Although Time's Man (now Person) of the Year is about who has had the most impact in a given year, it's not meant to be an honour or endorsement of the person chosen, or at least not officially. Not is it something Hitler "won". He was named it.

In their wording, he was "the newsmaker who most influenced world events for better or worse” in that year (1938), which tbh is hard to argue with.

From this article about it,

Time named Hitler 1938’s Man of the Year in its Jan. 2, 1939, issue, whose cover illustration, did not feature the portrait of Hitler in the circulating posts, but rather a black-and-white drawing depicting Hitler as a small figure playing a large organ with the caption: “From the unholy organist, a hymn of hate.”