1. society
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Rolling Out Your ESOP:
What to Say, When, and How
Alex Moss
Praxis Consulting Group
Excerpted from The ESOP Communications Sourcebook, 6th ed.
For details on The ESOP Communications Sourcebook
or to order online, visit www.nceo.org/r/sourcebook
Copyright © 2014 by the National Center for Employee Ownership (NCEO). Do not
reproduce or redistribute this material without the express written permission of the
NCEO. See www.nceo.org for more information.
Chapter 3
Rolling Out Your ESOP:
What to Say, When,
and How
Alex Moss
This chapter addresses the process of introducing an ESOP to your
company, from the initial announcement through a series of specific
follow-up activities over the first year or so. Taken together, these activities will be called the “ESOP rollout process.” The first step in this
process is typically a kickoff meeting. This chapter provides a detailed
review of this type of meeting. The other steps in the rollout process
are summarized.
The kickoff meeting alone is not enough to build a full understanding of the ESOP and ownership, but it is a critical first step in setting
expectations for effective employee ownership. The specific structure
and content of activities that follow the rollout vary from company to
company.
The goals of the ESOP rollout process are to help employees understand your ownership transition and to build their commitment to trying
to make your ESOP and your company successful. Employee reactions
to the ESOP are often mixed. ESOPs seem strange to many employees,
and there is a natural tendency to distrust the goals, the process, and
even the specific details of ESOP communications. This phenomenon is
reinforced by the technical complexity of ESOP rules. At the same time,
many employees may feel excited about the potential benefits of being
owners. They have many different expectations about what ownership
“ought” to mean, some of which may be consistent with your selling
shareholders’ and your company’s goals, and some of which aren’t. The
underlying purpose of all ESOP implementation activities is to provide
25
26 | The ESOP Communications Sourcebook
information that improves trust in the concept of shared ownership,
and that over time aligns everyone’s expectations about ownership, all
with the goal of improving your company’s long-term success.
The challenge is that, at the beginning, no one other than those
who were actively involved in putting the ESOP together understands
what an ESOP is, how it works, how it will affect the company, or how
it could benefit individual employees in the future. By the end of a successful rollout, every employee:
•
will have participated in a range of educational activities;
•
will have received various legal and informal supporting documents;
•
will understand at a basic level what the ESOP is, what ownership
through an ESOP means in your company, what to expect from
the company, and what is expected of him or her as an actively
participating employee-owner; and
•
will know where to get answers to further questions about the ESOP
and ownership in general.
Note that improving company performance is not an achievable
goal of the ESOP rollout process, because even a very successful initial
rollout by itself is not sufficient to achieve the serious performance
benefits we term “building a high-performance ownership culture.” The
rollout process lays important groundwork, but it is by no means sufficient to achieve the longer-term cultural changes and organizational
performance benefits that broadly shared stock ownership can yield.1 In an ideal world, an ESOP rollout would involve a series of coordinated activities over the first 12 to 18 months. In practice, many
companies conduct a few activities, with or without a clear plan in
mind, and then figure out what should come next based on how well
the first messages sink in and what questions they hear from employees.
Depending on your company’s history and current needs, you can use
the process outlined in this chapter either to develop your own ideal
1.
The process for developing a high-performance ownership culture is described
in detail in Virginia J. Vanderslice and Alexander P. Moss, “Getting Your
Company Ready for an ESOP: the Ownership Culture Perspective,” available
online at www.praxiscg.com/thought-leadership.
Rolling Out Your ESOP: What to Say, When, and How | 27
rollout plan, or as a checklist against which to measure the steps that
you have already taken, evaluate gaps, and consider future activities.
The common steps in a full ESOP rollout include:
Step 1: Initial companywide kickoff meeting;
Step 2: Leadership planning to clarify ownership goals and strategies;
Step 3: ESOP committee setup, training, development, and planning;
Step 4: Detailed ownership and/or business training; and
Step 5: Monitoring, evaluating, and refocusing.
In principle, beginning with step 2, even before the ESOP deal is
completed and the initial kickoff meeting is announced, is ideal. But,
in practice, time often doesn’t permit this type of advance planning.
So, while the order of the steps above is more common and realistic,
it is not quite ideal.
