and Jim Bado
Is your ESOP providing the promised employee motivation, enhanced customer satisfaction and improved profitability? If no, you’re not alone. While studies have demonstrated ESOPs can be powerful tools to strengthen company performance and employee morale and retention, these results are only achieved if stock ownership is combined with a strong employee-owned culture.
You don’t have to let your company suffer from unmet ownership expectations. Behind every ESOP success story is a strategy to engage employees as owners, making the ESOP much more than a company-paid retirement benefit. It’s never too late to start or improve the tools you use to get the most out of shared ownership.
Frequently communicate your ESOP to employees
Have you ever heard the old marketing adage that a person needs to see or hear something seven times before they will act? For ESOP companies, that means repeating information about your ESOP many times, in as many ways as possible. Start with what your company already does to communicate with employees. How can you integrate ESOP information into your regular communications? For example, if employees have weekly meetings with a supervisor or quarterly all-team gatherings, can you add 5-10 minutes of ESOP or business education into those meetings? If you send employees regular texts, send them the occasional ESOP infographic or employee-owner spotlight. Do you already have an annual meeting? Consider a detailed explanation of yearly business performance and an ESOP game that serves as a training and team-building tool.
Communicate in different ways to capture the attention of as many employees as possible. Use a mix of written, visual and audio materials and include interactive activities whenever possible. If you’re unsure what will work best in your ESOP, we’re here to help. Over the last 30 years, companies like yours have turned to Workplace Development to help build libraries of ESOP modules, host in-person and online trainings, create newsletters and bite-size content, play interactive games and competitions, and much more.
Putting effort into frequent ESOP communication will pay dividends when your employees feel the cultural difference of being a part of an ESOP.
Be clear about employee owner roles and responsibilities
There are many ways to make employees feel like owners, but the first step is to set them up with realistic expectations. Training employees on their rights and responsibilities enables them to understand what employee ownership is at your company and what it is not. If roles and responsibilities are not addressed at your ESOP, it can lead to misunderstandings and dissatisfaction among employees who thought they would have more input and control of the company like they do with their house or car. When employees understand what they have influence over and what they do not, it leads to better results and a happier workforce. Set employees up for success through an activity or written communication that explores how traditional concepts of ownership differ from beneficial ownership at an ESOP.
Opportunities like an ESOP committee or employee work teams can provide additional avenues to strengthen your ownership culture. When ownership invites participation, you can reach the desired performance benefits. Again, the key is to be realistic with expectations. If you create a committee or work team, be specific about the goal of the group and if the committee has ultimate decision-making capabilities or is simply advisory. Both forms of participation are valid and beneficial, but leadership must be clear on which type it is. To keep up morale, make sure participation boundaries are set and communicated to all.
Improve communication about performance
There is a spectrum of what financial inclusion can look like at your ESOP. And to get the promise of improved growth and profitability, you need to include employees in conversations about performance. Sharing detailed financial information may be your method but it may not tell your business story clearly. The surest way to get employees to start thinking and acting like owners is to create communications, targets and games that communicate, “How are we doing?”
For some companies the story is told using financial results – some would call this open book management. If that’s not for you, there are other techniques you can adopt for greater business transparency. Regularly share performance results that will help employees understand how their daily work contributes to the bottom line. Make these numbers mean something by offering business training. If you are going to use financial terms as your language of performance, make sure everyone is speaking the same language. We’ve found that interactive learning games can explain and solidify these concepts for employees. An employer who shows you how you matter, brings you into the story and shares success with you is a company that can attract and keep talented individuals looking for more purpose.
Annual statements and stock-value activities are another opportunity to tell the business story. The magic of an ESOP happens when employees understand how their job-level performance drives stock value, which in turn increases the value of their ESOP account. Workplace Development runs annual meeting activities that illustrate how working safely, using time wisely or generating innovations can increase stock value. Use the annual statement to explain what’s driving stock value and why it may have gone up or down. Giving employees these practical, real-world insights will help them feel more connected to the company, its success and their own success. People stay in jobs where they feel like they belong.
Make sure you have the right people in the right seats
To borrow a metaphor from the book Good to Great, an ESOP company needs the right people in the right seats on the bus to be successful. That starts with the management team. Does your leadership team believe that employee owners can have an impact on improving performance in job-level actions, or do they see employee input as a burden? Do they accept the challenges and headaches of running a participatory business or do they function like feudal lords dominating their fiefdoms? Do all members of the management team share these core values? Think over these questions and consider if your current management team is an asset or an obstacle to the ownership culture you want to foster.
When you become employee owned, the ESOP gives you an opportunity to manage the firm in a different way. Not just talking about employees as assets, but believing they are and treating them as skilled, professional adults. Leaders who invest in employees, raise them up, recognize their good work, and welcome feedback create the kind of place where people want to remain.
Building a company of informed, involved employee owners takes time, effort and action. If you’ve been hoping that a nice ESOP account balance (or a potential future balance) will reduce turnover and attract talent, consider taking some action steps to ensure it.
- Communicate both the cultural and financial advantages of employee ownership.
- Create conversations about performance that illustrate job-level impact.
- Invest in training, involvement and inclusion.
- Move past hoping for a good outcome, take positive action and embrace the journey.
Commit to making ownership more meaningful so there is no chance it could be perceived as an empty promise.
To help improve employee-owner retention and performance, contact (330) 899-7100.