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Questions to Ask During a Merger or Acquisition

colleagues shaking hands

Mergers are different from acquisitions because the two companies are equal (for the most part), and they make the joint decision to combine forces. An acquisition is typically a takeover of a smaller firm by a larger firm. Most of the announcements in the HCM space are acquisitions, but we have seen a few mergers over the past year, including Shaker and Montage (ModernHire) and, most recently, Kronos and Ultimate Software.

Kronos and Ultimate Software can easily be characterized as equal companies coming together. They both have 6,000 employees, both have revenue of nearly $1.5 billion, and both went public and then went private again. But, more than anything, they both have the type of leaders who would come to your home if you were sick and cook you a meal and babysit your kids. It’s the type of leadership that was built on a foundation of kindness and decency. In technology, this type of leadership is rare.
While I do have some early thoughts on the merger of these two firms, some of my friends like Lance Haun have done a better job covering this announcement. But I have been thinking about mergers and acquisitions and what I would want to know if I were a customer.

So, here are a few questions that customers and prospects might want to consider when faced with a merger or acquisition:

Company
– What is the timeframe for change? When can customers expect to see changes to the company or products?
– What are the goals of this announcement? Are the revenue and product goals realistic?
– Will any office locations or headquarters change in the next year?
– Are there any plans to add headcount to the new organization?
– Will there be a rebrand?
– Are there future acquisitions or mergers planned in the next year or two?

People
– What will happen to the current leadership team? Are there a certain number of years leaders are required to remain with the new entity?
– What are the plans to retain key customer contacts, including sales, customer support, and services? Are there short-term or long-term plans to consolidate these functions or replace these functions?
– What will change for implementation teams and support? Will there be a transition period that will impact implementation timeframes?
– What is the morale of the current employees at both companies? Are they excited about the announcement or concerned about their future?

Products
– Are there any plans to sunset the brand of one of the companies?
– What is the investment in research and development moving forward?
– What are the plans to integrate these products?
– What products will be the focus moving forward?
– What is the product roadmap for the next six months to a year?
– Will customers be involved in product development?

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It Is a Good Time to Be in HR Technology

Last week was a big week with some major announcements about investment in HCM. First, Workday announced a $250 million venture fund with investments to go into early and growth stage providers focused on topics such as AI, blockchain, and machine learning. This announcement not only demonstrates Workday’s growing leadership in all things HCM but it also enables startups to develop better products and expand their customer base. Less obvious announcements from last week include Gartner’s decision to sell its talent assessment business (through the acquisition of CEB – which acquired SHL) to private equity firm, Exponent, for $400 million. Not to mention, investment raised by Joveo ($5 million), gr8people ($8 million), and ZipRecruiter ($50 million). Investors recognize the opportunity and the demand for better solutions to attract, engage, and retain talent. And, it is a good time to be in HR Technology.

Here are some of the areas where we see the most investment:

–          Recruitment Marketing: Interest in the recruitment marketing space has not died down. Investors recognize that recruiting is evolving the same way marketing evolved several years ago. They are looking at solutions that offer one platform for engaging, nurturing, and connecting with talent before they ever apply for a job. Research we did last year found that 1 in 3 companies are increasing their spend on solutions that handle everything before someone applies for a job.

–          AI: The topic of AI is pervasive in HCM. Yet, most companies are still confused by what AI is and how it can be used to solve talent management challenges. Companies are curious about the value of AI and what use cases they should consider. But with so many providers entering this space, it is challenging to know who to consider. Hopefully, some of the investment in AI will help to provide clarity around AI and differentiate some of these providers.

–          Blockchain: The topic of blockchain is everywhere and not just because of the buzz around Bitcoin. Essentially, blockchain is a database that is not stored in just one central location but is everywhere- making the data easier to maintain. Sourcecon published a great article recently, where it explains Blockchain in this way:  “Imagine a Google or Excel sheet you’ve shared with your recruiting team to track hiring activities. Your sheet updates automatically in real time, it’s asynchronous, and everyone has access to the ability to update it.”

–          Employee Recognition: At one time, an area where investors seemed to tread lightly, the employee recognition market has really taken off. Investors recognize that employee recognition is the key driver of employee engagement and are looking at solutions that enable social recognition, feedback, and peer-to-peer interaction.

We will continue to watch the investment in this space are we are excited for the opportunity it presents providers and practitioners. Our friend, George LaRocque, does an exceptional job of covering the investment in this space. We also recommend checking out his research and publications on this market.

