“Good communication is our way of protecting and growing the investment in the ESOP,” says Suzanne Tabor Deffet, CFO for Allied Mineral Products, Inc. based in Columbus, Ohio. “If we had another investment this size, we would do everything we could to protect it,” notes Deffet when describing the commitment of time and resources put into ESOP communication. If people do not understand the plan and appreciate it, the company would not realize the full investment in the ESOP.
Allied Mineral Products, Inc. – which manufactures and sells refractories to metal melting industries worldwide – has 28 years experience having an ESOP. Ongoing communication is part of its success. “You’re never done communicating,” Deffet says. Whether it is learning technical facts about the plan or getting relevant information to people at every stage of ESOP participation, the need for communication is never ending.
Getting new participants connected
New participants can be victims of the “double whammy” for ESOP apathy. First, they have small account balances, and then they have a long stretch of time before they can enjoy the reward. “We connect with new participants before they even get a statement,” says the CFO. For 15 years, the company has been doing new participant orientation sessions where newly eligible participants learn about corporate values and basic ESOP facts.
A new ESOP Communication Committee — composed of a diverse group of employees — holds “new participant recognition” luncheons each quarter to welcome the new participants. In addition, these participants are recognized at the company’s monthly meetings by the members of the committee.
Why the strong focus on new ESOP participants? “These new members can have a tremendous impact on our stock,” Deffet explains, “but they don’t yet have account balances that get their attention.” The ESOP welcoming effort is more than a kind gesture; it is an opportunity to engage new people in long-term success.
Make sure that long-term employees get information
Communicating with long-term employees about the business and the ESOP is also a key part of Allied’s success. Information about financial performance, future challenges and successes are part of an annual meeting. This large group meeting — attended by employees from the company’s worldwide locations — includes a formal presentation and an open forum for questions and answers.
For the last four years, the company has also held small group meetings where employees can learn more about a topic with a small group of their peers. The company holds these meetings once a week for a period of months. One year the topic was the change from C to S corporation status. In the year of the Enron stock debacle, Deffet provided an in-depth analysis about how Allied was different.
This year the topic was roles and decision-making in an ESOP. In small groups, a facilitator from Workplace Development ran an exercise about rights and responsibilities in an ESOP. “Using an outsider for the roles discussion allowed people to dig into the topic,” explains Deffet. Then each small group participated in a business simulation game where they made decisions for a simulated ESOP company.
“The game allowed people to experience challenges that our business faces,” noted Deffet. Whether it was planning for stock repurchase, increasing employee compensation, investing in new technology or making an acquisition — participants got a chance to make some of the decisions they had been hearing about for years. “When they got their report card — the stock value — I could see that people were really feeling those decisions,” observed Deffet. In this year’s annual meeting, she plans to use the simulated decisions to explain real world decisions made during the year.
People need answers when they are ready to ask
As a mature ESOP, Allied Mineral Products has learned not to assume a question is answered. “You can have someone who has been hearing about the ESOP for years, but maybe this is the year they really want to know about the rules for distribution,” explains the CFO. Because the ESOP is more complicated than other benefits and the issues can change over time — ESOP communication requires revisiting themes that were covered in previous years and responding to questions when people want to ask them. That is why company leaders reserve part of the small group meetings for free flowing questions about the business and the ESOP.
Recently the ESOP Communication Committee at Allied Mineral Products, Inc. has taken a role in helping with continuous communication efforts. One of its early projects was a bulletin board for ESOP information. The bulletin board includes answers to “Frequently Asked Questions.” Yes, even after 28 years, some questions are still “frequently asked.” Answering them is all part of a commitment to continuous communication — which secures the investment in the ESOP.
For more information on the ESOP Association’s ESOP Report, see https://www.esopassociation.org/meet-learn/publications