Congratulations. You’ve completed your paperwork, met the Department of Labor criteria and successfully established your employee stock ownership plan (it took a while, didn’t it?).
You’re now half the way there. In order to perform better and reap the clear benefits an ESOP can generate, you must couple employee ownership with employee engagement.
It starts with you. Research as well as my own experience and that of ESOP leaders shows owners must walk the talk, providing leadership in engaging with employees and articulating their ESOP’s values and vision. From this cascades the operating strategies that employees must grasp and believe.
Communications is the key. I am a strong proponent of spending that extra dollar on retaining a communications partner to “help train the trainers” and launch an effective strategy and program that conveys to employees a consistent leadership vision and expectations. Employees want to believe they have been listened and responded to. Nothing kills an ESOP faster than not delivering that.
This communications effort should begin early in an ESOP’s life cycle – but not necessarily immediately. As veteran ESOP consultant and my longtime friend Cindy Prodoehl notes, this process can begin once the ESOP “field fatigue” – from working strenuously to establish employee ownership – dissipates. “It takes a while for the management group to recover its energy and get back to why it established the ESOP in the first place,” explains Prodoehl, a Principal Financial Group vice president.
Prodoehl says the long-term communications effort can wait until the ESOP issues its first financial statement to participants and the employee owners see their first “share” appear in their personal account. This event, which generally occurs a year or so after the ESOP is formed, motivates many employees to become more engaged in helping see their annual share grow.
Many companies find it effective to form a communications or engagement committee. To succeed, it must include leadership – the CEO, chief financial officer, HR leader and representatives of middle management, among others. Remember, they are ESOP employees, too. If you don’t include management, little gets done.