In December 2020, we wrapped up our year-long study on the people analytics technology (PAT) market. One of our key findings from the study: PAT vendors responded quickly to customers’ needs that arose from the twin pandemics of 2020 (COVID-19 and racial injustice).
Practically speaking, this meant vendors focused much more heavily on employee engagement and experience than before. As Figure 1 shows, 67% of PAT vendors from our study reported employee engagement as a primary area of focus in 2020, compared to 60% a year earlier. Similarly, 58% of vendors stated employee experience as a primary area of focus in 2020, versus 43% in 2019.1 (Readers can access important details on the vendors in this space, including our assessment of them, via our interactive tool.)
PAT Critical to Staying in Touch with Employees
People analytics tech has enabled leaders to keep a check on employee pulse throughout the year, especially as fatigue from the pandemic began to set in. For example, 75% of employees in the U.S. reported symptoms of burnout toward the last quarter of 2020.2 Further, findings from a survey by the U.S. Centers for Disease Control and Prevention reported 41% of American adults struggled with mental-health issues stemming from the pandemic.3
People analytics tech that focused on employee engagement and experience helped business leaders understand what was happening with their people—both with data and at scale.
For example, orgs that leveraged this tech to boost their existing (or to design new) listening strategies were better able to support their employees as they faced rapid and unexpected changes.4
Today, as COVID vaccinations roll out worldwide, a sense of hope is starting to emerge. Leaders are looking to reshape the future and redesign new ways of working. To do this effectively, they must understand how employees are feeling and how their needs are changing.
Once again, people analytics tech is poised to play a crucial role.
From measuring how employees feel about returning to offices, to making recommendations to managers on how they can communicate effectively to keep employees engaged, PAT can be pivotal in helping employers redesign their workplace strategies.
PAT Market Evolving Quickly
Given how rapidly business needs have changed, it’s no surprise that the PAT market has continued to grow and evolve in 2021. In the first 3 months of this year, we’ve witnessed some big players make important moves that reflect the growth and evolution of this market.
- Workday announced its acquisition of Peakon, an employee engagement solution
- The IPO of Qualtrics, an experience management platform
- The launch of Microsoft’s Viva, an employee experience solution
A Closer Look
The employee engagement and experience market is critical and changing rapidly, and it deserves a deeper study than we gave it in 2020. The purpose of this research is to provide those responsible for employee engagement and experience (HR leaders, people analytics practitioners and managers) with greater insights on this technology, specifically around:
- The role of people analytics in employee engagement and experience
- The different vendors in this space and how best to understand their offerings
Before we dive into the specifics, we want to take a moment to define the 2 terms “employee engagement” and “employee experience”—and how they connect to each other.
Understanding Employee Engagement & Experience
Let’s start with first clarifying the definitions for both of these terms.
Employee engagement: A measure of energy, involvement, and concentration that is exhibited in work attitudes and behaviors. It is a measure of how an employee feels and behaves at a particular point in time.
Employee experience: Employees' collective perceptions of their ongoing interactions with the org. It encapsulates the ongoing perceptions of an employee’s interactions with the org through their entire journey
Given these definitions, it is clear that employee experience has a much broader scope than employee engagement. Figure 2 below highlights a few other main differences between these 2 terms.
So how should we understand the relationship between these 2 terms?
Employee engagement is an outcome of employee experience.
Basically, how an employee behaves is a direct result of their perceptions based on all their interactions with the org throughout their lifecycle. So, employees will be more engaged with their work if they have an overall positive experience with the org.
How Tech Can Help
Tech plays a critical role in helping orgs with both employee engagement and experience. Such solutions can:
- Offer tools for leaders to check-in and connect with their employees to improve their interactions with people
- Provide an internal platform for employees to communicate and share information to improve interactions with the overall org
- Enable orgs to listen to their employees in a continuous manner to understand how they feel
So, how has PAT leveraged these capabilities to help leaders with their challenges around employee engagement and experience? We take a closer look at this in the next section.
Employee Engagement and Experience Vendors' Capabilities
Before we venture any further, let’s define an employee engagement or experience people analytics tech vendor.
Employee engagement or experience technology vendor: A vendor that uses people data to understand employee engagement or experience.
In our 2020 people analytics study,5 we grouped all participating vendors under 9 categories, based on their tech and analysis (organizational network analysis, text analysis, workforce planning, or multisource analysis) or the talent areas they focus on (labor market analysis, learning, employee engagement and experience, employee coaching, or HCM / integrated talent management).
Employee engagement and experience was the biggest category in our study, with 36% of all vendors. PAT providers in this space offer capabilities that enable customers to do four things, as outlined in Figure 4:
Specific to current times, vendors have leveraged these capabilities in several ways to help their customers. Figure 5 provides details on each of the roles identified in Figure 4.
