Corporate Restructuring at Mary Kay

I have been attempting to get information about the changes at Mary Kay Inc., but it has been challenging. Although the active distributors have received a bit of information, the details have been kept at the levels of upper management and executives. Employees below that level don’t know exactly what is coming, and only know what they are seeing when people are being let go.

As we already know, four distribution centers are being closed between now and July. This is a loss of 200+ jobs. The official announcement went like this:

Special Message from Nathan Moore
Published: 2.13.20
It’s the beginning of a new year, a new decade and, as always, a renewed excitement about what’s in store for you and our great Company in the future.

When I assumed the role of President of the North America Region, one of my top priorities was alignment and clear focus so that Team US could provide the best support for you and your area members. So, we made some changes to the organizational structure of the US staff located at The Mary Kay Building to help ensure that we are set up for success.

The next step in this process has been reviewing the structure and performance of our outlying distribution centers. As you know, the landscape of shipping has drastically changed over the last 10 years with the astronomical growth of online ordering. With this in mind, I asked my team to analyze our distribution model to understand how we should be set up to address the evolving shipping landscape and better meet the needs of the sales force. In short, I asked for better customer service and faster product delivery times.

After much analysis, we’ve made the decision to change how we run distribution. We must improve our turnaround time on product orders. And though it might seem that simply changing a process here or there would solve the problem, we learned that we are no longer in the optimal locations to meet evolving shipping demands. So, this reorganization is the best option to better meet current demands and position us to be highly competitive in the future.

As a result, we are reorganizing to three distribution centers and changing the locations of distribution centers outside of Texas. These new locations will be warehouse centers only. With these changes, we have restructured our customer service function, and centralized the Customer Service group in Dallas. Having them in one central location will help ensure consistency and continuity.

My expectation is that after we have completed this transition, you will receive unparalleled customer service and faster delivery of product orders.

And, as you know, in 2017 we created the Field Support Team. It had been many years since we had staff embedded in the field away from The Mary Kay Building. We had an existing “branch” model with both customer service and distribution, as well as under-utilized space from a time when sales counters were functional. As we looked at our future distribution model, and the U.S. organization overall, we realized that this structure with the Field Support Team was not sustainable. As a result, we have made the very difficult decision to dissolve the Field Support Team function. Rest assured our Sales Force Development and Sales Education teams will continue to ensure that you will receive all the coaching, educational and motivational support you need to grow your businesses and achieve your goals.

We will be sure to update you when we have finalized the two new distribution center locations. I am confident that these new moves and structure will set us up for great future success and will help you provide exceptional service to your customers!

My best,
Nathan Moore
President, North America

I also understand that various departments at corporate headquarters are being eliminated or restructured. Departments already affected include marketing, IT, quality, and engineering. Everyone believes there are more job that are going to be eliminated this year, but there is no official word.

The entire sales development team that was responsible for interfacing with the NSDs (Sean Key and 4 others) was let go a week ago. This is the “Field Support Team” that is mentioned above in the announcement. It appears the duties will be assigned to the remaining sales force development and recognition people (who previously were focused just on sales directors and below). The sales development teams that work with each of the seminar divisions are still intact, but people are unsure of whether any changes are planned there.

Sean Key’s title (per his LinkedIn profile) was Vice President, Sales Force Motivation & Field Support. He was with the company since June 1989. His bio from the “Feel the Power” (eyeroll) Retreat said:

Sean began working for Mary Kay in June 1989 at the Northeast Distribution Center in Somerset, NJ on a part-time basis as a Box Maker. He had just graduated from high school and Mary Kay was a summer job before starting college. In September 1990, Sean began working for Mary Kay on a full-time basis while pursuing his education at a local university. He held positions as an Order Filler, Shipping Clerk, Quality Control Inspector and Customer Service Representative before being promoted to Warehouse Supervisor at the age of 21.

Two and a half years later, Sean accepted a position as the Sales Development Coordinator for the Southwest Region and relocated to the Mary Kay corporate office in Dallas, Texas. Sean has supported the US sales force since moving to Dallas in 1994, and currently, he is the Vice President of Sales Force Motivation & Field Support. In this role, Sean and the Field Support team travel throughout the North America region building relationships, inspiring excellence and providing sound business strategies to the sales force. Sean graduated cum laude with a Bachelor’s Degree in Business Management from LeTourneau University and his personal motto is, “If excellence is possible, good is not good enough.”

Sean has apparently deactivated all of his social media accounts. I am wondering if this restructuring came as a surprise to him. And I’m also wondering why the company didn’t find a different role for him. He *seemed* to be a very valued employee, and the news that he was let go was a shock to to upper level directors and NSDs.

What else do we know?

