Mary Kay Cosmetics Case

MPO Strengths

* Consultants are financially rewarded only if they increase sales and recruiting. The strong link between performance and outcomes (strong P-to-O instrumentality in Expectancy Theory) leads to high employee motivation.

* Mary Kay’s automobile reward program is highly valued by employees (high outcome valences in Expectancy Theory) and has spurred many consultants to perform at very high levels. Automobile reward is contingent on the meeting of minimum monthly sales targets.

* Consultants’ need for belonging and esteem (Need Hierarchy Theory) is cost effectively leveraged by the various recognition programs.

* Mary Kay Cosmetics has training systems to improve performance (improve E-P in Expectancy theory). Consultants have access to training manuals, weekly meetings, sponsored conferences, a hot-line, and other on-going support.

* Opportunities for advancement and achievement are clear and transparent allowing consultants to pursue their growth and development needs (motivators in the Motivator-Hygiene model).

* Consultants have high autonomy and flexibility. They are essentially independent franchisees. As independent sales people, they have immediate feedback on their own performance.

MPO Problems

* VIP consultants work extra hard to become directors, but are often too ill-prepared, inexperienced, and lacking in team strength to meet the demands of continuing director level performance (weakening E-P in Expectancy Theory). The jump to director level may be too challenging (Goal Theory), but director level learning supports may be inadequate (Social Learning Theory). Failure follows, self-efficacy is damaged, and so is the director’s unit morale. ERG Theory suggests that satisfaction-progression
may be replaced by frustration-regression.

* Many consultants have stagnated at a “maintenance” sales level as they become satisfied with retaining their VIP cars. Inadequate incentives exist for these consultants to go beyond this maintenance level, especially if they are not intrinsically interested in achieving director status.

* The percentage of the sales force winning cars has doubled, but car “tenure” has declined resulting in large losses for cars that are in service just a short time.

A brief analysis of the MPO strengths and problems identified

Mary Kay Cosmetics has effective incentive, evaluation, and recognition programs that are clearly based on performance. However, Mary Kay Cosmetics must give VIP consultants incentives to go beyond “maintenance” level performance and ensure that inexperienced VIP consultants do not progress too rapidly to director status. Director level turnover is too high. The company does a good job supporting consultant level development, but must improve support and training for newly promoted directors. Mary Kay Cosmetics must also minimize the cost of maintaining low performing consultants. The challenge is reduce costs while improving sales force morale and motivation.

References:

Dickson, D., & Saunders, C., & Stringer, M. (1993). Rewarding People: The Skill of Responding Positively. New York: Routledge.

Flaherty, C. F. (1996). Incentive Relativity. Cambridge: Cambridge University Press.

Kohn, A. (1993). Punished by rewards: The trouble with gold stars, incentive plans, A’s, praise, and other bribes. New York: Houghton Mifflin Company.

Matsumoto, R. T. (1969). Relative reward effects in differential conditioning. Journal of Comparative and Physiological Psychology, 68, 589-92.

Stock, C. (1978). Effects of praise and its source on performance. Perceptual and Motor Skill, 47, 43-46.

Weiner, B., & Kukla, A. (1970). An attrubutional anlysis of achievenment motivation. Journal of Personality and Social Psychology, 15, 1-20.

Woodside, A.G., & Davenport, J.W. (1974). The effect of salesman similarity and expertise on consumer purchasing. Journal of Marketing Research, 11, 198-202.