One Page Talent Management: Driving Value through Simplicity

1. One Page Talent Management:Driving Value through Simplicity Marc EffronSeptember 2007

2. About Avon • The world's leading direct seller of beauty and related products • $9 billion+ in annual revenues • 44,000 employees • 5 million independent sales Representatives in 100+ countries • 2/3 of earnings are from outside the U.S., with a focus on developing markets

3. CAGR 25% CAGR 10% $8.7 $1.2 $8.2 $7.7 $1.1 $6.8 $1.0 $6.2 $6.0 $0.9 $5.7 $0.8 $0.8 $5.3 $0.7 $0.5 2006 1999 2000 2001 2002 2003 2004 2005 1999 2000 2001 2002 2003 2004 2005 2006 Five Years of Double-Digit Growth Revenue (US$B) Operating Profit (US$B)

4. So We Had Some Work to Do . . . Fundamental restructuring began October 2005 • Flattened the organization (15 layers of management to 7 - 8) • Moved from a regional to a matrix structure, made Marketing and Supply Chain global, horizontal organizations • Reduced C & B expenses by 20% - 25%, eliminating ~25% of VPs and Directors, 20% of Managers; 4,000 employees • Started to build significant Brand Management and Marketing Analytics capability • Bought new executive talent (from some of you!)

5. CFO HR Mktg. Strategy Sales Comm. Legal CEE NA LATAM WEMEA Supply Chain APAC China A New Line-Up All but three executive team positions had new incumbents; 40% were hired externally CEO New Hire New Incumbent

6. So how would we win?

7. We Know What Works . . . The Top Companies for Leaders showed how to continually grow earnings and great leaders – and proved that better leaders deliver better business results! The Top 20 Companies for Leaders • What makes the Top 20 so unique? • The 3 Fundamental Leadership Truths • CEO and Board Leadership and Inspiration • Maniacal Focus on High Potentials • The Right Programs, Done Right • The Top 20 create more space betweenthem and their competitors though: • Practical Accountability • Consistent Execution • Clear Differentiation The Secret Ingredient: Design practical processes that ensure successful implementation

8. But it’s Not Working • Deloitte’s Aligned at the Top study says there’s “an increasing tension between company needs and HR's ability to deliver” • BCG’s The Future of HR in Europe says “HR executives face a credibility gap when it comes to executing basic HR duties” • Articles like Fast Company’s “Why We Hate HR” continue the debate about HR’s effectiveness • Yet we’re doing the same things in the same ways expecting different results

9. So What To Do? • We know that talent management processes are successful if they are consistently implemented • We know that line managers will only use tools/processes that • Clearly add value • Take little time So we decided to do things a little differently

10. One Page Talent Management • One Page Talent Management radically challenges conventional TM thinking. It’s driven by the belief that: • Today’s talent practices are academically correct but practically deficient • The value in talent practices is only realized through execution • A few elements in each talent practice deliver most of the value • HR has overcomplicated its practices with no basis in fact • HR has harmed its reputation by creating bureaucracy and complexity without adding value

