Candidate: Thu-Mai Nguyen Candidate no: 000222-329 School: Lamar High School Date of Submission:

Business and Management Research Project (Higher Level)

RESEARCH PROPOSAL How can Avon Products Inc. modify their communication and leadership styles in order to create a more loyal and inspired workforce of their lower level employees?

Research Proposal
Research Question How can Avon Products modify their communication and leadership styles in order to create a more loyal and inspired workforce of their lower level employees? Rationale Avon Products Inc. is a multi-level marketing company that sells cosmetics, perfume, and toys. It is known for its independent sales representative, also their lowest level of employment, that usually sell door-to-door or, online.1 Their unconventional method is beneficial in increasing their numbers of sellers, and therefore sales revenue. But in managing their unique employee workforce Avon does not have the time and resources to ensure that each employee is satisfied and working at high productivity and/or high morale. I chose to look at communication and leadership management as these two components are vital to a successful and satisfied workforce. Communication is necessary for all information transfers and leadership styles are important to how employees are motivated to work. These are also practical perspectives to evaluate as they are controlled internally by Avon and can be beneficial while unimposing. Theoretical Framework I plan to look at Avons current communication methods and leadership strategies to see how this affects their sales representatives. I will analyze possible motivational theories in context to Avon in order to determine solutions that are applicable. Methodology Primary: Personal investigation in working as an Avon representative to witness training, communication methods and other employee management. Interviews with district sales manager in order to discuss the reasoning behind Avons current methods and discover how communication and leadership works from a level of seniority Secondary: Online or other possible research to discover press releases and reports from Avon that detail their workings. Review various sources on effective motivation and leadership styles to evaluate each ones practical use. Limitations

What is Direct Selling? Earnings Opporunities. http://www.avoncompany.com/earningsopportunity/ whatisdirectselling.html

Limitations include that my recommendations may not be easy to implement for such a large company, which will be considered in my suggestions. And my primary research may have intended or unintended bias in the results. Action Plan December 7, 2010 May 31, 2011 November 9, 2010 March 4,2011 December 20, 2010 February 10, 2011 Personal investigation as an Avon sales rep Secondary Research of leadership and communication methods Various interviews

1. Executive Summary
The introduction explains the background of Avon and how they currently operate in their management and communication networks. This will provide the basis of my analysis and depict where I want to improve. Although Avon has not expressed their desire to modify their current practices, they are still presented with the problem of having self-motivated sales representatives leading to other problems. As it is not practical for Avon to change their entire work policy by hiring each representative, my analysis will focus on what they can do at the moment in increasing morale, and improving motivation and communication. The findings include primary and secondary research about the details of Avons current working practices, and how successful it is now. The research will be put into analysis as I look into Blake and Moutons Managerial Grid, Robert Houses Path-Goal theory, Mayos Hawthorne effect, and Tannenbaum and Schmidts leadership continuum about their primary ICT communication systems and laissez-faire and directive leadership. The possible solutions focus on expanding their communications network to include more face-to-face communication, more people interaction such as with training and reporting meetings, and varied motivational rewards besides financial motivators.

2. Introduction
Background As Avon grew to be a successful global empire, they have had to compromise their working operations to manage all of their workers. As they cannot manage each and every worker, Avon has had to allow independent sales representatives who are completely independent from Avon and therefore must be his or her own boss. Avon has done this to appeal to the sector of workers that wish to be entrepreneurial. They provide resources to reps in the form of online training to teach the reps everything about how to work with Avon in terms of navigating their website and each persons account information.2 They also provide occasional classes with trained people on selling techniques. This has allowed them to successfully manage their business without the hassle of managing each employee. Although they may have had expected problems such as a constant labor turnover rate or upset employees, Avon feels that it is worth keeping their hiring technique because they have such a large volume of workers that few employees leaving does not affect their sales revenue as there will probably be new reps that will join. In this perspective, the reps are seen as expendable. Case Definition Although their methods are successful in terms of business growth, it does not do much for their independent reps because they not valuable employees. Since they can only sell or recruit, their only job promotions include moving higher on the ladder of sales or number of recruits. But this does not provide any job enrichment, enlargement, or enhancement as they are simply increasing the amount of work and not enriching it. As Avon has moved toward more advanced internal communications technology (ICT) network systems they are growing more and more dependent on these systems.3 This becomes the primary communication method from higher level management to lower level reps. This easily allows employees to feel distant from the corporation. Avon communicates to their reps though their online account at www.youravon.com where reps come to put in order and manage their account. Avon has provided training through their online Beauty of Knowledge (BOK) courses that reps can access at any time, and send their majority of messages through this online account method. Since Avon or their managers rarely communicate with the reps face-to-face or oneon-one it is quite difficult for Avon to implement a strong managerial style. Their training is more of Directive leadership in the Path-Goal theory as they simply give the rules and guidelines on how to work and then let the reps work on their own, trusting them to follow their policies. If there is any problem with any one rep it can be easily solved with the termination of him or her at little cost to Avon.
2 3

