Andrea Jung will soon reach a decade as CEO of Avon Productsavp. She's the most-tenured female CEO in the Fortune 500, having outlasted such notables as Carly Fiorina of Hewlett-Packard and Anne Mulcahy at Xerox. Jung, who at 50 may have another decade or more to go, spoke to USA TODAY corporate management reporter Del Jones about the challenges of leading a company through an unusual recession. Following are excerpts, edited for clarity and space.
Q: Hard decisions are being made daily by companies to stay afloat. How do you order layoffs, save every possible dime and maintain morale?
A: Communicate, communicate, communicate frequently and face to face, not in an e-mail. Communicate the purpose of the vision and the reason for tough decisions. Whether it's a layoff or pay freeze, they must understand the rationale and why it will make the company healthier. It's more than morale, it's trust and respect. In 2005, we announced a delayering of our organization, and a third of our managers left. We started fixing the roof when the sun was shining.
Q: What else has this recession taught you?
A: Reinvent yourself first before you reinvent your company. This is one unusual environment, and I'm lucky that I didn't have to go through this my first year. There are pros and cons of experience. A con is that you can't look at the business with a fresh pair of eyes and as objectively as if you were a new CEO. Fire yourself on a Friday night and come in on Monday morning as if a search firm put you there as a turn-around leader. Can you be objective and make the bold change? If you can't, then you haven't reinvented yourself. If you can, then you can have a decade of tenure that is like having different jobs. I'm not the same leader I was even last year, because those skills have rendered themselves not as useful. I've had to reinvent myself every year.
Q: Cash conservation seems to be the only strategy now. How is Avon conserving without hurting the company long-term?
A: Don't touch market share or the consumer. We've not pulled back on advertising or philanthropic efforts, even though that is the natural tendency. We've spent too many years laying the foundation.
Q: Wouldn't this be the time to take some risks when others are playing it safe?
A: Leaders on the offense, not the defense, will come through this recessionary period. In terms of acquisitions, strategic rationale has to trump all. Obviously, there are some great financial opportunities now. But acquisitions are for medium- or long-term value creation, and you have to have extraordinary strategic rationale.
Q: What signs will tell you the economy has turned?
A: We study the number of (Avon) sellers who are active. If that's growing, it's an indication that things are starting to improve. But for us, unemployment is not always a negative. It provides an opportunity for us to recruit people. We ran an ad that said: "I can't get laid off because this is my own business." Consumers say that they don't foresee that things will be different a year from now, and only 13% say they will resume their old buying patterns. The psychology on saving and spending has arguably changed forever. The indicators will be different. You don't have a crystal ball as a leader. But if you rely on the history of past recessions, you could be caught off guard.
Q: Sounds like you fear a dead-cat bounce? Should companies dig in for a Japan-like lost decade of no growth?
A: If anybody had a crystal ball before, it's pretty much smashed now. No one can predict what will happen, whether it's U-shaped (recovery), V-shaped, or it's going to be two years, four years or 10 years of slow growth. It's going to be difficult for some time to come. Conserve cash; reinvest in ways that grow market share.
Q: Government has intervened heavily in this recession. What has it gotten right? What concerns you?
A: Without being a political pundit, each one of us who has come into a leadership role knows that the first 100 days will be looked at. President Obama's 100-day plan is pretty impressive. I think it's a Wow 100-plus days. The administration is not operating from fear, it is trying to drive change for the future, and that's a good thing.
Q: None of this change concerns you much — the intervention in the private sector, the ballooning deficit, tackling something huge like health care in a recession?
A: I certainly don't envy the challenge of those decisions. But there are clear, pressing issues that have been around a long time that have to be addressed. Finding the middle of the fairway is important, but clearly, we have to move forward. Health care is bold and complex. There's never a good time to make that kind of bold change, but I have a lot of confidence that they will figure it out.
Q: Is it smart in times of high unemployment to replace weaker employees with talented employees who are available?
A: I'm a huge believer that it's always about talent. I just got out of a meeting that was a lengthy talent development session. That's what I do with more than 25% of my time. But it's not simply capitalizing on the recession. Talent is the No. 1 priority for a CEO. You think it's about vision and strategy, but you have to get the right people first. It's less about who's on the market now. These times are here to stay for a while. You better have the best talent, whether it's promoting them within your house or trying to attract the best people, because these times require even better capabilities than were required awhile ago.
Key tips from Andrea Jung
•In difficult times, communication is key to maintaining employee morale.
•Leaders must reinvent themselves regularly. Fire yourself on Friday and come in on Monday as if it were Day 1.
•Conserve cash when it does not hurt market share.
•Resist making acquisitions due to fire sale prices. Make certain of strategic rationale.
•Prepare for a fundamental shift in consumer spending, and an economy that may not grow for years.
•Born in Toronto. Skipped the first grade and began college at 16. Magna cum laude Princeton (literature '79).
•CEO of Avon Products November 1999.
•Abandoned dream of being a journalist when turned down for an internship at The Boston Globe.
•Plays piano, loves opera, but says she can't sing a note.
•Fluent in Mandarin. Father a Hong Kong-born architect, mother a Shanghai-born pianist and chemical engineer.
•Ex-husband Michael Gould is the CEO of Bloomingdale's. Brother Mark Jung, with a Stanford MBA, is former CEO of home-entertainment company Vudu.