This year, major companies including Lowe’s, Ford, Harley-Davidson, Tractor Supply, and Molson Coors walked back their DE&I commitments. Not only are companies pulling back, they’re talking about it less too; in 2024, companies mentioned DE&I and related terms 22% less frequently in earnings reports and other documents than in 2023, Gravity Research found.
But e.l.f. Beauty, the third-largest mass beauty brand in the US, is bucking that trend. It proudly touts the fact that 78% of its board members are female and 44% are diverse. This year, it rolled out a campaign called Change the Board Game, with the goal of increasing the percentage of women and minorities on corporate boards to 50% by 2027.
It’s conducted research into board diversity in partnership with North Carolina Agricultural and Technical State University (NC A&T) and is compiling a database of public companies’ self-reported board demographics. And it also sponsored 20 women and diverse candidates for Accelerate, the NACD’s boardroom readiness program.
Though skeptics might say this sounds like a circa-2020 PR move, there’s solid business strategy behind it. The majority of e.l.f.’s customers are Gen Z and millennial women—a consumer group that wants to know the values of the companies they purchase from, CEO Tarang Amin said during a session at the 2024 NACD Summit.
Customers will notice things like the makeup of a company’s board, CFO Mandy Fields told CFO Brew. And both e.l.f.’s diverse board and its employees reflect its consumers and help the company innovate products that resonate with them.
Even companies without a younger consumer base can benefit from focusing on leadership diversity, Fields said.
Gen Alpha and Gen Z are “the next generation that’s going to be buying products and engaging with your brand,” she pointed out. What matters to them is “something that even if you’re not in beauty, you’re going to have to take into consideration,” she said.
Relating to your customers leads to success: e.l.f.’s had quite the success story. Founded in 2004 as an online-only beauty company selling products for $1 apiece, it went public in 2016. As of this year, it’s had 22 consecutive quarters of growth.
Though it certainly hasn’t hurt that e.l.f. offers products at affordable prices during a time when consumers are pulling back on discretionary spending, part of its success can be attributed to the attention it pays to what its customers want. That’s important in a crowded market like beauty, according to Amin, who estimated that there are 1,900 brands in the US alone. Staying ahead in a “very low-barrier-to-entry category,” he said, “does require that resilience and being able to pull from different perspectives.”
e.l.f. also takes inspiration from its employees. Anyone can weigh in during twice-monthly innovation meetings, Fields said. “We want every voice heard, because our employee population reflects the community we serve,” she said. “When they get excited about something, we know our community is going to be excited about it as well.”
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The company’s diverse board brings fresh perspectives, Amin said. If three or four board members are seeing something the management team didn’t, “you pay particular attention,” he said. The board also challenges leadership. “After all, that’s what we want on a great board,” Amin said. “We want them to push our thinking and make us better as a company.”
The CFO as influencer? Younger consumers want to know what the values are of the companies they buy from, both Amin and Fields said. And they’re going to be looking for proof that organizations live out those values. Or, as Fields put it, they want to see that the “‘ingredient list’ of your company lines up with its values.”
e.l.f. has made its “ingredients”—its leaders—more visible. They’re active on social media—and not just LinkedIn, but platforms like Twitch and TikTok, where they meet with consumers. “And we’re talking to them about everything: What kind of innovation would you like to see? Who should we partner with next?” Fields said. “And so we’re taking those insights directly from the community.”
Fields was pleasantly surprised recently when 18,000 viewers showed up to a session on Change the Board Game that she hosted on Twitch. “You would think, ‘Oh my goodness, it’s going to be like 100 people on here’,” Fields said. “But there was so much engagement. It was really incredible.”
Increasing board diversity: According to e.l.f’s research with NC A&T, only 27% of directors at US public companies are women and that percentage haven’t budged since 2020.
e.l.f is working to change that, “because we feel that this is tied to our purpose,” Fields said. “We’re in a position to use our voice. We’ve done it. We created a diverse board.”
e.l.f. did so by being “very intentional” about recruiting diverse board members, Fields said. She recommends that companies that want to increase board diversity consider board members from nontraditional backgrounds.
“A lot of times CEOs are prime candidates for board members, but guess what? There’s not a lot of women and people of color who are CEOs,” she noted. Companies might want to think about CMOs, CFOs, and division heads without C-suite titles, she suggested.
“It may not be an overnight thing,” she said, “but you can make progress.” When you have an open board slot or an opportunity to expand your board, she added, “think about how you might do it differently.”
Update 11/4/24: The story has been updated to accurately reflect that e.l.f Beauty sponsored 20 women and diverse candidates for Accelerate, not 19 as originally mentioned.