Rarely has a new CEO jumped into a big-time, high-profile turnaround situation such as Avon Inc. presents. And if history is any guide, the ‘Do Nothing’ Avon Board of Directors will not be of any help.
Sherilyn S. McCoy who took over the CEO slot on April 23rd must hit the ground running. And not only must she put out short-term fires, she also has to develop a long-term strategic plan — on the run. Simultaneously, she must learn a new (for her) direct-sell business model. Plus she has to deal with SEC probes of bribery charges in China; insider trading accusations; and a myriad of operational malfunctions. In fact, many are questioning her first major judgment call concerning Avon, and that is accepting the job in the first place.
McCoy, who was formerly Vice Chairman of Johnson and Johnson, was passed over for the CEO job at the $65 billion pharmaceutical giant in February. McCoy gets high marks for reinvigorating the pharmaceutical division at J&J facing patent expirations on major drugs. She did not have as much luck when she took over J&J’s consumer business that was hit hard by manufacturing problems leading to the recall of products ranging from Tylenol to baby lotions.
Andrea Jung, former CEO and current Executive Chairman, who has controlled the ‘Do Nothing’ Board for over a decade gets the blame for Avon Products’ current sorry state of affairs, and she deserves more than her fair share. But the real culprit is the Board of Directors. Inexperience cannot be the explanation. The majority of the Board has had some experience with the direct selling model, as six of them have been members for 10 or so years. How deeply they understand the model is another question.
By the time the ‘Do Nothing’ Board acted, the company was already spiraling out of control. Unless Avon’s McCoy turns out to be Houdini, and can pull a rabbit out of a hat, it may well be too late to save the 125-year-old direct-selling beauty company. [Read more...]