11. Provides honest feedback in an effective manner Score: 3.42 • Provides honest feedback Keep feedback fact-based and avoid letting your emotions influence the tone or content of your message. Stay culturally aware when giving feedback. • Be sure to ask for, and listen to, other’s opinions when giving feedback. Performance Management Plan -- 2007 Q1. Associate Manager Guidelines Name: Name: • Keep it simple • Ensure understanding Location: HR Generalist Title: • Focus • Keep the conversation alive • Provides frequent coaching to drive improved performanceScore: 3.58 • Provide feedback and coaching to those who are not direct reports. • Understand the amount of coaching each direct report need and be sure not to over or under coach anyone. Q2. Dept: Name: 1 Describe the Associate’s ’ performance goals for the year (in order of priority) A. Goal Metric Results • Uses facts and data to make business decisionsScore: 4.25 • You are seen as very strong in this area. Focus on helping others to understand fact-based analysis and decision-making so you grow these capabilities at Avon. Q3. B. Goal Metric • Balances analysis and experience to take intelligent risks Score: 3.75 • No consistent themes emerged form the comments. A few suggestions included not letting data slow your decision-making and ensuring you see the downside risks in proposals. Results Q4. C. Goal Metric Stop • Possess the humility to acknowledge and work on own development needs Score: 3.58 • Accept feedback without being defensive; listen, don’t try to explain why or blame others • Stay calm under pressure; you sometimes become overly controlling during stressful times Results Q5. Caution D. Goal Metric • Is aware of the personal and professional needs of others Score: 3.92 • Increase your personal contacts with your direct reports and other key associates in your organization. • While you are aware of others needs, be sure you focus on them by executing development plans even during challenging business times. Q6. Results Continue Value Added Describe the two behaviors that are most critical to achieve the goals listed above. Please use the Focused Leadership Edge competencies 2 (attached) or others (see the “How To” page). In the lower half of the box, describe how the Associat e will develop these behaviors. A. B. • Consistently displays respect when interacting with others Score: 4.25 • Be aware of the communication needs and styles across Latin America. Your direct style may be interpreted as blunt or rude, which will limit your effectiveness. Q7. Comments Summary Rating 3 • Communicates frequently across functions and regions Score: 3.67 • Increase your communication across the regions and across functions; be balanced in how much communication each group receives. • Identify every constituency you need to communicate with (ask others for help with this) and develop and plan for each. Effort Required Q8. Signature & Date “ We have agreed to these objectives” “ A performance evaluation was conducted” 4 At goal setting At year - end review Matrix Matrix Associate Associate Manager OK? Manager OK? Manager Manager • Establishes and accepts accountability across matrix relationships Score: 3.67 • Ensure your decision-making always includes your regional partners. • Be very clear on expected actions and accountabilities within the matrix, include the regional leaders when making these decisions. Q9. • Adds value through specific skill or area of expertise Score: 4.08 • (No significant suggestions were received) Q10. One Page Talent Management • OPTMis the art of designing talent practices that maximize value while minimizing effort and complexity Stop Caution Continue Value Added • How we do it: We start by asking ourselves three basic questions: • What is the core business objective? • What is the simplest possible design that also maximizes value? • Can we provide managers unique insights or guidance? Effort Required • We design one page that captures all necessary information

12. One Page Talent Management This isn’t a design gimmick . . . It’s a way to achieve the true potential of talent management

13. The Process – Performance Management • Core Objective: Ensure understanding of performance and development goals; evaluate progress fairly at year-end • Maximize value/minimize effort • Eliminated all elements not directly related to the goal: weightings, individual goal ratings, goal labels, competency ratings and behavioral standards (in PM form). • Eliminated separate career development and development planning section • Set maximum of four goals to increase focus • Simpler design minimized need for instructions

14. Performance and Development Planning Performance Management Plan -- 2007 Focus on essential info • What is the goal? • How will you measure results? • Was it achieved? Associate Manager Guidelines Name: Name: • Keep it simple • Ensure understanding Location: HR Generalist Title: • Focus • Keep the conversation alive Dept: Name: 1 Describe the Associate’s performance goals for the year (in order of priority) A. Goal Metric Results B. Goal Metric Results Maintain Balance of “What/How” • Behaviors critical to achieve these goals C. Goal Metric Results D. Goal Metric Results Describe the two behaviors that are most critical to achieve the goals listed above. Please use the Focused Leadership Edge competencies 2 (attached) or others (see the “How To” page). In the lower half of the box, describe how the Associat e will develop these behaviors. Reduce unnecessary info • Rating: 1 – 5 with no labels, weighting or needless complexity A. B. Comments Summary Rating 3 Signature & Date “ We have agreed to these objectives” “ A performance evaluation was conducted” 4 At goal setting At year - end review Matrix Matrix Associate Associate Manager OK? Manager OK? Manager Manager

15. The Process – 360º Feedback (The A10) • Core Objective: Support Avon turnaround by providing easy, focused, practical feedback/feedforward on leadership behaviors critical to turnaround • Maximize value/minimize effort • Extracted four basic capability statements from existing competency model • Eliminated rating identifications (i.e. self, manager, peer) which added complexity without enough value • Reduced data complexity which eliminated the need for graphs & charts • 10 critical questions • Add Unique Insights or Guidance • Summarized “feedforward” statements from forced qualitative responses, “what one thing should they start/stop/continue doing” to improve • Will add in year-over-year progress when enough data available

