If you read nothing else, read this...
- When rolling out a share plan, employers should consider corporate strategy, staff demographics and the type of share plan on offer, and then tailor communication to these factors.
†
Case study: Wolfson switches staff on to sharesave
When Wolfson Microelectronics launched its first sharesave scheme this August, it used a variety of communication strategies.
Face-to-face briefings were conducted with Ernst and Young and Yorkshire Building Society (YBS). Issy Urquhart, vice-president of human resources at Wolfson, says: "All UK employees were invited to attend a briefing session and we had outstanding attendance. We were delighted to welcome the YBS advisers to these briefings as it meant our employees had face-to-face access with the experts, something we knew our staff would really value."
Wolfson's strategy included: a dedicated intranet site carrying a sound and PowerPoint recording of the briefings sessions and frequently asked questions, updated daily; an email countdown over the last week of the invitation period; reminders on payslips over the months leading up to the invitation period; regularly updated posters throughout the UK offices; a YBS phone helpline; and drop-in sessions during July and August.
"Wolfson is a high-tech company employing IT-literate employees, all of whom have access to a personal computer," says Urquhart. "Therefore we decided to use web or telephone participation methods rather than paper. Feedback from participants has indicated how easy both application routes were. We know employees shared information on the ease of application with each other and I am sure this contributed to the high take-up rate."
The three-year share plan had 60% take-up among Wolfson's 358 UK employees. Monthly savings average £151, with 46% of employees saving between £200 and £250 a month.
†
Case study: Share incentive plan relaunch boosts take-up at First Group
After relaunching its share incentive plan (Sip) in November 2009, FirstGroup saw overall take-up increase by 38% compared with the previous year. Take-up by staff aged under 30 rose by almost 63%, and now exceeds the rate among older employees.
The relaunch was particularly focused on the under-30s, among whom participation had been traditionally low. Lisa Procter, group reward manager at FirstGroup, says: "Younger colleagues clearly were not engaging as well [with Sip], so we tried targeting them with a punchy, magazine-style launch brochure, while sending a more traditional booklet to over-30s.
"We also encouraged everyone to use the simple, stylish online share modellers we developed with Penkom. The [Sip] modeller clearly shows the impact of investing different amounts, and of tax and national insurance breaks, free shares and share price movements."
The take-up figures were FirstGroup's best to date. The scheme was more than 200% oversubscribed and record numbers of staff requested the highest level of savings allowed. All this for £20,000 spent on communications for its 36,000-strong workforce.
†
Case study: Asda staff sold on sharesave benefits
When Asda relaunched its sharesave plan in February 2010, staff who had previously benefited from it were used to boost take-up.
Laura Wilcock, shares manager at Asda, said: "We asked staff to put stories about how they spent money from previous schemes on our intranet site, The Green Room. We had photos of people on holiday and at their wedding, things they had used the money for. The challenge is getting the message out there, so we use real stories to help us."
The Green Room site also includes an employee Facebook group that reminded staff of the scheme's deadline dates and invitation period. Iain Wilson, client relationship director at Computershare Plan Managers, which administers the scheme, says: "There was evidence that that group had a viral effect in the broader Asda community.
"What was great about using that, apart from it being very cost-effective, was that you can get things done really quickly. If there is evidence that a key message has not been absorbed properly, you are able to correct that in seconds."
The scheme, which last year had 25,000 UK members, allows staff to save £5 to £250 a month over three years. The shares are those of Asda's parent company, Wal-Mart, which is listed on the New York stock exchange.
†
Good communication is the key to a successful share scheme, and employers need to understand which strategies will work best for their particular workforce, says Jennifer Paterson
During the dark days of the recession, some savvy employers grabbed the opportunity to launch employee share schemes so staff could benefit from share prices that could, surely, only go up. Whether employees always appreciated this complex level of forward thinking is open to question. Certainly, without good communication, opportunities would have been lost.
Figures from HM Revenue and Customs (HMRC) show that more than 12,000 UK employers operated employee share schemes during the 2008-09 tax year. How organisations engage staff in HMRC-approved schemes, such as sharesave (also known as save-as-you-earn, or SAYE) and share incentive plans (Sips), depends on factors such as the employer's corporate strategy, its workforce demographic and the type of share scheme on offer.
For instance, an organisation with a rigorous environmental policy may want to use web-based communications. Louise Drake, national sales manager at Yorkshire Building Society, says: "If you are a company that is really pushing green issues and recycling in-house, the way you communicate might be dovetailed with that."
