It would be a huge understatement to say that the talent management industry has undergone considerable change and churn over the years. In the last four decades, the industry has seen just about every kind of consolidation and distribution play possible, including roll-ups and integrations, mergers and acquisitions, franchises and distributors, independent sales representatives and agents, content acquirers, partnerships, and brokers. This activity could be either an indication of a maturing industry or of one that has yet to fully evolve. More importantly, however, is the question: What role will all of this activity play in the industry’s future?
As the global economy continues to change, driving often unique—but certainly different—demands on the workforce, the talent management industry has had to keep pace. Interestingly, however, some firms have been relatively successful navigating this change while others have not, and indeed many have outright failed. Although more than a $164 billion dollar industry, some $46 billion of which was spent on external services, according to ASTD’s 2013 State of the Industry Report, it hasn’t always been this way. Indeed, less than 50 years ago, learning and development firms began appearing, some parading their wares with—at the time—novel video tape vignettes.
How times have changed. Technology alone has had a 20 percent annual growth impact on talent management products and services. For example, Bersin and Associates, in its 2013 Total Management Systems Provider Comparison and Profiles, estimates that more than $4 billion was spent on just talent management systems software in 2012. Other forces have been at play as well, with many attempts at acquisition and consolidation, including some ill-fated ones such as Provant, a roll-up attempt of some 21 training companies in the late 1990s, resulting in a 1998 IPO. After becoming financially overextended, it starting divesting in 2001 and a year later sold the remaining companies to Drake, Beam Morin of Japan.
There have been some relatively successful consolidation plays as well. Some examples are: the Times-Mirror acquisition of Zenger-Miller, Learning Int’l., and Kaset Int’l. from 1985 to 1992, which in 1998 were consolidated into Achieve Global; Right Management’s acquisition of some 40 small firms over a ten-year period before going public and then shortly thereafter being purchased by temporary staffing giant Manpower; Kenexa’s acquisition by IBM; Taleo’s by Oracle; and Success Factors by SAP. Additionally, private equity firms such as Providence, The Riverside Company, and many others have targeted training and education suppliers in building their funds by identifying strong platform companies and then growing them through frequent add-ons. Perhaps the granddaddy of them all, which may have set the merger and acquisition wheel in motion nearly 40 years ago, was the purchase of Wilson Learning by John Wiley & Sons, who then divested it in 1991 to Wilson’s Japanese subsidiary. Wiley, however, has come back into the “training” business with the relatively recent acquisitions of both Pfeiffer & Company and Inscape Publishing.
The obvious conclusion that can be drawn from all of this activity is that the industry has been going through its own metamorphosis, supported by the influence of technological advancements in human resource information systems, learning management systems, and online learning capability. At least from the outside looking in, it appears that talent management is a growth industry. This situation has created an interesting dynamic in the business of talent management, which up until a decade or so ago was still a mom-and pop-industry with only a relatively few big players, most of which were large strategy consultancies with talent management practices, like Deloitte, McKinsey, Accenture, and PWC, among others.
Looking back at these events, one wonders what made some of these firms successful and others not. Are there any consistent patterns that can explain those that have and continue to be strong industry contributors and those that don’t? Are there critical success factors that separate the wheat from the chafe?
What do you think? Please share in the comment section below.
Check out Steve’s full series, Managing and Growing Talent Management Firms.