Events

Culture Amp announced today it acquired Zugata, a continuous performance management technology company. I was thrilled to hear about this acquisition – Culture Amp’s first – as it has real potential to both increase the competitiveness of the talent management technology landscape and significantly benefit both Culture Amp and Zugata’s customers. In this blog, I’m going to explain what is happening more broadly in the market and then specifically focus on this new acquisition.

As I wrote last year, talent management practices are converging; in particular, the following areas are coming together:

• Performance management (PM)
• Employee engagement
• Recognition
• Learning / career management

This is happening because organizations are trying to better “listen” to employees by more holistically collecting feedback (on employee engagement, experience, and performance) and using that insight to drive culture. This shift is a natural outcome of the massive changes we’ve seen in performance management across the last eight years or so, where more frequent performance conversations and seeing the manager / employee relationship as critical to employee engagement have become the norm. In this new world, the employee and manager are the center of these talent management practices, and they are using technology tools to regularly check in on, enable, and encourage performance, engagement, and experience.

Unfortunately for HR technology customers, though, there has been a hole in the technology market. Many of the traditional talent management systems vendors have not been able to create this employee-centered system that enables continuous, circular feedback and development opportunities. Further, the best-of-breed solutions have – as you would expect – only focused on their primary silo, and not offered enough capabilities to provide the experience either.

But that began to change about 18 months ago. We’ve recently seen a wave of acquisitions and capability build-outs to meet these multiple needs (and I’m sure this list is not comprehensive):

• Glint (an employee engagement / experience company) started to build PM capabilities and then was acquired by LinkedIn (talent acquisition and learning, via Lynda.com)
• TinyPulse (an employee engagement / experience company) built out recognition capabilities via “cheers” and “virtual suggestions”
• Limeade (an employee engagement / experience company) built out recognition capabilities, in addition to well-being and inclusion
• YouEarnedIt (a recognition / engagement company) bought HighGround (a PM company)
• Globoforce (a recognition company) built a light-weight PM module (Conversations)
• OC Tanner (a recognition company) built a light-weight PM module (Align)
• Achievers (a recognition company) built an employee engagement / listening module
• Reward Gateway (a recognition company) bought Brand Integrity and now has an employee engagement offering

So, in short, you can see that a lot of previously best-of-breed vendors are bringing together at least three of these four capabilities.

Which brings us to today’s announcement. I was thrilled to hear about this acquisition for many reasons (detailed below), but the biggest one is that it allows Culture Amp to go beyond its traditional employee engagement / experience offering and now provide performance management, recognition, and some aspects of learning, via Zugata.

Let’s talk about why this makes sense for Culture Amp first. For years I have urged Culture Amp to think more about how to serve the performance management space, given the above trends and the strong demand from their customers for a PM solution (many Culture Amp customers have been customizing their solution for years to meet performance management needs). Second, Culture Amp’s customers are deeply passionate about their product and driving meaningful, data-driven change in their organizations. If there is a technology vendor that could further help the performance management revolution, Culture Amp is it. Finally, Culture Amp is competing in the highly-competitive employee engagement / experience market, and a performance management offering helps them further differentiate their product.

So why Zugata? For the last few years, I have had a short list of innovative PM solutions, and I’ve told anyone that asked that they should check out Zugata (someone finally listened!)  There are lots of reasons I like Zugata, in addition to the fact that they offer performance management, recognition (praise only, no rewards), and learning.

First, I love how Zugata incorporates organizational network analysis (ONA) into its continuous feedback technology. By doing this, Zugata can help identify the people an individual has worked with the most in a given period, and then solicit ongoing feedback from the most relevant folks. Further, since Zugata is doing this, it can avoid over-asking for feedback from any one individual, which is a real challenge in the continuous PM era. In addition, this built-in ONA capability can help people understand who they work with the most and the composition of their own network – which can be useful for understanding where the network may need to be built more.

Second, Zugata offers natural language processing (NLP) of performance feedback and allows leaders to analyze key themes. For example, an organization can use NLP to identify the feedback given to high performers in the company to understand the behaviors / attributes that are being rewarded the most (frequent positive mentions) versus the least (infrequent or negative mentions). The company can then compare those highly rewarded behaviors / attributes to the published values / behaviors / attributes to see if the company is “walking the walk” in terms of what is valued within the culture. Further, as I’ve written about in our research on diversity and inclusion (D&I) technology, Zugata allows organizations to see if specific words or capabilities are being commented on for one gender more than the another (e.g., focusing on work output more for men and personality more for women). This can help an organization begin to root out unconscious bias that is occurring within performance management.