Mary Kay’s sales are down GLOBALLY, but I think the decrease in the U.S is the most painful. China is hurting as well, I have been told. Apparently there have been problems at the new Richard R. Rogers Manufacturing/R&D Center, so products are still not being manufactured there. The building has been open for more than a year, so it’s got to be a big financial drain to pay for a building that you’re not even fully using. Production has been outsourced to contract manufacturers, and a premium is paid for those services.

In general, Mary Kay is trying to get with the times. They have not REALLY evolved as technology and online shopping has evolved. Yes, you can shop online with your consultant. But selling this “home party” model is getting tougher and tougher.

Consultants and directors now have the ability to order products from MK via an app and have the order shipped directly to a customer through a cloud-based system they call Project ONE. The order gets to a customer in 2 to 3 days, so you can see this reduces the need for distribution centers around the U.S. Also, this reduces the need for customer service employees, so Mary Kay is consolidating this function in Dallas.

It seems that consumer behavior is a major driver in this. Yet it cuts into the MK business model and makes overall sales go down.

If you don’t need consultants to buy large inventory packages anymore (because they can order what they need when it’s sold), corporate’s numbers are going to suffer. We’ve known for years that the initial inventory order is the most that consultants will ever order. So little of the products are actually sold, that subsequent orders from consultants are very low.

If the large initial inventory orders go away, so does Mary Kay’s profitability. It’s a catch 22 for Mary Kay. They can’t keep doing business the old way because consumers won’t participate, but if they evolve the business to keep up with technology, they lose their bread and butter (the initial inventory orders).

40 Comments

  1. SuzyQ

    Wow. This is great news! Sad for those who are being laid off (except for Sean Keys) The writing has been on the wall for years and has been ignored by corporate. The only thing that has changed is the products and according to a previous thread, they are not liked by consultants or customers. I can’t imagine going to someone’s home for a skin care class when I can stay in my own home and order what I want on the computer. It will be interesting to watch the implosion of areas/nsd’s/sales to consultants. It’s about time!

    1. TRACY

      I heard through the grapevine that $100 could change Sean’s life! Get himself a starter kit and get on his way to unlimited earnings. I’m sure there’s a sales director out there who would match their time with his effort. It’s not selling, it’s sharing. And with a full store of profit-level inventory, he’d be on his way to Court of Sales in no time.

      1. Char

        And another perk. He wouldn’t have to deal with all those benefits like a salary, health insurance, and a 401k etc. when he can be an MLM “business owner”.

        Btw, have you guys seen the hilarious reviews on Glassdoor? There are actually consultomers who post. ROTFL. They write there are no benefits, and the real employees rave about the benefits. The delusion is funny, but so sad.

  2. Char

    Nathan Moore and Sean Key? I thought MK was about empowering women.

    It may be wishful thinking, but I can’t help but wonder if the antiMLM movement of late has had an effect. Reddit and YouTube channels have been really picking up steam, and the world is finally learning the truth about the scam called MLM. Tracy, of course, being one of the pioneers of this internet movement.

    OR, the FTC ramping up investigations on these scams could be another. Perhaps the Advocare changes are in the works?
    http://www.pinktruth.com/2019/05/21/advocare-quitting-mlm/

    “On Friday Advocare announced that it was dropping its multi-level marketing component as of July 17, 2019, and there are allegedly more than 100,000 Advocare distributors who will be impacted. Why are they doing this? Pressure from the Federal Trade Commission (FTC), it seems. The speculation is that the FTC took issue with how Advocare compensated its distributors.”

    1. pinkblacksheep

      I think changes like the Advocare one are coming for a lot of companies. Especially with party plan companies, where even Facebook parties aren’t as effective. I mean, people can just Google anything they’re interested in and see videos on products, so the “education” aspect of a party is obsolete. I think Mary Kay is not long for this world… at least not in any way close to how it is right now.

  3. Lazy Gardens

    My, I weep for them! “They can’t keep doing business the old way because consumers won’t participate, but if they evolve the business to keep up with technology, they lose their bread and butter”

    It’s way past time for a graceful exit. This is going to be a pratfall

  4. MLM Radar

    And now that shipping distances will be increased, look for an increase in MK order shipping charges.

    As you know, the landscape of shipping has drastically changed over the last 10 years with the astronomical growth of online ordering…
    Since MK has never fielded a retail outlet, and MK product sales have always been through a catalog-style warehouse-direct ordering model, the only drastic change in the last 10 years is the astronomical growth in online orders through legitimate companies.

