Motivation Programs of Avon Products - Assignment Example

? Total Rewards Compensation Plans for Sales Force of Avon Products, Inc. Selling is not an easy task and many sales personnel will agree to this. The company needs to establish proper motivation programs in order to avoid losing salespeople now and in the future. A total reward strategy is important in such cases if the management has to succeed in helping sales people stay on course and deliver organizational objectives. Avon Products, Inc. is one of those companies that engage in selling. It is located in New York City in the US. The company deals in beauty, fashion Jewelry and apparel. It has one of the largest salespeople in the world approximated at 6.5 million. The company has over 120 years in the industry with a strong financial background and resources to pull its operations. With a clear, well structured, multi-level compensation plan, the company has continued to attract and retain its salespeople making it a highly competitive firm. In order to motivate the sales force to produce the highest number of clients, describe six (6) features of an effective total rewards program. Rewards for many decades have been used primarily as a necessary evil in the attraction and retention of employees. However many studies suggest that there is no direct link between rewards and employee performance although research shows that the absence of it demotivates employees (Robillard, 2008: O'Halloran, 2012). This has thus led to the need to implement total rewards strategy that could be used to drive business success. Such a program could be used by the organization in addressing some of the challenging issues in the 21st century such as aging workforce, competition in the market place, influence of globalization on firms and the need to operate effectively in different business strategies such as in mergers and acquisitions (Armstrong, 2010). A total rewards program includes the overall value proposition that a firm provides to its employees. Such a package includes compensation which includes: basic pay, short term incentives and long term incentives; benefits which include health, retirement, work/life benefits; and careers which include such things as training and development, lateral moves, stretch assignments and career incentives (Manas & Graham, 2003). An effective total reward system has the following key features: first it has a mix of both monetary and non-monetary rewards (Asinof, 2006). The monetary rewards include compensation in the form of base pay, overtime pay, short term and long term incentives, cash profit sharing, bonuses, commissions among others. The non-monetary rewards include such things as benefits which entail health and group benefits, retirement, paid off, work/ life programs, death benefits and prerequisites (Moynihan & Wells, 2011). Secondly, such a strategy must be aligned to the business strategy of the organization. Depending on the nature of the business strategy adopted by the organization, the strategy should be effective. A reward strategy has the power of minimizing on driving organizational performance and thus an effective total reward strategy must be able to support the overall business strategy to ensure performance. Third, such a strategy must match organizational resources and capabilities. It would be ineffective to design a total reward strategy which is overboard and which organizational resources cannot support. It would also be demeaning and inappropriate to have a strategy that is below what the organization can offer in terms of financial resources and capabilities. Fourth, an effective strategy is one that delivers rewards that drive specific behaviors necessary to achieve organizational objectives (Zingheim & Schuster, 2004). If for example, Avon Products, Inc. has a target of selling one million cosmetic products in one month, the reward strategy should be designed such that it motivates the salespeople to find clients. This could be through bonuses, incentives or a paid holiday trip! This communicates something to employees and helps them stay on target helping them easily achieve organizational objectives. Fifth is that it ensures personal wellbeing of the employee. Good working conditions are among the first motivators or things that motivate the employee and contribute to job satisfaction. Employee benefits also do the same. Health and wellness programs are part of the rewards and help employees remain healthy and fit to work as required. Lastly, the strategy ensures professional development of the employee by ensuring the availability of career growth, training and development programs and chances or opportunities for growth as well as promotions (Brown & Purcell, 2007). Describe the behaviors of the sales force that are targeted with the compensation plan. Sales people have a habit of wanting to maintain or increase income opportunities. Therefore, a compensation plan at most times disrupts the normal functioning of the sales force and might have a negative impact on the organization when it is not properly managed. There are various types of compensation plans that have been adopted by firms and are used to manage salespersons. However, as much as they may be good during a certain period of time, a