Third, Zugata uses the data within its system to suggest specific learning opportunities, offering an expanded development library from the likes of Lynda.com and Skillshare. While there are a lot of technologies that do this, what has impressed me most about Zugata is that it uses the information on who has what specific strengths and then can suggest mentor matches for folks who need to develop those specific strengths. Further, if a mentor is not available within a company, organizations can leverage Zugata’s relationship with The Muse, and given their employees access to career coaches. This represents a focus on extending beyond content to recommending relationships, which is an important shift.

Finally, I am excited about this acquisition because I think there is a strong culture fit between these two companies. Culture Amp remains laser-focused on culture (as you would expect), and in particular cares deeply about diversity and inclusion. As you may expect from my commentary on Zugata’s D&I capabilities, Zugata also cares about making the corporate world more diverse, inclusive, and equitable.

This acquisition is likely to force the market to advance. It will no longer be enough for these providers to loosely stitch together the different capabilities (engagement / experience assessments, performance management, recognition, and learning), given the number of players who will offer those capabilities. Instead, technology vendors will have to provide an increasingly seamless solution that has a clear vision of the value it provides to workers, managers, leaders, and HR. This will benefit everyone.

I should not conclude without mentioning, as always, there will be challenges for both companies in managing and executing the integration. And, as we all know, most acquisitions are not successful. However, I am very bullish on this one and wish Didier and Srinivas and their teams well as they continue their efforts to become one big Culture Amp team.

Why this is important right now:

Research abounds showing the positive impact of diversity – and gender diversity in particular – on an organization’s outcomes. For example, a recent McKinsey study showed 47% higher return on equity for companies with women on executive committees.¹

However, women are unique in that they are the only historically disadvantaged group who make up nearly 50% of the workforce. Despite that, they are woefully underrepresented at top levels. Fewer than 5% of S&P 500 CEOs are women and only 26% of senior management positions are occupied by women.²

To address this, organizations have recently invested in unconscious bias training in droves. However, it is not at all clear that unconscious bias is the villain. One large-scale analysis of more than 80 research studies and 17,000 individuals found no reliable relationship between measures of unconscious bias and actual behavior.³ And even if unconscious bias did affect behavior in some cases, simple awareness cannot remove implicit bias. It cannot be trained away. Diversity training, in fact, is one of the least effective methods to promoting diversity and inclusion.⁴ It may even make matters worse.⁵

Hypotheses:

Exclusion from informal professional networks has been identified as one of the greatest barriers to career success.⁶ One multinational study of over 240,000 men and women found that while 81% of women report some form of exclusion at work—astonishingly—92% of men don’t believe that they are excluding women at all!⁷

However, research shows that men’s and women’s networks do not seem to follow consistent patterns, revealing that solving the problem is not so as easy as simply identifying new ways in which women should build their networks. Instead, we believe organizations may need to re-think work partitioning, training, mentoring, sponsorship programs, and collaborative technologies to create opportunities for professionals to develop effective working relationships built on understanding and trust.

To that end, RedThread Research is excited to announce our new research initiative on how women use their networks to advance in organizations and the potential opportunity for technology to amplify those network behaviors. This research is being supported by GSV AcceleraTE. The final research report will be previewed at the 2019 ASU GSV Summit, April 8-10 in San Diego, and published shortly thereafter.

This Project:​

This research will focus on identifying how women can more effectively use existing opportunities, overcome factors that hinder performance, examine the role of technology, and make recommendations on what can be done by women and men as individuals, and organizations as the system in which people work, to improve women’s likelihood to rise in companies.

More specifically, we will examine the following topics:

Participate:

The above list represents our initial hypotheses as to what the study will cover. However, one of our core values at RedThread is collaboration and we need you to be a part of the process. We are collaborating with Dr. Inga Carboni, Associate Professor of Organizational Behavior at the College of William and Mary, to conduct interviews now through the end of March. If your organization is doing anything interesting on this topic, we encourage you to reach out to us and share your input at [email protected].

We are currently looking for folks to participate in our research around these topics:

• How organizations help women advance in their organizations
• How organizations help women build and develop important professional relationships inside and outside their organizations
• How organizations are helping women design their networks intentionally
• The importance of women’s networks and relationships in enabling them to advance within the organization
• The role or potential opportunity of technology to democratize or accelerate women effectively using their networks

If you have an interesting story to share about the topics above, wish to participate in an interview, or have recommendations, please contact us.