H&M: Communication Strategies in the Digital World

Today, I am going to discuss H&M’s communications strategies to investors, governments, the community and the world. What is the brand doing well and what can they improve upon? I will touch upon Corporate Social Responsibility (CSR), which you will probably be familiar with in relation to H&M, and I will also talk about crises and their effects on strategies.

Strategies in Investor Relations

In their book Digital Strategies for Powerful Corporate Communications, Argenti and Barnes quote the National Investor Relations Institute (NIRI) in their definition of investor relations. The central point is that it is an integration of “finance, communication, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial community and other constituencies.” Argenti and Barnes frequently discuss the prevalent mistrust in large corporations in our world today. The authors highlight the importance, then, of more communication. Important steps to remember in investor relations are to articulate “the company’s vision, strategy, and potential to investors, analysts, and the media,” to ensure “expectations of the company’s stock price are appropriate,” and to reduce “stock price volatility.” Argenti and Barnes point out that “research shows that corporate IR activity could account for as much as a 25 percent variance in a company’s stock price.” Communication is important!

First of all, H&M shares information: stock information, annual and periodical reports and sales development reports on their website. According to Argenti and Barnes, “2008 was the first year that all U.S. companies were required to post their annual reports and proxy statements online.” It appears H&M is moving with (and ahead of) the times by going digital. H&M has annual reports online all the way back to 1999.

Many IR groups hold IR Website Awards and in Argenti and Barnes’ book, we see that H&M fairs well in many of the categories: “broad, deep access to current and historical information,” up-to-date information, easily accessible information, graphics, data and more should be “aesthetically pleasing,” and all users should have equal access. There is one category H&M doesn’t quite hit, but I will touch on that later.

The head of Investor Relations, Nils Vinge, is actually readily available on the site with his phone number even listed. This was a surprise to me, since many times people feel they need to “jump through hoops” to get to important people. I also often find e-mail addresses are listed and not phone numbers. This is impressive and although it may seem small, I believe this is a conscious choice to show authenticity and openness. Board members and ownership structure are listed publicly with ample pertinent information. The site also gives information on the annual shareholder meeting in Sweden as well as an archive of annual reports. As I have mentioned, there is also a direct newsletter for which anyone can sign up.   

With the goals of social, economic and environmental sustainability, investors are going to be interested in the stability and follow-through from the organization. That said, beyond just the direct and publicly posted communications to investors, H&M reaches investors through various means, regardless of if it is indirect or this particular group is the direct audience. H&M “proves” themselves through hard numbers, through consistent advertising and through public relations and an online, social presence.

A note on the CEO, who is also a shareholder (and stakeholder):

Karl-Johan Persson (b. 1975) is the Managing Director and CEO (Chief Executive Officer) of Hennes & Mauritz. His grandfather, Erling Persson founded the company in 1947. The current CEO answers to the board of directors. First of all, to reach out and be open to the public, H&M has published Persson’s background and work information on their site (probably to show that beyond being the grandson of the founder, that he has “earned” his way to where he is) and also has posted an interview with him discussing his thoughts on business growth and sustainability. All “insider” shareholders (this is more in the investments side) are listed on H&M’s site, including Persson.

Communication Strategies with Government Bodies/Government Relations

According to H&M’s site, the company and the CEO, Persson, have sent letters to the government in Bangladesh to raise the minimum wage to a sustainable amount. H&M also arranged a conference in Dhaka with suppliers, labor groups, unions, government representatives and more to present a development plan. In fact, as of yesterday, H&M announced that the governments are taking too long to raise the wages in Bangladesh and Cambodia and H&M has made “a plan to ensure that workers making its clothing are paid wages that cover their cost of living. This was reported in news outlets across the country and world. These aforementioned relationships with governments are crossovers between H&M’s mission and corporate social responsibility and government relationships.

Aside from conferences, letters, awareness campaigns and corporate plans, it is difficult if not impossible to find information about H&M and government relations. I will discuss it more in my suggestions later in this post, but H&M does do lobbying (like the Bangladesh and Cambodia issue noted above), but there is little information available about the details behind it—contributions towards lobbying, specific actions and more. As Argenti and Barnes say, corporations and lawmakers were “slow to adopt Web 2.0 as a platform for communication and messaging.” H&M often proves to be ahead of the curve in this respect, but needs to play some catch up in terms of government relations.

Community Relations and Corporate Social Responsibility (CSR)

There are many buzzwords for Corporate Social Responsibility (CSR), and Argenti and Barnes note that “the actual business case for dedicating resources to CR initiatives most likely falls somewhere between profitability and obligation.” This may be the case with H&M, but it is more likely that decision makers at the company had vision in the early stages of the green initiative and made the right choice. The brand clearly cares about sustainability – these are not merely projects or individual campaigns, but a means of running the business. There is much confusion among stakeholders on what “green” means and if a company is being honest, so it is all the more important to make this clear. Thankfully, through an up-to-date website, social media campaigns, advertisements and online events, H&M communicates their message.

In my last post, I talked about the Fashion Against AIDS campaign. Celebrities like Selma Blair, Akon and Penn Badgley represented H&M’s cause by saying, “I Wear, I Care.” Bhargava discusses celebrity spokespeople in his book, Personality Not Included. The authenticity and trustworthiness of this type of spokesperson is often called into question since many view celebrities as just being “paid to play” and not actually being personal enthusiasts. Still, Bhargava notes that celebrities in connection with social causes often result in success because the public assumes this must be something the celebrity personally cares about (Bhargava uses the example of the ONE Campaign and Brad Pitt, Bono, George Clooney and more). I think it is very smart that H&M went this route; however, one might say that any H&M celebrity endorsement or spokesperson is a showing in support of social causes. I say this because H&M has so closely aligned itself with sustainability and fair labor, that the two are almost synonymous. When Beyonce models for H&M, it is assumed she is supporting the mission of the brand. The same goes for David Beckham and Gisele Bundchen. In the case of H&M, the use of celebrity works for them because of their strong branding and messaging to the public in everything they do.