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Your Employees are Financially Stressed. So, What are You Going to Do About It?

a person using a tablet to show data and charts while other employees take notes

According to research by the American Psychological Association, 72% of Americans are financially stressed. It goes without saying that financial stress takes a serious toll on an individual’s health, happiness, and overall well-being. But it also has a ripple effect on our workforce. When employees are stressed, productivity, performance, and engagement all plummet. So, what are we doing to help employees manage stress? Not much. New research from Aptitude reveals that 70% of companies have no formal process to manage employee stress. Given the impact of stress on our personal and professional lives, can’t we do better? Can’t we provide employees with the right resources and support to manage their personal finances and pay off debt?

Fortunately, some organizations are committed to doing more. Companies are being more strategic when they think about financial stress and investing in solutions that impact the bottom line. In our latest research, we found that 1 in 4 companies have financial wellness solutions. While it is exciting that companies are embracing financial wellness, many of these solutions do little to help employees manage the stress. Instead, they simply provide information and data without an action plan to help employees as they move forward. Financial wellness is an area that is still emerging and organizations must make better decisions around the providers they consider.

One of the financial wellness providers I have been most impressed with this year is Best Money Moves. Their solution helps organizations tackle the real issues impacting our workforce in a way that maintains employee privacy and empowerment. It is a mobile-first employee benefit solution that helps employees understand and take control of their finances. It also offers “money coaches” to help employees make better decisions about their finances moving forward.

Most companies understand that financial stress has become a crisis and that this is the time to address it. Yet, finding the right solutions can be tricky. Here are a few recommendations to think about as you begin tackling financial stress in your organization:

  • Measure It: Find solutions that do more than just make assumptions or generalize financial stress. Instead, consider solutions that truly measure individual stress levels and provide an action plan to help employees take control of their finances.
  • Keep It Simple: Finances are scary. The worst thing an employer can do is invest in solutions that overcomplicate financial wellness and make it intimidating. Companies should look for solutions that keep it simple and easy for employees to understand what they need to do.
  • Establish Trust: Privacy is a critical consideration in financial wellness. Employees need a solution that they can trust will maintain their privacy and provide the right advice.

We are excited to be providing more research on financial wellness this year and would love to hear what solutions you are using and what challenges you are facing.

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New Year, New Priorities, and New Data

We are ready for a new year. We have been busy planning ahead and we are setting new goals and priorities. It is an exciting time to be in HCM and we are looking forward to the next twelve months.

Here are a few of the things you can expect to see from Aptitude in 2018:

  • New Data: Mollie launched her Impact Survey and she is in the process of analyzing the key findings that include payroll, compensation, and total rewards data. Later this month we are launching our Talent Acquisition and Engagement Survey and will look at investment, integration, and analytics. We will be sharing our findings in early February.
  • New Website: We are all about simplicity this year, and our new website will reflect this commitment. We want to make it as easy as possible for our community to find our research, connect with analysts, and discover our latest thoughts and insights. We will be launching a new website in early Q2.
  • New Content: We are becoming more consistent with the content we publish – not only reports, but also blogs (every Tuesday and Wednesday) and Aptitude Fast Facts; data points we will share on our website and twitter every Monday.
  • New Conversations: Connecting with HR and Talent Acquisition leaders and practitioners is a big part of what we do. We plan to make this an even bigger commitment in 2018 through research advisory councils and new relationships and conversations.
  • New Index Reports: We are updating our Payroll, ATS, and Recruitment Marketing Index Reports. Also, we are tackling RPO and recognition this year. We will share more information on our Index Reports in the next few weeks.

We are excited for everything “new” this year and would love any feedback on our surveys, content, website…anything. Let us know what research you are hoping to see this year!

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HCM Startups: Asking the Tough Questions

worker holding a tablet with data and charts explaining to co-workers

It is a good time to be a startup in HCM technology. With new investment, new priorities, and a new focus on the experience, this market presents some exciting opportunities. In fact, according to CB Insights, the amount of investment in this industry has increased from $400 million in 2012 to just under $2 billion last year. The investment and opportunity seems so promising that entrepreneurs from all walks of life are entering this market with new solutions that promise to change talent and workforce management. Sounds great. Yet “new” is not always better in the world of HCM and companies need to be cautious when investing in startups.

Below are a few questions to consider:

  • Financial Viability: Some startups have every intention of becoming a leading provider in the market with staying power. They are passionate about the work they are doing and the value they provide to your company. Other providers are just hoping to get acquired. They have an exit strategy, and it doesn’t include helping you achieve your goals. When considering startups, you want a provider that is going to be around in the next few years and will partner with you around your unique needs.
  • Integration: Startups don’t always understand the complex HCM ecosystem and how important integration is to corporations. You should consider providers that integrate with more than your HRMS and have a willingness to learn and connect with many partners.
  • Deep Domain Expertise: Startups don’t have to be experts in everything HCM but they should have a strong understanding of their market. They should partner with clients to build out their expertise and be flexible to new challenges that come up. According to Aptitude Research Partners, 56% of companies are investing in providers that can demonstrate deep domain expertise in talent acquisition.
  • Budget: It is easy to get excited by something that is new, but you need to make sure that the startups you are considering align with your HCM budget. Is this something you will need to get buy-in for, or can it replace some of your existing technology?

