The mix of basic salary, benefits, bonuses, commissions, and other personal development programs constitute a compensation plan. The sales generated by salespersons hence their performance determines individual compensation. There are four factors that management should take into consideration in order to achieve a competitive compensation plan. They include a mix of salary and incentive, performance levels, level of pay, and performance-payout relations. Motivation is the key factor to a company with the aim of achieving a high sales volume of its products or services. An increased sales growth, job satisfaction, increased market share and accounting goals are attained as an employer strives to utilize company resources to motivate an employee.
Six Features of an Effective Total Rewards System
Avon initially analyzed its reward system, available resources in dollars, workforce so as to ascertain the improvements to make from the underlying gaps. A competitive reward system is not only composed of basic salary, but other features like compensation, benefits, work-life balance, performance recognition, and career development. Career development is pursued by many employers in workplaces because it leads to employee job satisfaction and reduced turnover (Hoole, & Hotz, 2016). Thus, an employer will have to maintain professional employee development to attain loyalty and improve their skills or competence towards their duties. Various forms of career development programs at Avon are tuition assistance, mentorship or seminar programs, and technology training of its workforce.
Benefits to sales force could be diverse due to the nature of their duties. Some companies prefer to reward employee benefits based on their performance and length of stay at the company. Insurance and medical benefits are basic to an employee and will keep them motivated towards exemplary performance (Arora, 2016). Social Security insurance, Medicare and Medicaid, retirement benefits, unemployment insurance, and state disability insurance are some of those offered by Avon. Employees also benefit from holiday packages, sick leave, bereavement leave hence the top-notch workforce it has been able to maintain.
Performance recognition by an employer will motivate employees to work hard towards the set targets. Team recognition will give an impression that teamwork is valued hence various talents and competence are developed among employees. The sales force is able to share innovative ideas that should be implemented by Avon to attain large customer base and penetrate different market segments. It does not take massive resources to recognize performing employees, as it can be attained through appreciation luncheons, verbal appreciation, and employee-of-the-month awards (Beardwell, & Thompson, 2017).
Compensation of a salesperson is variable based on their performance. It is usually competitive at Avon as they are paid through basic salaries and commissions depending on sales volume. Short-term incentive pay systems are aimed at achieving short-term performance improvements. Cash bonuses and stock options are offered annually to challenge employees to work hard for sustained productivity. Employees who maintain consistency in their performance over the years are promoted to new positions and developed career-wise.
Work-life balance at Avon is attained through flexible working schedules to enable workers to attend to personal and family matters. As they come back, they will be motivated to achieve sales targets due to the atmosphere created by the employer. There are employees who wish to advance their studies while others have to take care of young children or elderly persons. Additionally, Avon provides fitness facilities, nutritional counseling, investment sessions, stress management programs and child-care facilities (Hoole, & Hotz, 2016). It is in accordance with labor union provisions that an employee enjoys the above benefits hence a company could be sued for violation of such depending on geographical location and nature of its industry.
Empowerment of women in the modern-day world has been a topic of debate, with companies investing towards that initiative. Avon has for over 120 years succeeded in women empowerment through its hiring, training, compensation and career progression. The company identified market gap of customers’ interest in product samples, and it is currently operating in more than 40 countries with estimated revenue of $8 billion (Effron, & Goldsmith, 2010). Employees working in such a culture will always look forward to better performance than the rival companies.
Behaviors of Sales Force Targeted With the Compensation Plan
In order to achieve commendable sales results, Avon takes into consideration relating external factors affecting compensation plans, for example, market conditions. There are certain factors that affect salespeople behavior such as organizational culture. However, performance should be linked to incentive plans to avoid unexpected behavior among by the sales force. Although behavior has no measurability, Avon’s management ensures that its compensation plans are predictive of matching sales revenue, market share and sales growth from existing customers (Effron, & Goldsmith, 2010). A sales compensation program should be well communicated to stakeholders to avoid failure on the delivery of set objectives.
The behavioral traits expected of a salesperson in order to achieve a competitive reward are integrity, clarity and communication, tolerance, reliability, objectivity, measurement review and informative. It is therefore essential to maintain close contact with salespeople for them to evolve from their failed practices and adopt new challenges aimed at attaining goals (Madhani, 2014). Avon has more than 6 million representatives in various economies because it acknowledges that it has to bring beauty to doors and also food on the table through job creations. An employee with desirable behavior expected in the sales field coupled with good performance track will always gain from the compensation plans of Avon.
Value Proposition Achievement for Current and Future Workers Using the Outlined Plan
The cost of the reward programs and the value created by employees should be proportional. Avon has continued to thrive because it focuses on empowerment of its employees using innovative strategies. Many companies are mostly concerned about employee rewards, job security, base salary, health care benefits, and time off. We are living in a competitive and dynamic world hence the adoption of exemplary employee empowerment programs makes Avon achieve a competitive edge in the beauty industry. Employees are able to attain economic independence through talent development, career progression, and performance recognition.
The employer is able to get value for their investment as employees will yield high productivity which improves revenue generation and capital reserves. Other organizations fail to realize that the salespeople are the driving force in performance. They instead focus on their mission, values and vision, reputation and challenging opportunities for mergers or acquisitions (Beardwell, & Thompson, 2017). Companies like Avon that has triumphed even in tough economic times put into consideration many business performance factors. Above it all, sales force compensation to derive high productivity and customer base is critical to the company.
Probability of Future Salespeople Joining the Aforementioned Plan
The already existing sales force will determine the probability of others joining them in the future. As they conduct their door to door sales and advertisement of Avon products, they will in the process inspire others. Some will even go ahead and discuss their work experience with Avon to the interested parties. And since Avon has a good working environment and a competitive reward system, prospective employees will make applications in request of joining the sales force team. A company like Avon being internationally recognized in the beauty industry will attract employees due to its productivity, technological advancement, and employee engagement.
The company itself has high expectations on prospective employees to ensure that its reputable culture is maintained. Employees are expected to maintain key company priority goals, communication and positive contribution towards the wellbeing of the company. Such strategies will keep prospective stakeholders like willing employees and investors interested in the competitive Avon’s opportunities. The total rewards program should be aligned with the business strategy to achieve such goals. The employees will be tuned to the organization culture through company investment on employee empowerment, after which they reap positive returns on investment, as shareholders enjoy value for their money through dividends (Madhani, 2014). Employee behavior will be influenced towards the attainment of profitability and job satisfaction.
Conclusively, sales force compensation plan should be competitive as it influences performance and company reputation. Avon has been a successful company regarding employee empowerment in the beauty industry. A reward system should be proportional to employee input to keep capital reserves in balance for a sustainable future. An employee should possess integrity, communication, reliability, tolerance and measurement review skills for business prosperity.
- Arora, R. (2016). Role of Performance Improvement and Instructional Design in Strategic Human Resource Management. Journal Of Strategic Human Resource Management, 5(1). http://dx.doi.org/10.21863/jshrm/2016.5.1.022
- Beardwell, J., & Thompson, A. (2017). Human resource management. Harlow, United Kingdom: Pearson Education.
- Effron, M. & Goldsmith, M. (2010). Avon Products Inc. in Best practices in Talent Management. San Francisco, Pfeiffer, A Wiley Imprint.
- Hoole, C., & Hotz, G. (2016). The impact of a total reward system of work engagement. SA Journal Of Industrial Psychology, 42(1). http://dx.doi.org/10.4102/sajip.v42i1.1317
- Madhani, P. (2014). Managing Sales Compensation Across the Economic Cycle. Compensation & Benefits Review, 46(1), 16-24. http://dx.doi.org/10.1177/0886368714535023