Charles S. Jones is frank about what went wrong at Peopleclick Authoria last year.
After the private equity fund that Jones runs acquired Peopleclick for $100 million in January 2010 and merged it with Authoria, the company brought in an outside manager to oversee the integrated recruiting and talent management systems vendor. It was a bad move.
In ensuing months, an undisclosed number of former Peopleclick and Authoria employees grew dissatisfied with CEO Joe Licata’s management style and quit or announced plans to leave, according to Jones, analysts and other industry observers familiar with the situation.
On the product side, the newly merged company’s competitors hogged the spotlight and won vendor competitions despite analysts’ assessments that Peopleclick Authoria’s products were just as good.
Things came to a head in November when Licata left and Jones stepped back in as CEO, a job he’d held briefly after the merger was announced. Since then, Jones, who is also Peopleclick Authoria’s chairman, has focused on righting the listing business, rehiring at least 13 ex-staffers and issuing stock options to each of the company’s 540 employees.
“If I could be utterly candid, I was called back because it restored confidence in the business and its mission,” Jones told Workforce Management in a phone interview from the company’s Waltham, Massachusetts, office.
Licata could not be reached for comment.
The changes at Peopleclick Authoria don’t end with the leadership shake-up. Jones confirms that Bedford Funding, the $800 million White Plains, New York, private equity firm that owns the company, is negotiating to buy an unnamed human resources technology business in a deal expected to close in the first half of 2011. Industry analysts have speculated that an e-learning provider would make a good acquisition since it fills a hole in the company’s existing product line. Jones agrees, but declined to disclose additional details pending the acquisition’s formal announcement.
If such a deal materializes, it will be the latest of more than a dozen mergers and acquisitions in the talent management market in 2010 and the first quarter of 2011. Merger and acquisition activity is blistering as companies fill out product offerings to increase their share of a talent management market that analyst Bersin & Associates predicts will grow 15 percent this year to $3 billion.
Fueling the spending on talent management software tools is a resurgent economy and growing recognition by companies that people management plays a key role in bottom-line results. The buzzing market makes for a volatile industry landscape.
“On any day, any vendor could be in play,” says Lisa Rowan, technology researcher IDC’s longtime HR analyst.
Despite the potholes, 2010 wasn’t an entirely bad year for Peopleclick Authoria. According to Jones, the company successfully merged former Peopleclick and Authoria operations and sales teams and is hiring people for research and development, sales, and sales support positions; a national jobs board lists 29 openings.
Efforts to cross-sell Peopleclick’s recruiting systems and Authoria’s talent management systems are coming to fruition. The number of customers buying products from both platforms rose 50 percent in the past year, Jones says, and includes clients such as Citrix Systems, the virtualization software vendor.
That’s proof that by aggregating product lines, the company is better equipped to take on competitors such as SuccessFactors and Taleo, Jones says. Others agree.
“Peopleclick Authoria is one of the success cases for a merger in our industry,” says Elaine Orler, president of Talent Function Group LLC, a San Diego-based staffing and recruiting consultant. “They were very prescriptive about how the organizations would be structured together and the teams involved were very active in making the merger a success for the customers.”
The company’s strategy got a major vote of confidence in June 2010. After an industry-wide search spanning several months, Mercer LLC, the $3.3 billion HR outsourcer, technology and consulting company, said it was tapping Peopleclick Authoria to provide talent management functions for a new human capital management products and services platform called Human Capital Connect.
Though the partners haven’t disclosed any customers, Jones says deals in the pipeline will add “millions” to Peopleclick Authoria’s revenue, which closed 2010 at approximately $83 million. Peopleclick Authoria’s internal turmoil did not shake Mercer’s faith in the company, says Kim Seals, Mercer’s global leader of human capital operations and technology solutions practice.
“Charles Jones has been a champion of Mercer Human Capital Connect from the beginning and actively worked with us to define the offering,” she says. “The continuity of Charles’ leadership and (Peopleclick Authoria’s) management execution has ensured that there was no impact with the exit of Mr. Licata.”
In another partnership announced last fall, the company teamed with Brad Smart to incorporate the “topgrading” innovator’s employee ranking system into its recruiting, performance, succession planning and compensation software.
Peopleclick Authoria is already pitching the partnership to customers and in ads on its website. But Jones says it will take another six months to completely weave into its product line the system that Smart, an industrial psychologist and management consultant, has developed. The process uses in-depth interviews, meticulous reference checks and other hiring techniques to identify and advance “A” players, redirect or retrain “B” and “C” players and dump employees seen as deadbeats.
Through good times and bad, Jones and Peopleclick Authoria have had the support of Bedford Funding, which is making human capital management vendors the focus of its investment portfolio. They’ve also had the approval of PSP Investments, the $50 billion Canadian government pension fund investment manager that poured tens of millions into Bedford Funding so the equity firm could buy Authoria in 2008 and Peopleclick two years later.
Mark Boutet, communications and government relations vice president at the Montreal-based firm, wouldn’t comment on specific investments. But since the relatively new fund won’t start paying out benefits until 2030, it’s made long-term commitments to all its investments.
“No matter what happens in the market, we aren’t forced to sell any assets,” he says.
To rectify Peopleclick Authoria’s marketing and public relations deficits, Jones plans to hire an HR-industry public relations firm effective March 1 and is simultaneously launching the company’s first social media marketing campaign. He also re-hired Christian Merhy, Authoria’s former senior director of marketing, to take over as the company’s marketing vice president.
On Jones’ first day back on the job in November, he expanded an existing stock option plan to cover Peopleclick Authoria’s entire workforce so everyone would be as motivated as top managers to help the company succeed.
In his first brief stint as CEO immediately after the merger, Jones divided his time between Peopleclick Authoria and Bedford Funding. Today he is completely focused on running Peopleclick Authoria while other Bedford Funding partners attend to fund business, and he doesn’t expect that to change.
“I like this place, and since I own it, I have no intention of firing myself,” he says.
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