Investing in a startup can be a positive thing for your company. It can help you reimagine the way you are attracting talent, engaging talent, or even providing benefits. Startups can take your HCM strategy to the next level – but you still need to be judicious about the providers you are considering. You need to ask the tough questions. Sometimes “new” is nothing more than new. Solutions should provide greater efficiency, a strong experience, and a willingness to partner with you as you face challenges.

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Marketplace or Market Hype? Three Ways to Tell the Difference

silhouettes of people discussing and sharing ideas with ideas floating above their heads

Who doesn’t love the concept of a Marketplace? As consumers, marketplaces allow us to make a dinner reservation, order food or even get a ride to the airport. They connect us with providers, reduce the friction of buying and selling, and help us navigate through a very complex ecosystem of providers.

Fortunately, there is no shortage of marketplaces in HCM technology. Providers such as ADP, SmartRecruiters, iCIMS and Newton Software now offer valuable marketplaces to help their customers make better decisions. Even emerging providers recognize the value of linking customers with the right providers. In fact, nearly half of the 169 recruiting startups on the AngelList from August-September of last year were marketplaces (analysis from Ray Tenenbaum, CEO of Great Hires).

While the concept of a marketplace in HCM makes sense, the reality is that not all marketplaces are created the same. Many providers that have announced a “marketplace” are offering nothing more than a list of partners and an open API. How can companies decipher between a true marketplace and market hype?

Below are three ways companies can tell the difference:

  1. Customer Experience is The Priority: In order to be a true marketplace, you can’t just categorize or aggregate the market, you need to enhance it. Providers have to create value for their customers and improve their experience. An HCM marketplace should allow customers to easily search for providers, view ratings or feedback and easily make purchases. Users should not have to leave the marketplace to do any research on providers.
  2. Certification Is a Critical Part of the Process: The marketplace should be selective about who is and who is not included. Some marketplace providers are so eager to include as many companies as possible (remember- most get money from the providers they include) that they lose their value. A certification process allows a marketplace provider to set the criteria for who can be included and let the customer know that “This is who we trust. So, you can trust them too.”
  3. Insights Instead of Information: A marketplace should provide insights about the providers included so customers can make better decisions. Some marketplaces simply list providers under categories and include a brief description that can be found on their website. The HCM ecosystem is complex and the marketplace should help companies determine what providers can help meet their needs.

The concept of a marketplace can provide tremendous value to both providers and customers when it focuses on the experience. If we think about how marketplaces help us as consumers to make quick and educated decisions, the same should be true in the world of HCM.

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The HR Technology Conference 2015: Trailblazers Don’t Make the Best Settlers

Many people holding up tablets in front of their faces with their pictures on the back

I first heard this quote at last month’s GlassDoor Employer Branding Summit when Spencer Rascoff called Zillow (the real estate tech giant) a startup. Some companies, regardless of their size or growth potential, still operate best when they are pushing the envelope, running at warp speed or getting messy with all hands on deck. Is this a good thing? I think so especially in a time when “startup” has become the flavor du jour. This sentiment is one that certainly rang true at The HR Technology Conference this week. Both emerging providers and traditional players were coming to market with new products and exciting announcements. Everyone from ADP (who announced significant enhancements) to Engage2Excel (who developed a novel approach to old-school recognition) to The Marcus Buckingham Company (who stole the show with its approach to building high-performing teams) had something interesting to share. The energy this year is hard to describe.

In the startup spirit, a few themes resonated with me this week including the need for a communication platform, a marketplace and recruitment optimization. Below are a few providers to watch in each category:

Communication:

It sounds basic but communicating with employees, candidates and managers is a critical part of any HR process or strategy. Yet, it is so often overlooked. Companies tend to rely on email as their primary method with little impact on engagement or retention. The good news is that several of the technology providers are offering a more effective communication platform.

