When your goal is to focus your employees on the performance and profitability of your business-and how to improve it-there are a number of options available, including implementing an Employee Stock Ownership Plan (ESOP).
In my last column (Feb. 28 issue of Tire Business) we discussed the different ESOPs that are available. Once your company elects to offer your employees stock ownership, an effective communication effort regarding the new benefit is absolutely critical to any plan's success.
There is no equivocating about the fact that providing an ESOP for your employees will cost your company money. That's why you must make sure they realize you're concerned and really do care about their future.
By communicating that, you cannot only encourage participation in the plan but also help employees better appreciate this new benefit your dealership is offering.
Why is proper communication to employees so important-and why won't simply stuffing a flyer in their paycheck envelopes be enough of a communication strategy?
Proper communication with regards to employee benefits is critical because:
* It manages your legal compliance;
* It helps to achieve your recruitment and retention objectives by producing a positive image in the community-everyone knows the companies in town that have great benefits;
* It keeps employees motivated; and
* It makes them feel appreciated and connected with the company.
Additionally, the dealership should try to avoid the three cardinal sins of employee benefits communication. The first is too little communication. A telltale sign is when an employee is asked if they have a retirement program and they look at the ceiling, nod and mutter something about, ``I know we do but I don't know much about it...but I'm young anyway.''
The second danger is communicating employee benefits in volumes that can only be lifted by ``The Rock.''
And the third pitfall: Communication by a benefits plan administrator who only talks in acronyms and present/future value phrases and is just way too comfortable throwing around return rates on the various investment options.
Select a strategy
OK, Mary, I hear you. So how should our dealership communicate?
Glad you asked. An effective benefits communication strategy consists of several steps and mediums.
Step 1: Define your objectives. They should include (but not be limited to) awareness and understanding of the benefit and its potential to improve the employee's life; an overall employee participation percentage goal-tying the benefit to the company's appreciation of its employees; and tying the benefit to the company's performance.
For example, if the dealership is going to provide 50 cents for every dollar contributed by the employee, the match could be improved by 5 cents for each overall company goal that was achieved.
Step 2: Design your communication framework. Remember, most people need to hear something seven times before they assimilate the new information. (And I always thought my spouse was just nagging; actually, he was just helping me ingest knowledge!)
Your seven steps could include ideas such as:
* An employee committee to help you design the program or the communication of the program;
* An introductory article in your company newsletter;
* A payroll stuffer;
* A flyer on the employee bulletin board providing introductory information with a catch phrase like, ``Want to have $250,000 before you are 50?'';
* An overview of the program provided to management before communicating the plan to employees;
* An on-site presentation for employees during work hours;
* An off-site communication meeting-with spouses included;
* Faxes, company voice mails, periodic e-mails to heighten an employee's knowledge and interest, a Web site to visit on the company that has been selected for investment and information on the employee portion of the dealership's Web site.
Pick from the variety of communication options, design the communication pieces and the timing of each, then-and this is important-run them by a few employees to obtain valuable feedback. Then you can make the appropriate changes to reflect the suggestions you've received.
This last step is of critical importance. Many times we have a certain level of knowledge about a topic and thus make too many assumptions regarding our audience's level of knowledge. As a result, often the communication methods used are confusing. Avoid this mistake by reviewing the information with employees who have various levels of knowledge on employee stock ownership.
Step 3: Define your target audience. Once you've determined that, you should then talk through the following delivery decision points:
* Should you deliver the speech in an overall group, break the group into smaller subsets with a cross section of each job, or group by job group so examples can be job-specific?
* Should the meeting be on site or off site with a lunch?
* Do you use a PowerPoint presentation or handouts?
* Should the employee's spouse be present?
* Should the information be communicated verbally and in written form in Spanish with a bilingual presenter?
Your stock administrator should play a role in these meetings. Employees want to put a face with the company that is going to potentially be investing their money. The communication process is important because legally the dealership has a fiduciary responsibility to educate workers on their options so they can make intelligent, informed decisions.
