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MANAGEMENT GIANT
Mary Kay Ash

Timeline
1918 Mid-1930s 1938 1959 1963 1968 1972 1984 1985 1991 2001 Born. Persuaded to take up selling by a traveling saleswoman. Crowned sales queen at Stanley Home Products. Joins the World Gift Company. Leaves the World Gift Company after missing out on promotion. In September, starts Beauty by Mary Kay. Raises $2,340,000 by selling 195,000 shares on the New York stock market. Company is one of the nations largest private employers. Mary K. Cosmetics loses women employees to full-time jobs and sales dip dramatically. Ash buys back outstanding 70% share of the company not owned by her family. Company turned around: books $487 million in sales. Dies.

Summary
Mary Kay Ash overcame adversity to build one of the largest direct-sales cosmetic companies in the world. She had an invalid father and working mother, and so independence and responsibility were forced on her at an early age. But the independent streak served her well when she took up selling in the mid-1930s. When she was passed over for promotion because of her sex, Kay started her own cosmetics company where she could give women the work opportunities that she knew they were clamoring for. To finance expansion she parted with a large proportion of her shares. The resulting loss of complete control, combined with an exodus of women to permanent salaried work, caused the company problems in the 1980s. Undaunted, Kay and her son bought back the shares. Under the control of the family once more, the company was successfully turned around, and Kay took a back seat, allowing her son Richard to lead it into the new millennium.

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Background and Rise

Mary Kay Ash was born Mary Catherine Wagner in 1918it is believed, although there is some mystery about thisin Hot Wells, Texas. A bout of tuberculosis had left her father an invalid, and as a result her mother was the principal breadwinner in the family. With her mother working long days as a restaurant manager, the young Ash was left to cook, clean, and look after the home and her father. Although a bright pupilshe gained straight As at schoolmoney and marriage meant college was delayed, permanently as it turned out. Three children followed and Ash, like her mother before her, was forced to take a job to help support the family. Opportunities for a mother with only a high-school education were limited anyway; opportunities in depression-ridden Texas were almost nonexistent. Salvation came in the form of a door-to-door saleswoman who turned up on Ashs doorstep in the mid1930s. The saleswoman, who was selling books, offered to give Ash a free set if she could sell ten sets herself. Soon the ambitious Ash was persuading her friends from the local church that the childrens books were an essential purchase. The ten sets were gone in less than two days. For the next few months, she did little else except sell books and by the end of nine months she had accumulated $25,000 in sales. Ash had found her vocation.

Defining Moments
Ash moved on to Stanley Home Products, a direct-sales company. Her success continued, and she was crowned sales queen in 1938. Her private life was less successful, however. After the end of the Second World War, her husband asked for and received a divorce, leaving Ash to support three children alone. Undeterred, Ash continued to make great progress as a saleswoman. At Stanley she was entrusted with recruiting and managing other sales staff, and in 1959 she joined the World Gift Company. However, she resigned from the World Gift Company when in 1963 her male assistant was promoted above her. Ash had hit the glass ceiling with a resounding thud. I worked for 25 years, and no matter how hard I worked I couldnt ever get to first base, she later observed. It was a tough time for Ash. She was 45 years old, jobless, and, despite a recent marriage to George Hallenbeck, a Dallas businessman, still supporting two children. I have never spent a more miserable time in my life. I just felt my life was over. I lived across the street from a mortuary and I almost called them, she said with characteristic black humor. But rather than give up, she decided to write a book in which she would distil her direct-sales knowledge. After sketching out her thoughts, she decided instead to put her ideas into action and start her own business. The result was Beauty by Mary Kay (later renamed Mary K. Cosmetics). The business got off to an inauspicious start. First, tragically, her husband died of a heart attack. Then her lawyer tried to persuade her against the new venture. But Ash was determined. She had formulated the concept of a company that would provide women with business opportunities not previously available. She bought the rights to a face and hand cream and devised a business model based on consultants who would demonstrate products at Mary K. beauty shows held in their own homes. This strategy was designed to give the customer additional value above and beyond
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the service provided by her greatest competitor, Avon. Business commenced on Friday 13 September 1963. Her chances of success were improved by getting her first employees, nine consultants, to contribute 50% of the retail price of the cosmetic packages they were selling. By the end of the first year of trading, sales totaled $198,000, and the number of employees had grown to 200. Ash threw a celebration party, handing out wigs to her best salespeople. After her demoralizing experience at the World Gift Company, she was determined to make sure that her staff felt motivated and fully rewarded. Salespeople who reached a certain level of sales had their achievement recognized on a ladder of success. Reaching a new rung was rewarded with a token signifying success, anything from a ribbon to a pink Cadillac. Way ahead of her time, Ash was an avowed equal opportunities employer, valuing the contribution that her female staff could make to the organization. She was a benevolent employer, sending birthday cards to all her employees and often inquiring about their circumstances. I cant believe that God intended for a womans work to receive only 50 cents on the dollar, she said. Her forward-thinking attitude meant that there was no shortage of potential employees, and they were well rewarded. The companys mark-up was above average, and the commissions paid to staff were generous. Consultants also could earn commissions on the sales of staff that they recruited, and those who signed up a significant number were promoted. In 1968 Ash, now Mary K. Ashhaving married again in 1966raised $2,340,000 by selling 195,000 shares on the New York stock market. She used the money to finance the building of a new production facility in Dallas which allowed the company to manufacture nearly all its own products. By 1972 the company was one of the nations largest private employers, with sales of $18 million and several thousand employees. Between 1963 and 1978 sales grew at an average of 28% annually. In the 1980s, Ashs crusade to give women business opportunities began to backfire as more and more of her consultants, who were still paid on a commission-only basis, began to take full-time paid positions at other companies. Sales fell from $323 million in 1983 to $260 million by the end of 1984. In 1985 Ash took the opportunity to purchase the 70% of shares that were not already owned by her family. In a leveraged buyout she and her son Richard paid a reported $350 million for the outstanding shares. This put Ash back in the driving seat of the company. Under the direction of the founder and her son it quickly turned round, and in 1991 achieved $487 million in sales. Today Ash takes a back seat. With over 475,000 consultants in 25 countries, the company she founded is the largest direct-sales cosmetics company in the world.

Context and Conclusions

A vision of a business where women could work and be rewarded on their merits drove Mary Kay Ash to found her beauty company in 1963. She could have pursued her impulse to write a book when she was passed over for promotion at the World Gift Company. Instead she chose to build an organization where women counted, to provide opportunities for women who wanted to work, and to treat them with respect. It was typical of a woman who had been forced into a position of responsibility before

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she was even in her teens. My objective in life is to help women know how great they really are, Ash has said. Although not a strident feminist, in her own way she made a significant contribution to womens interests in the 20th century. Along the way she built one of the most successful cosmetic companies in the world.

Close But No Cigar

David McConnell Door-to-door book salesman turned perfumer, David McConnell founded the California Perfume Company in 1886. He renamed the company Avon in 1939. The decision was inspired by a visit to Stratford-upon-Avon, the birthplace of dramatist William Shakespeare. Mrs. P.F.E. Albee, a ministers daughter from Winchester, New Hampshire, was the first Avon Lady and played a large part in organizing the network of company saleswomen.

The Best Sources of Help

Web site: Mary Kay Cosmetics: www.marykay.com

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