Each step includes some combination of meetings, discussions,
and documents, in both print and electronic formats. Examples of
these documents are included elsewhere in this book, as well as on the
NCEO Web site at www.nceo.org, and from your professional advisors.
Step 1, Announcing the ESOP: The Initial Kickoff
Meeting
Purpose
The first step is to announce the formation of the ESOP and its purchase of company stock on behalf of employees. The general purposes
of the initial kickoff meeting are to set the context—why an ownership
transition in the first place? why an ESOP?—to explain the ESOP at an
overview level, and to reinforce a general sense of where the company
is headed and how the ESOP is a critical part of the plan to get there.
Some companies make the mistake of expecting employees to
understand and applaud this announcement. In fact, employees are
often somewhat stunned to hear the news and may be fearful at first
about “what it really means.” It is important not to expect an immediate
acceptance of the ESOP or to be too disappointed when the expected
28 | The ESOP Communications Sourcebook
standing ovation fails to materialize. The kickoff should be viewed as
the beginning of the communications process, not the whole process,
and it will take some time for this announcement to sink in and have
meaning. The point of the kickoff meeting is to make the announcement
and to set up future communications activities.
Timing
The kickoff meeting is most commonly held after the ESOP has been
established and has purchased stock. Occasionally, this meeting is
conducted prior to the actual completion of the ESOP transaction.
Companies that do this may simply want to solicit employee approval
or input. In rare cases, employees are given the opportunity to redirect
other retirement funds into the ESOP, and these meetings become part
of the required legal disclosure required in the investment process.
These, however, are exceptions.
The initial ESOP announcement is ideally made to all employees at
the same time, often in one large meeting. In larger, multisite companies,
this may be done via consecutive onsite meetings or by Web-cast, if
your company has a high-tech bent. Whatever the logistics, the point
is to get the same message out to everyone at as close to the same time
as possible.
Attendees
Typically, all employees attend this meeting, not just those who have
already met the requirements to become ESOP participants.2 The benefit
of this is that all employees have the opportunity to learn about what the
ESOP is, how it works, and what the eligibility requirements are. Some
companies prefer to limit attendance to currently eligible participants,
2. The most common exception is in unionized companies in which labor and
management choose not to bargain for ESOP participation by union members.
These employees generally do not attend this or any other ESOP meetings,
but certainly union members may be invited or at least permitted to attend.
Sometimes the union leadership prefers this so that their members understand
the issues; sometimes they prefer that their members do not attend, so that
members stay focused on the package of benefits that has been negotiated.
Rolling Out Your ESOP: What to Say, When, and How | 29
on the theory that this is a privilege of being in the ESOP and that new
participants will have their turn in the future. On balance, we generally
recommend that all employees attend because this builds on the theme
that the ESOP is meant to be for everyone, even those who will not
become eligible until a future date. However, if some employee groups
will permanently be excluded, it may be best to meet with these groups
separately to explain why other employees are participating in the ESOP.
Many companies find it helpful to conduct the meeting in the
evening or on a weekend. This makes the meeting a special event
rather than a “gather around the water cooler and then get back to
work” announcement, and it adds to the sense that the announcement
is worthy of special treatment. This permits some spouses to attend.
Because spouses are often willing and able to ask clarifying questions,
they can also become an important source of independent support for
the ESOP and speed the process of creating a positive buzz. However,
inviting spouses increases the scale of the meeting and limits the times
that the meeting may be held. Some companies also prefer to focus on
delivering the message only to employees at first.
You may also consider inviting the press and public officials, although this is uncommon. If the press does attend, it may be helpful to
issue a press release in advance, giving them the basic details from your
perspective. Reporters at this meeting will hear what you say to employees and how employees react. Some employees may be intimidated
by their presence, and some company leaders prefer to offer a level of
internal detail that is not appropriate to share publicly. As a result, we
suggest you avoid press participation until you have had a chance to
discuss the basics with employees first.
Public officials also sometimes attend, particularly if they have
been involved in lending money to the ESOP or assisting in another
way that you wish to recognize. The ESOP is frequently part of a larger
strategy to keep your company anchored in its community, and the selling shareholders may be prominent citizens. Public officials are usually
eager to support business owners. These kickoff meetings tend to be
“feel-good events”—the news is very positive—so including public officials provides an opportunity to build positive relationships for future
reference. As with the press, however, some companies simply prefer
to keep the meeting open only to employees.