Customers Are Happy with Their Engagement and Experience Vendors
Our people analytics study of 2020 included a poll of 72 customers, which revealed that customers of these PAT solutions are generally satisfied with them. Specifically, customers gave an average NPS score of 61 for employee engagement and experience vendors (see Figure 6), as compared with the average score of 67 for all vendors in the study. To put that into a bit more context, the average NPS for SaaS companies in 2020 is a score of 40,6 making 61 a great score for PAT vendors in this category.
Some of the quotes from the most satisfied customers in this category include:
“An innovative vendor, constantly improving the product and providing excellent customer support and flexibility.”
Large healthcare company for an employee experience / engagement analysis solution
"Comprehensive surveying and reporting tool with good support."
Large retailer for an employee experience / engagement solution
"High flexibility can be used for multiple purposes."
Large pharmaceutical company for an employee experience / engagement solution
PAT will continue to play a crucial role in helping customers as they prepare themselves to face a new set of challenges related to employee engagement and experience in 2021 and beyond.
Employee Engagement and Experience Vendors
Let's turn to the specific employee engagement and experience vendors, which we divide into 3 categories:
- Employee engagement (EE) vendors
- Employee experience (EX) vendors
- “Passive primary” vendors
In the content that follows, for each category, we provide a framework that is based on the heritage of the vendors, such as founder or acquisition history.
The origins and backgrounds of the vendors, as well as if they’ve been acquired or have acquired others, influences the capabilities they offer and how they go to market.
Each framework provides a list of all the vendors in that category, their backgrounds, details on whether they collect perception data, passive data or both, acquisition history, and a customer NPS score, if available. At the end of each category, we provide a set of checklists to help both customers and vendors think about some key questions when selecting or selling tech (respectively).
We also provide our RedThread assessment for each vendor included in this space which can be accessed through our interactive tool. Readers can use the tool to click on the logo of a vendor and read our assessment for them.
Employee Engagement Vendors
For vendors in the employee engagement (EE) category, we created a framework with the following groups:
- Professional services background. Vendors in this group were founded by people with a strong background and experience in professional services, such as consulting. Their offerings come tightly coupled with professional services (although the tech can also be purchased on its own).
- Employee engagement native. These vendors started out as engagement survey providers, and their primary bread and butter continues to be engagement surveys.
- Employee engagement via other talent areas. Vendors in this group are known for their other products, such as performance management, along with employee engagement. A number of vendors in this group have either acquired other talent solutions in the past or have been acquired themselves—which influences their approach to the market and areas of focus.
A clear distinction among these different groups is difficult due to areas of overlap and, thus, some vendors fall into more than 1 group. All vendors included in this category:
- Have a very strong focus and background in developing employee engagement and pulse surveys
- Go to market as an employee engagement platform and have traditionally focused on engagement as a primary talent area
- Have customer success stories that primarily feature examples of understanding employee feedback and improving engagement
Figure 7 below shows our framework for this category and provides key points on each vendor. (Click on the image below to enlarge it.)
Putting the framework into action
In the following checklists, we offer some key questions for potential customers and vendors to help them better understand the tech and their needs, respectively.
Formed in 2010, Coffee Circle is a German coffee-roasting company that employs 70 people. Deborah Moschioni, Head of HR, joined the company in 2018 and introduced a people analytics tech solution that focuses on employee engagement. Her goal was to collect employee feedback so that Coffee Circle could implement initiatives that are important to the company.
When the pandemic hit in early 2020, Coffee Circle began leveraging the people analytics solution for engagement purposes to support its employees through the crisis. As Deborah explained,
“We wanted to understand how everyone was feeling during this difficult period so that any means of supporting them better could be identified. Additionally, the wording of the COVID response templates was particularly compassionate and mindful of the situations many of the respondents may be facing.”
In April 2020, Coffee Circle ran its Recent Changes survey, based on its people analytics solution’s Emergency Response template. With a 74% response rate, the survey identified 3 areas as having the most positive ratings:
- Trust and support in regard to the measures the org had put in place to address the pandemic
- An appreciation of how the leaders had been communicating
- An appreciation of having more free time and flexibility
The survey highlighted pain points around the difficulties in staying focused, remaining productive, a lack of social connection, and having feelings of anxiety. The company addressed these issues by introducing daily check-in calls between leaders and their teams, and a virtual kitchen so that people could still find a space where they could chat with others.
As the situation started to normalize, Coffee Circle began to explore what employees needed moving forward and identify any aspects of their working life which may be holding them back. The company used its people analytics solution’s tailored Return to Work template and launched a Needs and Learning survey at the end of June 2020.
