Executive summary
The international human resource practices in the worldwide business require effective management to ensure unceasing existence of the global business organizations. Avon being a multinational beauty company operates globally in the manufacturing and sale of the beauty products for women, apparel and fashion ornaments. It conducts its operations in over 100 countries and does direct marketing to its consumers through 5.8 million sales representatives and it has over 42,500 associates allied to it.
This report incorporates discussions and evaluation of the strategic international human resource practices of Avon in terms of staff training and development, the reward management system and the process of recruitment and selection of employees in the international market. These fields are important as Avon has to deal with the development of a robust global management team of independent representatives, associates and the national s of the foreign country. The report also addresses the effects of social and demographic changes in the business model of the company and the contribution of international human resource management in the global expansion of the company to ensure success. The multinational companies ought to consider the mode of management of the personnel within the market places that exist across different cultural orientations as an issue of strategic importance with the effective administration of the practices outlined above. This paper will finally recommend the necessary cross cultural, training and human resource practices that suits the operation of Avon that could ensure its continued positive realization in the world’s multicultural market environment.
1.0 Introduction
Globalisation irrespective of its disadvantages and disadvantages has lead to the increase in internationalisation or organisations (Rugman and Collionson, 2012). Because of the stiff competition in the worldwide business for maximisation of profit, growth opportunities, gaining competitive advantage and others, the need for startegic design and delivery of international human resource management practices has been emphasized so as to effectively and efficiently manage the diverse workforce that exists within them (Brewster, 2011).
Strategic international human resource management (IHRM) is well-defined by CIPD (2013) “as an approach in the management of human resources in the multinational company which provides a planned framework for long term business goals and outcomes. It is basically concerned with long term people issues and longer concerns about structure values,cultures, commitment and resource matching for needs of the future.”
The company Avon is multinational and it manufactures and sells beauty products like apparel, fashion ornaments and cosmetics for women. It currently operates in over 100 nations and does direct selling of its productsthrugh the facilitation of its 5.8 million non-dependent sales representitives and it also had close to 42,500 associates allied to it by the year 2009.
The report will use Avon as a case study to explain issues concerning the management of a multicultural or a global workforce. The IHRM practices of Avon and hoe they are manged will be discussed and appropriate recommendation in the long term and short term regarding the current human resource issues will be drawn.
2.0 Discussions
2.1 Avon’s SIHR Practices
Strategic IHR management principally involve administration and planning of all facets of the employment in the MNCs (Harvey et al. 2001). Discussion an evaluation of Avon’s strategic human resource practices concerning her global management, independent representatives and associates will be done here. Four core practices will be covered including reward management, recruitment and selection in addition to training and development.
2.1.1 Selection and Recruitment
Selection involves the application of appropriate method to determine the applicant that is best suited for the job position while recruitment is the act of seeking for applicants from employees that are capable of matching the requirement of a particular task. (Taylor, 2010). As evidenced in the vision of the company, the market targeted is women and therefore an alignment has to exist between her vision statement and her strategy for selection and recruitment for success to be realized (Hollinshead. 2010: Albrech. 2002). This is shown by the alignment of her vision with the IHRM practices because the top five of her executive are females and 89% of the total employees in U.S were women as at 2009. Internationally the majority of her associates and representatives are females (Deresky, 2011). Presently her board of directors that comprises ten members, six are females though they also have men working at different levels (Avon, 2013).
In the selection and recruitment process Avon uses multi-domestic and polycentric strategies (Hollinshead. 2010) globally as the regional managers, sales leaders, independent representatives and the district managers are the nationals of the host countries who clearly comprehends the cultural and institutional meanings of carrying our business in their locations (Deresky, 2011). Her practices are mostly localized and the recruitment process are done online followed by a selection process carried out online too.
2.1.2 Difference between the recruitment processes
Avon as a multinational company tend to harmonies the processes of recruitment so as to make her recruitments fair to all across the world. In most parts of her national destinations, recruitments are mostly done through the internet where online interviews are conducted. For instance in China. U.K and India she selects and recruits using the internet. Even though the process of online selection and recruitment can be subjected to questioning as it could hinder proper communication because it does not capture the non-verbal cues (Guardem, 2011). In her domestic market recruitment and selection are at times done on one on one basis with applicants attending live interview sessions.
