Click here to order the June 2014 issue in which this article appeared or click here to download it to your mobile device.
IN THIS ISSUE:
• The BIG HISTORY of Direct Selling • 10 Things to Know • The List
• Topping the Charts • Profiles • Celebration
• Leadership • Growth Based on Percentage • Growth Based on Revenue •Humanitarian
Truman Hunt, President and CEO of Nu Skin Enterprises, is the recipient of the 2014 Direct Selling News Bravo Leadership Award. This award was presented to Hunt because of his leadership and commitment to Nu Skin employees, independent representatives and the industry as a whole. Hunt has demonstrated the qualities embodied in the Bravo Leadership Award—guiding those around him toward greater good, progress and achievement, while also earning the respect and admiration of those he leads.
Throughout Hunt’s career he has displayed his considerable leadership skills both within Nu Skin and in the direct selling industry worldwide. In addition to his top position at Nu Skin Enterprises, he serves on the executive board for the Nu Skin Force for Good Foundation.
He served as Chairman of the World Federation of Direct Selling Associations (WFDSA) from 2005 to 2008 and is currently a member of the organization’s operating group. He will become Chairman of the U.S. Direct Selling Association this month. In 2012 Hunt was named CEO of the Year by Utah Business magazine.
As he spoke with Direct Selling News, Hunt expressed enormous pride in both his company and the industry. His conversation was peppered with references to the company’s culture and its commitment to the business principles that have brought it so much success. Hunt is focused on the company’s mission to be a force for good throughout the world by empowering people to improve lives with rewarding business opportunities, innovative products and an enriching, uplifting culture. He believes that the same principles that are so foundational for Nu Skin in the United States have also made it a success in the 52 other countries in which it operates.
“While there are certainly differences culturally between countries that can lead a company to customize or tailor its product offering for a given geography, the principles that dictate success play across borders,” Hunt says. “In our case, when we have tried to over-customize our product or business opportunity, it hasn’t been constructive. We go back to the principles that work everywhere.”
Those four principles: people, products, culture and opportunity. Nu Skin regularly evaluates its own performance on each of those principles. For example, it asks itself whether it is doing a good job of hiring and training the right people—those who already share its values when they join the company.
“We seek like-minded people who can rally around and share the desire to pursue our corporate mission to do good around the world. Our business is built on the examples and character of its people,” Hunt says. “When we get the right people internally and externally, magic can happen.”
Nu Skin’s products are just as important. Hunt emphasizes that direct selling is an ideal channel for differentiating product characteristics and educating consumers.
“We have the luxury of being able to sit down with consumers and spend hours if we want to, versus 30 seconds on TV or on a page in a magazine. We’re able to be innovative and build products that work.”
“We don’t articulate our mission as maximizing shareholder value, but as being a force for good in the world. We want people’s lives to stand for more than the size of their bank accounts.”
—Truman Hunt, President and CEO, Nu Skin Enterprises
He also points to the company’s culture—one he believes it shares with many companies in the global industry. “Direct selling is an industry comprised of people who tend to see the glass half full instead of half empty,” he observes. “I like the fact that we’re surrounded by entrepreneurial people who think positively and aren’t afraid to dream and take action to make those dreams a reality. At Nu Skin we’re committed to being a force for good in the world—to making a positive impression through our products and opportunity—even through the vendors with whom we partner.”
He adds, “It’s a rare environment when a corporation’s mission is really not profit-based. For a public company, especially, that might be particularly unusual. [Nu Skin is publicly traded on the New York Stock Exchange under the symbol NUS]. We don’t articulate our mission as maximizing shareholder value, but as being a force for good in the world. We want people’s lives to stand for more than the size of their bank accounts.”
Hunt does want Nu Skin’s opportunity to enhance sales leaders’ bank accounts, though, and one of the company’s focuses is on providing the best sales leader compensation possible. He says that from the time the company was launched, its philosophy has always been that if someone is going to do the hard work necessary to build a successful direct selling business, they should be rewarded as generously as possible. In 2009 Hunt articulated a new goal for Nu Skin. He called it Nu Skin 2.0. The initiative was designed to help the company achieve its vision of paying more to its salesforce than any other direct selling company. He established specific revenue and sales compensation targets and then rallied the business behind this vision, providing clear and unapologetic leadership as the company moved steadily toward its goal. Nu Skin now pays about 45 percent of every revenue dollar as sales compensation and incentives—a number he says is on the high end of the industry scale.
One of the personal ways Hunt measures the value of the company’s business opportunity is by watching his own children, who are now in their 20s, graduating from college and figuring out what to do with their careers. Hunt notices that direct selling measures up well in his kids’ eyes when they compare it with more traditional career options.
“It’s reassuring to me, and one of the reasons I continue to believe in direct selling’s future,” he says. “It isn’t getting easier for anyone to create economic independence through traditional career mechanisms. It’s almost impossible today to save your way to financial security, no matter what your income is. The realities of starting a business are daunting and not getting easier. The fact that we make it easier to start a business with modest risk and offer the luxury of product-return policies—where else in the real world is that kind of business platform available?”
|The Nu Skin Innovation Center and expanded U.S. headquarters in Provo, Utah, which opened in October 2013, encompasses more than 300,000 total square feet and includes this spacious lobby area.