I have also talked about “Kiss for a Cause,” another Fashion Against AIDS campaign that asked for user-generated content: submit photo of yourself kissing a loved one and H&M will donate $1 to AIDS prevention. If you’ve read my blog before, H&M Loves Music should sound familiar to you: H&M is reaching the music scene by spotting trends at music festivals. H&M reaches out to the community through their social networking sites, as I have discussed at length in prior posts. On H&M's website, there is a blog by presumably someone in the corporate office with occasional guest bloggers. The posts are kept short and eye-catching. Some feature specific products that consumers can buy online. The blog appears to be edited well. Again, this communicates to the H&M fashion fan: "We care. Here's even more content that you can check out."

Additionally, H&M holds online fashion events such as the most recent one with the tagline: “Conscious: Look great. Feel good. Be conscious.” This includes “authorities” on fashion discussing hot topics. Bhargava talks about “The Authority,” or a “credible and unbiased third party” who is “believable due to subject expertise and perceived neutrality.” The site for this particular event proclaims, “Watch the panel discussion with some key people in the fashion industry live from Vogue headquarter in New York.” This is at a neutral location and it is insinuated that these are non-H&M experts, establishing credibility with the neutral location and occupation. The moderator was Simon Collins, Dean of Fashion at Parsons The New School for Design. Two of the panelists were from H&M, one panelist was an independent fashion consultant, one was a designer, one was the managing editor of Ecouterre, an eco-fashion website, and so on. All of these, with the exception of the two from H&M, would be considered authorities. They are supporting Vogue (high fashion) and they are supporting H&M. This type of event interacts well with multiple audiences (customers, board members, investors, employees, those in the fashion world, etc.) and shows that H&M cares. As Collins noted, “they put their money where their mouth is.” This is pushing forward H&M’s perception as a socially responsible brand.

Furthering H&M’s Digital Strategies

In Argenti and Barnes Digital Strategies for Powerful Corporate Communications, we learn about IBM’s “jam sessions,” which connect “employees around the world and empowering them to voice their ideas.” I am not aware of H&M’s internal strategies as I am an external researcher; however, with such a large company, these type of think-tank events could be not only useful marketing-wise, but also for employee engagement and satisfaction. Employees are stakeholders and this is a great way to reach out. I do like that H&M invites everyone to the annual meeting (although it’s in Sweden, which is limiting).

Remember when I was talking about the IR Website Awards? One tenet to judge by is that the site should “offer two-way communication.” H&M does well at many things, but I think they could improve on this. I like that they include H&M’s IR director’s phone number, but there needs to be more. I like the jam session, or maybe there could be online or networking events like the online fashion event that took place.

With regards to government relations, the conferences, letters, awareness campaigns and corporate plans are excellent ways of communicating with government bodies, but I would suggest adding an easily accessible “Government Relations” link near “Investor Relations.” It may be that H&M is not as directly involved with the government as other brands, but this is still an important facet. I did find a “Political Contributions and Lobbying” section after some searching, which asserts that the brand does not support a specific financial party, but has done lobbying such as that to the Bangladeshi government and also “addressing the issue of forced child labour in Uzbek cotton industry at the EU level. H&M even has a portion of their site dedicated to their “conscious actions” and if they are at the level of “started,” “more to do,” or “on track.” This certainly adds to their authenticity factor, but I would love to see this type of page more prominent.

Strategies in Crisis: Business as Usual or Big Changes?

Argenti and Barnes write multiple times in their book that crises can be catastrophes or opportunities. The way a company handles negative situations can bring them out on top (or even more popular than before) or sink them deeper. There are examples of good and bad handlings of PR crises from Coca-Cola to Tylenol to BP to Exxon-Valdez. We all know that the world has drastically changed since the innovation of Web 2.0 and with it comes faster media response, bloggers and microbloggers, widespread and fast-moving hoaxes and more. The important thing is that “corporate leaders…hold—and not bite—the hand that feeds them.” It’s okay not to be in total control.

When I think of crises, I automatically think back to the book, The Crisis Manager: Facing Risk and Responsibility by Otto Lerbinger. I read this in my undergraduate studies, and it has many strategies that not only still ring true, but that I remember clearly. Before a crisis, make sure to create a contingency plan, try to sort out all of the worst-case scenarios and appoint an internal spokesperson. Under the “Risk Management” section, H&M does outline any foreseen or potential risks to the company. This can never be an exhaustive or complete list, because there are always unpredictable factors. After a crisis occurs, take responsibility, act quickly, assess the situation individually and investigate…and don’t forget to apologize if it is your fault.

H&M does a good job communicating for the most part, with letters, blogs, events, website information and more. In this sense, it would be business as usual. In another sense, more active response might be required in the form of a press conference or video news release. Take the situation I spoke about previously regarding H&M’s labor accusations. I like the way H&M combatted this: through their continued marketing, through their messaging and support of fair wages and with special sections on their site addressing the issues. The only thing I would add would be to include a multimedia element (like video or interviews). The important issue there is to have a unified message and spokesperson/people.

Conclusion

If you’ve made it to the end of this, good on you! In conclusion, I’d like to say that H&M is a well-represented brand that follows through with its mission and goals. There are certainly areas of improvement, but the brand comes across as self-aware, open and authentic, and I trust it will continue to innovate. And it's not too shabby that H&M was named one of Ethisphere's 2013 Most Ethical Companies.