Behind the deal: Why LTG bought PeopleFluent
By Piers Lea, Chief Strategy Officer, LTG
Our recent acquisition of PeopleFluent has had a good reception from the market and industry analysts on both sides of the Atlantic. As we can’t talk to everyone personally, we thought it would be a good idea to put pen to paper to outline our thinking in buying a business that doubles the size of LTG and gives us much-desired scale in the US.
The first point we should make is that this was a great deal. Acquiring a highly-rated company with 90% recurring revenues and some acknowledged product gems is a ‘buy and build’ dream.
Some may see the acquisition as a departure from the LTG strategic focus on learning. Indeed, we have had questions along these lines.
But we don’t see it this way.
In fact, a wider scale talent management platform has been on our list of desired capabilities since we formed our three-year strategy in 2014.
So why this strategic intent from the outset?
Talent and learning fit together
There isn’t anyone we can find who doesn’t agree that talent and learning fit together conceptually.
They were originally split to bring focus to an issue characterised by Steven Hankin, of management consultants McKinsey & Company, as the ‘war for talent’.
As organisations become more sophisticated, we’re now seeing these separated departments becoming unified – or, at the very least, working closely.
From a systems perspective – and as organisations tackle digital transformation in all sectors – it makes no sense for talent and learning to be divided.
To understand our intent, we first have to agree what we all mean by ‘talent management’.
We can’t improve on the Wikipedia description:
“Talent management refers to the anticipation of required human capital for an organization and the planning to meet those needs.
Talent management is the science of using strategic human resource planning to improve business value and to make it possible for companies and organizations to reach their goals. Everything done to recruit, retain, develop, reward and make people perform forms a part of talent management as well as strategic workforce planning. A talent management strategy should link to business strategy to function more appropriately.”
The point here is the naturally-joined sequence of activities between recruiting, retaining, developing, rewarding and helping people perform. And we have long advocated that learning needs to become part of the operating DNA of the business, not an adjunct.
To understand the background to our theory, it helps to understand the thesis described by John Hagel:
As entrepreneurs running tech learning businesses over the last 25 years, we understand that digital transformation requires a complete shift in our people’s skills, attitudes and behaviour on a permanent and constantly accelerating basis. We believe this will happen (and, in many cases, is already underway) at huge scale.
An example of this is automotive organisations shifting from ‘car manufacturers’ to ‘technology companies providing mobility’. Or oil and gas companies moving to become eco-providers of energy. Or central government trying its hardest to ‘go digital’ across all services.
According to Gartner, by 2022 “…nearly 80% of organizational skills will have to be reprioritized or revisited because of digital business transformation”.
The process of achieving this requires new kinds of thinking and technology. We believe we now have the building blocks in place to support this.
So what is our intended proposition?
The proposition is simple.
We will help multinationals (and central government agencies and departments where we can) to close the widening gap between workforce capability and the requirements of future workforces.
We will help put the right people in the right job and then help them be the best they can be… and will measure learning investment against business impact so our clients know where to focus their spend.
The first part of this phrase is partly borrowed from David Perring, of European industry analysts Fosway. It sums up our aim well. Hiring the best people is pointless if you don’t then do everything possible to ensure they are able to be the best that they can be. This requires a mix of things: being placed in the right role to suit their skills, attitudes and characteristics, understanding career development ambitions, ensuring development, enabling new skills in a fast-changing environment and delivering ‘engagement’ on many levels beyond pay.
Why would you not want to join up these things from a systems perspective?
The last sentence of the Wikipedia definition is important. “A talent management strategy should link to business strategy to function more appropriately.”
From our perspective, this link back to business strategy is crucial. Large organisations, like other businesses, need to be able to flex in real-time to meet market demand. This is not possible without the use of technology. Flexing people and teams, enabling what they need to learn and driving performance are key to success in a business world that is simultaneously moving faster and becoming more complex. This needs a constant line of sight back to what the business is trying to achieve. When that is shifting, often in quite subtle ways, keeping a workforce up to speed and appropriately led becomes exponentially more complex.Navigating change means thinking digitally and allowing all of these processes to become driven and enabled by data.
Measuring the business impact of learning
As you may have seen, across LTG and especially LEO Learning, we have been championing thinking and tools to enable ‘measuring the business impact of learning’ as a key strategic development for organisations.
To do this well you need to be able to link strategy and people performance against business goals and learning.
Organisations need this in order to see where to focus L&D spend (and slowly but surely move towards predictive analytics so that people can be accurately reskilled in preparation for the future).
Individuals need this to judge whether a particular piece of learning is relevant to them. They will be able to see how it might benefit their current performance or future career ambitions so that they can decide whether to invest their time.
In all honesty, we know that no one has time for learning and development these days. But unless we make time, individuals and organisations will fall behind. We really need data to tell us what to learn so we are sure it will give us a measurable result. And we need to learn while we work, not as an adjunct.
These processes should be threaded through the operating DNA of all successful businesses, enabled by carefully thought-through systems.
Please note that this is not to say we suddenly expect, as a group, to be providing all these end-to-end services all at once. The point – at the heart of our strategy – is the ability to be able to bring our clients the right capability and capacity to achieve their current goals at exactly the right time. Most organisations, and each of their internal departments, are at different levels of sophistication. The type of service or product proposed needs to be carefully planned to meet their specific needs.
