is the son of Kenyan immigrants (Lubitz, 2018). Due to this
phrase on the hoodie instigated a countless deal of controversy particularly in the markets of
United States of America and South Africa due to the perception of ‘monkey’ in orientation
to a black person. Pertaining to this, many distinguished personalities also started boycotting
the firm and terminated their partnership with the company because of the cultural or ethnic
controversy. The company has always stated that diversity helps in strengthening their
company and they also consider diversity in people as well as notions and personal style.
However, due to this allegation of racism has resulted in destruction of stores of H&M in
South Africa stimulating the firm to terminate their operation in the nation.
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The ethical issue
Due to the display of H&M there has been ascending of two ethical issues that is
racism as well as utilization of children in advertising. Focusing in relation with the first
ethical issue that is racism, there is no precise definition of racism in advertising.
Nonetheless, the utilization of racial components is a famous approach of targeting specified
demographics of customers. In relation with the case of H&M the company was targeting
basically a young black boy for their hoodie product and does not mean to harm the
sentiments of black people. But the case was sparked up and numerous debates started that
whether it is ethical to make use of racial remarks in marketing. Although the company was
only targeting black consumer market, many people have taken this as a racist action of the
company (Cortese, 2015). On the other hand, the second ethical issue which was displayed by
H&M is the use of children in advertising. Presently, the market is being affected by entry of
children into an advertisement for augmenting sales. Even though the advertisement of H&M
was quite relevant as hoodie can be worn by individuals of all ages encompassing children, it
should have utilized a white boy and still refer to him as coolest monkey in the jungle.
Firstly, the word monkey was linked with racists particularly those that target people who are
black and secondly, because of the attention being received by the advertisement and the 5
years old kid might have terrified by the image viewed across the globe (Furnham and
Gunter, 2018).
Response of the company
As a response to this crisis, H&M apologized on January 8, 2018 in regards with
offending others. However, the company did not made an apology for posting the
advertisement and said that they have removed the advertisement from their online stores.
Nonetheless, press have originated the sweatshirt advertisement running without the model
the similar morning on the sites of UK. When this apology was also criticised by media and
people, the company then distributed a comprehensive announcement the subsequent day.
H&M quantified that they are not selling the sweatshirt and have already recycled them.
Afterwards, there were many questions being put up by general public and the company
responded to the same several times (H&M issues unequivocal apology for poorly judged
product and image, 2018). Moreover, the sweatshirt was removed from the stores and the
company asked apology on social media accounts as well as website by seeking help of
statements. Additionally, they have also promoted Annie Wu, a Taiwanese immigrant who
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had worked with H&M from 2012, as the world-wide leader for variety as well as
inclusiveness
Consequences
Due to this crisis and posting of advertisement including a young boy wearing a
sweatshirt embellishing “coolest monkey in the jungle”, H&M faced many boycotts and
protests. Because of this, the company had to close their stores for some time in USA and
South Africa. The members of South African Economic Freedom Fighters established
marched through malls and have destroyed some of the properties of the company as well. In
addition to this, the mother of the model also faced backlash for defending the company and
being called as a traitor for her race (Giertz-Mårtenson, 2016). Even the finances of the
company were hit in the repercussion. It has been identified from the case that just engaging
individual from different ethnic context is not sufficient for combating racism.
APPLICATION OF PRINCIPLES OF STAKEHOLDER
MANAGEMENT FOR CRITICISING THE RESPONSE OF H&M
Stakeholder management
Talking in relation with stakeholder management, it is being referred as the process
through which company monitors, organise as well as makes improvement in the association
with their stakeholders. Furthermore, it also includes determining the stakeholder
systematically and evaluating their requirements as well as desires along with executing
processes for meeting out their requirements. There are different definition of stakeholder
management and most of them pay attention on the notion that company can manage their
stakeholders. The attention is being paid on developing a plan for management of stakeholder
and listing different engagement levels for varied groups. As in the case of H&M, there are
different stakeholders such as internal and external (Clarkson and et.al, 2014). Internal
stakeholders includes employees, managers, board members and owners of the company and
on the other hand, external stakeholders are customers, suppliers, lenders and investors. It is
important for the company to manage their stakeholders, however it is quite evident from the
crisis of sweatshirt embellishing “coolest monkey in the jungle” that the company has not
satisfied their customers which are external stakeholders. The decision regarding promotion
and advertisement of sweatshirt along with the response to the social issue being raised by
this advertisement was being given by the internal stakeholders which was up to some extent
not correct.
