Culture Amp buys Zugata to tie peer feedback with engagement

Employee feedback tools that improve workplace and individual performance are seeing fast growth in HR tech. Take Culture Amp, for example. Founded in 2011, it now has a user base of 2,000. Or, take Zugata. Founded in 2014, it now has 1,000 customers.  

Or, consider this: Late Wednesday, Culture Amp announced it had acquired Zugata, and the merger is complete. The two firms are now operating as one. The terms were not disclosed.

The merger gives Culture Amp the chance to go to all the firms that use its technology and sell the Zugata tool as an add-in, said Josh Bersin, an independent HR analyst. "I think it's that simple, and then merge the two together into a bigger product," he said.  

At a basic level, Culture Amp is an employee feedback platform that uses AI to improve the performance of an organization, whereas Zugata uses AI to improve individual performance.

The two firms already had some joint customers, and they will continue to sell the tools separately. But among the improvements that users of both tools will see is deeper analytics. Some joint customers were already looking for connections in the data, said Srinivas Krishnamurti, former CEO of Zugata and now director of product and performance at Culture Amp, based in Melbourne, Australia.

Srinivas Krishnamurti

They were "actually taking data out of both the systems and trying to connect the dots to see how engagement and performance are interconnected," Krishnamurti said.

Culture Amp's platform gathers data from its customers that looks at approaches, data and questions -- something it calls collective intelligence -- and uses machine learning to craft engagement surveys. From the customer data, it develops best practices that help firms get at the heart of how employees actually feel, Krishnamurti said.

Zugata uses an AI-type technology to connect with employee communication tools, such as Slack, and to discover who is collaborating in an organization. The system automatically solicits developmental feedback from employees -- which can include collaboration practices and skills -- in peer-to-peer communication that isn't used by managers for evaluations.

Separating evaluative feedback, which may be tied to compensation, from developmental feedback is important, Krishnamurti said. "When money becomes involved, everybody will just figure out how to game the system," he said.

Krishnamurti said the approach works because of how organizations function. Peer-to-peer development feedback is intended to help the team succeed. That is the motivation that makes the peer-to-peer feedback work, he said.

"Increasingly, an individual cannot just come in and have a huge impact [on their organizations] by themselves," Krishnamurti said. Successful work environments are more based on a "network of teams" that can effectively work together, he said.

Bersin said the innovation in Zugata is in the way it asks its questions. It "allows you to give your peers developmental feedback in a positive way. To me, that's the innovation in it," he said. The only tool that does something similar is ADP's Compass, he said.