Online Account, www.youavon.com Annual SEC report, Avon SEC filings

Therefore reps are forced to work for themselves with only financial benefits; they more they sell, the more income they receive. This method cannot last long as a motivator besides to make the required income to survive. Beyond this method, the reps are not motivated to work toward job promotions or any kind of job enrichment. Again, as this cannot be solved by simply hiring the employees to be directly under Avon and allow them opportunities in other departments or non-financially based job promotions; Avon must use motivation methods that do not affect their working policies. This is why my research question focuses on: How can Avon Products Inc. modify their communication and leadership styles to create a more loyal and inspired workforce of their lower level employees?

3. Findings

Poor dependence on current communication By using their online method of communicating, they have no way to ensure that the message is accurately received or read by the reps even though it is formal communication. Reps may also be in the dark if they do not understand a new change or do not take the time to take in current announcements since it is simply their choice whether or not to listen to any communication done though the online accounts. Their communication methods also disregard Albert Mehrabians Three Vs (Visual, Vocal, and Verbal) theory that explains a message is only understood 55% from body language and facial expressions, 38% from tone of voice, and 7% from the words spoken. Avons usual electronic messages cannot take use of vocal liking with a nice tone or visual like with good body language. Weak managerial styles Avons policy of not hiring the reps directly under them allows Avon to leave leadership to the employees as each rep can be considered an entrepreneur. But Avons motto of the reps working for yourself, not by yourself requires Avon to provide the necessary support. As their support is currently in the form of online training and occasional group training meetings about sales, Avon does not have to implement a strong managerial style as it is left up to each employee whether or not it can be done by each employee. On Tannenbaum and Schmidts leadership continuum, Avon would fall under using the Sells method where they expect the workers to simply follow already made decisions. Similarly, Avon uses directive leadership on the Path-Goal Theory because they give their subordinates orders that they must follow. These styles are some of the least productive because of how little involvement workers have in the decision making process, and in the case of Avon, the reps usually have no involvement in decision making. Poor motivation methods As reps must self-lead they must also self-motivate meaning they are reduced to financial motivators. As there is a sector of reps working with Avon as a secondary job or not as a primary income method, there is not a large need to sell for income meaning they are left with even less motivation. The only other form of motivation is with their products by providing them to reps for free or at a discount. This can be done by offering reps special deals on new products to help in promotional selling, offering specialty items Avon related items for entertainment, or offering reps special discounts/sales not available to the public. This method treats the employees more as customers than sellers by replacing conventional fringe benefits with free or lower priced products. The only way Avon combats their lack of fringe benefits is with their Avon Advantage where reps are offered certain discount of services, such as dry cleaning or

tax services, related to running their business. But Avon allows this because they do not provide the services. Lack of care in worker retention As mention before, there is little cost to Avon in losing a rep as they are constantly growing when more and more people sign up to sell. Therefore Avon cares more about higher level management4 and is not dependent on any one rep. This can make reps feel unimportant and contribute to lower morale.