Implementing a well-thought-out communication plan ensures employees receive the most current material available on their new benefit plan.
Armed with this information, they can meet with their accountant and have adequate information on their retirement. This will allow employees the opportunity to invest additional monies in the company plan or buy needed outside supplements in order to give them enough cash flow for a comfortable retirement.
Step 4: It is time to sign up for the benefit. Even if your initial meeting has a ``sign up for the new benefit component,'' plan to set up an immediate follow-up meeting for your employees to complete the appropriate forms either online or in person.
Many employees will want time to digest and discuss with their spouse and accountant what they learned in the initial communication meeting. The sign-up forms need to be easily understood and completed.
In my human resources consulting business, I have heard many complaints regarding the sign-up procedure for benefits. As a general rule of thumb, when the dealership is asking an employee to part with and/or invest their own money-even if it is for their own good and the dealership plans to provide matching funds-the process needs to be as painless as possible.
Step 5: Evaluate your communication efforts. The best way to do that is by looking at your overall participation percentage, talking to employees who attended the meetings and checking the number of hits on your informational Web sites. You also can ask a few employees with whom you have a good relationship why they did or didn't sign up for the new benefits.
If an employee did not sign up, ongoing communication strategies should be contemplated. One easy-to-remember approach is to communicate with non-participants the month before your quarterly statements go out to the participants. This will heighten their awareness of the plan.
Then, when they hear their co-workers discussing the plan, they may ask questions and decide to enroll.
Explain benefits again
Are there additional times the dealership should communicate about its ESOP other than when the plan is introduced?
Communication should occur at plan introduction and at a variety of other times. Those include:
New hire enrollment: The No. 1 time to obtain enrollment in a retirement program is at the initial time of employment. Employees should understand plan basics such as eligibility requirements and employee contribution options. They should also be given an easy-to-read chart on ``how their money can grow over time.''
Often a one-on-one meeting occurs at initial employment. Make sure you have the appropriate person explaining this benefit option to your prospective participant. This is your first chance to give your new employee a positive outlook on the dealership's benefit plans-make the most of it.
New hire orientation meetings: Some companies have their new employees sign the necessary forms to get them on the rolls, then give them benefits information to take home for review. After a week or two they then provide a more lengthy orientation on the dealership, benefits, etc. If your dealership has adopted this approach, the ESOP should be a part of this orientation.
Plan changes: Legally, the dealership needs to inform employees of plan changes-whether they are positive or negative. Plant the seed before the changes take effect.
Use your multiple mediums like e-mail, paycheck stuffers and voice mail to inform your employees of any upcoming changes. Try to keep plan changes to a minimum. Change-even if it is a good change-is often unsettling to an employee.
Employees like to feel like they have at least a rudimentary understanding of their benefits. Constant changes make it virtually impossible for a worker to obtain this level of comfort. Also remember: Plan changes require amendments to the plan, so check with your benefits attorney.
Dealership changes: Corporate developments may affect employee benefits. A profitable year may prompt more generous matching while a loss may make a reduced match-or no match at all-necessary. Mergers and acquisitions also can affect the structure of a company's ESOP.
Employee changes: If there is a change in your employee's life, such as a marriage, divorce, new baby, promotion or even a demotion, a change in the employee's ESOP election may be in order.
Ongoing employee questions: Who should your employees contact with their questions regarding the plan? Many stock investment administrators provide a Web site or a toll-free number to answer questions.
Although this may seem easy, it may not be preferred. Before advising your employees to try these options, use them yourself and see if they project to your employees the image your dealership wants to project. It is always prudent to have an on-site employee who can answer questions regarding the plan.
Your workers probably will feel more comfortable with someone they know. But remember to caution the employee handling questions not to answer any regarding future returns on investment options. And that employee should have thick skin-if a worker has chosen an investment option that may not be providing the desired return, believe me, the answer person is going to hear about it!
Unfortunately, dealerships often spend an inordinate amount of time creating an ESOP and virtually no time designing the effort to communicate its benefits. Trust me, the time and money spent designing a communication strategy will reap high returns on investment.