Report: Leadership Styles, Management Practices, and Culture at H&M

This report provides an in-depth analysis of H&M, examining its organizational culture, leadership styles, and management practices and their impact on the company's business functions and strategies. The report begins with a historical overview of H&M, including its evolution and expansion. It then explores the company's vision, leadership styles (transformational, democratic, laissez-faire, and autocratic), and management practices such as rewards and training. The report investigates the impact of culture and management styles on H&M's business functions and strategies, considering both positive and negative effects on employee performance, decision-making, and overall company profitability. Finally, it offers recommendations to improve leadership styles, management practices, and strategies, including the implementation of democratic leadership and both monetary and non-monetary rewards to enhance employee motivation, performance, and retention. The report concludes by summarizing the key findings and emphasizing the importance of effective leadership and organizational culture in achieving business success.

Context of business

INTRODUCTION
While setting up company, owner needs to build a good organisation culture, management
practices and leadership style that motivates employees in achieving organisational goal (Bell,
Bryman and Harley, 2018). Study contains evolution of H&M and how leadership style,
management practice and organisation culture affects business functions and strategies of H&M
company. Further study recommends that how H&M should improve its strategies and
management practices improving employee performance and profitability of company.
PROJECT 2
History and summary of company
Background: H&M is first shop opened in Vasteras and established in 1947. It was first
named “hennes” which mean “hers” in Sweden because it sold only womensware. In 1968
Persson acquires “Maurtiz widforss” and changed name to “Hennes & Maurtiz”. This has shown
the wide range of products of company. Shortly after merger H&M began to expand outside
Sweden. Nordiac countries of Denmark and Norways were the first to open H&M international
branches.. In 1980-1999 H&M expanded globally in Germany, Austria, Netherlands, France and
many others. In 2006 H&M expanded in online shopping named hm.com in Europe (Iivari and
et.al., 2016). In 1990s H&M created buzz and generated massive following from customers
which makes company confident in booking supermodels for advertising. H&M opened the first
store in US on 31st march 2000, in new york on fifth avenue to start expansion outside Europe. In
2008 firm announced selling of home furniture which was initially done through online and now
there are stores internationally located. An attempt to reduce damage from garment production in
environment, company has taken in initiative and launched a wide range of garments from
recyclable materials in 2010 as H&M conscious.
H&M was committed to reduce waste and preserve environment by their apparel
collection which was started in 2013. Company give discounts and vouchers to the customer who
donate their used clothes in any H&M store, the clothes were recycled and new clothes are
created to achieve goal of eco-friendly environment (Kew and Stredwick, 2016).
Apart from all these efforts company has launched H&M foundation (a non-profit
institution) to improve the standard and lifestyle of the nations worldwide and implement
positive change. The foundation has 4 goals : provide education to children, women
empowerment, giving clean water in poor areas, educating every individual about eco-concious.
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The reason for choosing this company is staff turnover is increasing and company is
facing issues relating to profitability because it can not compete with the price and quality of
product with their competitors. Company is also facing brand issues and it cannot beat
competitors like Boohoo and ASOS in speed and price (Lankoski, 2016).
Culture of organisation, vision and management practices of business
To achieve company's objective firm has to implement effective leadership good management
practices and organizational culture so that employee seeks interest in giving the best
performance.
Vision: To provide eco-concious garments to everyone and to lead change towards
renewable fashion.
Leadership style: Leaders guides employees of the company and motivate them to
achieve common objective. It is important to follow leadership styles because it helps company
to work smoothly. Different process and methods are used to achieve employees goals and thus
achieving goal of company as a whole. There are any leadership style such as transformational,
democratic etc.
Transformational leadership style focus on clear communication, employee motivation
and setting goal. This type of leader spent more time in setting big picture and instead of wasting
energy into each individual employee goal this kind of leader are driven by organization's
objectives (Phillips-Wren and et.al., 2015). It motivates employees to create change and innovate
that help in organization to grow.
Democratic leader ask for input and take feedback from team before making decision. It
is also called participative style because members of organization participate in decision making
process. Individual who are not considered as part of hierarchal standards are a part of decision
making process. In this process everyone has opportunity to participate and give their ideas.
Laissez-faire leaders are opposite of autocratic leaders, they focus mostly in delegation
task to their team and provide little supervision. They spend less time in managing employees
and dedicate themselves in other projects. Company can adopt this leadership style only when
there are all experienced employees (Shi and Bigdeli, 2016).
Autocratic leaders are focused on results and they make decision with small group of
trusted people and assume employees will do what they are asked to do. This can be used by
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company where there are strict guidelines. It is beneficial for employees who have great
supervision.
H&M company uses transformational leadership style to inspire, delegate and provide
feedback & motivation to employees.
Management practices: These practices are used to motivate employee to perform better
and increase productivity which increases profit of the organisation. Management practices can
be of many types such as reward, seek clarity, engage workers, improve communication and
many others. H&M follows these management practices (Souto, 2015).
Reward are given by manager to employee as their recognition of work and achievement
in job. It motivates employee and has a positive impact on them to achieve more and increase
employee loyalty. Rewards help in retaining employees. Motivation theory says that giving
reward to the employees improves their efficiency of work. Reward can be given in monetary
form such as bonuses, gifts and non-monetary form such as promotion, recognition, appreciation
