Avon Case Study

Shounak Dash
Roll no. - 320SM1007
2nd year, MBA
Avon Company Background

Avon product is 122 years old company. Founded by David H. Mcconnell. He founded the
California Perfume company renamed it as Avon Product in the year 1939. Organization grew
into direct selling of cosmetics, fragrances and skincare products.

Year 2005 –Avon was 8 billion dollar company. Year 2000-2004 = 25 % CAGR, in operating
profit. The Global Company Avon operated in more than 40 countries and received more than
70% of its earning outside the US. Year 2006 –Had flattening revenues and declining operating
profits.

Talent management Challenge

By 2006 decline of revenue made the organization to restructure:

Moving from regional to matrix structure

Geographic regions were transformed into matrix for select global business function, primary
marketing and supply chain.

Delayering
Delayering six month process to take the organization from 15 layers of management to 8 layer
including:
•Benefits
•Compensation
•Reduction up to 25%

Significant investment in executive talent

Among the 14 people reporting directly to CEO within 2004 –2006, 6 were replaced externally
who were directly reporting to CEO.5 leftover were put in new roles.
New Capabilities Were Created
Hundreds of new leaders were launched, as they source brand management marketing
analytics and supply chain capabilities.

Talent Challenge
The turnaround led to numerous gaps identification. These were due to poor functioning of
talent processes. After reviewing Avon’s existing talent practices, member of the talent
management identified, 6 overriding weaknesses that effected them, they are:

 Opaque - Neither managers nor associates knew how talent practices were working. For
an average employee it’s a “black box”
 Egalitarian - Every associates were treated equally as they misinterpreted the company’s
culture, thus high performers were not satisfied and low performers were not managed
properly.
 Complex - Complexity existed without commendable value and the effectiveness rate of
the talent practices are low, cause they had to manage data and assemble thick black
binders of information for twice yearly reviews
 Episodic- Employees survey, talent reviews, development planning, succession planning
were done at a frequency determined by individual managers around the world.
 Emotional- Talent activities were often influenced by personal knowledge and supported
by objective facts
Meaningless - HR could not even the most basic questions.

THE NEW MODEL

1. Fundamental changes had to be brought and implemented to bring about practices that
would be easy to use, quick to build and effective immediately.
2. Two guiding principles were framed from the top companies for leader study.
•Execute on “what”
•Differentiate on “how”

Changes
So for the weaknesses to be removed, a new talent management system was launched having the
following changes of processes:

•From opaque to transparent

•From egalitarian differentiate
•From complex to simple
•From episodic to disciplined
•From emotional to factual
•From meaningless to consequential

From opaque to transparent

Avon 360 degree assessment
A new much simpler 360 degree program was designed and implemented that explicitly stated
proper managerial and leadership behaviour and this information could be show to all
participants like manager, HR leader, regional talent leader and anyone who Avon has decided
to show.

It removes the potential stigma of having others to see them as a bad manager and 360 degree
findings quickly forward.
Broad based transparency
For career development the HR team developed “The Deal”.

The deal made clear that every associate had to deliver results, display proper leadership
behaviour, know our unique business and take advantage of development experience.

THE DEAL
GROW AVON LEAD AVON KNOW AVON DEVELOP
THROUGH
EXPERIENCES

Yours’s ACHIEVE LEAD OUR UNDERSTAND TAKE ON

Role RESULTS FOR ASSOSCIATES DIRECT SELLING CRITICAL
REPRESENTATIVES CAREER
EXPERIENCES

AVON’S PROVIDE CLEAR PROVIDE PROVIDE PROVIDE RIGHT

Role PERFORMANCE AND FEEDBACK ON TRAINING AND ASSIGNMENTS
EXPECTATIONS; LET LEADERSHIP EXPOSURE AND
YOU KNOW WHERE SKILLS EXPERIENCES
YOU STAND
For development courses
Avon made clear that the larger investment they made the more explicitly they made the
disclosure.

Thus they made a two year high potential development process offering to top 10 vice
presidents.

Performance review
The switching of three point scale to 5 point scale gave additional clarity to participants about
their actual progress by clarifying the scale definitions.

The recommended of the scale was widely communicated where the talent process reviews,
manager were asked to share the assessment of leader’s future potential.

From complex to simple

●Avon Company believed that the traditional practice if executed pretty well would be
effective but since the process was quite complicated the employees and managers avoided
using it. So they realized they had to change it. Thus they committed themselves to radically
simplify every talent process ensuring the complexity was balanced with an equal amount of
value they made a one page talent management approach wherein they asked 3 questions:
1. What is the fundamental business benefit that their talent process is trying to achieve?
2. What is the simplest possible to achieving this benefit?

3. Can we add value to the process that would it make easier to manager to make smarter
people decisions.

Performance management
When the turnaround occurred the company previously had 10 page performance
management; and the performance review in 3, 4, 5 years had not occurred so they decided
the easiest way to be achieving business goal by letting the managers know their value. At
each step they asked whether it would add more values to it they careful weighted all
additional elements whether it adds on complexity which is left.
The output was a one page form with spaces for listing the goal and the metric maximum four
goals.
Engagement surveys
The list of these questions allowed managers their survey results by reading just one page:

 Business profit –performance management

 The simple path –goal establishment and questioning
 Adding value whether right action is done

From egalitarian to differentiated

 The differentiation included:
 Compensation targets
 Development investments
 Eligibility for participation in high potential programing, global moves and assignments to special
projects.
 From episodic to disciplined
It consists of three steps
1. Consistent global tools and processes
Adjustments were made to tools and process to ensure they met needs around the world
2. Adding talent management structure globally
Ensured great dialogue and consistent improvement
3. A committed CEO
Conducted performance reviews setting clear goals for her team

From emotional to factual

 The TM team worked to inject more fact based decision into talent discussion.
 Some of the facts were qualitative and others were quantitative but as a whole they
enabled a complete conclusion on individual’s performance.
Qualitative Facts added

 Calibration discussion
 Review rating
 Facilitation by regional talent management leader
Quantitative facts added

 360 degree assessment

 Engagement survey
 Engagement goals
 Individual behaviour improvement
From meaningless to consequential
In creating the new talent practice, they tried to inject accountability into each one, answering
each one critical question.

 Monetary accountability
 Associate led accountability
 CEO led accountability

The results of talent turnaround

From opaque to transparent

 Leaders now know what's required to be successful.

 How to help them get there.
 Consequence of higher and lower performance.
From complex to simple

Manager now know the right thing to do for their associates as they have lowered the barriers
and helped them value added tools and information.
From egalitarian to differentiate
The highest potential understands how the company feels about them. Lower performing
leaders get the attention they need.
From episodic to discipline
Process now happens on schedule and consistently among the world.
From emotional to factual

Talent decisions are made with an additional layer of qualitative and quantitative information
drawn from many different leader’s experience.
From meaningless to consequential
Leaders know that they must build talent in the Avon way for both their short and long term
success.

Talent Creed
1. Fundamental changes had to be brought and implemented to bring about practices that
would be easy to use, quick to build and effective immediately.
2. Two guiding principles were framed from the top companies for leader study.
•Execute on “what”
•Differentiate on “how”
Talent Strategy
• Moving from a Regional to a Matrix Structure
• Delayering
• Significant Investment in Executive Talent
• New Capabilities Were Created

Talent management System

 360 assessment process

 Broad- based Transparency
 The engagement survey
 One page talent management.