"Dear, whatever you're selling, I've already got two of them." These words, from the Ashley Judd-starrer Double Jeopardy, uttered by a woman who mistakes an approaching Judd to be a door-to-door seller, are an apt reflection of the predicament of the direct selling industry. Considered a last resort for people unable to find employment otherwise, or for those looking to make a quick buck, the only qualification direct selling needed, it was widely assumed, was nonchalance and persistence when doors were slammed on one's face with a thunderous "no".
It gets worse in emerging markets like India where modern direct selling, which proliferated in the mid-90s, has suffered from an acute lack of regulatory clarity, because of which it has often been equated with fraudulent pyramid/ponzi schemes. For a long time, products sold by such firms were viewed with scepticism, while recruitment processes lacked the professionalism present globally.
But over the last few years, the sands seem to be shifting in the Indian direct selling market, estimated at Rs 7,200 crore and set to touch Rs 64,500 crore by 2025 (according to a FICCI-KPMG report). Some of the newer multinationals in India have brought with them global best practices. With a greater emphasis on recruitment and training, we now hear terms like 'career development', 'succession planning', 'work-life balance' and 'diversity' in hallways of the rather plush offices of direct selling companies. The business environment now also supports the spirit of entrepreneurship more, which has worked in attracting educated people to the sector. It is like doing business without worrying about the business investment.
Consider this: the 1982-founded Eureka Forbes India chooses to employ its own sales staff as opposed to having a network of dealers. Its service network enters 20,000 kitchens daily, and 90 per cent of its customers are present within a 5 km radius of a company service station. Or take consumer products company Amway India, where 50 per cent of the employees have worked in the company for over five years; 25 per cent for more than 10 years, and globally, the average tenure at Amway is over 20 years. The attrition rate at Amway India is 10 per cent. What seems to be working in its favour is a sharp and deliberate focus on human capital.
So, how are direct selling companies managing to hold their own in the battle for talent? How do they make sure they are developing the right skills at every level? More importantly, are they prepared to identify and aggressively develop high potentials as part of a proactive succession management process?
The people story
Of the 11,000 employees at Eureka Forbes, 8,000 are sales employees (called Eurochamps) who meet 60 million people every year by knocking on their doors. Over 65 per cent of the recruits come through the friend-get-a-friend scheme, while the rest are recruited from colleges, through job melas, job portals, recruitment consultants, ads, employment exchanges etc. In the case of beauty companies Avon and Oriflame, even social media is a hunting ground. "We look for people who are not typical city boys - they should be hungry to prove themselves. They may come for money, but they don't stay for money," says Marzin Shroff, CEO, direct sales and senior vice-president, marketing, Eureka Forbes, adding, the maximum attrition in the company happens in the first six months itself, post which it is 6-8 per cent.
Avon hires sales representatives following two models: cold (involving cold calls in a neighbourhood or participating in closed group events), and warm (backed by a strong network of friends and family and helping them join Avon). On its part, Oriflame recruits through pamphlets, referrals, Oriflame opportunities meetings (forums where new catalogues are launched) etc. Users of Oriflame products are known to turn into its consultants.
Now consider how every meeting at Eureka Forbes starts with the corporate anthem - an attempt to build pride among employees. Once a Eurochamp joins, he goes through a structured training programme - a 14-day module called NEO (new eurochamp orientation) where he is imparted selling skills, product know-how, English skills and field-training. There is one trainer per 100 people. After a month of joining, these Eurochamps undergo refresher training, which integrates the first month of field experience with 11 key objection-handling and relationship-building skills.
At Amway, the distributor is first made an effective salesperson, then an enthusiastic product advocate, then a team leader and finally, a supervisor/leader. Amway has seven lakh distributors attending 18,000 training sessions (conducted in 11 languages) in a year. The company also has high-tech e-learning portals in four languages (Hindi, English, Tamil, Bengali), which had four lakh registrations in 2014. Product booklets are present in 11 languages. Furthermore, Amway provides its distributors with health and beauty assessment centres - experiential and advisory zones in its 155 offices where distributors can not only learn about products but also bring select customers with them for tips and product experiences.
"More than 60 per cent of our distributor base is women, which is why training time is flexible so that housewives or part-timers can attend as per their convenience," says Anshu Budhraja, general manager, Amway India.
At Oriflame, consultants undergo a monthly Set One training, which highlights the products/benefits and imparts effective sales skills to maximise earning. Set Two training teaches networking and managerial skills and business know-how. Further, beauty and wellness training is held every quarter for all consultants. Depending on skill sets, there are 30 annual trainings that its 2.5 lakh consultants can avail of. There are beauty and wellness and leadership academies (teaching time management, teamwork etc). Then there are director seminars, including train-the-trainer programmes etc. For advanced level training for network leaders, Oriflame offers 'leadership academy 2'.