4. Main Results and Analysis

Annual SEC Report, Avon SEC filings

Although their communication allows Avon to reach all of their reps, it cannot be fully effective to all employees as district line managers cannot check if every rep received and understood each recent announcement. They cannot ensure if each employee is implementing a recent change or following a new policy. Their large dependence on using their more advanced technology also leaves them open to security threats prone to using certain ICT methods. Since the higher level managers are not explicitly the hired leaders of the reps, the inadequate leadership provided falls under Middle of the Road management under the Managerial Grid model.5 Here, Avon has to balance the needs of the reps and the needs to the business. Avon cannot put all of their effort into motivating all of their employees and cannot leave them with little support. This is why Avon has compromised by utilizing online methods for their workers to do just about all of their tasks. There is also no consideration for the Human Relations school of thought from Mayo. His theory, named the Hawthorne Effect, explains that non-financial motivators can work better than financial ones. His experiments showed how production increases were because of the employees working together and collaborating innovation and creativity. This social aspect in now known to be integral in improving productivity, because it satisfies the natural human need to socialize. People naturally work more productively and efficiently when engaging with others as this creates team spirit and group dynamics. Avon misses out on this opportunity with their workers being independent and not working collaboratively. Avon tries to compromise the situation with their occasional training meetings or leadership parties so that reps can have some interaction with each other. Avon has continued their motivational practices because it currently works enough to maintain Avons success. But Avon can try using other methods that people naturally respond to for workers to feel more loyalty to Avon, and have more non-financial motivation. For Avon to make its lower level workforce feel important and appreciated, Avon will have to modify their methods by improving and adding new leadership, motivation, and communication policies.

5. Conclusions
In order to create a more motivated and inspired representative workforce, Avons strategies should be modified as such:
5

Bjerke, Bjorn. Business Leadership and Culture, Natural Business Styles in the Global Economy. Cheltenham Edward Elgar, 1999

Communication needs to be expanded to include more available people-to-people conversations. Their communications needs to be strict enough to ensure that all workers have the necessary information needed such as product recalls or changing selling or pricing information. The unofficial leadership from the upper level managers needs to be increased so that Avon Inc. can be more involved with all of their employees and make the reps feel that their actions are important and appreciated. Avon needs to take a bigger part in motivating their workers besides using commission based paying methods. Avon needs to recognize and implement more social motivators that people naturally require from interactions or from their peers.

6. Recommendations
Revision of communications network

In addition to their expansive ICT network of communication, Avon should add more opportunities for reps to speak with people one-on-one. Since people meeting together can be difficult through conflicting schedules or other common problems, Avon can still utilize their ICT methods through video-conferencing or online chats or phone calls. My specific recommendation is to allot a supervising manager who is available for online immediate conversing so that reps will have the option of speaking to higher level authority with immediate responses. And if they choose to use their advanced technologies as their primary method of communicating, they should take steps to ensure information is not lost such as following up with emails or calls as well as using their online account method. Increased managerial and leadership styles Leadership should be increased and expanded to more than just online resources and occasional leadership meetings. If Avon wishes to remain with their online form of leading, they can include forums or chat rooms where reps and upper level managers can meet to discuss topics. But more effectively, Avon should organize more leadership led by district line supervisors or larger managers so that more reps can attend as many times ensuring that as many of their workers will receive as much personal leadership as needed. Modified motivation techniques Avon should be more involved in their workers motivation as each employee is different and the same financial motivation cannot work on everybody. I suggest Avon to do specific fringe benefits related to their work processes such as allowing free samples, brochures, or other business tools necessary when reps fulfill certain qualifications. Another way is to reward workers in aiding the hassles of their job when they are doing especially well. For example, when a worker has a good selling period or meets some other requirements Avon can reward them by offering free shipping on returns or quicker delivery of products. They can also have social/celebratory events to promote the Hawthorne Effect but also use incentive programs by inviting people who met a certain quota or having the events for the highest selling district. That way workers will be motivated to work more effectively as it affects their own work practices instead of feeling like customers when simply offered products as rewards.

Bibliography
Annual SEC Report, Avon Products Inc. 02-20-09, 12-32-08

Avon company website, www.avoncompany.com, Corporate Responsibility Bjerke, Bjrn. Business Leadership and Culture National Management Styles in the Global Economy. Cheltenham, Edward Elgar, 1999 Glasgow, Donna. Leadership Upline, Personal interview. 12-09-10 Representative Online Account, www.youavon.com, Avon compnay Avon SEC annual report, page 13, 16, 198