Yesterday, Workday announced plans to acquire Peakon, an employee engagement provider, in an all-cash deal worth $700 million. Peakon is an employee engagement survey platform that collects feedback and measures employee sentiment in real-time. For anyone following the engagement survey market, this acquisition is no surprise. Companies spend millions each year on surveys, and pressure from C-level executives has increased this investment recently. If an executive is concerned about the company brand, personal reputation, or employee retention, surveys are the go-to response.
Over the past few years, companies have switched from the expensive, traditional consulting model (Aon, Willis Towers Watson, and Gallup) to SaaS providers that offer real-time insights and a better experience. Providers like Glint, CultureIQ, CultureAmp, SurveyMonkey, Perceptyx, and of course Qualtrics have thrived in this market. And 2020 was no exception. Even the traditional consulting firms have invested more heavily in technology. Willis Towers Watson (now merged with Aon) has experienced significant growth in its pulse surveys and engagement survey platform.
But, the engagement survey market is not just a tech play. It requires deep domain expertise, services, and some significant hand-holding as companies look to take these insights and turn them into action. Some providers have focused so heavily on the tech component that they lose sight of the partnership. Providers that have balanced both will see the most success (CultureiQ and Perceptyx are two examples).
So, what does this acquisition mean for the market?
- 2020 has accelerated the demand for a better experience. The events of 2020 have forced companies to engage with employees in new ways. According to a study we did this summer, 1 in 3 companies increased their investment in surveys. And, many companies had to think differently about the insights they were collecting. Questions around safety, childcare, and mental health are a critical part of the employee experience today.
- More acquisitions will follow. Qualtrics also made news this week and went public, just two years after SAP acquired it for $8 billion. All eyes are on engagement surveys and people analytics right now and providers like Oracle should be evaluating their options.
- Engagement surveys need to align with business priorities. One key differentiator of Peakon is that companies can integrate employee engagement data with other key performance indicators like customer retention in one dashboard. The future of engagement surveys is not just in measurement but in the actions and alignment with overall business priorities.
- Acquisitions are part of Workday’s strategy. Peakon is undoubtedly not the first major acquisition that Workday has made in the HCM space. It continues to become a leading provider in this market through its development, partnerships, investments, and acquisitions. I don’t expect this to be the last major announcement from Workday this year.
- Partnerships will continue to be a differentiator. The speed and engagement that these next-generation survey providers offer are valuable for any company looking to engage its workforce. Still, companies should not lose sight of the importance of partnership. Understanding what support, expertise, and change management is available should be an important consideration when evaluating these providers.
The next year will be interesting. Companies will continue to invest in these providers, and we can expect more acquisitions. But, whatever happens, this is an impressive market to watch, and it is reassuring to know that companies are committed to understanding their workforce.