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Application of principles of stakeholder management
There are different principles of stakeholder management which has been named after
Max Clarkson. The very first principle is related to acknowledgment which states that it is
crucial for the managers of the H&M to acknowledge as well as actively monitor the
concerns of the legitimate stakeholders. At the time of decision making and operations of the
firm, the interests of these stakeholders must be taken into account. Considering the case of
Hennes & Mauritz wherein the firm has displayed on their official website in UK a picture of
a young black boy, Liam Mango, who is a 5-year-old Black male modelling a green hoodie
sweatshirt embellished with the words “coolest monkey in the jungle” in white capital letters,
the firm has not taken into account the interests of their external stakeholders which the
company wanted to target that is black consumer market (Kim and Chung, 2015).
The second important principle of stakeholder management is related to
communication. It states that it is important for the managers of the company to listen to and
communicate with the stakeholders openly in regards with any kind of dispute, issues, risks
and contributions being assumed due to their involvement in the corporation. Up to some
extent, this principle has been considered by H&M. On 7th January the timeline of the crisis
of the company was initiated and it was the day when the company published the
advertisement of the black boy wearing the hoodie on their website online. For the duration
of ten days different responses from the stakeholders were received especially clients as well
as collaborators of the business like celebrities. They were all positing their views and
sentiments regarding the advertisement on social media (Cornelissen, 2014). Throughout that
period, it can be noticed that H&M has continuously communicated with their stakeholders
through posting statements on their websites and different other posts on social media. In
addition to this, the company also interacted with the stakeholders through responding to the
comments being received on varied posts. The completion of the instantaneous crisis period
was subsequent to the interview being made by SVT news on 18th January which featured the
mother of the model. Thus, in total the company has posted four statements on social media
wherein they were in a position to apologise their stakeholders for the advertisement and have
also explained the manners through which they will going to solve the impacts of the crisis by
moving forward. Considering this it has been appeared that H*M was aware of the
requirement of interaction and communication with the stakeholders during the crisis period.
They interacted with the customers in different manner like social media by utilizing
Instagram, Facebook and Twitter. They were the main platform however they have also used
their online websites for communicating with the stakeholders ().
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Moving further, another principle of stakeholder management is related with adopting
processes as well as modes of behaviour which are sensitive to the interest and abilities of
each and every stakeholder community. There are varied types of stakeholders of H&M.
Some of them are large which possess different requirements and some are small which
possess particular requirements. In response with the crisis, the managers of the company
were accountable to determine the requirements of each and every stakeholder whether small
or large and then they must have tailored the communication to the individual type of
stakeholder. The principle also states that irrespective of the type of stakeholder, the
communication method and audience can change but the main message behind that
communication does not change. Pertaining to this, the advertisement being published by
H&M featuring black boy must be replaced with other model if the company wanted to target
black consumer market. Because using a young black boy with embellishment of “Coolest
monkey in the jungle” has impacted the sentiments of black consumers and they feel
offended for the same (Fortin, 2018). The project manager of the company must have
changed the level of details while communicating the purpose of the advertisement however
the actual core message should have remained consistent throughout the channels of
communication.
Furthermore, there is one more principle of stakeholder management which states that
managers of the company are required to work in cooperation or partnership with other
stakeholders and entities for making sure that the risks along with the harms arising from the
activities of the company are minimalized and at times when it is not possible to avoid them
then suitable compensation should be given to the stakeholders. Change is not easy for all the
stakeholders whether it is internal or external. Many a times, changes being produced by the
activities of the film are desirable by the stakeholders and at other time, the impacts of that
activity are undesirable. As in the case of H&M, in response to the crisis related to
advertisement, company has published their first on twitter and others posts were also
published on other social media platforms and online website of the company with the
passage of time (). When analysing the individual posts and contents of the company, the
customers and other stakeholders of the organization felt that post one was regarded as the
manners of H&M to buy more time for responding to their stakeholders. They believed that
the firm already understand which routine has not been considered by them adequately and
thus, they have posted that the firm is investigating why this has occurred. It was the strategy
of the company to behave in such a manner that whatever has happened was not something
they might have prohibited from the foundation. Nevertheless, the customers also felt that the
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organization has taken more accountability in their second post as compared to the first post.
In that post the firm was genuine in their statement. It stated that H&M is not pointing and
blaming out their routine however is taking the accountability by admitting that they had the
obligation and they have not lived up to their obligation this time. This post depicted that the
organization understands and realized their mistake. Furthermore, in the third post the
customers felt that the company have not really made an apology however have informed
people in regards with the things that have occurred in South Africa (). Nonetheless, the
customers and other external stakeholders of the company recognise that the firm has
punctured that it was not their intention with the crisis and the employees are not involved in
this which is quite appreciable. On the fourth posts, H&M announced that they have hired a
diversity leader and wanted to hear from the diversity leader. Different feedbacks were being
received by the company from different people. The post was quite essential for H&M as it
presented the future viewpoint of the company. However, the company did not believed that
people will listen to them right aware as they are still being angry with the company due to
the publishing of the advertisement featuring a young black boy. This was all done by the
company for reducing the undesirable results of the changes being taken place in the
company that is the advertisement crisis. Consequently, it can be said that instead of waiting
for the issues to take place further, the manager and the owners of the company have decided
to proactively develop association with the stakeholders who can support the firm in solving
the challenges, issues and risk being posed by the advertisement crisis through posting
different types of posts on social media and online websites (Wang, 2019).
