Assignment 2: Avon Products
- Determination of Necessity for Change
Avon Company has a 122-year history and experienced fundamental changes. The Company was founded as a door-to-door bookseller distributing free samples of perfume as an additional bonus for the customers. As perfume samples drew more customers’ attention than books, the owner of the Company David H. McConnell founded California Perfume Company. The Company had become a successful global $8 billion cosmetics seller with 10% cumulative annual growth reached by 2005. Avon operated in forty countries receiving 79% of earnings from abroad having excellent financial results. However, the Company faced challenges connected with the decline of operational profits and flattering revenues in 2006. Despite many contributing causes, it appeared that the growth of the Company was not supported by talented management and infrastructure. The structure, people, and processes were inconsistent with the size of Avon (Goldsmith & Carter, 2009).
After review and detailed analysis of the situation that occurred, CEO of the Company found that existing talent practices were opaque, egalitarian, complex, episodic, emotional, and meaningless. Existing talent practices were opaque because senior managers and Associates were not aware of existing talent practices including performance management and succession planning. The following practices took place:
- Egalitarian practices took place in the Company when high performers did not enjoy a different work experience. Besides, low performers were not managed effectively (Hunter, Schmidt & Judiesch, 1990).
- Complexity of talent management practices was connected with the unwieldy process of succession planning. Filling volume performance management form by a full-time employee performed reviews twice a year.
- Employee surveys, development and succession planning, and talent reviews were not done or were done at the discretion of individual managers having episodic character.
- Decisions related talent promotions, movement, and key talent management activities were influenced by individual knowledge and emotions not being based on objective facts.
- Talent practices were meaningless because employees were not motivated properly or encouraged to perform well (Goldsmith & Carter, 2009).
CEO Andrea Jung initiated the following changes in talent management:
- moved from regional to a matrix structure when geographic regions operating with significant latitude were not put into the matrix;
- layers of management were shrunk from fifteen to eight with compensation management reduction of 25%;
- significant investment in executive talent was made by replacing the key roles;
- new capabilities were created including brand management, marketing analytics, and supply chain areas (Goldsmith & Carter, 2009).
2. Identification of the Model for Change
TheoryThus, a theory of change in context of Avon Company included the following steps:
- Moving from opaque to transparent talent management practices. This step included launching development courses with a two-year development process was offered to 10% of VPs. Also, performance reviews switched from 3-point scale to 5-point scale providing clarity to the actual progress of participants (Jones, 1986). Besides, distribution of ratings was widely communicated (Goldsmith & Carter, 2009).
- Establishing fair performance evaluation and reward system. Changes in performance management included encouraging Associates to set new goals and fair evaluation and reward of their performance. As the correlation between engagement and performance was revealed, an engagement survey was conducted to find out the effectiveness of all managers through the level of engagement since employees’ engagement was the driving force for accountability (Goldsmith & Carter, 2009).
- Moving from an egalitarian to a differentiated approach to talent management was conditioned by the necessity to determine quality of talent aiming to differentiate Company’s investment in talent. It helped direct managerial efforts and promote those Associates who targeted promotion and personal development (Goldsmith & Carter, 2009).
- Shift from episodic to more disciplined practices of talent management was conditioned by the necessity to make uniform processes of performance evaluation. More disciplined practices used in the Company helped leaders plan talent management processes and identify the directions for talent investments (Goldsmith & Carter, 2009).
- Shifting from emotional evaluation of employees to factual data provided by the 360 and engagement survey was made. Before the turnaround began, the evaluation of Associates was performed on the basement of emotions and personal relationships. Establishment of the 360 evaluation model and conducting an engagement survey added qualitative and quantitative factual data for performance evaluation that contributed to fair assessment of talent quality possible (Goldsmith & Carter, 2009).
- Managerial accountability for talent practices was injected in three levels: monetary, associate-led, and CEO-led accountability. Thus, team leaders were paid for managing talent, Associates were encouraged to communicate their one-year goals, and their achievements consisted with the goals set were evaluated at the end of each year. Avon leaders understood that focus on talent management is crucial through applying accountability principles in many ways (Goldsmith & Carter, 2009).