Avon is equipped with a structured talent model where annually, pipelines of internal talent and succession plans for each position across various levels are reviewed and mapped out.
From trainings to order placements, IT plays a very prominent role in facilitating the operations of direct selling companies. Virtually all companies have e-learning modules and with an increasing number of educated, IT or managerial people entering the business, online training is crucial. Avon, for example, has an e-learning portal equipped with modules on leadership, on-the-job effectiveness etc. There are sophisticated IT systems for performance management, compensation modelling and HR dashboards.
At Eureka Forbes, reviews take place at the end of the month where a Eurochamp is assessed on the number of doors knocked, demos given, and sales achieved. This is fed onto a SAP server, and through algorithms of the demo-to-sales ratio, the supervisor figures out his weaknesses, highlighting where he needs more training. A leader can know a champ's scores on his phone through the touch of a button. Sales people fill their reports on tablets every day. IT helps HR function like clockwork. There is also a special hotline number for Eurochamps to use when stuck with a customer query.
Diversity and inclusion
Incentives, gifts and holidays abroad - standard fixtures in a direct seller's HR strategy - aren't enough to retain employees. To go beyond this, high performers at Amway become part of its global talent pool and some choose to take up assignments overseas. The company also has virtual reporting structures across the EIA (Europe India Africa) region. Recently, Amway sent a batch of 120 local recruits from Madurai for training to China on Amway's upcoming manufacturing plant in India.
Avon and Oriflame also send executives overseas for assignments, projects and conferences. Expat movements/postings are assisted by training on the nuances of different countries, functions etc. At Avon, the concerned person is sent on a familiarisation trip to that market; there's a lot of handholding to facilitate the move and convey internal and external communication guidelines for that market. "Whether you cut it by gender, experience, job description, locality/country of origin, we have a different mix of people in the organisation," says Ruchira Gupta, HR director, Avon India.
Oriflame has international sponsorships in the 60 countries it is present in, and over 500 people go out of India every year for conferences and projects. "We float opportunities and people who want to go - maybe for the opportunity or because their husbands are there - are encouraged to do so," says Pradnya Deshpande, sales director, Oriflame India.
Eureka Forbes has recently launched a women-only direct selling line for its Euroviva range of products. It has 500 women as nutri-consultants and through a four-day seminar the company gives them a career plan, compensation structure, and learning roadmap. The company's call centre, EuroAble, is managed by 90 differently-abled people. As part of the selection process, candidates have to undergo a written examination and group discussions, followed by personal interviews. Most of the employees recruited come from the lower income strata, with limited or no fluency in English.
The management provides three-month training right from English proficiency to product training and handling consumer calls. Infrastructure too has been specially designed for the team. The workstations are a foot longer than the standard, three-feet call centre desks, and have enough space all around to allow easy access, both by wheelchair and crutches. Desktop computers have all controls on top, so employees don't have to bend low.
In the good old days, Eureka Forbes followed the model of having large offices in important areas in a city, but now, the company has smaller offices at short distances. This fiscal, over 250 Eurochamps under the age of 30 were promoted to the level where they can run their own offices. The promoted champ and his wife sit in the office 'puja', for instance, to allow them a sense of ownership. Any young leader who wants to take up a challenge can become an entrepreneur of sorts and run his own office, while still being an employee of the organisation.
EuroSenate is another initiative to empower employees under which some HR functions have been decentralised. In all SBUs, Eurochamps with over two years tenure stand for elections from their 'constituencies' (around 10 offices) every year, from which four counsellors are elected, and these four make up a senator. The senator is given power to sanction money on the spot for champs in case of family/health emergencies, without waiting for approvals from the head office.
"An ecosystem of micro-entrepreneurship is a by-product of direct selling," concludes Amway's Budhraja, with resources, investment, physical infrastructure and a business model all taken care of.
|Finally, some takers: Moorthy K Uppaluri|
These developments are encouraging for the industry as it increases its credibility, helping the players to recruit better talent. And unlike many other businesses, the success of direct selling also depends on a person’s skill as well as his cultural fit with the company, making HR best practices from across the globe relevant and critical. Today, companies offer professional and personal development programmes to hone individual talents. And to maximise performance, companies establish specific and meaningful goals in addition to consolidating careers through certified diplomas.
Interestingly, technology, which was perceived to be a threat with shifting demographics, has now been turned into an advantage by inducting passionate youngsters into the industry through social media platforms. Companies have also realised the criticality of succession plans – grooming motivated youngsters will go a long way in ensuring sustained growth in the future.
Moorthy K Uppaluri
CEO, Randstad India and Sri Lanka