Since Nu Skin operates around the globe and Hunt is active in WFDSA, he has a rare view of the way current events and culture in any given location may affect his company’s business. For example, in Venezuela, political turmoil has resulted in protests, crushing inflation rates, food shortages and consumers queuing up to purchase basic goods. But Nu Skin’s business has continued to be healthy there. Hunt notes that evidence exists to support the notion that when economies struggle, people turn to low-risk opportunities for supplemental income, and direct selling meets that need.
He also points to China, a global direct selling behemoth with a unique regulatory framework, as a very robust marketplace with a huge pent-up entrepreneurial appetite. The company’s recent regulatory challenges there have given it rare insights.
Under Hunt’s leadership, Nu Skin cooperated with regulatory reviews conducted by the Administration of Industry and Commerce (AIC) in Shanghai, where its China business is headquartered, and the AIC in Beijing, where the company maintains a branch office.
As a result of the reviews, Nu Skin China was penalized in the amount of $524,000 for the sale of certain products by individual direct sellers that, while permitted for sale in Nu Skin China’s retail stores, were not registered for the direct selling channel. Nu Skin China was also fined $16,000 for product claims that were deemed to lack sufficient documentary support. Nu Skin reported that six of its sales employees were fined a total of $241,000 for unauthorized promotional activities. In addition, Nu Skin China was asked to enhance the education and supervision of sales representatives and has already taken steps to correct the issues raised in the AIC reviews. It voluntarily suspended business promotional meetings and applications for new sales representatives to fully cooperate with the regulatory reviews. The company in China recently resumed corporate-hosted business meetings and began accepting applications for new salespeople.
Despite the regulatory challenges, Nu Skin’s business in China has been robust. In Greater China, fourth-quarter revenue increased 248 percent to $481.6 million, compared to $138.3 million in the prior-year period. The sales leader count in the region improved 232 percent, while the number of actives increased 127 percent compared to the prior year.
Truman Hunt predicts that China will become the world’s largest direct selling market in the next five to 10 years.
Hunt predicts that China will become the world’s largest direct selling market in the next five to 10 years. The country already consumes more than half of the products made by European luxury companies. He also notes that the baby boomer population, which is 10 years behind the U.S. demographic, is larger than the entire population of the United States.
“It’s an enormous marketplace that is developing economically very quickly,” he explains. “People have a real desire to be in business for themselves and to control their own destiny.”
Regulatory reviews in China have offered Hunt an opportunity to exercise his usual determination to do what’s best for his company, even when decisions have been difficult. One of the toughest was when Nu Skin went through its business transformation process in 2005 and 2006.
At the time, the company operated three distinct opportunities: Nu Skin, Pharmanex and Big Planet. Different management teams ran each of those three divisions, and all of them competed for the attention of the salesforce. Revenues had begun to contract a bit. Hunt led the initiative to reconfigure the company’s strategy, allowing it to offer a focused presentation to the salesforce rather than sending them down multiple paths. It was a difficult time as management trimmed the corporate staff, but this change in strategy is actually when the tide turned. The success can be attributed to Hunt’s ability to combine humility with strong leadership to engage and inspire his executive team to lead the way to change.
“We took advantage of that moment in time to evaluate all business issues,” Hunt recalls. “There were no sacred cows that we weren’t willing to evaluate in terms of their impact on the business, and it resulted in an overhaul of our organization and strategy. The process was not without pain, but it was also clearly a key point in the growth of our company.”
Since then, Nu Skin Enterprises has produced impressive growth. In March it reported record fourth-quarter results with revenue of $1.06 billion, an 82 percent improvement over the prior-year period. In addition, full-year 2013 revenue was $3.18 billion, a 49 percent year-over-year improvement, placing it in the No. 7 spot on the Direct Selling News Global 100 list. As a reflection of this growth, the company also expanded its corporate headquarters in Provo, Utah, in 2013 by opening a more than $100 million Innovation Center that includes five world-class research labs and a state-of-the-art data center, as well as a gym facility for employees, eight installations of original art and a restaurant open to the public, all inclosed in a sleek and modern building that is environmentally friendly, having achieved a LEED Silver certification upon opening.
As gratifying as those results are, they are just the next step on the journey to even greater success, Hunt believes.
Nu Skin’s goal:
to be a $10 billion company by the year 2020, which will enable it to pay between $4 billion and $5 billion to its salesforce.
“We at Nu Skin don’t feel we’ve arrived yet where we want to be, even though we’ve enjoyed record levels of growth, commissions paid to the salesforce, and the good we’re doing for society through our corporate social responsibility initiatives,” he says. “Our ambition is to be the world’s leading direct selling company by generating more income for our sales leaders. We have the goal of being a $10 billion company by the year 2020. That will enable us to pay between $4 billion and $5 billion to our salesforce. As we look at the environment, we believe that we can generate that level of success.”
Even though he discusses his business in terms of financial success and is totally devoted to Nu Skin’s vision and mission, Hunt emphasizes that it’s the individual stories of transformation that keep him excited to come to work every day.
“I think of the people in Colombia who literally had no hope for a bright economic future, but now send their kids to private school and live in a home with windows,” Hunt says. “Those kinds of stories keep all of us working diligently to make those opportunities available to as many people as possible. Before joining Nu Skin Enterprises, I ran a company that sold products to the big-box retailers of the world, just selling widgets but having no connection with human lives. Here, the lives we touch create a dynamic that Wall Street may never understand.”