Despite the fact that the family that controls L’Oreal, the world’s biggest cosmetics group in terms of sales have often had very public disagreements, a new book argues that the business owes a lot of its success to its family-ownership structure.
Entitled L’Oréal, La beauté de la stratégie (L’Oréal, The Beauty of Strategy), author Béatrice Collin argues that family ownership is one of the three pillars of L’Oreal’s success. “Since its inception, the family character of L’Oreal has always been a vital force for the company, despite the twists in recent years,” says Collin, who teaches at the Paris-based business school ESCP Europe. “Family ownership has brought stability, long-term vision, and a mindset that combines prudence and entrepreneurial spirit.”
Collin also said that another pillar of L’Oreal’s success – stability of shareholders and corporate governance – was related to being a family business. “Few companies have experienced, such as L’Oreal, such stability of their leadership and management teams” she says. “In over a century, only five leaders have succeeded at the head of the group and this continuity is also at the level of shareholding. The heirs of the founder have also maintained the power of decision making at board level. This stability of leadership and governance is certainly a key factor in L’Oreal’s success.”
Last year, L’Oreal had revenues of €22.5 billion and employed more than 78,000 employees in 130 countries. Founded in 1909 by Eugène Schueller, it is now controlled by a combination of the second, third and fourth generations of the family, who together own around 30% of the voting rights in the business. Second generation Liliane Bettencourt, 92, still owns most of the shares. Here daughter Françoise Bettencourt-Meyers has around 12% of the company’s shares held in a trust, and her son, Jean-Victor Meyers, was recently appointed to the board of L’Oreal.
Liliane and her daughter have often been in dispute over control of the business. In 2007, Françoise launched a criminal complaint against a close confidant of her mother, who she believed was exploiting Liliane for personal gain and money. What became known as L’affaire Bettencourt developed into a big story in France, and eventually led Françoise to try to get a court to agree that her mother was unfit to manage her fortune. In recent years, the dispute between the two has been dissipated, partly as a result of the decision by the family to allow Jean-Victor to oversee the health and personal life of his grandmother.