Strong alignment with goals, vision and strategy, better employment processes and improved employee engagement have helped transform Lush Cosmetics into the success it is today, according to its local director, Peta Granger.
After operating at a $5 million loss each year, the local arm of Lush Cosmetics was given an ultimatum by its UK parent to either turn things around or to shut down operations.
Now, five years later, Lush Australasia is thriving and last financial year, the company’s local revenue was $36 million while like-for-like (LFL) sales were 36 per cent at the same period and 45 per cent the year before.
Over a two-year period, the local business has grown more than 80 per cent just from LFL stores (not including new stores locally, compared to a global growth rate of 15 per cent LFL per year), according to Granger, who put the turnaround down to three key steps.
1. Uniting the business
Holistically aligning the business with the same vision and strategy, Lush Cosmetics created an environment in which people knew how their roles contributed to the main goal.
“We were transparent with everyone in the business about the losses and the really dire situation,” she said.
“Thankfully, most of the staff all had some pretty strong views about what was wrong. So we really just set about creating a roadmap on how we were going to get the business first to break even and then to profitability.
“We really just communicated these goals, plans and beliefs in the business on a very regular basis and how individuals and teams can contribute to that. Essentially, I think we all just started heading in the same direction with passion and drive, and people started to feel really invested in the business.”
This led to loyal employees who were committed to the success of Lush.
“I remember a couple of years ago, when we announced to our store managers that we’d done more than break even, we’d finished the year on a small profit, and more than half of the room were weeping,” Granger recalled.
2. Improvement of employment processes
After the creation and communication of an inspiring vision and strategy to save the business, Granger said the company then looked very closely at its employees, employment law, performance management, coaching and feedback, conflict management, goal setting and holding people accountable.
“Some people had real potential and talent but just hadn’t been managed properly and so they were pretty disengaged. And then there were others that had just gotten toxic and unhappy and were probably in the wrong company,” she said.
After making sure it had the right people for the journey on board (and the wrong people for the journey moved out) turnover in the business today stands in the low 20 percentage range (compared to the high 30s five years ago).
Granger said this step helped to bring motivated individuals together into teams and more generally as a group, who wanted to be with the business and were passionate about the cause.
3. Improving employee engagement
“Then we set about really focusing on their engagement,” said Granger.
“One staff member once said to me, ‘People don’t want to sell something; they want to belong to something’, so we set about creating a community within the business that people wanted to be a part of, in which it was OK to challenge and improve on the way things had been done in the past.”
Local employee engagement surveys are conducted nationally, on a regional (Australia and New Zealand) level as well as globally across 52 countries.
“They often make up our to-do lists in the coming year and they highlight where we are making progress and where we’re not,” said Granger, who explained that these are “hugely instrumental” in identifying blind spots as well as opportunities and areas to focus on, which help shape the direction the business is taken in.
“We are lucky because our staff are pretty opinionated. So the information that we get out of those surveys is like gold dust to us.”
Its local results indicated that there has been a 42 per cent improvement overall in the past year (with the biggest improvements in leadership, customers and culture), and 96 per cent of staff are now proud to work for Lush Cosmetics, 93 per cent think that it is an inspiring place to work, 92 per cent believe the work they do contributes to Lush’s success as a business and 83 per cent had confidence in the leadership skills of their manager.
For the full interview with Granger and story on the turnaround of Lush Cosmetics, see the upcoming issue of Inside HR magazine. Additional reporting by Craig Donaldson. Image source: Hayden Brotchie