2.1.3 Development and training of Personnel
This entails creating the required knowledge, abilities and the skills to enable the employee to efficiently carry out their duties for the purpose of organizational and personal development. Organisation consider training their employees so as to boost their performance to enable them to achieve the competitive and sustainable advantage in business (Stewart, 2011). Avon invests a lot in training, as they conduct job training seminars regularly for her employees and also runs programs on leadership. This concurs with the resource based view (Hollinshead, 2010) which stipulates that the main source of competitive advantage that deserves attention should be the human resource and therefore an organisation should invest in training them. For the associates and representatives the company offers an online based training and curriculum entitled, “beauty and knowledge” which runs a self-paced 24hour course on sales and marketing areas (Avon, 2013). Because Avon uses both informal and formal methods of training it can be concluded that they use the social learning and systematic training models as suggested by Bandura and Megginson, (Stewart, 1999 and Mankin 2009).
The specific training programs that are presented to representatives and associates are shown in the Figure 1 below:
Figure 1: Modes of Training Employees in Avon
Adapted from www.avoncompany.com
The effectiveness of the training programs embraced by Avon in profit creation can be questioned because of the drop in Avon’s annual turnover between 2010 and 2011 and in 2013 by a margin of 5.1% and 7% respectively. This could be in indication of reduction in performance irrespective of the training programs.
2.1.4 Means of Reward Management
Employee reward entails the various forms of non-financial and financial returns that include the benefits received by employees (Armstrong, 2012). This is one of the robust tools of ensuring the establishment of an effective employment relationship in the business organisation. The means of its management is crucial as it dictates the nature of the affiliation. Avon allocates elevated premiums on benefits and compensation of the employees (Deresky, 2011) because the associates, representatives and the HCH’S are offered a certain portion of bonuses that are based on the volume of sales and they are also allowed to order for goods and receive them without payment that can be done after conducting sales. However formal structures of pay are not available in the company (Avon, 2013), it still gratifies her employees by making distinctive reward packages that suits them. 75% of her representatives were reported to have attained financial autonomy (Scott and Dolan, 2009). The representative in India get up to 30% from personal sales and receive up to 17% on cluster sales. Team based rewards packages are suitable for an Indian collectivist society (Hollinshead. 2010).
3.0 Avon’s Business Model and Demographic and Social Change
The model of a given business has to inculcate the major aspects of the business, its objectives, operational policies, and target customers (George and Bock, 2011). Her model is the door to door or the direct business model. In utilizing this model the representatives move from door step to door step to supply products to the customers (Deresky, 2011).
3.1 History of Avon’s Direct Selling Model in Light of the Demographic and Social changes
The door to door business model dates back to the year 1886 when an American traveler salesman of books noticed that the ladies were more into having perfume samples than having his book and they were also at home most of the times when their husband were at work. He therefore decided to recruit these women as sales representatives and this was a positive idea as not many women had employment opportunities then. This model was very effective and it employed even redundant women and in 1920, 1972 and 2008 Avon’s sales clocked $ 1million, $1 billion and $10billion respectively.
The social and the demographic changes that have taken place in the U.S the model has undergone various shaping so as to integrate it in the lives and epoch of the customers and representatives. The modifications are discussed below:
3.1.1 The Door to Desk Modification Introduced in the 1970’s
Avon introduced “Advanced Call Back brochure that could be left on the knob of the doors and that included product samples,” (Avon 2013) at a time when women were not found at home due to the encouragement of their employment. The brochure was left behind to enable the customers to call back.
3.1.2 The Work Place Selling Modification of 1986
This modification enabled the Avon’s representatives to deliver goods to customers in their various offices work place.
3.1.3 The Technological Age Modification (Era of Globalization)
The world has been made a global village by the internet where services and goods are ordered for and delivered electronically (Rayner, 2009). A number of tools were introduced to overcome this challenge such as online ordering, intelligent ordering that prompts concerning special promotions, eBronchure and the communities based on the internet that the sales representatives utilize in receiving and selling of products (Avon, 2013). The company believes that its direct selling model will not be sidelined even if the world has undergone social and demographic changes (Avon, 2013).
The Figure 2 below shows the different changes that the model has undergone in the U.S and also in some global markets with respect to the social and demographic changes.
Figure 2: Country Specific Modifications of Avon’s Business Model
Source: Adapted from, (Avon, 2013)
It can be observed from the figures above that Avon has got a big market considering the general population. The percentage range of 35-49.9% of the working class women shows that women were no longer at home to be server by the direct marketing technique which has also affected the various country specifications of the models as shown above.