etc. If rewards are not provided to employees then they will not give their best and will not have
any interest in achieving organizational goals. They will be demotivated which leads to increase
in employee turnover.
Training is also one of the important management practice through which employee learn
new skills and technologies which can be used in company (vom Brock, Zelt and Schmiedel,
2016). Training helps employee to better perform their work who are not capable to work
according to the requirement of organization. Training can be given off-the-job and on-the-job.
Off-the-job training is given to employees outside the company, it is theoretical concept which
involves learning by obtaining knowledge. In this training employees are away from work
environment which eliminates frustration and stress. In on-the-job training employees are trained
inside the organisation while performing the given task and there is no disturbance because
production and training are done simultaneously. If training is not provided to employees then
they will lack skills which can be a barrier for the company to achieve its goal.
Organization culture: Culture of an organisation is underlying values, ethics, beliefs
and a way to connect with the employees. It is also called corporate culture which can be seen in
the way organisation treats its customers, employees and conduct its business (vom Brocke, Zelt
and Schmiedel, 2016). It is a degree to which freedom of decision making is allowed, how
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information flow in organization hierarchy. Organization culture decides that how much
employee is committed to their job in achieving goals and objectives.
Handy model of organisation culture says that every organization has different culture. It
is a process to check how powers are distributed in specific levels of organisation. There are 4
types of culture which an organisation can follow i.e. role culture, power culture, task culture and
person culture.
Role culture is a type of culture in which work is assigned to employees as per their
qualification and skills. In this culture employees want security and stability as much as possible.
This culture is famous for strict rules, regulation and obligations (Bell, Bryman and Harley,
2018). Organization having such kind of culture have less coordination, employees feel pressure
thus decrease in productivity.
Power culture is a culture in which power lies with the higher authority only, this type of
organisation culture responds quickly, it is result oriented. Organization finds difficulty in
decision making as employees are not involved in this process, new ideas and strategies cannot
be implemented.
Task culture is a project oriented approach in which an individual have to do particular
task assigned to him. All the members in team having same skills perform their task together.
This type of organisation flexibility, good coordination which increases employee performance
and company's productivity (Iivari and et.al., 2016).
H&M uses task culture in the company to achieve its objective and build employee
relations.
Person culture is people oriented culture where people are educated and can work
according to their expertise. In this kind of culture people do not coordinate with each other and
conflicts arises among them. Productivity of organisation decreases and employee turnover
decreases.
Impact of culture and management styles on business function and strategies in H&M
H&M uses task culture in which company's employees are divided in the groups and
assigned task to increase sale, improve customer relationship and increase productivity. This type
of culture have fewer conflicts as members of the group performing same task have same skills
and abilities (Lankoski, 2016).
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Task culture has positive impact as well as negative impact on business functions and
strategies. Task culture makes communication easy for employees and make them motivated as
superior gives power to subordinates to take decision which generate new ideas and innovation
through which products can be improved. Decision making can create a positive impact as well
as negative impact on company, it can be an advantage when all the members of the team arrive
at the same decision which is approved thus reducing chances of conflicts and it can be a
disadvantage when one group member dominates others to follow his decision that may create
conflicts thus company fails to implement strategies and achieve business goals.
H&M uses transformational style which focuses on clear communication, employee
motivation and setting goal (Phillips-Wren and et.al., 2015). It motivates employees to create
change and innovate that help in organization to grow. Supervision is done by company leader.
Higher level and lower level work together to achieve team morale and high motivation.
It has both negative and positive impact on the business function and strategies. It lowers
turnover cost as company is able to retain employees, it creates a positive impact on human
resource function and reduces cost of hiring, training and development of employees. Continuous
feedback needs to be given to employees to maintain their interest in achieving goals. It can
create a negative impact on business strategies as employees lack skills but continue to work on
it without getting feedback which reduces company's profitability.
Recommendations to improve leadership styles, management practices and strategies
H&M need to implement democratic leadership style in which leader has to give
feedback to the employees to improve their performance and take feedback from employees for
decision making so that employees can participate and give innovative ideas and strategies which
help in increasing sales of company and increase profitability (Shi and Bigdeli, 2016).
H&M need to implement both monetary and non-monetary rewards such as promotion,
bonus, gifts, appreciation and training and development campaigns as a part of management
practices which improves employee performance and teach them the required skills, motivate
them and encourage them to generate new ideas and strategies which can help company to
achieve its goal. Employees will be loyal to the company if there work is appreciated and will
not leave the company thus increasing in employee retention (Souto, 2015).
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CONCLUSION
Study can be summarized as leadership is the ability of person top lead people in firm.
Leaders are the responsible person those whop guide employees and give them motivation so
that they can perform their duties well. Organizational culture plays significant role in business
unit, if culture is good then people will feel valued and they will like to work in such
environment but if culture is not good then employees may feel under pressure and they may
think to leave the job. Management has to motivate staff members by giving them rewards and
recognition, this may encourage them and make them loyal towards the brand.
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