3. Illustration of the Types of Information Evaluation and Its Benefits
When shifting from opaque to transparent talent management practices, Avon used 360-degree assessment to evaluate talent potential of the Company. TM leader analyzed VP’s 360-degree assessment to understand common behavioral strengths and weaknesses of the employees. However, 360 assessment tool was changed aiming to protect personal information that was not supposed to be disclosed borrowing from “feed-forward” principles offered by Marshall Goldsmith (Goldsmith, 2006). The 360 assessment findings were communicated to all team members showing participants who were seen by behavior participants supposed to be going forward.
Adding transparency to talent practices contributed to understanding of the consequences of higher and lower performance. Knowing the current and potential performance ratings helped Associates understand how they could change their ratings. This approach helped increase Associates’ engagement in the business process. Managers and Associates started to feel more accountable for their progress and progress of the Company. The capabilities of Associates were adequately evaluated giving the opportunity for the high performers to realize their potential and helped low performers set goals and achieve them under the leadership of senior managers. Increased leaders’ accountability was the force driving change in talent practices being reflected on the Company’s performance (Effron, Greensdale & Salob, 2005).
Also, engagement survey was conducted to reveal Associates engagement issues. Engagement survey showed correlation between increasing engagement and increasing business metrics. CEO of Avon realized that changing attitude to leaders’ accountability tied to the level of engagement will help leaders manage their teams more effectively. The engagement survey supposed to be simple and comprehensive at the same time. The first goal was to understand as much as possible about engagement. The second goal was to use simple questions so the options for score improvement would be clear if score improvement is needed (Hunter, Schmidt & Judiesch, 1990).
Another way to collect necessary information was to let managers inform their Associates about their goals. Managers were proposed to make a form containing goal labels, individual rating of goals, and behavioral ratings. Thus, a simple performance management process was created (Jones, 1986).
4. Speculations about Success of the Changes
People effectiveness is supposed to increase by 15% by if the leaders stay accountable for the results of their management. Planned increase in revenue is 30% during the next 5 years. If these results will not be reached, talent practices should be re-evaluated, and consistence with change management should be assessed (Goldsmith & Carter, 2009).
Changes in talent practices will lead to significant improvements in effectiveness of talent management at Avon including increase in Associates’ ratings, improved performance, and increase in managerial accountability. Increased transparency of performance rating will help move talent managers to key markets within the next 5 years. At the same time, performance rating results should not be fully communicated to the participants because excessive disclosure can be harmful to the Company. Senior managers should be very careful when communicating performance evaluation information to the employees. If excessive disclosure takes place, 360 assessment can be re-considered in terms of protecting personal information that can be potentially harmful for the internal climate (Jones, 1986).
Simplification of all business processes will help develop accountable leaders. However, it is important not to make the processes oversimplified because important moments could be missed if business processes are oversimplified. Sometimes detailed information is needed to evaluate the situation that occurred. Managers should track balance between simplification and oversimplification of business processes aiming to reach ideal results in performance (Hunter, Schmidt & Judiesch, 1990).
References
Effron, M., Greenslade, S., & Salob, M. (2005, September). Growing great leaders: Does it
really matter? Human Resource Planning Journal, 28(3), 18-23.
Goldsmith, M. (2006). Try feed forward instead of feedback. In M. Goldsmith & L.
Lyons, Coaching for Leadership (pp. 45-49). San Francisco: Pfeiffer.
Goldsmith M. & Carter L. (2009). Best practices in talent management: how the world's
leading corporations manage, develop, and retain top talent. 1st ed. New Jersey: Pfeiffer.
Hunter, J.E., Schmidt, F.L., & Judiesch, M.K. (1990). Individual differences in output
variability as a function of job complexity. Journal of Applied Psychology, 75(1),
28-42.
Jones, C. (1986). Programming productivity. New York: McGraw-Hill.
