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Luxottica Group Optimas Award Winner for Managing Change

In acquiring a major rival, the eyeglass retailer takes pains in reaching out to its new employees to avoid culture clashes and hold on to key talent.

September 7, 2011
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Related Topics: Mergers and Acquisitions, Managing Change
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Four-hour van trips across Ohio smoothed the way for a merger of two of the country’s largest eyeglass chains. After Luxottica Group acquired rival Cole National in October 2004, Luxottica human resource officials made constant trips from their North American headquarters in Mason, Ohio, to the central Cole office in Twinsburg, Ohio. The visits—which typically lasted for a week and continued for several months—were part of a broad effort to prevent a culture clash from undermining the merger from the get-go, says Robin Wilson, senior director of human resources technology and analytics at Luxottica.

    She and about a dozen Luxottica HR officials made the journey to make sure that approximately 600 former Cole employees in Twinsburg understood that they mattered and could get their questions answered.

    "It was all designed to ensure that we demonstrated a culture of inclusiveness," Wilson says.

    Before the $501 million deal, Milan, Italy-based Luxottica owned major chains LensCrafters and Sunglass Hut, employing 23,100 people in North America. Cole had upwards of 10,000 employees working at store brands including Pearle Vision Optical, Target Optical and Sears Optical. The combined company now employs more than 36,500 people, with nearly 5,400 retail locations in the U.S., Puerto Rico and Canada.

    Mergers can fizzle when firms flub employee relations. Among Luxottica’s concerns during the integration was retaining key Cole talent. Luxottica immediately made it clear that it was going to close Cole’s Twinsburg headquarters. But vital Cole employees were given retention bonuses to keep them on board during the transition. Luxottica also set up a call center exclusively to field questions from former Cole employees. There also was the consistent presence of the Luxottica HR contingent—one of a number of Luxottica teams that spent weeks in Twinsburg.

    All the reaching out came in the wake of an earlier merger mistake. When Luxottica bought Sunglass Hut in 2001, the acquisition was hampered at first by a cultural rift, Wilson says. "It wasn’t a better-together mentality going into it," she says.

    "Better together" was the slogan Luxottica used for the Cole acquisition. But it was more than a slogan, says Mark Hess, senior manager of compensation programs at Luxottica. Hess was director of store operations for Pearle at the time of the merger. He says Luxottica treated Twinsburg employees honestly and fairly. The 2004 merger was much more respectful than what Hess experienced eight years previously, when he worked at Pearle and it was gobbled up by Cole. "Cole to me seemed to act as the conquering hero that came in to save our company," he says.

    Hess is one of more than 200 employees from Cole headquarters who landed jobs at Luxottica. Fifty-five percent of the Cole employees in Twinsburg who were offered posts in Mason accepted.

    According to Luxottica, integration efforts held down store-level turnover. From October 2004 to October 2005, just 15 percent of the more than 6,000 Cole retail associates at optical stores resigned. The overall U.S. retail industry quit rate was 35 percent in 2005.

    In addition, the combined sales of Cole and Luxottica Retail grew 13 percent in 2005 versus 2004. Combined operating income grew by 44 percent.

    For not losing sight of the value of cultural integration during a major merger, Luxottica is the winner of the 2007 Optimas Award for Managing Change.

Milan, Italy-based Luxottica Group designs, makes and distributes prescription frames and sunglasses with a focus on luxury eyewear. Its North American retail division, Luxottica Retail, employs more than 36,500 people and has nearly 5,400 retail locations. For the first nine months of 2006, the group’s sales totaled $4.4 billion. Net income was $409 million.
 

Luxottica Group makes frames and sunglasses under its own brands, which include Ray-Ban and Revo. Through license deals, it also makes eyewear for such brands as Dolce & Gabbana and Polo Ralph Lauren. Products are designed and manufactured at six plants in Italy and two wholly owned plants in China.

Workforce Management, March 26, 2007, p. 29 -- Subscribe Now!

 

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