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Fashion Companies Need to Rethink Their HR Function

While most fashion companies are lagging behind in the “race for talent,” a few are getting ahead by investing in innovative HR strategies.

LONDON, United Kingdom — Fashion’s “race for talent” continues. In an industry where success depends on a company’s creative output and design talent, personnel are powerful advantage. And yet, Human Resources — the department responsible for recruiting, developing and retaining that talent — is not enough of a priority within a fashion business.

According to business research association The Conference Board, chief executives across the globe consistently identify human capital as their biggest challenge. But these same leaders also only rank HR as the eighth or ninth most important company function.

Meanwhile, in a 2014 report by The Boston Consulting Group (BCG) and The Business of Fashion on fashion and luxury brands’ race for talent, the talent gap was identified as the greatest challenge these businesses would face over the next decade. Fifty percent of the 60 global fashion and luxury companies surveyed believed they lacked access to the best creative talent, while 67 percent said it was impossible or very difficult to find top-notch creative directors.

“Traditionally, a number of fashion companies have not given as much thought to succession planning and training as some other companies,” says Sarah Willersdorf, a partner and managing director and topic lead for luxury, fashion and beauty at BCG, and one of the authors of the BCG/BoF report. “In some cases it’s maybe the talent and HR team hasn’t been built up strongly enough, but in others, it’s about focussing resources. Sometimes when I speak to chief human resources officers or chief talent officers, they know these things, but they just don’t get the same attention as some of the other areas from the rest of the leadership.”

Due to the lack of attention many fashion companies give to their HR departments, recruitment practices in the industry often follow very traditional methods, eschewing digital tactics for head-hunters or agencies. According to the BCG/BoF report, 40 percent of new business and creative hires still come through these channels. Willersdorf also adds, “Fashion and beauty has historically been a little incestuous. You see a lot of rotation of talent across companies.”

Two and a half years ago, Marcus Wainwright and David Neville, the designers behind contemporary brand Rag & Bone, made their first senior executive hire from outside the company: Traci Wilk, vice president of Human Resources. Now, the company, which has roughly 550 employees, has an HR team of six people — a significant commitment of resources compared to many competitors. “HR should not be an afterthought,” says Wilk, who believes that the notion of “taking care of your employees and from there your business results will follow” has been fundamental to Rag & Bone’s growth strategy. This is borne out by the data: according to BCG, revenue growth among firms that excel at recruitment is three and a half times faster, and profit margins twice as robust.

Effective talent management and leadership development, which are crucial to improving employee engagement and output, are both functions of HR that many fashion businesses can improve upon. Sixty percent of those surveyed by BCG and BoF admitted that their performance here was “substandard.”

At Rag & Bone, Wilk has tackled this problem with an ‘employee-led development’ scheme, which helps employees “take ownership of their own development” by “providing the tools and resources to get people thinking more about their careers, and not sort of sitting back and waiting for their managers to develop them.”

Wilk also took inspiration “from technology companies that are more about simplification,” to cut out traditional time-consuming practices, like formalised monthly progress reviews. “When I look to fashion companies, a lot of what they’re doing is sort of the old, antiquated, very administrative types of HR activities,” she explains.

Indeed, technology is widely regarded as the industry with the most forward-thinking approach to human capital. Andy Dunn, the co-founder and chief executive of Bonobos, a menswear e-commerce company, also looks to the technology sector for inspiration to improve his business’ employee engagement and working culture.

When founding Bonobos, Dunn made the decision to approach retail “with the mindset of a Silicon Valley company,” by setting up stock option plans for company personnel, meaning a significant chunk of the business is owned by its employees. It’s an effective way of managing employee engagement, he explains, as it creates “a sensibility that, no matter who you are, you’re tremendously invested in it.”

“What we try to do is a build a Netflix-like culture on recruitment, and what I mean by that is being really aggressive about the recruitment,” says Dunn. His HR team meets far more candidates than most businesses, relative to the number of people that they hire, and places a heavy emphasis on feedback from multiple members of the Bonobos community, using specially designed technology to allow current employees to feed back detailed comments on their potential colleagues.

“I think it’s comical how little time is invested traditionally in the mutual evaluation of a job… getting it wrong for both the employee and the company is a major problem, because it tends to take you at least half a year to figure out that it’s not going well.” A more rigorous recruitment strategy, Dunn says, results in employees who are better qualified, more enthusiastic and, crucially, more loyal, because they’ve worked harder to get there.

Other fashion companies are taking HR online. Nordstrom, the US chain of high-end department stores, has diversified its recruitment strategy across digital and social media, in order to pursue technology and e-commerce talent. As well as hosting events like ‘Hackathons’ to strengthen relationships with the technology community, Nordstrom produces video testimonials, blog posts and utilises social platforms like LinkedIn to attract a wider range of applicants. As a result, almost 70 percent of the company’s new hires in this sector have been external. This progressive approach also saw the company ranked 10th in Fortune’s list of companies most admired for HR.

Digital activity is also a vital tool in employer branding. According to research conducted by consulting firm Universum, 74 percent of respondents claimed to have at least a moderate employer brand presence on social media, but only a third had dedicated employees maintaining it.

In the past, “many fashion companies have rested on the fact that they have a great brand — an actual consumer brand — to attract talent,” explains Willersdorf, but says they must also differentiate themselves from other employers, “rather than relying on being the brand that ‘makes these shoes’ or ‘this bag.’”

Neil Blumenthal, co-founder and co-chief executive of eyewear e-tailer Warby Parker, says HR works best when it highlights a company’s culture. “The best recruiting tool is just doing cool stuff,” he says. Warby Parker publishes two blogs promoting its company culture, including one run by the tech and data team.

According to Blumenthal, building up your brand as an attractive employer is particularly important “because the best people can choose where they want to go and also the best people aren’t necessarily looking for jobs — they need to be called away.” When Warby Parker advertises employment opportunities, the job descriptions are written “in a Warby tone and voice that should give you an insight into what Warby Parker is like.”

The fight for talent is intensifying, in part “because there’s a millennial generation — and even a younger generation from that — who just want to work differently and who want to engage with their employer in a different way,” argues Willersdorf. As the pressure mounts for fashion companies to compete in the digital space — and hire and retain the talent needed to do so — areas like employer branding and company culture will only become more important. “It’s become a more challenging environment for talent and HR professionals,” says Willersdorf. “People have to start thinking more aggressively, because attracting, training and retaining great talent has become more difficult.”