    We must improve our turnaround time on product orders.
    Red herring! Red herring! What they really need to improve is their inventory turnover rate, which is hard to do when they have to stock too many warehouses with enough product so that each one can fulfill sales force orders. (Inventory turnover is a business math calculation that tells you how fast you’re selling your stock and replacing it with new stock. Consultants aren’t supposed to know about that.)

    we are no longer in the optimal locations to meet evolving shipping demands.
    They have too much unwanted product sitting in too many warehouses, and that’s costing them money. Oh, the irony…

    As a result, we are reorganizing to three distribution centers and changing the locations of distribution centers outside of Texas. These new locations will be warehouse centers only.
    All the while, cities everywhere are competing fiercely to become the next Amazon distribution center, with the astronomical growth of online ordering. But MK is downsizing its distribution network.

    How very ironic. This is a company that convinces each of its recruits to have her own personal warehouse of “full store” inventory, but decides they have too many warehouses at the corporate level. This is just another instance of risk-shifting where MK corporate shifts its costs of doing business to the already over-stretched sales force.

    <we learned that we are no longer in the optimal locations to meet evolving shipping demands
    He means de-volving demands, which is no surprise because they’ve also downsized the sales force divisions from five to four.

    <under-utilized space from a time when sales counters were functional.
    MK doesn’t count end-user sales. If they did, maybe the sales counters would have kept their jobs.

    Rest assured our Sales Force Development and Sales Education teams will continue to ensure that you will receive all the coaching, educational and motivational support you need to grow your businesses and achieve your goals
    Coaching in how to recruit your customers. Education in why recruiting is far more important than selling your “full store” inventory. Motivation that you should undercut your own “business” because it’s better to recruit that to be greedy and keep all your profit for yourself.

  5. SuzyQ

    Just wondering how the hell they can get any recruits now? Back in the day, I could recruit a plant… because I was a true believer… and I don’t see any way to do that now. This makes me so happy!

  6. PeachyNotPink

    I’m incredibly curious how NSD’s and Directors are going to spin this information into being something good.

    I think the folks here on Pink Truth will have a new wave a lies and omissions to battle in the coming months as MK slowly slides into decline.

  7. EyesWideShutNoMore

    One of the factors that finally made me quit was the constant increase in shipping. In Canada, the head office / dc is in Mississauga, and I live about 2hrs away so area directors used to pick up all our orders. That ended around 5 or 6 yrs ago, they let go the front desk staff to save money so we HAD to get our orders shipped. I wondered then if the pink dream was struggling. Yup!

    I’m curious now if the Canadian DC will close, there’s no way it’s good business sense to keep that one open when 4 in the US have closed. I bet the Canadian orders will now be sent via a US DC. Interesting, indeed!

  8. morningstar

    Very interesting indeed! Based on my career, I am able to parse through the wording and phrases and documents to get to the meat of the topic(s). The flowery words, and how it is all for the sales force is garbage surrounding the issue. It is to preserve MK profit margin, the end. I put question marks in one area, as I do not understand the lingo. The more puff and fluff, the more serious the situation. This executive letter boiled down IMO:

    • we made changes to the organizational structure of the US staff located at The Mary Kay Building..
    • We have a team to analyze our distribution model to understand how we should be set up to address the landscape.
    • we’ve made the decision to change how we run distribution. it might seem that changing a process here or there would solve the problems. this reorganization is the option to meet demands.
    o we are reorganizing to three distribution centers and changing the locations of distribution centers outside of Texas.
    o These new locations will be only warehouse centers .
    • we have restructured our customer service and centralized Customer Service in Dallas.

    • in 2017 we created the Field Support Team. We had a “branch” model with both customer service and distribution, as well as under-utilized space from a time when sales counters were functional????.
    o we have made the decision to dissolve the Field Support Team function.
    • We will update you when we have finalized the two new distribution center locations.

    Nathan Moore
    President, North America

    1. MLM Radar

      The branch model: MK had one central distribution center in Dallas, plus several large and semi-independent distribution center hubs in other cities. Each hub independently handled the orders in its region. The Dallas hub handled the south central region orders, plus kept the other hubs stocked.

      They ran into trouble when prepositioned but unwanted merchandise got backed up at the hubs, and the hot-selling products had to be cross-shipped from other hubs.

      But at least at the corporate level, if one hub didn’t have something it could pass the order to another hub. At the consultant level that is forbidden. If you can’t fulfill your customer’s order from your own bookshelf warehouse you have to place a new order from the company. You’re not allowed to ask the other consultants at your “success” meeting whether they have that item in their personal warehouses.

  9. morningstar

    Tracy – You made a comment regarding

    He *seemed* to be a very valued employee, and the news that he was let go was a shock to to upper level directors and NSDs.

    True he is very kind and charismatic in person. The type that when he talks to you one on one he looks directly at you and is in no hurry for you to speak. However in MK you never knew if it was fakery. With him I got a genuine kindness from within and if it is so- he will recover. That said, this is a wake up call for the old saying applies to all let go from corporate:
    The bad chases out the good, every time!

