Cloud HCM vendor Workday today announced its acquisition of employee engagement app Peakon for $700 million in cash. Listening to employees is on trend, especially since the enforced abandonment of traditional offices during the pandemic made it that much harder to tune in to conversations around the watercooler. At the same time, whether working from home or battling with the challenges of a deadly pandemic in the workplace, there's been a renewed focus on employee wellbeing, mental health and burnout. All this has come on top of talent retention issues that already existed pre-pandemic. As Aneel Bhusri, co-founder and co-CEO, Workday, says in a press statement confirming the deal:
Bringing Peakon into the Workday family will be very compelling to our customers — especially following an extraordinary past year that has magnified the importance of having a constant pulse on employee sentiment in order to keep people engaged and productive.
The $700 million all-cash deal is expected to close in Q1 of Workday's new financial year, which starts next week. Founded six years ago in Copenhagen, Denmark, Peakon employs 260 staff and has more than 1000 customers. Its products are designed to intelligently track employee sentiment and help managers take actions to improve engagement. As its co-founder and CEO Phil Chambers explains in a blog post on the acquisition:
We architected Peakon around employees, not surveys — meaning businesses can adopt an intelligent approach to gathering feedback on engagement, diversity and inclusion, health and wellbeing, and more, without overwhelming people.
We took benchmarking to a new level, delivering a highly objective and sophisticated way of understanding your culture. And we now drive the people agenda further, by tying business outcomes to engagement and proven actions that achieve this — across an incredibly diverse range of industries.
According to Workday's press statement, the acquisition brings together two separate ingredients. It states:
The combination will merge intelligent technology from Peakon that determines and distributes surveys and information to the right person at the right time, with the comprehensive employee insight in Workday, to help leaders continually discover and respond to evolving employee feelings, needs, and behaviors.
Inclusion, belonging, and the employee perspective
Workday places a particular emphasis on the potential to use Peakon to track belonging, which has been a big focus for Workday following the launch of its VIBE dashboard — VIBE stands for Value, Inclusion, Belonging, and Equity — to track diversity and inclusion metrics across an organization's people. However Chambers contributes a more bottom-up perspective:
By joining forces with Workday, we’re able to accelerate our mission to help every employee drive the change they want to see.
Workday and Peakon were not making spokespeople available today to answer questions about the acquisition — we did ask — but Chambers elaborates on his views in an interview published on the Workday blog. He explains that the company was founded to apply the principles of measuring customer experience to employee engagement:
Our products give an objective view of your organization’s culture and management practices, including your strengths — what’s motivating your people — or the challenges you’re facing and things that could be improved.
But whereas Workday's approach tends to focus on collecting data that can be analyzed centrally, Peakon seems to take more an employee-centered approach. Chambers comments:
I’ve always believed that a great job is one that adds to your life experience, and your growth as a person.
The interview also gives some details of findings collected by the Peakon Heartbeat initiative, which aggregates data across the vendor's customer base to identify broader trends within the data. There were particularly interesting findings in 2020 as the pandemic lockdown took hold and employee engagement actually rose in some industries even though people were no longer coming into offices. Chambers recounts:
The industry with the biggest uplift was financial services, which had to undergo rapid changes to stay productive during lockdowns. Our data points to a positive response to working from home, perhaps avoiding some stressful office environments as a result. We also observed a 5% increase in employees feeling their mental well-being was a priority for their employers.
But one telling downside was a decline in opportunities to progress careers:
Where employees did miss out in 2020 was on career growth. While many of us have learned a lot — perhaps more than during a regular year — our data shows that the formal recognition of that learning through growth and career progression has slowed slightly.
The more I learn about this story, the more I'm having flashbacks to all those SuccessFactors presentations in the wake of SAP's acquisition of Qualtrics about what can be achieved when X data meets O data. 'X' being experience while 'O' being operational. The synergies Workday talks about in its press statement today seem very similar to this, providing a belated validation for SAP's acquisition of Qualtrics — one that SAP is now starting to undo.
However Peakon sees itself digging deeper than the likes of Qualtrics. In its blog post welcoming today's deal it explicitly calls out the shortcomings of this type of solution: "We saw general-purpose survey providers delivering poor quality, unactionable data."
The big unanswered question in my mind — which is why we sought an interview — is how Peakon's culture will gel with Workday's. I've not spoken to Peakon but I find myself warming to their employee-centric approach which seems to me in tune with today's zeitgeist. However I'd like a better sense of how they use employee feedback to guide manager responses. I'm also wondering how this employee-centered approach jibes with Workday's more dashboard-centric corporate metrics — there may even be a US vs Nordic clash of attitudes going on here.
On the whole I think this tie-up bodes well for Workday as I think there's an opportunity to bring in some timely fresh thinking as well as an adding an offering that's clearly on trend. But I'll look forward to hearing more in the coming months as the deal is consummated.
One other point to note is Peakon's Heartbeat metrics, an example of the kind of community intelligence that SaaS pioneer Rob Bernshteyn at Coupa writes about. Getting permission to collect this kind of data is problematic in HR circles but Peakon have clearly gone out of their way to do this and the results are particularly valuable in this kind of scenario.
Overall then lots to intrigue in this acquisition story but the devil is in the detail of how it will play out.