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UKG’s acquisition of Great Places to Work - 2.5 years on, a progress report

Brian Sommer Profile picture for user brianssommer April 18, 2024
Summary:
Not all mergers or acquisitions are accretive or deliver their expected benefits. The UKG/Great Place to Work deal was an interesting one and warranted a follow-up. Here’s a post-merger assessment of one of the more interesting and recent deals in the HR/HCM space.

great places to work

In September 2021, HRMS/Payroll vendor UKG (Ultimate Kronos Group) acquired Great Place to Work.  It was an atypical acquisition by a software vendor. When many software vendors complete a merger or acquisition, they usually acquire a complementary or tuck-in technology. For example, the buyer might acquire:

  • a new component for their technology stack (e.g., a generative-AI tool)
  • a new application (e.g., a payroll module for their HRMS)
  • an up or down-market version of their solution that will help them expand into a new customer segment
  • a competitor in a different part of the world (i.e., to aid in their global expansion)

The goal in these deals is to gain new kinds of synergies. The combined firm may become:

  • more efficient/productive
  • more profitable
  • bigger and operate at new levels of scale
  • more global
  • more diversified
  • more advanced technically
  • etc.

This deal was not a textbook tuck-in deal. Let’s see how that transaction has fared.

The deal participants

Great Place to Work Institute, Inc. (GPTW) was founded approximately 34 years ago. GPTW helps companies better understand the employee experience (EX) within their organizations. This is predominately accomplished via annual surveys. 

GPTW provides different views into a firm’s workforce. It can assess the EX along gender, age, race, sexual orientation and other factors.  Companies that become GPTW certified can become eligible for one or more Best Workplaces™ lists. These certifications frequently are noted in CSR (corporate social responsibility), ESG, DEI and other reports. These designations also get touted on employers’ recruiting websites and sales collateral.

UKG (Ultimate Kronos Group) is the post-merger result of the combination of HCM and time tracking vendor Kronos and HRMS vendor Ultimate Software. Both firms were large HCM firms with sizable customer bases and market share. A common investor in both firms (the private equity firm Hellman & Friedman LLC) became the controlling shareholder of UKG. (For more on that early 2020 deal, click here.) UKG frequently competes with large HCM and Payroll vendors like ADP, Workday, Oracle and SAP. 

Why firms need a solution around culture and EX

There have been a number of workforce trends in recent years that are problematic. These include:

  • Workforces have been changing and businesses/executives have been slow to understand and respond.
  • Too many companies are not winning the war for talent and have persistent issues attracting and retaining talent – any talent.
  • Spans of control have grown and the time that managers are spending with team members has shrunk.
  • Jobseekers are tapping into new data sources (e.g., Glassdoor) to vet potential employers and will not work for potentially difficult firms.
  • Culture and employee experience have become reasons why employees will (or will not) stay with an employer.
  • Workers are demanding more empathetic leaders.

A service like GPTW collects employee feedback related to an employer’s culture, commitment to diversity, acceptance of older workers, etc. The data can help great employers attract more and better talent. It can also help point jobseekers to companies whose job/employment characteristics they value.  This information can have marketing, employment, CSR and other value to an employer.

How the deal came together

GPTW’s leader, Michael Bush, was quite familiar with the HR software space. He sat on the board of directors of Workday and knew the private equity investors behind UKG. 

Workday’s acquisition of Peakon (an employee engagement tool) in early 2021 may have helped spur GPTW and UKG to merge. 

The GPTW/UKG deal 2.5 years later

I spoke with Bush earlier this week to get his viewpoint on the deal and whether it has proven to be a positive one for UKG. Here are some of the high points of that conversation:

  • At the time of the merger, GPTW had around 10K customers. That number is now 21K customers (more than doubling in just 2 ½ years). 
  • Likewise, the number of customer employees being surveyed has grown materially, too. At the time of the merger, GPTW was surveying around 11 million employees. That number is approximately 15 million today. 

In a 2021 press release announcing the acquisition, UKG noted:

UKG will offer Great Place To Work tools to existing and new HCM customers, with the goal of integrating data and benchmarking from the Great Place To Work ecosystem into its HCM solutions for easier access and actionable recommendations in the future.

UKG customers will have access to Great Place To Work assessments, along with hundreds of benchmarks that will allow organizations to understand the strengths and opportunities for improvement within their own culture as compared with their peers of similar size, industry, and geography. Additionally, UKG plans to embed elements of Great Place To Work insights into UKG HCM solutions over the next several years to help customers improve organizational health, elevate the life-work journey, and give an even greater voice to the employee.

That integration has been underway. UKG has integrated some GPTW data elements, benchmarks, workforce insights and other information into the UKG HCM products. One joint UKG/GPTW product is the Great Place to Work Hub.  More joint solutions are coming. 

It’s worth noting that the combined firm UKG has also grown materially during the last few years.

My take

If every employer and manager were a fair, self-aware and empathetic leader, the world wouldn’t need tools like GPTW. Sadly, there are lots of employers and managers that don’t possess those characteristics. As a result, jobseekers and jobholders have to navigate a business world where their careers are often subject to the whims of a mercurial boss or indifferent employer.

Better employers want better tools to understand the ever-changing needs/wants of their workforce. For that logical reason alone, the addition of GPTW capabilities into the UKG products is a good fit. 

These kinds of data points will also see continued interest from firms for their marketing, job attraction, CSR and other use cases. The acquisition should continue to deliver upside benefits for the near future. The GPTW branding is a competitive advantage for the company and one that competitors would find tough to displace. 

Readers might want to check out this very recent Fortune piece on the Fortune Best 100 Firms to Work For.  

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