The Employee Engagement & Experience Market: An Update on “Workday Peakon Employee Voice”

November 8th, 2021

Today Workday provided an update on its acquisition of Peakon, now called “Workday Peakon Employee Voice,” roughly six months since the deal closed. Before getting into the details of this update, we’re going to provide some context on the employee engagement and experience market. We’ll then turn to the goals of the acquisition and what we can tell so far about how well Workday Peakon Employee Voice is meeting those goals.

The Employee Engagement & Experience Market

Growing Rapidly

As we wrote earlier this year, employee engagement and experience technology has been a lifeline for leaders hampered by work from home and unable to interact directly with their employees. It enabled leaders to keep a check on employee pulse throughout the pandemic, especially as fatigue, burnout, and stress levels have all boomed. It has also helped leaders to understand changing perceptions of return to office plans and adjust at a much faster velocity than ever before. Further, leaders are increasingly using these solutions to better understand diversity, equity, inclusion, and belonging (DEIB) within their organizations.

The pandemic did not create the employee engagement and experience market – it was going full steam ahead before March 2020. However, the events of 2020 turned that steam into rocket fuel. As a result, the employee engagement and experience market was one of the fastest growing people analytics tech segments in 2020, and when we complete our study of 2021, we expect it to be THE fastest growing segment. Further, we believe that growth will continue well into the future, as senior leaders have just begun to really grasp the power of people data.

Quite Crowded and Complex

Yet, the employee engagement (eng) and experience (exp) market is quite crowded and complex, especially when you consider all of the vendors who have added employee engagement to their core offerings. For example, let’s take 4 areas we’ve seen converging for the last 3 years or so:

  • Employee engagement / experience
  • Performance management
  • Recognition
  • People data integration

When you look at the intersecting points of all these areas and vendors, you get a chart that looks like Figure 1. There are approximately 30 vendors by our count in the employee engagement or experience market, and we are certain there are more than we have on this chart (if you’re one of them, feel free to email us at [email protected], and we will get you on our list).

Figure 1: Vendors in the Engagement / Experience, Performance Management, Recognition, and People Data Integration Spaces | RedThread Research, 2021.

We are seeing so much overlap because vendors and customers realize that it is no longer realistic to keep these concepts separate. How do you understand engagement without also understanding performance feedback? And how do you give performance feedback without also giving recognition? And how do you understand any of this without solid people analytics?

As a result, we are seeing a need for significant data integration – which is leading to interesting data partnerships, such as the People Intelligence Alliance, as well as acquisitions.

And Very Acquisitive

And there have been lots of acquisitions – and on multiple levels. For example, there have been acquisitions where somewhat larger engagement / experience or performance providers bought each other, such as:

Many of these vendors bought their smaller counterparts so as to expand their feature set, acquire new customers, increase engineering capabilities, etc.

But we’ve also seen the much bigger HR Tech vendors buying best-of-breed engagement / experience solutions, such as:

These bigger vendors’ reasons for purchasing employee engagement and experience platforms were different: it was a customer value and data play. They were looking to do three things:

  • Provide a high-quality engagement / experience solution for customers
  • Create or round-out their offerings in the four areas highlighted above
  • Integrate data from these different talent areas more smoothly

Given those three goals, how is Workday’s acquisition of Peakon going, 6 months in?

The Integrated Product: Workday Peakon Employee Voice

As we wrote in the acquisition blog, we think this purchase made a lot of sense. In short, it filled a hole in capability for Workday, Peakon is a solid product, and there was strong cultural alignment between the two orgs. Let’s talk though, about how this acquisition is performing, given the goals mentioned immediately above.

Goal 1: High Quality Engagement Solution

The new, integrated product, Workday Peakon Employee Voice, appears to be following Peakon’s pre-acquisition trend of delivering strong customer value. Customers are using the solution to take insights on topics such as engagement, diversity, equity, inclusion, and belonging (DEIB), and health and wellness and turn them into action through conversations, personal dashboards, team collaboration, and contextual learning resources.

