You attended an ESOP conference, heard an enthusiastic company speaker talk about the benefits of its ESOP Committee and right there, you decided you want to start one. Before violating the African proverb pilfered for this piece’s title (i.e., a wise man does not jump into the water with two feet), here are three things to consider.
1) Why do you want an ESOP Committee?
This may seem like a no-brainer, but twenty-five years’ experience working with ESOPs has shown us that companies often create ESOP Committees without thinking through the purpose. Maybe, top management knows why they want it, but those reasons often don’t reach, or get misconstrued by, supervisors and sometimes the team itself. Before taking the leap, decide why you want to make the jump. Here are some common reasons why:
- Communicate and educate about your ESOP
- Promote the development of your ownership culture
- Build enthusiasm for your employee ownership culture
- Solve employee and workplace problems
- Define what it means to be an employee owner at your business
- Collect employee feedback about how to make your business more successful
- Build a line of sight from employees’ daily activities to company success
- Be involved with the plan administrative process
- Celebrate ownership/recognize employees
- Run internal events to strengthen our sense of shared purpose
You can see from the length of this list, there are a lot of possible roles for a committee—this is why it’s important for management to agree on the team’s purpose. Management input on the reasons “why” gains buy-in to and support for the ESOP Committee’s activities. Companies can create an ESOP Committee with the best of intentions only to see the effort crumble because a lack of agreement of the team’s purpose led it to crashing into the “rocks” hidden beneath the water’s surface.
2) How will you form the team? Again, what seems relatively simple becomes complex when you peel back the layers. The Committee can be composed however you want it to be, so how will you insure its structure helps it best achieve its purpose and goals? Will your team include different locations or departments, managers or a management liaison, new employees, who aren’t yet in the ESOP, bi-lingual employees? How many are too many? How many are too few?
Once you agree on how many and who will be part of the team, the next step is implementing a recruitment process that reflects your firm’s culture and values. The method of selection for a committee members flows from your purposes and goals for the team.
No matter what path you chose, you ought to consider what happens if you get too many interested people (a good problem) or too few (a not so good problem). Workplace Development’s Committee development process helps ESOP firms to define their unique criteria for committee membership. Some companies have asked us to interview volunteers and make a recommendation for who ought to be on the team. The key: implement a process that supports your ownership culture development objectives.
3) How will the team operate? Like with any ongoing team, there are a number of logistical issues to address before you start an ESOP Committee. Here are just a few things to think about in the ongoing operation:
- Meeting frequency
- Tenure/terms for members
- Budget for group
There are, of course, more things to consider in forming a successful ESOP Committee (like the team’s mission, vision and goals), but if you address these three you’ll be off to a good start. And, maybe more importantly, you’ll stop yourself from jumping into the water before knowing how deep it is.
Workplace Development Inc.’s field-tested ESOP Committee Development Process accelerates the effectiveness of new teams and revitalizes ESOP Committees that need to refresh their strategy or structure. For more information contact Jim Bado at email@example.com or 419-427-2435.