30 | The ESOP Communications Sourcebook
The point is to use the kickoff meeting to reinforce a sense of community both inside the company and outside, and to convey the message
that the ESOP is meant to maintain local ownership and control—or to
reinforce whatever your specific ESOP goals may be.
Meeting Format
There are many possible formats for these meetings. Examples include:
a simple meeting with one or more speeches by senior leaders; a dinner
meeting that may also function as an annual company meeting (or annual employee appreciation dinner); or an informal weekend meeting
that includes a business meeting agenda during a larger event.
For example, one company rented a hotel for its meeting and invited
employees and spouses to attend. Everyone knew that the new president
was a racing fan. They created a “track” from room to room by laying
down black landscape cloth and taping stripes down the middle with
masking tape. After a few introductory remarks in a large conference
room, employees divided into groups and traveled down the “ownership
road,” moving from room to room. In each room, a different manager
or outside ESOP advisor explained an aspect of the ESOP for five to 10
minutes, and then the group moved on to the next station on the road.
This entire exercise lasted a couple of hours, with pit stops along the
way and a company dinner at the end.
Another company held a “piece of the pie” party at lunchtime. They
frequently hold all-employee meetings in the cafeteria, and they adapted
one of these meetings for the formal ESOP announcement. One side of
the room was lined with tables containing many different kinds of pies.
Everyone got a piece before sitting down to hear from company leadership and to meet several of the outside ESOP advisors, who explained
their roles and what to expect over the coming months. One lucky
advisor received his pie the old fashioned way—in the face—although
this is not generally recommended.
Seasonal themes are common. The ESOP kickoff may be integrated
into a holiday party in the late fall or early winter; a beach or Mardi
Gras theme event in the late winter and spring; or a picnic, barbecue,
or river cruise. Of course, October is “Employee Ownership Month”
within the national ESOP community, and some companies choose
to coordinate their kickoff meetings with these events. In most cases,
Rolling Out Your ESOP: What to Say, When, and How | 31
the timing of the ESOP transaction sets the basic time frame, and the
meeting follows soon after with a theme and format that depends on
the time of year and your company’s style.
It can be helpful to follow patterns that are already familiar to employees when introducing the ESOP. If you hold regular all-employee
meetings in a certain way, consider following a similar format for this
meeting. The message is: “Yes, something new is happening, but we’re
not giving up on what got us here in the first place. The ESOP is a new
tool to support the kind of business that we’ve always aspired to be.”
Don’t delve too deeply into the technical details of the ESOP and
the transaction in the kickoff meeting; rather, keep the focus on the bigger picture. This meeting is just an introduction to the ESOP concept.
More details will come later.
Later in this chapter is a sample agenda that can serve as a starting
point for you.
Step 2, Where Are We Going, What Do We Need?
Leadership Planning
Once the ESOP has been installed, the transaction has been completed,
and the initial announcement has been made, there is generally a collective sigh of relief and a period we call “the ESOP hangover.” Companies
often lose sight of their ongoing ESOP rollout strategies during this
period. Sooner or later the questions will arise: “What are we getting
from our ESOP and from employee ownership? How are they contributing to the success of our firm?”
This leads into the question, “What do we want?” and “Which of our
strategic goals should be achieved more successfully now that we have
an ESOP?” Once again, this is a much larger discussion about creating a
broader ownership vision that is linked to improving the business, and
this topic is reviewed in detail elsewhere.3 These questions should begin
to be answered as part of the ESOP rollout. Therefore, we summarize
here a basic process for engaging senior leadership in identifying how
3.
See, for example, Virginia J. Vanderslice, “Harnessing the Power of Ownership
Passions: Creating a Shared Ownership Vision,” available at www.praxiscg.
com/thought-leadership.
32 | The ESOP Communications Sourcebook
the ESOP should improve the business and in setting an agenda for
future ESOP implementation activities to achieve these goals.
