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How to Create and Maintain a
Successful ESOP Committee
March 30, 2012
Linshuang Lu
Consultant, Praxis Consulting Group
© 2012 Praxis Consulting Group, Inc. All Rights Reserved.
Praxis Consulting Group
About Us
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© 2012 Praxis Consulting Group, Inc. All Rights Reserved.
Agenda
• Building an Ownership Culture
• Communication Committees Overview
• Strategies for Addressing Typical
Challenges
• Communication Committee Activity Ideas
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Introductions
• Organization
• Role
• Committee status
• What’s one exciting thing that’s happened
with your ESOP or communications
committee this past year?
• What’s one hope or opportunity relating to
the ESOP or communications committee
that you have for this next year?
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What Does the Research
Say?
Ownership
Improved
Performance
Participation
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Ownership Culture
Employees at all levels:
• Think, feel and act like co-owners.
• Take responsibility for their actions
individually and collectively for the success
of the company.
• Participate effectively to improve company
performance
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Example of Leadership
Competencies (King Arthur Flour)
1. Leads change
2. Thinks & acts strategically
3. Wows customers
4. Drives accountability
5. Develops self and others
6. Communicates effectively
7. Excels as team member/ leader
8. Models positive attitude
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Building an Ownership Culture
Alignment of behaviors
Education
Communication
Participation
Incentives
Foundation: Leadership vision
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The Big Picture
• Communication Committees are not
required by law or most ESOP plans
• You have tremendous flexibility
• Key questions:
– What is your vision for sharing ownership through the
ESOP?
– What role will the communications committee play in
supporting that vision?
• Everything else flows from these decisions
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Small Group Discussion
• What are your ESOP communication committees’
mission and goals?
• How does your committee play a role in building an
ownership culture and driving behaviors?
If you don’t have a committee:
• What might your committee’s mission and goals
be?
• How would you like your committee to contribute to
building an ownership culture and driving
behaviors?
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Communications vs. Other Types of
Committees
Communication
Fiduciary and Administrative
• Responsibilities defined by
company leadership
• Responsibilities related to
decision-making and
administration of the ESOP
Plan itself
• Accountable to company
leadership
• Common mission include
employee education,
communication, motivation and
employee input mechanism
• Duties regulated by ERISA;
Committee ultimately
accountable to ERISA
standards
• May be a named fiduciary in the
plan document or take on
fiduciary responsibilities
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© 2012 Praxis Consulting Group, Inc. All Rights Reserved.
Individual Reflection
• What’s working well with your committee?
What are its strengths?
• If you don’t have a committee: what’s working
well at your company? What are its strengths?
• What is your biggest challenge right now?
OR, what’s your biggest opportunity?
• What might be causing the challenges that
you are experiencing?
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© 2012 Praxis Consulting Group, Inc. All Rights Reserved.
Small Group Discussion
• Share your major challenges
• Identify top three or four challenges
• Be prepared to report out
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Challenges – Report Out from
Discussions
• Access to Computers and Multi-Location
• Participation from Multi-Locations
• Rumor and Gossip – False Information
• Equal Voice – Management/Employees
• After Start – What needs to get
communicated
• How to get started
• How to keep fresh ideas
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Common Challenges
• Unclear mission and purpose
• Limited leadership support
• Limited resources (time and money)
• Inappropriate structure (member selection,
leadership selection, subcommittees)
• Team dynamics
• Lack of new ideas
• Multi-site company
• Diverse workforce
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Rapid Brainstorm
• In your small groups, pick a challenge.
• Brainstorm ideas about how to address the
challenge
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Elements for an Effective
Communication Committee
• Mission
• Structure
– Membership, selection, representation, terms, roles and
management liaison
– Subcommittees
• Committee member education
– Technical
– Meeting skills, team building and group dynamics
•
•
•
•
Leadership support
Resources (Usually time and money)
Planning
Continuous improvement
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Typical Period Planning Process
• Planning Retreat
– Review directives from leadership
– Brainstorm and prioritize
– Develop a plan and budget for the 1st 12-18 months
• Mid-stream: implementation, regular
monitoring, support, readjustment
• Towards the end
– Evaluation
– Plan & budget for next period
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Other Strategies
• Evaluation from the committee, from
leadership, from employees
• Mission/goals/charter revisit with senior
leadership
• Clear expectations in committee member
contribution with support from supervisors
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Other Strategies
• Dedicated planning time
• Rotation of members and leadership
• Visits to other ESOP companies and
ESOP-related conferences
• Brainstorming exercises
• Themes and traditions
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Building an Ownership Culture
Alignment of behaviors
Education
Communication
Participation
Incentives
Foundation: Leadership vision
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© 2012 Praxis Consulting Group, Inc. All Rights Reserved.
Education
• ESOP Education
–
–
–
–
–
Purpose
Transaction
Eligibility, allocation, vesting and distribution rules
Role of trustee
Share price valuation
• Business Education
– How to read a financial statement
– Link between actions and profit and share price
– How do different departments contribute to the company
• New Hire Orientation
– To the ESOP and the business
– To the culture of the company
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© 2012 Praxis Consulting Group, Inc. All Rights Reserved.
Communication
• Company performance information
• Annual statement training and share price
meeting
• Regular staff meeting updates
• Updates on the company’s direction and
long-term goals
• Communication between departments
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Participation
•
•
•
•
Suggestion box
Problem-solving/task force responsibilities
Employee survey/assessment
Facilitation and management of town hall
meetings
• Facilitating employee involvement in strategic
planning or corporate values
• Regular gauge of employee questions and
concerns and “temperature”
• Drafting rights and responsibilities
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Incentives
• Be sure people have “line of sight” from
their own actions to goal achievement
• Recognition/Awards
• Alignment of values with incentives
• Feedback/input on quality of life, work/life
balance and benefits
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Other
• Legislation/External Advocacy
• External Marketing
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Other Resources
The ESOP Committee Guide 3rd
Edition
Published by the National Center for Employee Ownership
With articles by Jim Bado, Stephen Clifford, Dave Fitz-Gerald,
Brian A. Inniger, Camille Kerr, Kellee Kroll, Linshuang Lu,
Christopher Mackin, Liz McKeever, Alexander Moss, Tracey
Myers, The Phelps County Bank ESOP Committee, Loren
Rodgers, Corey Rosen, Virginia Vanderslice, and Jack Veale
Available on nceo.org and esopassociation.org
ESOP Association Annual Awards for
Communications Excellence (AACE)
Compilation of past winners sample materials and activities
http://www.esopassociation.org/resources/resources_AACE
.asp
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© 2012 Praxis Consulting Group, Inc. All Rights Reserved.
Praxis Consulting Group
To learn more about us, please visit
our website at praxisCG.com or
contact us.
Contact:
Linshuang Lu
Consultant
(267) 283-1115
[email protected]
Praxis Consulting Group assists
organizations in developing high
performing workplaces by aligning
organizational leadership, strategy and
culture.
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© 2012 Praxis Consulting Group, Inc. All Rights Reserved.