Employees see things differently when they understand the line of sight between job level actions and company results. Actions at a job level that save a few dollars, improve efficiency, collect invoices a bit faster or attract future customers are powerful building blocks in growing ESOP rewards. Shared ownership through an ESOP can only be engaging if they can see and understand their own connection. Below are some steps that help strengthen this connection for ESOP participants.
1) Teach basics of ownership
To build a line of sight, people first need to understand the ESOP’s benefits. If it has been a while since you’ve talked about shared ownership, you may want to return to the basics and answer questions like:
- Why do we have an ESOP?
- How does it work?
- Who participates?
- What grows my account?
- When do “I” get my money?
Communicating your ESOP’s fundamentals builds the foundation for creating a line of sight to performance. As you communicate, remember the best place to start is to tune into participants’ favorite radio station WII-FM (what’s in it for me?). Focus on your plan’s specifics: people want to know WHY they should care.
2) Seize the statement opportunity
Employees’ understanding of the ESOP’s benefits starts with being able to make sense of their own annual statement. This presents you with an excellent opportunity to communicate. Many companies hold annual meetings to walk through the statement and illustrate what happened to employees’ ESOP accounts last year. New employees who attend can receive a “sample person” statement to see what they can receive if they stay with the business.
If your company operates across multiple locations, consider holding sessions via a web presentation, producing a customized talking presentation, or sharing written materials that demystify the statement.
3) Build a bridge to stock value
Value can be a tricky concept to understand. Most people didn’t learn about it in school, so once again, start with fundamentals like:
- How often is the value set?
- Who does it (and why)?
- Key factors the appraiser examines
- ESOP valuations compared to the public company marketplace
- How does your company compare to others?
In most situations, you’ll want to avoid delving into complex valuation techniques like discounted cash flow analysis, pro forma financial projections and discount formulas. After all, you are telling the story about value to make a connection to daily work — not explaining the professional appraisal methods.
4) Make the connection: the power of a dollar
Once people understand ownership and value, the challenge becomes showing how job-level actions can add up. The best way to do it: customize examples from employees’ daily work that affect the success of the company. In Workplace Development’s interactive Power of a Dollar learning activity, we build custom examples that help employees see the power that small improvements can make on the rewards of an ESOP. Employees’ eyes light up when they see how powerful their job-level actions can be.
The place to start is with the measure or activities that you already know are critical to your business’s success. In a production environment, that can mean looking at scrap, rework, on-time delivery or efficiency. For distribution business, it might be successful ship rate, number of calls received, average hold time or average order. Professional service businesses may focus on billable hours or revenue growth in certain categories. In retail, it might be margin or comparative same store sales information.
When you break it down into dollars and cents and ask people to discuss the impact, you can make the ESOP come alive for people who may see it as a distant benefit. When employees discover the value of job-level actions, they experience the connection to shared rewards of your ESOP every day.
To learn how Workplace Development can help your firm build a line of sight from employees’ daily performance to ESOP stock value, contact Jim Bado at 419-427-2435 or firstname.lastname@example.org.