Outsourcing communication to boost share plan take up

Communications can often be vital to share scheme take up, and deciding to outsource your messaging may have a profound impact, says Bea Oaff

What is a great share scheme without a strong communication strategy behind it? Pose this question to a HR expert and the most likely answer is ‘a wasted opportunity’.

To drive understanding and take up, it pays to have a comprehensive financial education programme around an organisation’s share scheme. The question is what the communication should include and how to deliver it to best effect.

First off, employees need to understand the basic concept of what’s on offer. Claire Chadwick, marketing manager of HBOS Employee Equity Solutions, stresses: "This is key to getting buy-in." So employees have to be told how to receive or buy shares, how long they have to hold the shares for, what the potential returns can be and, once sold, what the tax implications are.

After this, employees also need to understand the finer details – the "nitty gritty mechanics of the scheme and its implications" as HBOS’s Chadwick puts it. This includes the application process and the deadlines for submitting the paperwork, guidelines on changing or stopping payments, and selling or withdrawing shares. There are also rules around employees missing payments, leaving the scheme early or dying. Employees should also be made aware of the tax-saving option of putting shares into a self-invested pension plan when a scheme matures and the impact of a change in the ownership of the employer, shares going underwater or the sale of shares on statutory benefits.

Employers not only have to consider what the financial education should cover, but also how it will be delivered. Katherine Usher, principal consultant at share plan provider Halliwell Integra, says: "The main consideration is your target audiences. You must really appreciate who your people are and the different ways they work."

Once target groups have been identified, employers can then choose the most appropriate delivery methods. These could include presentations, booklets, an intranet site, a helpline, dedicated emails and face-to-face surgeries.

The final decision around delivery is who it should come from – the organisation itself or an outside specialist. Fiona Downes, head of employee share ownership at IFS ProShare, an organisation that promotes share ownership, says: "There are pros and cons for both options." It can be argued that a share scheme communication strategy executed in-house will have a greater chance of reflecting the employer brand. However, if this option is taken it is crucial that the employer does not stray from financial information into financial advice. This is because any company perceived to be giving financial advice can be liable for decisions made upon it.

Where an outside consultant is brought in, or the share plan provider delivers the communications, there is the upside of offering employees the benefit of specialist experience and expertise.

Ultimately, it is up to the company to decide what’s best. "There is no one answer, every company has to decide what is best for itself, " adds Downes.

Case study – Punch Taverns

It is generally accepted that around 30% of employees typically sign up to a share incentive plan (Sip).

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However, when the pub company Punch Taverns launched its Sip in 2004, it experienced a 50% take-up rate among employees.

Francis Patton, customer services director at Punch Taverns, says that properly and proactively communicating the scheme was always a priority. ""Our primary concern was to ensure everyone within the business not only knew about the Sip, but understood the benefits of taking a stake in the company."" Working with its scheme provider, Halliwell Integra, Punch Taverns organised a series of presentations and follow-up surgeries where individuals could discuss the Sip on one-to-one basis. It distributed booklets and made more information available online. It also provided an email address and a dedicated phone line.