RECOMMENDATION ON THE WAYS H&M COULD HAVE
RESPONDED
A stakeholder is being referred as an individual which have the power to influence
and being influenced through the accomplishment of the goals of the organization and its
behaviour. According to Harrison, Freeman and Abreu (2015), stakeholders are defined as a
group or individual which are involved in the organization for value developing process and
which also have an interest in the processes as well as outcomes of the organization. Other
than this, the person who is interested is majorly relied on the firm for attaining the goals of
the company. In regards with H&M, the major stakeholders are covered by shareholders,
investors, employees, suppliers, management as well as customers (Dietz and Gillespie,
2019). However, society, media as well as environmental groups are large stakeholders of the
organization. It is significant for the organization to determine all their stakeholders. If any
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group of stakeholders are violated then there is a risk that this group will going to impact the
company adversely in the near future.
Further as stated by Adeosun and Ganiyu (2017), organization most of time consider
their association with the stakeholder as an intangible resource and thus, places more
emphasis towards maintaining effective as well as enduring association with them by seeking
help from strategic communication. In the event of crisis of H&M, it is important for the
organization to develop strong relationship with the stakeholders who are connected with the
crisis that has taken place. However, the initial response of the company was not up to the
mark as they were not able to build connection and relationship with the target group which
felt offended due to the sweatshirt ad being posted by the company. The customers and other
stakeholders of the organization felt that post one was regarded as the manners of H&M to
buy more time for responding to their stakeholders (H&M, 2018). They believed that the firm
already understand which routine has not been considered by them adequately and thus, they
have posted that the firm is investigating why this has occurred. It was the strategy of the
company to behave in such a manner that whatever has happened was not something they
might have prohibited from the foundation. In such a situation, H&M must have responded
differently and were required to look their stakeholders as an important contributor of a
positive word of mouth which can leads towards alleviating the crisis.
Furthermore, organization must have made sure stakeholders help throughout the
crisis. This can be performed by H&M through substituting the people in the management
and interacting with the customers continuously for impacting their perceptions. As per the
stakeholder approach to management, the main goal of message strategy throughout the
period of crisis must be damage control for preventing the negative alteration in the
association with the environmental elements (Ramamurthy, 2016). Communication helps in
increasing the probabilities of sharing comprehension and augments predictability which in
turn enhances trust. Thus, H&M must have communicated in an effective way to their
offended target customers so that they can regain trust, loyalty and faith towards the brand.
According to the argument by Davies and Olmedo-Cifuentes (2016), the punishment
of the stakeholder is being influenced by whether they are impacted by the failure of the
company or they are not impacted by the failure. It is important for the H&M to determine all
their stakeholders and if they are being violated, as in the case of advertisement crisis, there is
a more risk that will going to impact the company in the near future through withdrawing
their support/ this can prolong the impact of the crisis. There are chances that customers will
stop buying products of H&M and even the suppliers can stop working in collaboration with
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the company. Besides, employees of the company might also refuse to work for the firm. To
avoid this, it is suggested to the company must formulate and implement processes which
satisfies the needs and wants of the customers and also make sure long term success for the
firm. It is essential for the company to offer immediate response to their stakeholders who are
being impacted by the crisis (Marris and Thornham, 2020). Nevertheless, H&M took long
one day to post an apology statement on social media which was not correct. For the purpose
of regaining trust and loyalty from the stakeholders, the company should have communicated
information in regards with the event immediately. This would have helped in reducing the
uncertainties of the stakeholders. In addition to this, the stakeholders must have been the
focus of H&M during the period of crisis. Due to failing in effective communication and
meeting out the requirements of the stakeholders, there has been a great deal of issues for the
firm which has escalated the crisis at hand. If the firm needs to be successful then they were
required to communicate and interact with the stakeholders willingly and openly throughout
the crisis.
Other than this, H&M should have utilized the theory of coombs which presents five
steps for preventing the crisis from happening. Before giving a response, H&M should have
followed these steps. Firstly, H&M should have performed environmental scanning which
involves evaluating the issues prevailing in the market. Through this the company could have
understood the negative association between the sweatshirt and the black boy. Secondly, the
firm should have collected the information related to racism and other prominent problems in
the society (Gillespie, Dietz and Lockey, 2019). Thirdly, it is crucial for the company to
evaluate the information concerning to the emerging issues. Fourthly, the company should
have taken preventive action to avoid escalating of this event. Clearly, the firm has not taken
a preventive action regarding the publishing of advertisement. Finally, the last one is
analysing the effectiveness of threat reduction. Hiring a diversity leader by H&M is regarded
as the action for reducing further threat. However, firm should have send the apologies to the
stakeholders immediately from the higher-ups in the company, as an alternative of just
through written statements.