The data showed that people’s attitudes had shifted, with 42% now valuing professional growth. Since the data also showed an appreciation for flexibility and autonomy (42%), Coffee Circle decided to continue operating a hybrid working model, with people able to choose how and where they work best.
Employee Experience Vendors
For vendors in the employee experience (EX) category, we created a framework with the following 2 groups:
- Focused on employee engagement and experience. Vendors in this group focus on engagement and experience, and provide insights that are primarily focused on creating and improving personalized experiences for employees throughout their lifecycle
- Focused on customer experience. Vendors in this group provide capabilities to capture and analyze customer experience data, and connect that to other types of data
Given our focus on employee experience vendors, we don't include vendors that only focus on customer experience. Instead, we included vendors that focus on customer experience in addition to the other two areas of employee engagement and employee experience.
All employee experience solutions included here also focus on engagement, and provide engagement and pulse surveys. However, we included these vendors in this category instead of engagement because:
- Several vendors have a strong focus and background in customer experience, and can help users connect those insights with employee experience
- Several vendors provide capabilities that collect data from the digital exhaust and connect active data with passive data—thus, providing a more continuous listening approach
- They go to market as an enterprise experience platform
Figure 8 shows our framework for this category, and provides key points on each vendor. (Click on the image below to enlarge it.)
Putting the framework into action
In the following checklists, we offer some key questions for potential customers and vendors to help them better understand the tech and their customers’ needs, respectively.
Southwest Airlines has always believed that, if the company takes care of its employees, then the employees will take of its customers.
Once the pandemic hit, the company soon realized that, due to the low load factors on its flights along with the unpredictability of the virus, it needed to adjust very quickly. Luckily, a few years earlier, Southwest had partnered with its people analytics tech provider to map out its employee company journey. So, when the company began feeling the impact of COVID-19, leaders turned to that journey to make sure they were thinking through all the moments that matter.
With the help of its people analytics tech, Southwest tackled challenges specific to the time of the crisis, such as:
- Creating bite-size virtual learning
- Shifting resources to move people where they’re needed
- Giving employees new opportunities
- Developing enhancements for remote learning
- Providing tools and resources
The company offered employees voluntary time-off and a voluntary separation package, and set up a recognition program for departing employees. The company rolled out a range of surveys throughout the year that focused on specific areas, such as:
- For frontline and HQs employees focusing on overall sentiment, leadership communication, confidence, and health and safety
- Remote work, productivity, leadership support, and return to campus sentiment
- D&I and hospitality
Southwest also created an exit survey for those who voluntarily separated from the company. The insights from the PAT solution helped the company focus on better equipping its leaders and served as key inputs into the future remote work policy.
Working with its PAT solution as a partner, Southwest had previously created a set of personas that represent where and how its employees work, as well as where they are in their career journey. Once the pandemic hit, the company added a COVID lens to these personas to address their specific employee needs. Leaders also created new personas based on the state of COVID-19 and the company, and developed a set of actions that leaders could take to help employees.
Southwest continues to use these insights to design new solutions for pain points, identify specific communication and training needs, and better equip its leaders.
“Passive Primary” Vendors
Recently, we’ve come across a few vendors that have traditionally swum in slightly different lanes of talent areas, but which are starting to market themselves in the engagement space. These vendors are not survey providers. They do not collect employee perception data directly from employees, and thus, do not measure employee engagement in the traditional manner.
These vendors collect passive data—created by employees through digital communications, emails, and collaboration tools—to provide insights on employee attitudes and work behaviors, and, thus, understand engagement levels. Others apply their services—such as text analysis—to feedback data already collected by the customer to identify patterns and themes that can be used to understand employee engagement.
“Passive primary” vendors are PAT solution providers that use passive data to produce insights for the purpose of understanding and improving employee engagement and experience.
For vendors in this category, we created a framework with the following 2 groups:
- Text analysis. Vendors in this group use sophisticated text analysis to understand how employees feel
- Organizational network analysis (ONA). Vendors in this group collect employee communication and network data, and apply collaboration analytics to understand employee engagement levels
This framework is helpful in introducing consumers to instances in which employee engagement can be understood through approaches that don’t involve any surveys. These vendors provide a new way of measuring and understanding employee engagement.
A big challenge that these solutions are able to overcome is self-reported high engagement levels in employee surveys. The flipside to this are the obvious legal, privacy, and security risks that such data collection methods bring along with them.
Figure 10 shows our framework for these vendors, and features key points on each vendor that include their approach to data collection and a customer NPS score, if available. (Click on the image below to enlarge it.)
Putting the framework into action
In the following checklists, we offer some key questions for potential customers and vendors to help them better understand the tech and their needs, respectively.
