How e.l.f. Beauty has nailed purpose and culture to deliver five years of financial growth

4 minute read

With 21 quarters of net sales and market share growth e.l.f. Beauty demonstrates how embedding core values into every facet of an organisation can drive exceptional results. Its power lies in its e.l.f.luence  – living its ethos and always believing that anything is possible

Sian Harrington promotion for more diversity in theb boardroom  (Graphic: Business Wire)
 (Graphic: Business Wire)

US-based vegan and cruelty-free products company e.l.f Beauty describes itself as a brand that disrupts norms, shapes culture and truly connects communities through positivity, inclusivity and accessibility. Out of 4,300 publicly-traded companies in the US it is one of only four that has a board of directors that is two-thirds women and a third diverse.  

The company, founded in 2004 selling premium-quality makeup for $1 online, delivered more than $1billiion in net sales in fiscal 2024, up 77%. Its e.l.f. Cosmetics arm gained market share for the fifth consecutive year. The firm, which has 475 employees in the US, UK, Canada and China, offers five purpose-driven brands in the eye, lip, face and skin categories and is the first beauty company with a Fair Trade certified manufacturing facility. 

At the core of its success is a deeply ingrained ethos that sets the foundation for its culture, says Kerry Preston, vice president of people development, speaking at Culture Amp’s Culture First Global 2024 event. "Bold disruptors with kind hearts" is not just a catchy phrase but a guiding principle that influences every decision and action within the company. 

“Our purpose is we stand with every eye, lip, face, fin and paw,” says Preston. This clear and compelling mission has fostered a strong sense of identity and purpose among employees, aligning their personal and professional goals with the company's vision.

Empowerment through equity

One of the most striking aspects of e.l.f Beauty’s approach is its commitment to employee empowerment through equity. Unlike many publicly traded companies, it grants equity to every employee annually. “Fair and equitable is part of our model,” says Preston. This not only provides a tangible sense of ownership but also ensures that employees are deeply invested in the company's success. It reinforces the idea that everyone, regardless of their role, contributes to the organisation's achievements and shares in its rewards. This sense of ownership has cultivated a culture of mutual respect and collaboration, driving innovation and high performance.

Redefining ROI: Return on time investment

The company’s understanding of return on investment extends beyond financial metrics to include the return on time investment in its people. Preston emphasises the importance of investing time in employees to drive intrinsic motivation and engagement. One way it does this is through access: one-on-ones with the entire executive team. “The number of one-on-ones that each member in our leadership makes available to every level in the organisation is phenomenal,” states Preston. “We start meetings with energy checks and transparency. How are we doing on a scale of one to five? It’s important for our conversation that this return on time invested is continuous and never ending,” she adds. 

This philosophy has paid off significantly, as evidenced by e.l.f's 91% employee engagement rate, 19% higher than the consumer industry benchmark. The company's commitment to fostering a supportive and engaging work environment has not only boosted employee morale but also contributed to its impressive business growth.

A culture of continuous learning

Learning and development are at the heart of the culture. The company dedicates specific days to immersive learning experiences that align with its core values. These learning days are not just isolated events but are integrated into a broader strategy of continuous development. E.l.f University supports this ongoing education by providing a platform for cross-functional training and knowledge sharing. There is a shared language – “we invest time in elves teaching elves,” says Preston. These “power-ups”  enable more than just third party learning or workshop, explains Preston. They are about co-creation and co-elevation, creating a true supportive community. 

Measuring impact and driving accountability

E.l.f Beauty places a strong emphasis on measuring the impact of its cultural initiatives. The company conducts an annual engagement survey, customised to reflect its values and ethos, to gather insights and track progress. For example, how is the leadership team fostering healthy conflict, how are people showing up and how do they have each other's backs? These metrics are crucial for making informed decisions and ensuring that cultural initiatives are effective. 

Additionally, it has replaced traditional performance reviews with continuous conversations, fostering a culture of real-time feedback and mutual accountability. “In the middle of a meeting there may be an opportunity for you to inject your voice more or to speak up. And so immediately after the meeting, we ask, “Do you have a moment? What would happen next time? or what must be true for you to have more of a voice in that meeting next time?” Preston explains. This approach encourages employees to take ownership of their development and contributes to a high-performance teamwork environment.

Navigating resistance to change

Change is an inevitable part of any organisation's journey but resistance to this change is a barrier to building a positive culture. E.l.f Beauty has navigated this challenge with resilience and agility. The company promotes flexibility, innovation and stress tolerance, helping employees adapt to change and embrace new opportunities. “Being bullish and intentional in setting up the organisation for success is a part of our people's strategy,” says Preston. “. We work at speed and quality – elf speed and elf quality are real components. So we have a very strong value around recharging. Friday afternoons at two o 'clock we are wrapping up. We have micro bursts of learning on Fridays at noon.”

By fostering a mindset shift from "busy" to "in high demand," ELF encourages employees to prioritise effectively and maintain high performance. “We have to teach people the core competencies that are resistant to change. Are you being flexible? Are you being innovative? Do you have a stress tolerance? Being able to have those coaching conversations. Mindset matters. Busy is a decision. I'm so busy versus I'm in high demand. Let me reframe the way I'm looking at it.” This approach to change management has been instrumental in sustaining the company's momentum and driving continuous improvement.

Leadership and psychological safety

Leadership at ELF Beauty plays a crucial role in maintaining a safe and supportive environment. The company conducts team effectiveness surveys to ensure psychological safety and foster open communication. Leaders are trained to create a space where employees feel comfortable speaking up and providing feedback. “Facts are your friends. So separate emotion and logic,” advises Preston. “E.l.f is committed and passionate about its elves. We dedicate the one team, one dream approach and being fair and equitable to everything we do. We have a huge power of e.l.f.luence internally, externally, across our community. It's opening up your ears to really listen. People want to be seen, they want to be heard, they want to be valued.”

Lessons from e.l.f. Beauty

  1. Embed core values in every aspect: Ensure that core values are actively integrated into daily operations and decision-making processes
  2. Invest in employees: Provide equity and invest in employee development to create a sense of ownership and alignment with the company’s goals
  3. Prioritise employee engagement: Focus on creating an inclusive and positive work environment to achieve high employee engagement
  4. Promote continuous learning: Regularly schedule learning days and support continuous development to enhance skills and knowledge
  5. Measure and act on feedback: Use customised engagement surveys and real-time feedback to understand the impact of cultural initiatives and make informed decisions
  6. Encourage continuous dialogue: Replace traditional performance reviews with ongoing conversations to foster immediate improvements and support mutual accountability
  7. Facilitate change management: Build competencies in flexibility and innovation to manage resistance to change and maintain organisational agility
Published 12 June 2024
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