The Status of the Company
Running Head: AVON PRODUCTS, INC. 1 1. Provide a brief description of the status of the company that led to its determination that a change was necessary.
Avon Products, Inc. (Avon) is a 122 year old company whose primary focus is on the economic empowerment of women around the world. Basically, the organization is a leader in direct distribution of cosmetics, fragrances and skin care products. Prior to and including the year 2005, the company was considered to be a very successful company operating in over 40 countries with 70% of its revenue from outside of the United States.
Its growth rate on profit margin was outstanding. In 2006, the company found itself in a declining state in revenue and profits. The company’s direct-selling business was taking on great costs for a number of reasons including global legal restrictions and some dissatisfaction of the company’s representatives. Since Avon’s reliance is on its direct-selling, the earnings and representative satisfaction are essential for the success of the business. The underlying factor along with other contributing causes was that Avon had grown faster than portions of its infrastructure and talent could support.
The structure, people and processes that support a $5 billion company were not necessarily a good support for the $10 billion company. In the process of reviewing its talent practices the talent management team was able to identify six areas of missing or poorly functioning talent processes. The weaknesses that were found in Avon’s existing talent practices were listed 1) opaque; 2) egalitarian; 3) complex; 4) episodic; 5) emotional; and 6) meaningless. 2. Identify the model for change theory typified in the case study of your choice. Discuss what led you to identify the model that you did.
Faced with the challenges of its flattening revenues and declining operating profits, Avon’s CEO restructured the organization and significant changes were made. As the changes began, it was found that Avon had some issues with its talent, both with the existing talent and with the company’s ability to identify and produce talent. The change model in the Avon case was the 360-degree feedback assessment tool. According to Silzer & Dowell (2010), the rise of 360-degree feedback assessments encouraged greater use of competency models built specifically around leadership behaviors.
Silzer & Dowell (2010) go on to say that “organizations soon had lists of the leadership behaviors they expected from their managers,” which was the case with Avon. Avon was found to be opaque. As such, the talent practices within the organization were not known to the managers or to the associates. The resulting change was that of new practices and a re-making of the existing practices to become more transparent except for when there were confidentiality concerns. Another weakness that existed with Avon’s talent practices was that the company was egalitarian and needed to turn around the quality of its talent.
Once this was understood, Avon made a change to differentiate its investment in its talent. This allowed for the company to better match the effectiveness of its talent investment with the expected return since before the turnaround the high performers were not engaged and the low performers were not managed very effectively. Avon’s level of complexity in its talent management practices was another noted weakness. Quality talent was not grown as quickly as was needed by the company so Avon simplified its talent process to ensure a balanced process. Employee surveys and talent reviews were performed episodically.
Decisions concerning promotions and other objectives were more or less influenced by as much by individual knowledge and emotion as by objective facts. The turnaround that was made here was that relationships became stronger and as the business grew, leaders know of other’s performance or development needs and used this factor in determining talent management. Finally, meaningless talent practices such as Human Resources professionals not being able to answer most of the basic questions posed by managers about talent practices and there was not existing accountability.
With the new talent practices, questions were answered and talent reviews were done and notations of progress were made. This was indication that effective communication had begun to take place. In this case, feedback was helpful and resulted in changed behaviors and overall things were done differently. According to Silzer & Dowell (2010) as leadership concepts and education gained greater currency, it became clear that the followers (subordinates) of leaders should share their views on their leader’s effectiveness.
Greater use of this model encouraged greater use of competency models built around leadership behaviors. 3. Illustrate the types of evaluation information that were collected and how they are used to benefit the company. As stated earlier, Avon faced challenges of flattening revenues and declining operating profits. Regarding this situation there were many contributing causes. One underlying issue was that Avon had grown faster than portions of its infrastructure and talent could support (Goldsmith, & Carter, 2010, p. 2).
Avon’s structure, including people and processes, had grown from that of a company with $5 billion in revenues to that of a company with $10 billion in revenues. With this growth Avon’s structure was no longer a good fit and was in need of a turnaround. To begin the process of turning the business around, the talent management group (TM) started by requesting copies of the 360-degree assessment of each VP, not to take any action against anyone, but to gain more knowledge about the behavioral information of the top leaders. Every enterprise must build knowledge into its value proposition. Knowledge cannot be separated but needs to be an explicit part of everything about an enterprise” (Edersheim, 2007, p. 189). The 360-degree feedback is a performance measurement which involves rating individuals on work-related behaviors. According to Noe, Hollenbeck, Gerhart, & Wright (2011), there are benefits of the 360-degree feedback. Organizations collect multiple perspectives of managers’ performance, allowing employees to compare their own personal evaluations with the views of others.
The request for the 360-degree assessment was denied citing confidentiality. This matter was addressed and a new and simpler 360-degree assessment process was designed and implemented which now allowed for the disclosure of behavioral information to be used when making decisions relative to promotions and assignments. The new process aided in making the talent process less complex and more transparent The performance management form within Avon was a ten page long form and many of the associates had not had a review in a number of years.
With the turnaround process, Associates were now aligned with a different set of goals and could expect fair rewards. More value was added to the process because now managers had a simpler tool to use and it allowed them to manage their teams more effectively. Prior to the turnaround at Avon, accountability for talent practices was non-existent. With the implementation of the new process, it was believed that the focus could be on people issues and that mangers could be held accountable for the improvement thereof.
Further, Associates were empowered to hold the managers accountable and to inform Human Resource leaders if things were not happening. The issues concerning accountability were applied such that talent management was the responsibility of the leaders within the organization and in keeping with Avon’s culture. 4. Speculate about success of the changes within the next five (5) years and how adjustments could be made if the results become less than ideal. The talent practices at Avon had some weaknesses which were addressed during a year to a year and a half turnaround period.
This process after turnaround saw great effective improvements in the talent practices. The most noticeable changes were in the areas of clear goal setting, feedback, development planning, and people effectiveness. As the talent management process has become simpler and more transparent at Avon, the development of leaders is now on a faster track. The work experience is also improved having made leaders more accountable for their behaviors. The effectiveness of the new process has contributed to Avon’s goals of reducing expenses and increasing revenue.
It is expected that Avon will continue to grow and with the updated talent practices, better leaders will be developed faster and those leaders must continue with the development and growth of potential new leaders. This process is expected to continue and Avon will stay on track in achieving its goals for continued success. It is important that the vision of the organization is continuously communicated. According to Bates (n. d. ) many leaders fail to get their messages across even though they are intelligent, analytical, and decisive leaders.
Human resource professionals know that the consequences are serious if leaders cannot successfully communicate a vision. Executives have to motivate and inspire, or they will fail. One role of HR professionals is to recognize when there is an issue and help leaders develop this skill. References Bates, S. (n. d. ). Communicating vision: How HR professionals can help leaders articulate big ideas and get people moving in one direction. Retrieved 11/03/12 from http://www. hrcrossing. com/article/270140 Edersheim, E.
H. (2007). The definitive Drucker. New York, NY: McGraw-Hill Goldsmith, M. , & Carter, Louis. (2010). Best practices in talent management: how the world’s leading corporations manage, develop, and retain top talent. San Francisco, CA: Pfeiffer Noe, R. A. , Hollenbeck, J. R. , Gerhart, B. , & Wright, P. M. (2011). Fundamentals of human resource management. New York, NY: McGraw-Hill Silzer, R. , & Dowell, B. E. (2010). Strategy-driven talent management: A leadership imperative. San Francisco, CA: Jossey-Bass.