The basic process involves one or more senior leadership planning
meetings with the following goals: to define your company’s ESOP and
ownership goals in relation to your strategic plan, to identify specific
desired “ownership behaviors” that support the ownership goals, to
determine what the company needs to do to encourage and support
these ownership behaviors, and to delegate authority to an appropriate
individual or group within the firm (sometimes, an ESOP committee,
often in conjunction with HR leadership) to design a detailed implementation plan and timeline.
Because the rest of the ESOP rollout process significantly depends
on the outcome of this process, what follows is an illustration but not
necessarily a recommendation for any particular company.
Step 3, Who Carries the Ball? Setting Up Your ESOP
Committee
Many companies choose to set up ESOP (or employee owners’) committees with responsibility for the rest of the ESOP rollout activities.
(We are specifically referring here to informal communications and
advisory committees, as opposed to ESOP fiduciary committees that
provide direction to ESOP trustees.4 )
ESOP committees are a clear, visible symbol of employee involvement, an essential element in turning the ESOP opportunity into
enhanced company performance. The committee is ideally set up
during the initial ESOP rollout process, following the leadership planning process described above, which among other things establishes
the ESOP committee’s goals and tasks. Senior leadership can then
say with confidence that future ESOP activities have not yet been
fully fleshed out, but that a team of employees has been assigned to
complete this task. The ESOP committee can then get to work on its
targeted activities, and senior leadership can get back to focusing on
running the business.
4.
This distinction, and the general operation of these committees, is described in
detail in other publications. See The ESOP Committee Guide, 3rd ed. (Oakland,
CA: NCEO, 2011).
Rolling Out Your ESOP: What to Say, When, and How | 33
The ESOP committee’s job is to continue to define and implement
the ESOP communications rollout. Start by training committee members so that they understand more about the ESOP and ownership, and
about best practices among other ESOP committees. The committee
may also need some basic training in the fundamentals of meeting skills
and problem solving to enable them to function effectively as a team.
Next, the ESOP committee will brainstorm activities that it might
undertake, set priorities, and then develop a schedule for high-priority
activities during the first 12 to 18 months of the ESOP. These activities
frequently include internal ownership events, such as ESOP meetings,
orientations, and training; external events, such as conferences, and
visits to and from other ESOP companies; and printed materials such
as newsletters, FAQ lists, and other paper-based and intranet-based
resources. Finally, your ESOP committee may be responsible for developing ESOP and business training for employees—see step 4 below.
This all requires planning, budgeting resources (mostly time, some
money), and monitoring and evaluating the activities and performance
of the ESOP committee, all of which are discussed in other publications
referenced earlier. The activities of the ESOP committee evolve over
time and the description here may not fit if your committee is already
more mature, but this is its common role in managing the initial rollout
process.
Step 4, Laying the Foundation: ESOPs and
Basic Business Education
If your ESOP goals include enhanced employee motivation and improvements to the bottom line, one of the most important steps in
your rollout strategy will be providing detailed employee education
about the ESOP and how it is linked to the performance of the business as a whole.
Assuming that you have conducted an ESOP kickoff meeting along
the lines described in step 1, employees will be familiar with its basic
terms. However, few will take the initiative to develop a more meaningful understanding on their own, and most will still be very confused
about the goals, rules, and opportunities of employee ownership. Thus,
a more detailed ESOP and basic business education initiative follows.
34 | The ESOP Communications Sourcebook
The ESOP portion of this training follows the same general outline
as the ESOP kickoff meeting described above. This time around, you
will provide much more substantial detail, more supporting documentation, and engage employees in actually learning and remembering
more. Companies have used many models and formats, ranging from
simple PowerPoint presentations, to highly involved participant roleplay exercises, to online Web/intranet training seminars.
The content and process will depend on the goals that you set in
your leadership planning process. If your ESOP is designed only as an
add-on benefit plan, your education goals will focus on teaching employees the basic ESOP rules. If your ESOP is designed also to engage
employees in improving your business now that they own a piece of it,
your education goals will include some basic business education. The
content will depend on how well employees already understand core
issues, such as business strategy, financial statements, and performance
improvement goals. Many other training activities may follow on these
and related topics, particularly as your business evolves and employees
need to understand how changing markets, technology, etc., are affecting your company’s future strategy and direction.
