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November 01, 2006

New Perspectives

Embracing Diversity in Direct Selling

by Professors Larry Chonko and Buddy LaForge


In this month’s Academic Forum, Professors Larry Chonko and Buddy LaForge visit with Nathan Moore, Senior Vice President, General Counsel and Secretary for Mary Kay and outgoing DSEF Chair, about the importance of diversity in the direct selling industry.

Larry: Buddy and I thought that you, Nathan, would be a great source of information on diversity, since you represent Mary Kay, a company founded by a great lady and one who has revered the talents of all people, particularly women, over the years.

Nathan: Thanks for those kind words. Great leaders treat people well. Mary Kay led by practice, principle and a deep respect for people. We hope we can carry on her spirit for many years to come.

Buddy: Why don’t you talk a bit about what Mary Kay is doing in the area of diversity?

Nathan: Mary Kay’s approach to diversity has its roots in its formation. From the earliest days of her company in the early 1960s, our founder, Mary Kay Ash, believed the playing field should be level for everyone. Initially, she set out to write a book to help women survive in the male-dominated business world, but ultimately realized she had created a marketing plan for her “dream company,” where women were provided an unprecedented opportunity for personal and financial success.

Larry: Mary Kay’s culture is deeply rooted in the values of its founder. How can other companies learn from this?

Nathan: I think it is important to recognize that the values professed and acted upon by top management are critical in setting the action tone for any company. We were blessed to have Mary Kay with us for many years, and her values are deeply ingrained in the company and in the culture that has grown around it over more than four decades. Her values and her enthusiasm for living those values are not easily copied. But there are some more tangible things that other companies can look to.

Buddy: Can you give us an example or two?

Nathan: First, companies must recognize that there is a large and broad-based talent pool. If companies are truly looking for the best, they must look everywhere. Second, any organization must be very clear about what they are committed to accomplish regarding diversity. No company can be successful if their diversity program consists of simply responding to negative occurrences. There must be goals, but they cannot be limited to demographic goals. If the business’s mantra is nothing more than affirmative action and reaction to negative events or legal mandates, the likelihood is that any diversity initiatives will cause unnecessary discomfort throughout the company and will not have lasting impact.

Larry: Are you saying that if an organization treats negative occurrences as apocalyptic, these stories become lore?

Nathan: Yes. And if that happens, a company might run the risk that anything that falls into the domain of diversity training can become a focal point of all things negative. Too often people seek to avoid confronting anything that suggests diversity, because they associate the word diversity with remedying past wrongs rather than as a term that brings with it the possibility of greater opportunities for each of us. Promoting a broader definition of diversity helps to avoid those negative connotations.

Buddy: How does Mary Kay view diversity?

Nathan: Diversity, equal opportunity and inclusiveness are woven into the fabric of our company’s unique culture. Larry, you may recall from our business-ethics presentation at Baylor that Mary Kay Ash started her company on the premise of the Golden Rule, with honesty and integrity as its cornerstones. Her objective was to give people, particularly women, a business opportunity she had been denied.

Larry: I remember that, and I remember how the story touched our students.

Nathan: Before forming her company, Mary Kay was passed over for a promotion at another direct selling company, losing out to a man she had trained. It became clear to her that, although she routinely broke sales records and worked harder, she earned far less than her male counterparts. So after a very brief “retirement,” she set out to form a company where the requirements for promotion were clearly laid out-having to do more with performance, personal ambition, enthusiasm and, above all, respect for others. To that end, diversity does not stem from a corporate mandate; rather, the company views diversity as a natural extension of the company’s mission. If it is a natural extension of our mission, then it follows that not only is it the right thing to do, but also it benefits our shareholders, our employees, the independent salesforce and their customers.

Buddy: What does Mary Kay do if they find that individuals are reluctant to explore diversity issues?

Nathan: Diversity is part of our Employee Performance Development Process (“PDP”). All exempt-level employees participate in the company’s PDP. The PDP has four main quadrants of review: People, Business, Fiscal and Objectives. Within the People quadrant, there are four subcategories: Communication, Golden Rule, Relationship Building and Diversity. Within the Diversity sub-category, the following aspects of the employee are rated: a) Does the employee value and respect diverse backgrounds, talents and multidimensional lives? b) Does the employee recognize and embrace the business value of involving people from different backgrounds, cultures and environments and those with different characteristics? and c) Does the employee demonstrate an understanding of the different cultures, customs and business environments required for our company to grow and expand, while adhering to the highest Mary Kay standards for ethical practices, product quality and safety?

