Hugo Boss, the high-end German fashion brand, was facing a crisis in 2020. Group sales were down €900m (£754m) on the previous year and the company suffered a €219m (£184m) loss.
The business was “a little bit dusted,” admits Jochen Eckhold, senior vice-president of global HR. “There was no excitement in the company and the brand had become boring in the mind of the consumer,” he says.
But things changed in 2021, when Daniel Grieder was appointed CEO. He immediately introduced a business transformation strategy focused on growth, innovation and digital technology. The company even adopted a new mission statement: “We love fashion. We change fashion.”
According to Eckhold, the new vision helped to reinvigorate the organisation and bring excitement back to the business. “We now have the ambition to change things and not just follow the crowd,” he says.
The strategy is paying off. Following Grieder’s appointment, Hugo Boss increased its revenue from €1.95bn (£1.62bn) in 2020 to €4.2bn (£3.5bn) in 2023. And, although it will likely fall short of its 2025 revenue target owing to a recent slump in sales, the company exceeded its profit expectations for Q3 2024.
Why simplicity is key
Eckhold believes that clear and simple communication have been key to reversing the company’s fortunes. Encouraging employees to buy into a business transformation project can be challenging. “We know that humans don’t like change. But by adopting a clear and simple strategy, which fits on one sheet of paper, it’s easier to rally people around a goal,” he explains.
Company culture was a significant component of Hugo Boss’s transformation, so naturally HR played an essential role in the process. Eckhold maintains that the company’s culture in 2020 was not ‘bad’, and therefore it did not require a complete overhaul. However, instilling a greater sense of ambition in the workforce required “adding a couple of genes to the company DNA,” he says.
He continues: “We needed to develop some new skills and behaviours to help us to be faster, bolder and more ambitious. It was the role of HR to support the company and fuel this change from the people side.”
Although many Hugo Boss employees were receptive to the changes, Eckhold says HR had to reinforce new ideas and encourage an entrepreneurial spirit through various workforce programmes.
For instance, Eckhold’s team introduced an employee share scheme in 2023, which gave all staff the opportunity to buy stock at a discounted rate. The aim was to tap into the so-called ownership effect – the increased engagement and productivity that results from giving employees a stake in the company.
“It allowed every employee to literally become an owner of the company,” Eckhold says. “It demonstrated that we are growing together for the benefit of all.”
For Eckhold, this is a perfect example of how HR can align its activities with the goals of the organisation and support business transformation efforts. Plus, he says staff have “really embraced” the cultural changes as a result of the share scheme; it had a 20% uptake in its first year.
HR’s digital transformation challenge
Another pillar of Hugo Boss’s transformation project was its digital strategy. But the pace of digital change and the impact on workers can present challenges for HR.
“Like many other companies, boosting our digital potential is a big priority,” Eckhold says. “If we sleep on digital transformation for the next five years, it will be very hard to catch up.”
However, in the race to digitalise their processes, businesses often overlook how technological changes impact employees, he says. “Technology advances so quickly. Organisations are good at adapting their strategy, but it’s the employees who bring digital strategy to life,” he explains. “They are the ones who directly face these changes, strategically and technologically.”
HR has a responsibility to train employees and create excitement around digital transformation, argues Eckhold. “If we lose people because they are either not adapting or not using technology, that will be a big disadvantage. Even worse, if they become fearful about losing their jobs or not being able to adapt to future roles, then we lose them mentally.”
Eckhold says fostering an open culture that encourages peer learning has helped staff to embrace new technologies. “The goal is not to tell people what to do from the top down, it’s to inspire them to come out of their shell, share ideas and admit their weaknesses, so they learn; it’s about creating a sense of community,” he says.
And, although adapting to technological changes can be challenging, Eckhold argues that new tech should be viewed by HR leaders as an opportunity.
“The people element of digital transformation is something that business leaders don’t always see clearly – and that’s where HR comes in,” he says. “By bringing these two things together – workforce and digital strategy – HR can be more strategic and fill a more influential seat at the table.”
Eckhold is adamant that people must be at the centre of any business transformation, but he acknowledges that HR can play only a supporting role. A successful transformation project requires effective management and a clear strategy.
“You can achieve a lot by aligning people behind a clear vision,” Eckhold adds. “People want to perform, companies just have to provide an environment where this is possible.”