16. Provides honest feedback in an effective manner Score: 3.42 • Provides honest feedback Keep feedback fact-based and avoid letting your emotions influence the tone or content of your message. Stay culturally aware when giving feedback. • Be sure to ask for, and listen to, other’s opinions when giving feedback. Q1. • Provides frequent coaching to drive improved performanceScore: 3.58 • Provide feedback and coaching to those who are not direct reports. • Understand the amount of coaching each direct report need and be sure not to over or under coach anyone. Q2. • Uses facts and data to make business decisionsScore: 4.25 • You are seen as very strong in this area. Focus on helping others to understand fact-based analysis and decision-making so you grow these capabilities at Avon. Q3. • Balances analysis and experience to take intelligent risks Score: 3.75 • No consistent themes emerged form the comments. A few suggestions included not letting data slow your decision-making and ensuring you see the downside risks in proposals. Q4. • Possess the humility to acknowledge and work on own development needs Score: 3.58 • Accept feedback without being defensive; listen, don’t try to explain why or blame others • Stay calm under pressure; you sometimes become overly controlling during stressful times Q5. • Is aware of the personal and professional needs of others Score: 3.92 • Increase your personal contacts with your direct reports and other key associates in your organization. • While you are aware of others needs, be sure you focus on them by executing development plans even during challenging business times. Q6. • Consistently displays respect when interacting with others Score: 4.25 • Be aware of the communication needs and styles across Latin America. Your direct style may be interpreted as blunt or rude, which will limit your effectiveness. Q7. • Communicates frequently across functions and regions Score: 3.67 • Increase your communication across the regions and across functions; be balanced in how much communication each group receives. • Identify every constituency you need to communicate with (ask others for help with this) and develop and plan for each. Q8. • Establishes and accepts accountability across matrix relationships Score: 3.67 • Ensure your decision-making always includes your regional partners. • Be very clear on expected actions and accountabilities within the matrix, include the regional leaders when making these decisions. Q9. • Adds value through specific skill or area of expertise Score: 4.08 • (No significant suggestions were received) Q10. The Result – 360º Feedback (The A10) Focus on essential info • What behaviors are critical, not just nice to have? • What information is most valuable to the participant? Make it highly practical • Raters tell participants exactly what to do (Start/stop/continue) Add unique insights/guidance • Raw comments summarized into themes by TM

17. The Process – Associate Engagement Survey • Core Objective: Direct leaders to take statistically derived actions on the engagement survey • Maximize value/minimize effort • Summarize the most relevant survey information on one page • Avon’s overall engagement score, their group’s score and their target • Avon’s score on key engagement drivers compared to the group’s scores • The two or three key engagement levers for that group • The power of each driver to increase engagement • Add Unique Insights or Guidance • Proprietary algorithm identifies key drivers of engagement for that group at the item level, modified for “achievability” • No additional survey analysis required for a manager to take action

18. The Result – Associate Engagement Survey Focus on essential info • What was our improvement goal? • How did my group score? • How did Avon score? Add unique insights/guidance • The relative power of engagement dimensions at Avon • The specific items that the group should act on to increase engagement

19. So Does it Work?? Early signs look good! • A few quantitative metrics • Manager provides timely and helpful feedback: + 11% • Manager plans for my professional development: + 7% • Manager clearly communicates performance goals: + 4% • A few qualitative metrics • Line managers saying “thank you for new perf. mgmt. process” (!) • Andrea and the Executive Committee says “best talent mgmt. process they’ve seen in 25 years” • Talent review discussions more fact-based, more decisive

20. Making It Work for You • Pick your “most broken” talent/people process (ask your customers – they know!) • Forget everything you know about how HR processes/ practices should be designed • Ask yourself (or your team): • What’s the essential business objective of this process? • What’s the simplest possible way to do this? • Add one small step at a time, asking “Does this add more value than it does complexity/effort?” • Execute that simple process flawlessly

21. So Something Doesn’t Add Up . . . • If “simple” works, why are most companies’ processes so complex? • If the causes of, and barriers to, building leaders are the same at most companies (and the Top Companies study said they were), why are some companies building leaders successfully and others not? • If we’re that good at what we do, why doesn’t anyone else think so?

22. Talent Pool or Talent Puddle:Where’s the Talent in Talent Management? • It’s time for a moment of humility • “There are only 8 people in this field who are any good” • Our ability to execute won’t improve until the quality of talent management practitioners improve. We must: • Elevate Practitioner Quality • Know the Business • Love Business • Take a Production Mindset • Simplify Our Work • Radically Simplify Our Work • Add Value • Define the Field

23. So in Closing . . . . • Simple works – the facts prove it • Don’t be afraid to blow up your processes – your leaders will thank you • Stop the articles – raise our own talent bar! For this presentation and others + free articles, go to www.marceffron.com