Larry: What would you say to someone who believes that diversity work is a waste of time?

Nathan: They’re flat-out wrong. Not only is diversity the right thing to do, but I would strongly argue it benefits our shareholders, our employees, the independent salesforce and their customers. Our corporate values and business opportunity resonate with women from all backgrounds, so it stands to reason that we embrace diversity as one of our core philosophies. People who view diversity as a waste of time are out of alignment with any organization that seeks to market its products or services in a global marketplace. Diversity is about things like fairness, inclusion, ideas and creation of new strategies and tactics to replace old ones. How are these things a waste of time? The character of any organization that allows such a response comes into question.

Buddy: How does Mary Kay incorporate diversity into its strategic thinking?

Nathan: As I mentioned earlier, it is deeply ingrained in our culture. Since we view diversity as a natural extension of our mission, every decision we make should take into account and value diversity at all levels. Even at the highest levels of management, when we’re faced with a problem for which a solution doesn’t immediately seem obvious, we find ourselves asking, “What would Mary Kay do?” at which point the answer usually becomes clear. Let me digress for a moment to something we talked about earlier. Rather than reacting to periodic events, Mary Kay is better served by thinking strategically about the proficiency and understanding needed to cultivate the values that can be derived from diverse people. Thinking this way helps us deal with negatives if they occur, but we do so in the context of an overall strategic framework that provides guidance regarding specific courses of action. In other words, both corrective actions, when needed, and proactive, positive actions are woven into an overall diversity strategy.

Buddy: I hear you saying that when an organization is clear on how it articulates its diversity strategy, the likelihood of successful outcomes increases dramatically.

Nathan: Absolutely! With a strategy, all Mary Kay people understand the reasons requiring their personal involvement. Management is better able to explain why attention to diversity is requested. Leadership is clear on how much time, resources and energy are needed to ensure diversity is embraced for the value it can provide in helping the company achieve excellence in everything it does.

Larry: What problems and opportunities do you see in delivering value and customer service across cultural barriers?

Nathan: I see enormous potential for all direct sellers as we embrace international growth and expansion. As companies grow and become multinational organizations with a global customer base, companies will need to hire diverse individuals if they expect to deliver high quality, customer service focused resources and goods. Take our Legal Resources Department as a snapshot. Of the 12 attorneys on staff, half are women and five are persons of color. Half command a language other than English, and four were foreign-born. I would argue that diversity on this micro level is as much a necessity as it is a value.

Larry: How can a firm profit from fostering a climate and culture of acceptance and agreement (supporting the Mary Kay business plan) while still fostering individuality (being able to use diverse skills on the job)?

Nathan: That is a great question and one of the things that diversity, as a term, seems to underplay. People with different backgrounds, expertise, etc., have many things in common. They hold many of the same things important. For example, our people all support the

Mary Kay business plan. They are all given opportunities to use their unique skills on the job. We, as a company, act on many suggestions offered by our independent salesforce. And there is dialogue and resulting agreement on how Mary Kay can improve. It is amazing that our people are interested in seeking ways to make our best people better and lend a helping hand to those who are struggling. Mary Kay people are linked by the common bond of understanding that what they do contributes to the accomplishments of the company. They all want a productive and supportive work environment, and the ability to work with high-quality products and services.

Buddy: In other words, a key to success is recognizing that we differ, but trying to embrace individual uniqueness through a series of bonds that people have in common.

Nathan: That’s right. And I would say that Mary Kay Ash was masterful in recognizing that people across a broad spectrum could bond and benefit from a simple set of common goals. She often said, “People will support that which they help to create.” She would probably agree with former President Jimmy Carter who said about America, “We have become not a melting pot, but a beautiful mosaic. Different people, different beliefs, different yearnings, different hopes, different dreams.” These differences are to be revered, but they can also be embraced for contribution to common endeavors.

Buddy: This has been a great conversation. Nathan, thank you for taking time to visit with us on this important topic.

Larry: I second that. It was a pleasure to visit with you Nathan and to listen to your thoughts on diversity.

Nathan: Thank you for including me in this conversation.

Buddy: This was a great session, but we forgot to be funny.

Larry: Maybe we will never be funny, but there is always next month.

Raymond (Buddy) LaForge is the Brown-Forman Professor of Marketing at the University of Louisville. Larry Chonko is the Holloway Professor of Marketing at Baylor University. E-mail your questions and comments to professors@directsellingnews.com.