Most effective training follows established principles of adult education: the material is concrete, it relates directly to attendees’ personal
experience, it is interactive (rather than being in a lecture format), and
it provides information that attendees can use immediately. This learning is most successful when conducted in relatively small groups of 8 to
15 employees, and each group represents a cross-section of the work
force. Training sessions should be long enough to cover real content,
but not so long that employees lose focus. Two to three hours typically
works best in our experience. This means that each training session can
be repeated several times at each site each day, depending on the size
of the work force at each location, shift schedules, and the number of
physical locations in your company.
It is advisable to present each session to all employees within a few
days to a few weeks and then to take a brief break before returning to
present the next session. This permits all employees to learn the same
material at about the same time, it is less stressful for employees than
all-day or multi-day training sessions, it permits the training team to
focus on one part of the curriculum at a time, and it spreads out the
time that any individual or group of employees is “offline” in training.
Rolling Out Your ESOP: What to Say, When, and How | 35
By the end of this process, employee-owners will have participated
in a series of structured educational activities that provide more detail
not only about how the ESOP works but also about how this relates to
your business success and what you want them to do to help your business achieve its goals. This is not a one-shot process; it is the beginning
of an ongoing effort to establish a foundation of knowledge, some clear
momentum, and expectations for the future.
Step 5, Lather, Rinse, Repeat: Ongoing Monitoring
and Implementation
The essential ingredients of any project plan are “scope, schedule, and
budget,” and your ESOP rollout will live and die by these measurements.
In an ideal world, a clear review process would evaluate the whole of
the ESOP rollout plan against the original desired outcomes, budgeted
resources, and delivery schedule, and then would help you plan future
activities based on work that had not yet been completed and new issues that had arisen.
In practice, many firms conduct ESOP activities piece by piece, and
evaluation is difficult because they have not clearly defined precisely
what they want in the first place. Once again, this is not necessarily a
bad thing. Many companies simply prefer to follow their hunches. Still,
the planning framework gives a clear outline for the basic steps and the
order in which they might be conducted.
This chapter presents a number of idealized frameworks, formats,
and outlines with the goal of providing tools for you to use in designing and implementing your own ESOP rollout process. These activities
may be conducted right after your ESOP is established (or even a bit
earlier, in some cases), or they may be added to the mix over time as
you become aware that one or another element seems to be missing.
It is important to reemphasize the underlying purposes: to build
trust in the entire concept of ownership and to align everyone’s expectations so that ownership contributes to the success of your company. The
recommendations included here are designed to contribute directly to
these outcomes. However, any implementation activities that accomplish these underlying goals will ultimately contribute to a successful
ESOP, even if you do not follow the literal form and content of our
recommendations here.
36 | The ESOP Communications Sourcebook
Finally, at some point what was originally an ESOP rollout naturally evolves into the normal day-to-day management of the ESOP as
an ongoing fact of life in your company. The systems, structures, skills,
and habits formed during the rollout will provide residual benefits long
after the initial activities have been completed. The rollout process itself
sets the stage and frames employees’ expectations for what ownership
means to the future success of your company and to your employeeowners personally.
Rolling Out Your ESOP: What to Say, When, and How | 37
Appendix: Sample Agenda
The following is an agenda template that we often start with, first in
summary form and then with details for each agenda item. This is only
a starting point, and not a recommendation that you should follow this
precise outline.
Summary:
1. History, vision, and purpose
2. ESOP overview
3. Video or ESOP company speaker
4. Next steps
5. Conclusion
6. Open discussion/Q&A
7. Written support materials
8. Immediate follow-up
Details:
1. History, Vision, and Purpose
The meeting generally begins with the president, CEO, selling shareholder, or another recognized leader making an announcement and
providing a brief framework. The announcement consists simply of
telling attendees what is happening. This should be framed around a
brief review of how the company was founded and how it has grown.
The point is to set up the discussion to follow.
The rest of this first agenda item provides the framework for telling
a story about “why.” Generally, this involves explaining that ownership of
the company has to change at some point in time, that the owners have
recognized this for some time, that they did (or did not) consider selling
the company to an outside party, and that they want to ensure that this
inevitable process happens in a healthy, planned way that supports the
long-term success and independence of the business. Again, the specific
message is unique to each company. The important point is to start with
38 | The ESOP Communications Sourcebook
a “from the heart” message by one or more of the selling shareholders
about what you are doing and why, and how this is designed to protect
and benefit the long-term future of your company and its employees.