  • GuideSpark: As a communication platform, GuideSpark bridges the connection between employers and employees through content generation tools, collaboration tools, user engagement, surveys, analytics and wellness.
  • PeopleFluent: Through its Talent Management solution, PeopleFluent supports communication with its Anytime, Anywhere Feedback feature, optimized for both desktop and mobile use.
  • The Marcus Buckingham Company: This tech solution is informed by Marcus Buckingham’s 20+ years of leadership research on the front end and supported by a deep coaching solution on the back end. Focused on building high performing teams, it is research based and action-focused – providing an effective solution for communicating and coaching teams and individuals.
  • Engage2Excel: This recognition provider has been around since the 1800’s but recently went through a rebrand, a strong partnership with Vestrics, and brought in a new team focused on measuring, managing and informing engagement and recognition.

Recruitment Optimization:

Without the right strategies or technology, talent acquisition is an incredibly complex undertaking. And, it has become more difficult over the past ten years. Today, talent acquisition deserves its own, integrated framework and its own suite of solutions. Organizations are looking at new tools and strategies to optimize their recruitment functions. Below are some providers that are committed to helping organizations improve their talent acquisition functions.

  • Yello: Yello was one of the companies I was most excited to meet with this week. They offer a suite of talent acquisition solutions for the enterprise, campus recruiting and the SMB market. Its smart team is focused on customer satisfaction.
  • Lumesse: Through a new interview management system, Lumesse is enabling companies to improve their time to fill while improving both the candidate experience and the quality of hire.
  • Findly: Much more than just a talent community, Findly offers a suite of solutions that helps organizations attract and recruit talent including ATS, assessment and sourcing solutions.
  • iCIMS: With significant growth over the past few years, iCIMS has demonstrated its leadership in the talent acquisition market. Its talent acquisition platform offers solutions that attract, recruit and onboard talent.
  • SmashFly: The defacto Recruitment Marketing provider, Smashfly is helping organizations through a complete recruitment marketing platform of inbound recruitment marketing, outbound sourcing and employer branding.
  • Entelo: Entelo, the leading sourcing provider, announced a new product, Stack, that helps companies manage resumes and applications and improve productivity.
  • SilkRoad and SmartRecruiters: This partnership between two leading talent acquisition players, SilkRoad and SmartRecruiters, will allow them enter into new markets and expand their product capabilities.
  • Greenhouse: This end-to-end talent acquisition platform recently raised $35 million to help companies optimize their talent acquisition efforts. And they have a very impressive team and product.
  • GreatHires: This solution focused on interview management and scheduling was one of the more innovative solutions I have seen in a long time. It gives candidates the information they need to feel comfortable in an interview and makes scheduling easy and flexible.
  • Randstad Sourceright: When you think of technology, Randstad Sourceright might not come to mind. But, this MSP and RPO might be the best kept secret in HR Technology. With its TalentRadar product, it extracts data and loads it into a themed database. The data it provides companies, is the data they need like when a requisition opens and when a job will fill.

Cool Companies:

Below are a few of the providers that I was most impressed with last week:

Appcast: I love Appcast not only because it was founded by Chris Forman (former president of AIRS) but also, because it is a simple concept. This solution changes the pricing model of job advertisement from click per candidate to pay per applicant and offers a powerful engine to help organizations make this shift. This change in the model helps companies reduce costs and improve the overall experience for recruiting functions as well as candidates.

Equifax: The people, the products and the vision are all impressive at Equifax. They do this by tackling very complex issues such as compliance, ACA regulations, and unemployment. While other providers are expanding their suite of products into different areas of HCM, Equifax has stayed focused on the bigger issues in our community- issues that impact the success and staying power of the overall business. A few of their solutions include compliance, ACA compliance, and unemployment. Check out what they have done with i-9 compliance and “the Work Number”.

Mercer: It is hard to find a provider that excels on both the technology and services side but Mercer is the exception. With a strong heritage in consulting and new products including Mercer Match (recruitment matching solution for sales teams) and a strong career development solution, Mercer is a force to be reckoned with in the HR Tech space.

The Daily Muse: Meeting with Muse founder, Kathryn was one of the highlights of the conference. If you missed her ignite session, The Daily Muse helps employers create a profile to strengthen their brand, use content marketing to promote the brand and support them as they weed out the “craplicants” and improve branding.

Marketplace:

During most of our conversations at HRTech, the topic of a marketplace came up. Marketplaces are a staple in the consumer world and are quickly becoming part of HCM. Below are a few providers to watch.

ADP: ADP’s robust marketplace allows customers to access 90 certified partners (with 400 partners in the pipeline. Other providers use a marketplace as a marketing tagline, while ADP has built one with real substance and credibility- one that will provide real value to customers and partners.

WorkMarket: This provider offers companies an end-to-end market for companies looking for independent contractors. It allows direct relationships between employers and workers and can be customized for any skill.

We will follow these providers and more this year and next and will be profiling them in our upcoming Aptitude Index reports. Also, we would love to hear from you about what providers were most interesting to  you at HRTech.

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