Australia and New Zealand Banking Group (ANZ) leveraged a PAT solution to turn Yammer into a listening tool for the executives and leaders: This provided them with the data to show the impact of their connection on employee engagement. The data have been a catalyst for getting ANZ’s executives and leaders connecting on Yammer as it shows the impact of leaders’ actions, resulting in increased executive engagement. The company can use the data to look at conversations that’ve been really engaging or not so engaging.
With an already well-established Yammer network across the ANZ business, Yammer Communities went “berserk” during the COVID-19 pandemic, when most employees suddenly found themselves working from home (see Figure 11). Each day, employees were encouraged to post their questions in Yammer. The team facilitating Yammer then reviewed the questions and focused on the most important and popular.
“The engagement was huge. We saw a huge uptake in mobile logins. I think on our top day we had 14,000 people log in.”
Richy Cartmell, Yammer Community Manager, ANZ
The team has been using polling as a method of engagement to discover the wants and needs of employees. Early in the bank’s COVID-19 response, it posted a poll on Yammer asking how ANZ employees felt about returning to the office. The poll received more than 3,500 votes and 120+ replies: People explained they were more concerned about safely getting to and from work than the risk of transmission in the office.
Data from the analytics tool is available for all ANZ employees to access, along with the solution’s internal training sessions. When people see their own online behaviors’ data, it acts as a “wake-up call” to encourage the right behaviors on Yammer and leads to conversations on how to improve collaboration.
We expect to see the PAT employee engagement and experience space change and evolve in the near future in the following ways:
- Increasing number of new players. The market is poised to keep growing for the foreseeable future for the following reasons:
- Everybody wants more data. As companies look to reopen their offices or adopt a hybrid approach, deeper and regular insights from perception and passive data will continue to be critical for leaders and managers.
- The personal now impacts the professional. Areas that were once considered separate from the workplace and owned by individuals—such as physical and mental wellbeing, and work-life balance—became crucial drivers for employee engagement and experience during remote work. Employers now see themselves as more responsible for these areas as they impact an employee’s overall experience with the org and drive engagement. Tech solutions in this space can help.
- Rise of nontraditional engagement and experience vendors. Users will increasingly see the value of applying PAT solutions—that use nontraditional methods of data collection, and don’t go to market as either engagement or experience solutions—to impact these areas. Similar to DEIB tech, we foresee more tech vendors offering capabilities for the purpose of engagement and experience. For example, with collaboration and wellbeing seen as crucial drivers for engagement and experience, ONA can offer useful insights to users. We’re already starting to see this growing shift with vendors as mentioned in our “passive primary” vendors section.
- Enabling action. PAT vendors within this space will do more than just collect and analyze data: They’ll increasingly provide specific and targeted recommended actions as part of their solution offerings. Additionally, they’ll also offer users more and more resources within their platforms that’ll enable them to act on those recommendations.
Employee listening became a strategic priority for leaders in 2020 and will continue to be critical in 2021. Efforts to understand and drive employee engagement and experience enabled companies to weather the storms, so to speak. While the pandemic will eventually come to an end and social unrest will be addressed (we hope!), lessons learned during these turbulent times will stick with us far into the foreseeable future.
Leaders must continue investing in these areas if they want to successfully survive and work through future disruptions. People analytics tech, that focuses on these areas, can help orgs care for their employees and be better prepared for the future.
- Our survey allowed vendors to select more than 1 area of primary focus for their products.
- “FlexJobs, Mental Health America survey: Mental health in the workplace,” FlexJobs / Brie Weiler Reynolds, August 21, 2020, flexjobs.com.
- “Mental Health, Substance Use, and Suicidal Ideation During the COVID-19 Pandemic — United States, June 24–30, 2020,” MMWR Morb Mortal Wkly Rep / Czeisler MÉ , Lane RI, Petrosky E, et al, 2020; 69:1049–1057, DOI: https://dx.doi.org/10.15585/mmwr.mm6932a
- “Insights Discussion: Navigating A Pandemic: Listening To Employees Through Turbulent Times,” Perceptyx, April 2020, https://blog.perceptyx.com/insights-discussion-navigating-pandemic-video-recording
- People Analytics Tech 2020, RedThread Research / Stacia Garr and Priyanka Mehrotra, 2020, https://redthreadresearch.com/pat-2020/
- “What is a Good Net Promoter Score?” Retently / Grigore, 2020, https://www.retently.com/blog/good-net-promoter-score/
- “Coffee Circle Case Study,” Culture Amp, 2020, https://www.cultureamp.com/case-studies/coffee-circle/
- “Southwest Airlines Keep Culture High,” Qualtrics, 2020, https://www.qualtrics.com/work-different/southwest-airlines-keep-culture-high/
- “ANZ – Top Yammer network: Authentic leaders listening to their people,” Swoop Analytics / Sharon Dawson, 2021, https://www.swoopanalytics.com/case-studies/anzlistening