CONCLUSION
The present research paper was being aimed to explore the negative publicity of a
company due to poor management or response towards a social issue with special reference
to H&M. the research paper has shed light on how a wrong advertisement has destroyed the
image and reputation of the company and the ways in which they have responded to the crisis
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have failed to regain trust and loyalty from the stakeholders. It has been originated that it is
important for the company to apply the principles of stakeholder management through
displaying concern for the stakeholders and by treating them fairly. Working together,
identifying their requirements, balanced association, collaboration, sharing of rewards and
frequent communication are some of the ways through which likelihood of attaining the
success can be improved.
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REFERENCES
Books and journals
Adeosun, L.P. and Ganiyu, R.A., 2017. Corporate Reputation as a Strategic Asset.
International Journal of Business and Social Science, 1, pp.89-98.
Clarkson, M.B.E., Donaldson, T., Preston, L.E. and Brooks, L.J. 2014. Principles of
Stakeholder Management. Pearson education.
Coombs. T., 2015. Ongoing crisis communication: Planning, managing, and responding.
Thousand Oaks: SAGE Publications.
Cornelissen, J., 2014. Corporate communication: A guide to theory & practice. London,
United Kingdom: SAGE Publications Ltd.
Cortese, A.J., 2015. Provocateur: Images of women and minorities in advertising. Lanham,
MD: Rowman & Littlefield.
Davies, G. and Olmedo-Cifuentes, I., 2016. Corporate misconduct and the loss of trust.
European Journal of Marketing, 50(7/8), pp.1426-144.
Dietz, G. and Gillespie, N., 2019. The Recovery of Trust: Case studies of organisational
failures and trust repair. London: Institute of Business Ethics.
Furnham, A. and Gunter, B., 2018. Children as consumers: A psychological analysis of the
young people’s market. London: Routledge.
Giertz-Mårtenson, I., 2016. H&M–documenting the story of one of the world’s largest
fashion retailers. Business history, 54(1), pp.108-115.
Gillespie, N., Dietz, G. and Lockey, S., 2019. Organizational Reintegration and Trust Repair
after an Integrity Violation: A Case Study. Business Ethics Quarterly, 24(3), pp.371-
410.
Harrison, J.S., Freeman, R.E. and Abreu, M.C., 2015. Stakeholder Theory as an Ethical
Approach to Effective Management: applying the theory to multiple contexts. Review
of Business Management, 17(55), pp.858-869.
Kim, M. and Chung, A.Y., 2015. Consuming orientalism: Images of Asian/American women
in multicultural advertising. Qualitative Sociology, 28(1), pp.67-91.
Marris, P. and Thornham, S., 2020. Media studies: A reader. New York: NYU Press.
Ramamurthy, A., 2016. Imperial persuaders: Images of Africa and Asia in British
advertising. Manchester: Manchester University Press.
Wilson II, C.C., Gutierrez, F. and Chao, L., 2017. Racism, sexism, and the media:
Multicultural issues into the new communications age. London: Sage Publications.
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Online references
Fortin, J., 2018. H&M closes stores in South Africa amid protests over ‘Monkey’ shirt. The
New York Times - Breaking News, World News & Multimedia. [Online]. Available
through: <https://www.nytimes.com/2018/01/13/world/africa/hm-south-africa-
protest.html>. [Accessed on 23rdFebruary 2022].
H&M issues unequivocal apology for poorly judged product and image. 2018. [Online].
Available through: <https://about.hm.com/en/media/news/general-news-2018/h-m-
issues-unequivocal-apology-for-poorly-judged-product-and-ima.html>. [Accessed on
23rdFebruary 2022].
H&M. 2018. The history of H&M Group. [Online]. Available through:
<https://about.hm.com: https://about.hm.com/en/about-us/history.html>. [Accessed on
23rdFebruary 2022].
Lubitz, R., 2018. H&M’s hoodie controversy: From initial backlash to stores destroyed, and
everything in between. [Online]. Available through:
<https://mic.com/articles/187418/handms-hoodie-controversy-from-initial-backlash-to-
destroyed-stores-and-everything-in-between#.tulgKL58v>. [Accessed on 23rdFebruary
2022].
Wang, C., 2019. The real story behind H&M's racist monkey sweatshirt. [Online]. Available
through: <https://www.refinery29.com/en-us/2019/07/237347/h-m-racist-hoodie-
controversy-diversity-problem>. [Accessed on 23rdFebruary 2022].
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