Whoever speaks first should not delve into the specifics of the
ESOP, because this first piece should be more emotional and philosophical—on a grander scale than the technical discussions that can follow.
However, the person should summarize the remainder of the agenda
for this meeting, and introduce the other speakers.
It’s important not to “sell” the ESOP at this point. Explain it, make its
benefits to other owners and the company clear, and communicate that
stock can go up and down. Employees appreciate this candid approach.
This first agenda item may require 10 to 20 minutes—more than
“Hi and welcome,” but less than “The Complete Rise and Fall of Our
Company, Inc.”
2. ESOP Overview
Employees need to hear ESOP basics. This presentation can be made
by a different person, so that there is a change of voice and focus in
shifting to the details. A few alternatives:
•
Some companies prefer to use a simple PowerPoint slide presentation delivered by a senior leader.
•
Some prefer to invite one or more of their ESOP advisors to explain.
Outsiders can bring credibility and allay any concerns that the
ESOP is some plan that the selling shareholders devised on their
own. This works particularly well if these advisors are both interested in talking with employees directly and are skilled at breaking
down the complex language of ESOPs and ERISA into something
approaching “normal English”—it really depends on the style and
skills of the advisors.
•
Some use speakers from the major trade associations. Outside
experts bring credibility and can put this particular ESOP into
context relative to other employee-owned companies locally and
around the country.
The substance of this presentation often follows a simple pattern:
Rolling Out Your ESOP: What to Say, When, and How | 39
•
Basic ESOP “facts and figures.” Illustrate the background landscape
of employee ownership and explain where your ESOP fits into the
bigger picture of employee ownership.
•
Review of the ESOP deal. Tell who bought what from whom and for
how much, where the stock is now (partially allocated, part in suspense
account, depending on your specifics), and how shares will get into
employees’ accounts over time as future contributions, loan payments,
and allocations are made. This explains the ESOP as a whole, but at
this point does not explain how it affects individual participants.
•
Summary of the ESOP rules. Include initial eligibility, allocations,
vesting, and distributions to show how the larger transaction results
in shares going into and coming out of accounts of individual participants. This addresses the question of what the shares will be worth.
•
Valuation. Explain what factors drive stock value, both in the external market and internally at your company; the stock price history
to date; and the outlook for the future.
•
Ownership behaviors. Describe what individual participants can do
to try to get the value up, or answer the question, “Now that you’re
an owner, what do we want you to do?”
•
Governance and decision-making in the ESOP. Explain what
changes and what does not change, at the shareholder level, at the
board level, and at the various operational management levels.
Governance in ESOP companies is a big issue. Typically, not much
will change from a purely legal perspective. For the purposes of this
particular meeting, the point is that “ownership is about how we
can work together to build a better company.”
It is important not to let this portion of the agenda become too
focused on the details of ERISA and ESOP rules. You do not need and
should not expect anyone to master the details at this point. Rather,
the purpose is to give attendees a sense of what’s happening and why,
to build trust in the goals and the process, and to create interest and
readiness to learn through future educational initiatives.
The time frame for this part of the agenda should be at least half an
hour and is rarely longer than one hour.
40 | The ESOP Communications Sourcebook
3. Video or Speaker from Another Local ESOP Company
Some companies include one of several trade association videos showing
stories of other ESOP companies. Alternatively, if you know another
local ESOP company whose leadership has a similar approach to yours,
inviting them to speak for a few minutes can be beneficial. Both of these
activities reinforce the notion that your company is not doing something
odd or unconventional, but rather is following an emerging American
tradition of sharing ownership broadly with employees, which in turn
echoes some of our most cherished national values and ideals.
The most common videos (which are available at little or no cost)
last about 15 minutes. Speakers from other companies can tell quick
versions of their stories in this same time frame, but you will need to
provide extra time for Q&A about the speaker’s company and ESOP if
you choose this route.