We are staking LTG’s future success on being able to recommend the right product or service at the right time to enable the achievement of business results. And, when appropriate, we will continue to partner outside the LTG family to make sure this happens.
Doing great deals
As you would expect, LTG likes doing good, earnings-enhancing deals to support our growth ambition and make shareholders happy.
Commercially, the acquisition of PeopleFluent is a great deal. Acquiring a business with revenues of around $100m, with $90m recurring (often on multi-year contracts), does not happen every day. Of course, there are some headwinds in terms of strong competition. But there is a big opportunity too, with the size of the market growing steadily.
PeopleFluent is a great fit for LTG.
Gartner has rated the PeopleFluent talent products as #1 across many areas, but as #5 in learning. By bringing PeopleFluent into the LTG family, we can immediately raise the bar on this learning capability. This is one of the keys to accelerating market success.
Innovative technology and talented people
You don’t get the luxury of time when conducting due diligence, but what we have found in PeopleFluent is a wonderful mixture of innovative products and highly experienced talent in the HCM (Human Capital Management) space.
The first thing we would cite is the excellent Productivity Platform that PeopleFluent has created. This seamlessly joins a number of significant systems and services, from talent acquisition and talent management to engagement, in easy-to-use ways.
We note that 100% of organisations which have taken Productivity Platform, which was released just over a year ago, have renewed their licences – often on a multi-year basis.
So at the core is the TA/TM (Talent Acquisition and Talent Management) software which includes provision for management of compensation, all neatly threaded together by Productivity Platform. But there is so much more besides.
To meet the growing trend of contingent workforces, the Vendor Management System business provides an interesting USP, as recognised by key industry analysts. As contingent workforces are becoming a more significant trend, so we believe they will need more training and risk management. The provision of good onboarding and effective compliance training, often linked to regulators’ guidelines, becomes almost as important to contingent workforces as it does to permanent ones.
We have been very interested to see how PeopleFluent advises on and enables Diversity and Inclusion (D&I). This is a significant area for US business because of the requirement to report on Affirmative Action requirements, but we see D&I as becoming more and more important across European business as well. Those looking at the gender pay gap legislation in the UK will know what we mean. PeopleFluent’s technology enables global organisations to see into their global recruitment in real-time to ensure they bring on a balanced workforce. When you are recruiting at scale, there is no other way to ensure that this is monitored – using good technology is the only way to achieve this when it’s being done at scale.
From an LTG perspective, we see recruitment as a key strategic enabler for large organisations.Threading onboarding services through this is important. We know that good induction is closely linked to performance and retention. We are doing more and more pre-onboarding (i.e. training before the first day of work) and consulting, reaching right back to the ‘attract’ stage. The result is learning being developed with potential recruits as the target audience. There are many traditional industries that can provide great careers who need to do better at telling their future workforce what they can offer. Digital learning is a great way to do this.
Part of the way that the recruitment process is enabled is by allowing applicants to conduct their first interview online. This is enabled by a video platform developed by KZO Innovations. We see great potential for this product within the LTG family as it enables video of all kinds. For us, the ability of the system to quickly record video, place this on the platform and create automated, searchable transcripts is especially exciting. It means that users can then search and find subjects they are interested in.
Think of this in the context of a leadership development programme where you want participants to upload their own presentations as part of the programme. This relates to one section of Productivity Platform, which enables the entire management of leadership development programmes, including mentoring and coaching. As you watch the video, you are able to click on the timeline and ask a question. The system will automatically send an email to the person who created the video and this will be answered in the same context – within the video timeline. Collaborative conversations can then take place around particular points.
We see huge potential for scaling the use of video to rapidly enhance the collective brain power of the organisation.
We also enjoyed being introduced to OrgPublisher, the organisational design software that enables swift updating of organisational structures as well as planning for who needs to learn what. We see potential for this from a compliance perspective.
So can we really make this all work to a new level?
PeopleFluent has a strong leadership team who know how to take this business forward. They are already on track to do this based on a strategy that really only started being enacted in 2017. We are very excited to start assisting them.
However, we do recognise that a key aspect will be in how we bring together the various extended technologies and services across LTG for both client and user benefit alongside PeopleFluent.
So a significant appointment we are making concerns Tim Martin (currently Managing Director of LTG business Rustici Software, based in Nashville, TN).
Tim will become the Chief Innovation & Product Officer (CIPO) for LTG from 1 June 2018. Those in the industry who know Tim will recognise a technology leader of the highest quality, respected on both sides of the Atlantic and probably further afield too. Alongside Mike Rustici, Tim is both a ‘king of interoperability’ (making things work together) and a consummate technologist.
We will be combining Tim’s expertise with the great work by the PeopleFluent Team on the Productivity Platform. This will secure the core combination of talent, performance and learning. Tim’s world-renowned skill is interoperability, which we see as crucial for both short- and long-term success.
We see huge benefits in some of the offerings in the PeopleFluent suite being supplied alongside LTG’s existing products and services.
You will recognise that this article is being released on the first day of LTG’s ownership of PeopleFluent, so we hope you will forgive us if we have missed anything significant. We almost certainly have, and we look forward to discovering more over the coming months.
However, we hope we have shed some light on the thinking behind the acquisition – and, like us, you share some of our excitement about it.
We will continue to share our plans and update you on the results of progress.
If you have any questions please do get in touch at email@example.com.
 The War for Talent Organization and Leadership Practice McKinsey & Company April 2001 © Copyright McKinsey & Company, Inc. 2001