change may cause a lot of problems that might not be good for the organization (Manas & Graham, 2003). Compensation plans based on sales volumes may lead to the development of aggressive behaviors that target more sales accounts. The problem with having many sales accounts is that the salesperson may not effectively manage them and in the process lose some clients. Many companies use this type of structure which includes the basic pay plus commissions and bonuses that come from the sales volumes (Armstrong, 2010). Compensations plans based on market share will encourage the sales people to want a few accounts; fewer than they can manage. The advantage with the few accounts is that one can get to penetrate their account more deeply and try and drive out the competition. In the process the salesperson is likely to increase market share (Hatum, 2010). The growth oriented compensation plans on the other hand are used to encourage the sales people to go for large territories. These territories may have a huge amount of untapped potential in them and which the organization could use to its advantage (Hatum, 2010). Avon Products, Inc. uses the multi-level compensation plan. This is similar to a growth strategy that is used to motivate people to gather large territories in order to benefit more from a network of marketers. The larger the territory, the better for the company as it will grow while at the same time ensuring the sale of their products through a number of salespeople. Assess how a value proposition is achieved for current and future employees in the plan you have outlined. A value proposition represents the reasons as to why the compensations strategy is effective for current and future employees of the organization. Current employees of in the organization get to benefit from a compensation plan that includes compensation, benefits as well as prospects of career development. The plan also ensures that the employees are motivated enough to achieve the desired organizational goals and objectives and thus gives them surety of more clients and sustained incomes as well as job security (Hatum, 2010). The plan is valuable to the current employees as it provides them with the opportunity to grow personally and professionally. All these are achieved by ensuring that the compensation plan is effective and in line with the organizational objectives. As for the prospective employees or the future employees, the compensation package is very attractive as it includes both monetary and non-monetary rewards, something which may not be provided in other companies. The plan also takes care of employee health, wellbeing and professional development through career training, health and social support groups. With all these, future employees are guaranteed of job security, good working conditions and commensurate pay and this attracts many to the organization. Based upon the type of plan you have created; indicate how attracted you think future salespeople may be to this plan. A compensation plan has to attract and retain employees. It is the right tool to get the most talented people to work in the organization and at the same time, it is a good strategy to help retain productive and performing employees in the organization. As salespeople keep on moving from company to company, it is important that a company projects a good image about itself in order to attract good salespeople who can drive its sales (Zingheim & Schuster, 2004). Attracting future sales people requires a creative compensation plan. In this plan, the strategy is to have a broad range of rewards that a salesperson is entitled to ranging from the basic pay, to bonuses and commissions which will be given depending on volume of sales made. The employee will also be entitled to cash profit shares depending on the profit made from the sales done by the employees. The compensation plan will also include rewards such as recognition where salespeople get awards of “best employee of the month” in terms of sales performance. All these will be of great importance to the organization and will attract others to work in the organization because of the good working conditions and very attractive compensation packages. Reference Armstrong, M. (2010). Armstrong's Handbook of reward management practice: improving performance through rewards. New York: Kogan Page Publishers. Asinof, L. (2006). Total Rewards. Fortune, 153(4), s1. Brown, D., & Purcell, J. (2007). Reward Management: On the Line. Compensation and Benefits Review, 39(3), 28-34. Hatum, A. (2010). Next Generation Talent Management: Talent Management to Survive Turmoil. New York: Palgrave McMillan. Manas, T. M., & Graham, M. D. (2003). Creating a Total rewards strategy: A tool kit for designing Business-based plans, Volume 1. New York: AMACOM Div. American Management Assn. Moynihan, D. P., & Wells, S. (2011). Designing Compensation Plans to Manage Today's Risk Environment. Compensation and Benefits Review, 43(1), 17-22. O'Halloran, P. (2012). Performance pay and employee turnover. Journal of Economic Studies, 39(6), 653-674. Robillard, A. (2008). Rethinking Rewards. Benefits Canada, 32(5), 73. Zingheim, P. K., & Schuster, J. R. (2004). Sales Reward Solutions. Compensation and Benefits Review, 36(21), 21-26. Read More