    PS
    I am not condoning the behaviors’ Sean used in MK as the rah rah leader.

  10. NayMKWay

    That picture…

    “Smile, you two!”

    “OK, that means we bare our teeth and squint, right?”

    Seriously, though, the corporate spin on this message made my BS meter wrap the needle around the peg. At a time when growing companies like Amazon are adding distribution centers to shorten the distance between product and customer, MK somehow needs to close existing ones to somehow accomplish the same thing? Is anyone buying this?

    It’s clear Mary Kay is imploding and trying to stave off the inevitable somehow, but the writing is on the wall. The only two options I see long term are either bankruptcy or bankruptcy. Either Chapter 11: they reorganize, drop the MLM model, and improve their product line to be competitive also; or Chapter 7: throw in the towel and shut down completely.

  11. el705

    Do I understand this: A customer can order under a kaybot on the website and corporate ships the product to the customer, they kaybot doesnt have to actually have the product in their basement for them to ship out?………so that will reduce the need for the kayboy to buy 1000s of dollars if inventory while at the same time wiping out love cheques for the upline?

    1. TRACY

      Yes, this has been an option for years, but it is not utilized very much. Why? The upline encourages “personal service,” which (of course) requires having inventory on hand. That’s because the upline makes the REAL money on the big inventory orders of the consultants. Relatively little product is sold to retail customers, so if the upline relied on actual orders from actual customers, they’d make no money.

    2. MLM Radar

      I remember reading a comment from an unhappy customer when she placed an online order. Her Kaybot consultant canceled the online order, then tried to replace it with personal delivery of a stale product from her own “full store” personal warehouse, accompanied by a recruiting pitch.

      Yes, this has been happening for years.

  12. BestDecision

    His DUI mugshot probably caught up with him again before anyone accused him of preferential treatment to certain NSDs and Directors

    The first thing that caught my eye on Nathan’s explanation is that this will ERASE the need for inventory. As Directors, we were able to encourage and prove time and again the benefits of keeping things in stock purely because of the lag time for shipping. Order on the 1st of the month = 15 day delivery estimate. This changes EVERYTHING about production and cars for Directors. If unit members can get their orders in 2 days, they’ll never buy Star level inventories.

    Watch those commission checks keep dropping…

    1. TRACY

      Except it was never 15 days. I was told that lie 20 years ago, and it wasn’t true then either. Order the last day of the month, get your stuff in few days. Order the first day of the next month, get your stuff in a few days +1.

  13. morningstar

    This is one of the first times that the sales force could send a message to corporate based on their actions. As beloved Sean Key is in their business, they could collectively send a message back, as in not ordering or order weird times, boycott functions, etc.
    The pink Kool-Aid is still flowing, a thought, for the lurkers. They taught to be strong, now show them.

    1. TRACY

      But why? Who cares? What did Sean REALLY add to the “business” for the sales force? He went and did motivational events. I suppose you could say that helped recruiting. But I think part of the reason he lost his job is that his results really aren’t measurable. He was a “feel good” part of the company, with a salary that was probably more than $300k (maybe even a lot more than that). Add on his four employees and all of the travel costs, and you can see that there is significant savings by eliminating his department. And at the end of the day, most won’t really notice other than not seeing him at seminar.

      1. BestDecision

        High pay and free company Cadillac for someone who dresses up in costumes at Seminar. I can imagine NSDs and Directors are scrambling to hide this from Consultants.

        But, if they’re making “so much money”, this wouldn’t phase them, right??

  14. Violet Rain

    I was wondering what was up with MK. I know 4 people who were living and breathing MK 24/7. Then, all of a sudden in the past 6 months or so, I’m seeing on Fakebook they each are now into other MLM’s….candles, clothing, home scents, purses. They still have their MK Fakebook pages and links to order, but no recents posts there. They must have gotten some word—

  15. J

    Hopeful that this is yet another sign of the end. I got a letter in the mail from chase saying their partnership with MK is ending next month. Thoughts? Related?

    In hindsight, it seems sketchy that they would pair with an mlm. It gave mk a suggestion of credibility.

  16. BestDecision

    There not telling Consultants a word about this. Completely covering it up so they don’t feel uneasy.

    Directors, if you are 100% honest and ethical, you’ll realize the reason your unit will be uneasy with all this is that they’re not making enough money to distract them from it. If they’re so successful and paying mortgages, this wouldn’t cause as much hysteria as it is with you.

    Face the music and get out while you can. We boasted to people that no one could ever lay us off in MK and how there are uncertainties in corporate America, but isn’t this what’s happening exactly in MK now?

    Have fun at Career Conference while the rest of us enjoy our weekends off!

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