Customers are rewarding Workday Peakon for the offering, as indicated by:

  • Commercial success of the new product has been significant, with Peakon experiencing a dramatic acceleration of its business
  • Growth has come from new Peakon customers as well as existing Workday customers

In addition, according to Workday, early customer feedback has focused on the ease of use of the platform, the ability for employees to provide feedback easily to leaders, and the use of natural language processing (NLP) to classify comments more easily (especially as positive, neutral, or negative) so they can respond much faster.

Workday is selling the product within its larger suite of products as well as a separate SKU. This is important, because it means that customers outside the Workday HCM ecosystem can still buy it.

Given all the above, it appears the acquisition is very much so meeting this goal.

Goal 2: Round Out Talent Offerings

As mentioned above, a second reason many of these large HR tech providers bought the smaller engagement / performance management vendors was to round out their overall talent offerings.

Peakon clearly ticks this box when it comes to employee engagement and experience (as discussed immediately above). What’s not yet totally clear, though, is the extent to which it does the same for the performance management offering.

Workday’s current performance management offering could use some improvement, especially when it comes to serving more agile performance management approaches. Prior to acquisition, Peakon offered Grow, which was its performance management solution targeted at organizations leveraging a more agile approach. This product is still available to customers, so in this way Workday ticks this box.

However, Grow is not yet integrated into the broader HCM suite in the same way as Workday Peakon Employee Voice. This means that Grow and the existing Workday performance management solution do not talk to each other yet. As a result, there isn’t really a way for existing Workday performance management customers to seamlessly adopt the agile approach offered by Grow.

Workday indicated performance management is a high area of interest and they plan to continue building out the capabilities of Grow and to integrate them into their standard performance review capability. We don’t yet have a timeline yet on when that might happen, though.

Goal 3: Integrated Data

The opportunity to integrate Peakon and Workday data together is one of the most exciting aspects of this acquisition – and one Workday is working on now.

As many of you know, Workday offers its VIBETM Index (VIBE stands for Value Inclusion, Belonging, and Equity), which provides insights on a wide variety of diversity characteristics in the following areas:

  • Hires
  • Promotions
  • Leadership
  • Belonging
  • Attrition

Yet, VIBE only has insights on the current state and how it compares to benchmarks – it gives little insight into how an organization got to that point.

This is where Peakon’s insights – specifically from its Include product – come in. Workday is integrating Workday Peakon Employee Voice insights into the VIBETM Index, so that leaders will be able to both see what is happening and why. You can imagine a world where, instead of just sharing stories on how representation has changed (as shown in Figure 2), the VIBETM Index could also share how key drivers of engagement or turnover have changed for a specific population, and what that might portend for the future.

D&I Tab of Workday People Analytics | Workday, 2021.

VIBE Index tab of Workday People Analytics | Workday, 2021.

VIBE Central Dashboard in Workday, available with Core HCM Subscription | Workday, 2021.

This integration of Workday Peakon Employee Voice data into VIBETM is still in process, but should be available relatively soon. Workday is also working to integrate Workday Peakon Employee Voice data into other parts of its People Analytics solution as well as into Prism, but those are not yet available.

Given all the above, we see Workday working quickly to meet this goal, though it hasn’t been fully achieved yet.

Looking to the Future

Looking forward, there are lots of other interesting ways Workday Peakon Employee Voice capabilities could be integrated into both other aspects of Workday as well as into the overall flow of work.

Our understanding is that Workday is looking to use Workday Peakon Employee Voice strategically throughout the employee experience, by asking targeted questions at specific trigger points (e.g., return to office, return from parental / care leave, 30/60/90-day milestones). The solution is currently integrated with both Microsoft Teams and Slack via the company's Workday Everywhere initiative and we image they will come up with additional ways to put the solution into the everyday flow of work.

From everything we can tell, it appears the acquisition of Peakon is going well, and we are excited to see Workday work to get these integrations – particularly data and of the performance management products – completed. By doing this, Workday will be able to realize its customer value proposition of delivering one data model and a seamless experience more fully. We look forward to continuing to hear from customers as this happens.

Heather Gilmartin Adams