4. Next Steps
What is said here depends on where you are in your ESOP implementation process. If you happen to be following the exact outline presented in
this chapter, this part of the kickoff meeting agenda would just summarize
the remaining steps 2–5 and provide general time frames for completing
each one. This item generally requires no more than 5 to 10 minutes.
5. Conclusion: Where Our Business Is Headed and How This Helps
It often works well if this portion is presented by a member of the senior
leadership team, perhaps the selling shareholder if she/he will remain
in control, or the new president if your ESOP involves a transition in
management as well as ownership. This agenda item provides a brief
review of the general outlook for the company going forward. The underlying message is “we believe it’s a good thing to be an owner of this
business.” This may include a brief review of both recent successes and
challenges on the horizon, and may conclude with a “call to action” that
frames ownership as a challenge to employees to remain focused on
building a business that they can be proud of owning.
This section doesn’t need to be long—five to ten minutes—but it
is important to end on a strategic note, rather than ending after the
somewhat technical discussion of the ESOP.
Rolling Out Your ESOP: What to Say, When, and How | 41
6. Open Discussion/Q&A
Although it is important to give employees an opportunity to ask
questions, do not be surprised if there are not many. Most employees
will have no questions yet—some will be a bit overwhelmed and not
quite sure what to ask, others will just be ready to switch gears and do
something else. To encourage employees to ask questions without fear
of looking stupid, you could ask them to hand in written questions and
then read and answer them in front of the room as a way to get started,
have them discuss what they heard and what they do and don’t understand in small groups, and then select their group’s top two or three
questions to read out in turn.
Even if all goes well, you will have a few skeptics, though they may
or may not be willing to ask tough questions at this point. A few other
employees will be supportive but will have detailed questions that you
may or may not want to answer at this early stage. In addressing all questions, consistently emphasize the purpose of pursuing the ESOP in the
first place and assure employees that much more detailed information
will follow in the coming weeks and months.
This final agenda item may require anywhere from five minutes to
half an hour. Some companies prefer to allot a specific time, and others
prefer to keep going as long as there are still questions. This often depends on whether food or other parts of the meeting agenda are waiting.
7. Hand Out Supporting Written Documentation
Many companies give employees a document to take home and review
for future reference. Various written explanations of ESOPs are available. The NCEO publishes an introductory booklet on ESOPs. Some
companies prefer to prepare their own customized “20 questions about
ESOPs” in advance so that they have a document ready to hand out at
the end of the kickoff meeting.5 This is different from the summary
plan description (SPD), the legally required summary of the ESOP plan
document. The SPD may be ready to distribute at this point, but often
5. The process of summarizing the basic concepts in plain language is itself a
learning experience for whoever takes it on. Some companies, therefore, delay distributing their own documents until their ESOP committees or other
internal ESOP experts have time to develop them carefully.
42 | The ESOP Communications Sourcebook
it has not yet been produced and thus will be distributed later in the
rollout process.
It is also important to translate this type of informal Q&A document into the most common languages used by your employees. Some
companies use their own translators, while others use commercial
translation services arranged through their ESOP advisors or on their
own. However, the translators must have a basic familiarity with ERISA
and ownership concepts. Have a bilingual person in your company who
understands or has been trained on how the ESOP works to handle these
issues. Make sure to edit any translated material before distribution to
avoid potentially serious misunderstandings.
At this point, employees will have heard a simple overview, had the
opportunity to ask questions, and received basic written information.
The next step is to sort out what the longer-term messages should be
and how to convey them effectively.
8. Immediate Follow-Up to the Kickoff Meeting
As a followup, some companies conduct Q&A meetings, brown bag
lunches, or some other form of meeting within the week or two after
the kickoff meeting. This gives employees time to think about what they
heard, to read any materials that you handed out at the kickoff meeting,
and to discuss their questions and concerns among themselves and at
home before they formulate their own questions. This creates some
visible short-term momentum, and addresses any early misconceptions
that your employees may have.
Building on these meetings, you may then proceed to various forms
of information sharing, such as phone or email hotlines and physical or
intranet bulletin boards. Have some place where employees can post
their questions. The ESOP committee commonly arranges these activities (see step 3). Because the answers to many questions will depend on
your company’s broader ESOP and ownership goals, do some planning
on that topic.