Making Change

In good times and bad, but especially bad, it’s critical for companies to know whether their employees are engaged—working hard, clear on their employers’ mission, providing strong service—and their customers are satisfied. Without high marks from either, businesses have a hard time during a downturn.

That’s why Modern Survey CEO Patrick Riley is bullish on 2009 and beyond. He knows that client companies will need more than ever to continue taking advantage of his firm’s assessment services, which can explain what they are doing well and where they need to improve.

Modern Survey polls a company’s work force primarily on line. This makes the results easy to tabulate, measure, and interpret. The company also offers consulting services that can help companies interpret and act upon the results of such surveys. Typically, firms are strong in either surveying or consulting, but not both, Riley says.

Riley started Minneapolis-based Modern Survey with his brother, Dan, and a co-worker, Don MacPherson. The trio worked in human resources at larger corporations—Dan Riley at Minnetonka-based UnitedHealth Group, and Patrick Riley and MacPherson at American Express. They saw firsthand the time and expense companies devoted to paper-based employee surveys and thought they could do it better and cheaper on line.

The Riley brothers used their HR software development know-how to create Web-based survey tools, while MacPherson brought extensive consulting experience. Modern Survey’s initial business came from the partners’ former employers; Ameriprise, a Minneapolis-based American Express spinoff, and UnitedHealth Group. (Both are still clients.) The firm says that its Web-based survey tools have been used by 80 Fortune 500 companies, as well as with many midsize businesses.

The Rileys and MacPherson grew their company organically. During slow times, the partners developed new products or pursued new sales channels. After 9/11, as companies put a freeze on HR spending, Modern Survey rejiggered its products so that clients could survey customers as well as staff about their experiences.

When Modern Survey encountered stiffer competition from larger and more-established consulting firms around 2004, it began licensing its software to these competitors in private-label form. Today, half of the firm’s revenues come from these indirect sales. “We realized if we can’t beat them, we should join them,” Riley says.