Following the announcement that French cosmetics giant LíOreal is to acquire The Body Shop in a 652 million deal, management consultancy Hay Group points out that the merger raises questions over the cultural compatibility of the two firms.
Deborah Allday, expert in M&A integration at Hay Group, points out that 70% of corporate mergers fail to achieve their objectives, due to factors such as unclear business objectives, cultural incompatibility and clashes of leadership styles and HR approaches.
Such are the challenges that lie ahead for LíOreal and the Body Shop: identifying the metrics to measure success, and unifying the contrasting ípeopleí cultures and management styles of a French corporate giant and a UK-based company whose culture ñ and business and operating model - is inextricably based upon a strong ethical trading stance.
Hay Group also warns that merging organisations have a very small window of opportunity - typically a year or less - in which to make the deal a success.
Once the champagne corks have popped, the hard work really begins, Deborah comments. It will be interesting to see how these two companies handle the merger of two very different corporate cultures.
Hay Group Research shows that the 30% of mergers that do deliver take a unified approach to assimilating company cultures, placing particular emphasis on culture and ípeopleí factors.
Successfully merged firms tend to:
Undertake careful culture and climate due diligence, in order to identify gaps between the organisations and the strengths and weaknesses of each
Identify synergy points where the two firms might not only connect, but also generate rapid growth
Create transitional leadership teams with the clearly defined objective of effectively guiding the organisation through the change.
Develop specific strategies and processes for key ípeopleí issues, including assessment, selection, reward, performance management, and communications
Stay focused on delivering the anticipated benefits
No two mergers or acquisitions are alike, but all face similar strategic challenges around their people and their culture, Deborah says. If they donít get these things right ñ and quickly - then whatever the financial cost of the deal, LíOreal may be asking if The Body Shop was worth it.
Is the Body Shop worth the HR Challenges?
.