3.1.4 Role of IHRM in the Global Expansion of Avon
IHRM deals with how multinational companies manage and relate with their workers in the globe (Hollinshead, 2010). It has a crucial role to play in expanding MNCs because it helps in creating structure, which they coordinate, and exercise control of their subsidiaries (Albrecht, 2001). It has created awareness of how issues of culture and differences in the institutions impacts on the use of these practices in the multinational companies. It also helps in deciding when to adopt an appropriate strategy whether multi-domestic or a global strategy (Hollinshead, 2010). Employee training and development are structure to best meet the needs of the host country nationals evidenced by the fact that they have both informal and formal training approaches. The internet is argued to be less cost effective but in some parts of the globe where problems of electricity and internet are experienced (Guirdham, 1999).
3.2 Analysis of Avon’s Orientation Using EPRG model
The EPRG framework outlines four management orientations of the organisation during the process of carrying out international processes and it is based on the notion that the extent of the organization’s involvement in international trade evolves gradually.
Ethnocentric Orientation- Avon exercised this orientation during its early stages of growth where it sought extension of sales to the foreign markets and put emphasis on the domestic market the U.S. Here systematic oversea research was not carried out.
Polycentric orientation-This is the kind of orientation employed by Avon in her operation. It has clearly identified her foreign markets country by country and it pays attention to the individual markets in the 100 countries that it operates in. Avon strongly believe in the cultural diversity that exist in different markets across the world. The company’s sales grew dramatically throughout the 1960s. In the year 1960, sales were totaling to $1.5 million an increase of 18% over the previous year. International sales totaled to $8.2 million and the Avon consisted of over 125,000 sales representatives and 6,800 employees. By the year 1969 sales amounted to $558.6 million with international sales being $193.1 million and the organization had over 400000 representatives and 20,800 employees. Distribution centers, manufacturing plants, and branches for sales were opened in many parts of the world as part of an expansion program making it to assume a full polycentric orientation (Avon Products, 2013).
Geocentric orientation that is based on the idea that it can be possible to outline both the differences and the similarities and to come up with the global market strategies that are responsible fully to the local wants and needs. It is weakly adopted by Avon.
Regiocentrism that is a phase of transition between geocentric and polycentric orientation considers the similarities and differences between various regions. The decision making process focusses on regions. Avon is in the path of adopting this orientation.
Source: Adopted from Keegan, W., Global Marketing Management (1995) p.363.
4.0 Conclusion
The significance of IHRM in ensuring the proper utilization of SIHRM practices in multinational companies cannot be overstressed because global success seriously relies on it. Hence an effective evaluation of SIHRM practices in this company leads to the recognition of effective management of the practices globally has become necessary. The business mode; of Avon was also realized to have undergone various modifications due to the social and demographic changes. Avon has therefore strive to evolve with the dynamic society and has also embraced diversity to avoid going extinct.
5.0 Recommendations
Research work indicates that important components of the on-set of the training programs that contribute to a smooth change to a foreign business environment incorporates: training on cultural awareness, instructions on languages, making of preliminary visits and the daily assistance in practical matters. The recommendations that will be outlined will encompass these core areas (Dowling, 2011).
- The training offered by Avon should concentrate on the job and task related issue rather than issues related to culture. This should be done in countries where the interaction between the sales representatives and the members of the host country is low and the degree of dissimilarity between the culture of the host country and the native culture is also low. Such training require a lower level of rigor (Dowling, 2011).
- The training offered by Avon ought to be more oriented to long term learning other than one short program that lasts for 24 hours with a narrow focus.
- Avon should emphasize on the provision of foreign language training. This will enable effective interaction between the representatives and the foreign customers hence improving marketing skills and sale thereof.
- The human resource team should put emphasis on the levels of competence in communication and not just the verbal communication to enable an employee to become bilingual and bicultural. This enables easier transition to the foreign markets from one culture to another.
- On the preliminary visits, the company should send their employees together with their spouses on a trip to the host country to allow them to evaluate their fitness for the assignment. Such trips help in the introduction of the expert to the context of the business and also helps in encouraging him or her to be more informed (Dowling, 2011).
- The company should communicate and develop a wide definition of work place disparity in the organization while considering the varied features of the host countries (Deresky, 2011). The management should have broad understanding of what entails the terms gender and race.
- Avon should maintain a pool of well-trained professionals who can be eligible for international tasks at any given moment.
- The management should also go an extra mile to comprehend the legislation and requirement that bind the employment relationships globally at all levels while applying SIHRM practices so as to establish an effectual and effective employment contracts and relationships (George G. and Block A. J. 2011).
Figure 3: Action Plan for the Short-Term/Pre-Market Entry Human Resource Issues
Figure 4: Action plan for the long-term/post-market entry
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