LinkedIn recently acquired Glint. Shortly thereafter, SAP acquired Qualtrics. This is a big deal in the employee engagement space. These two acquisitions by business software industry giants signal a strong outlook for employee engagement and leadership development in the modern workplace.
LinkedIn acquires Glint
Last month LinkedIn announced their acquisition of Glint. The deal was valued at more than $400 million. The final number likely doubled their 2017 Series D valuation. LinkedIn recognized the value of Glint after using it for themselves. The rationale behind the acquisition is that these two companies can work together to help businesses everywhere institute what LinkedIn calls a new best practice: regularly gathering employee feedback and giving leaders the tools to turn those insights into action. I agree with this rationale—utilizing this best practice led to our creating Insight—and from everything I’ve read this sounds like one of the most culturally aligned acquisitions in the tech sector that anyone has made this year.
SAP acquires Qualtrics
Earlier this month, SAP announced their acquisition of Qualtrics. This is a massive acquisition: SAP paid $8 billion in cash to acquire the company before an imminent IPO. Qualtrics formed the foundation of experience management, with their platform making them industry leaders in customer and employee experience. Employee engagement is only a part of Qualtrics’s offering, but that piece is worthy of a business of its own. The announcement is certainly less inspiring than the LinkedIn-Glint announcement, with more of a focus on revenue than changing workplaces for the better, but only time will tell which deal turns out to be the better investment.
Are more employee engagement acquisitions on the way?
Let’s look at where the employee engagement space has come from before getting too excited about a couple of acquisitions.
A very abbreviated history of employee engagement solutions
Employee engagement is a space that is certainly gaining more attention in recent years. Employee engagement survey products have been around for a few decades, but only in the past six or so years have solutions begun evolving beyond simply reporting on employee feedback. Consulting around employee engagement began with a focus on understanding and interpreting survey results. This later led to management consulting focused on responding to employee feedback. Eventually employee engagement solutions began packaging their surveys with premium consulting services where employee engagement experts dedicate time to helping you understand results and undertake change management efforts to improve employee engagement.
Today, you’ll find a handful of companies like Glint who offer team-based action recommendations as part of automated analysis of employee engagement results. Leadership advice on employee engagement is becoming a bit more standardized based on the needs of team members. As far as I know, our platform is the only solution out there today that takes this concept to the next level: individualized action plans for each employee, tailored to their needs. I’m certain we won’t be the last, though.
Market maturity and an increasing need for employee engagement
This maturity in the market is due to a heightened awareness of the need for engagement within workplaces. Additionally, with the US unemployment rate at a decades-long low, the need to retain talent is gaining attention. The supply side of the job market can not meet demand, and companies are starting to realize that the best talent acquisition strategy is talent retention. Employee engagement addresses the need, so I expect increased attention to be paid to this space.
However, overall growth for employee engagement will be limited by the number of companies willing to undertake sustained engagement efforts. This requires not only a capital investment but also a time investment from company leadership. I believe there will be steady growth in the market for employee engagement solutions for the foreseeable future. However, that growth will be tempered by the political will to seriously commit to long-term employee engagement efforts.
It’s easy to see two big-name acquisitions in the employee engagement space and assume a wave of similar acquisitions may be on the horizon. While we may see a few more employee engagement acquisitions in the next year, I’m not expecting the landscape to change significantly. Qualtrics is a unicorn and Glint had the good fortune to thrill one of their largest customers, who happened to be a decently moneyed player in a related space (talent acquisition and talent management). While it’s certainly possible for more acquisition activity in the near future, I don’t expect a gold rush of acquisitions in the employee engagement space.
Should companies avoid using Qualtrics or Glint?
It’s too early to tell what the future holds for Glint or Qualtrics. Acquisitions are funny things. In the best case, two highly-aligned companies identify they will be stronger together. The acquired company benefits from a surge of new resources to fuel growth in those instances. In the worst case, a powerhouse in the industry identifies a direct or indirect competitor, seeking to gain a stronger foothold in a nascent market. In those instances an acquisition will permanently harm the acquired company: the acquirer slams together two distinct company cultures, integrates the acquired technology into their existing platform, and transforms a once-great product into a component of their more traditional and antiquated offering.
Glint's place in LinkedIn's world
So which is the case with these two acquisitions? My personal opinion is that the Glint-LinkedIn acquisition is more of the former than the latter. LinkedIn was a customer advocate of Glint’s, and the similarities in the two companies lead me to believe the deal makes a lot of sense. They’re both data-driven, focused on building greater workplaces, and very aware of the need to utilize individual strengths within the needs of a larger organization. Like most acquisition announcements, the companies claim that Glint’s existing product offering will continue into the future. It’s possible that Glint’s platform will continue down its own path, considering LinkedIn’s parent company—Microsoft—has largely left LinkedIn to operate as it did prior to its own acquisition.
LinkedIn’s past acquisitions are a mixed bag of products that were completely incorporated into their platform and products that stand on their own to this day. The incorporated products made sense: Connectifier and Pulse improved LinkedIn’s core competencies as a professional social network. The ones that continue independently—like Lynda.com—also make sense: these fall outside of LinkedIn’s core competencies but are highly relevant to their user base. Glint walks the line. Employee engagement is highly relevant to LinkedIn’s user base, but it is a separate beast from social media and would feel tacked on to LinkedIn’s core product. However, I can absolutely see a future Sales Navigator-esque offering that utilizes Glint under the hood.
SAP's plans for Qualtrics
I feel less optimistic for the future of Qualtrics as an independent platform. Their offerings extend far beyond just employee engagement: their “complete experience management” offerings include customer experience, brand experience, and product experience. Such offerings are undoubtedly enticing to SAP as a way to evolve their own customer experience and people engagement solutions. I have no inside knowledge of SAP’s strategy with this acquisition, but the story so far would rhyme with history. Why maintain two competing products under one company? I strongly believe SAP will integrate Qualtrics into their existing employee engagement solutions. If I had to bet on which acquired company is more likely to continue as they are today, I’d wager that Qualtrics will be absorbed into its parent company’s offerings long before Glint.