our-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.
= Member Only
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.