Common focus on global scheme
A multinational organisation, meanwhile, might endeavour to create a common focus among its employees by rolling out a global share scheme. Malcolm Hurlston, chairman and founder of the Employee Share Ownership (Esop) Centre, says: "Through employee share ownership, they have a shared interest in the share price and the performance of the company, which brings them all together. From the company's point of view, it has to see the value of the identity of the company as being strong; and from the employee's point of view, they have to see the value as being strong."
Communication is all very well, but the share plan itself needs to be attractive to boost take-up, and this involves financial investment by the employer. For example, an employer can make sharesave enticing by offering the full 20% discount allowed under HMRC rules. And for a Sip, free shares or a two-for-one match can be offered. Janet Cooper, partner at Linklaters, says: "The company's take-up will be impacted by how much money it puts behind it, by giving free shares away or discounted share purchase or matched arrangements."
When looking at staff demographics with a view to communications, employers need to consider age groups and how each will best understand the concept of share plans. Julie Richardson, head of sharesave at IFS Proshare, says: "Before employers decide how to communicate it, they need to understand their employees. They need to look at the target market and make sure that whatever communication methods they use are suitable for the staff they need to reach."
Driving shares take-up
Organisations that communicate share plans in a traditional manner, such as by sending out a blanket email and a provider-supplied brochure, will probably not drive take-up. Peter Leach, director of Killik Employee Benefits, says: "Some of the retailers are really encouraging participation. They will go to quite considerable lengths to look at things such as age groups and target these with different brochures and messages.
"For example, they may be encouraging a younger generation to participate in the plan by highlighting the benefits of saving under a sharesave plan and using it as a savings vehicle to help pay off debt, versus someone who may be using shares to contribute to their pension."
Once demographic profiles have been determined, employers should analyse the ways in which staff cohorts are likely to learn most effectively about share schemes. Paul Randall, partner at Ashurst, says: "If employee share plans are about engagement, and they certainly are, then the communications are of fundamental importance. This is the opportunity not just to explain the mechanical workings of a plan, but to transmit a clear message of participation, ownership, even partnership, and the potential benefits of these, to the whole constituency of participants."
Options for engaging younger staff include DVDs, text messages, e-broadcasts and blogging. "Take the time to look at the employee base and find out what engages them," says Yorkshire Building Society's Drake. "Is it a Twitter, YouTube or Facebook culture? It is really understanding a workforce and what will work in an organisation."
Many employers use their intranet site to convey information about applying for the plan, as well as to invite staff feedback. "It is important to get a bit of feedback and do some research with employees on how they want to be communicated to," says IFS Proshare's Richardson.
Some employees respond better to a detailed explanation of what is on offer, such as a lengthy brochure. This is where financial education comes in handy, most often in the form of face-to-face presentations, workshops or seminars.
Linklaters' Cooper says: "A number of companies are looking at helping their employees become financially more capable, understanding what they can get out of the share plan, such as using the shares to pay off their debt, and having a wider portfolio of share investment, so they have a more holistic approach to the share benefit that is made available to them by their employer."
Workplace champions
Another important way to engage employees is to have workplace champions who can communicate the key messages and are available to talk to about the share scheme. Cooper adds: "They know about it, they know what benefits they are going to get out of it, they know how to apply for it, so they can help their colleagues to access that information and decide whether it is right for them.
"Particularly with global plans, local champions are absolutely critical for success because we are communicating a benefit that is coming from head office and somebody locally needs to be there to show them what share ownership means and what benefits there are."
The advantage of using local champions is illustrated in a study, To join or not to join: factors influencing employee share plan membership in a multinational corporation, published in August by the National Institute of Economic and Social Research (NIESR). It found that co-worker behaviour influences decisions around joining employee share schemes. Alex Bryson, senior research fellow at NIESR and one of the study's authors, says: "We asked [respondents] what they knew about share participation among co-workers and we found, for example, that if they think more people in their office are scheme members, then they are more likely to become members themselves."
Any communication strategy should also be tailored to the type of scheme being offered to staff, whether sharesave or Sip. Richardson points out: "Those are very different products, so the way you communicate one may be different from the way you would communicate the other. Where companies have chosen to offer both, they have to have a discussion about whether both plans are launched together or to keep them separate so they do not muddy the message."
Finally, it is important for employers not to drop the message after the initial flurry of activity. Instead of employers looking at share scheme communication as a one-off, two-week event each year, says Drake, it should be part of the organisation's overall benefits and reward strategy, and should be included in the corporate communications programme, just like holidays or any other standard offering.
Iain Wilson, client relationship director at Computershare Plan Managers, adds: "Clear communication on all points of the plan - not just the launch, but continually throughout its lifecycle - is critical."
†
Read more about share schemes