Effective communication is the lifeblood of a successful all-employee share scheme. Even the most generous of plans can wither on the vine if messages about the scheme fail to stand out from the rest of the corporate communications targeted at the average employee.
Experts suggest that simplicity and clarity are the cornerstones of successful communication strategies that will bolster take-up of schemes such as share incentive plans (Sips) or sharesave (also known as save-as-you-earn) schemes.
Jerry Edmondson, senior consultant in Hewitt Associates’ communication practice, says: “You need to create a compelling reason for people to be interested and then take away as many of the barriers to their ongoing interest as you possibly can.”
He believes the most important thing is ensuring staff see the linkage between themselves as employees and corporate aims. “The context, rather than the content is absolutely critical,” he says.
Fiona Downes, head of employee share ownership at ifs ProShare, cites simplicity as a major factor in effective communication, but adds that having a commitment “from the top” is significant in rousing employee interest. “If you’ve got someone there, such as the chief executive or senior management, involved then it seems to have a good effect on take-up,” she explains.
Segmenting the audience to present a more tailored approach to communications is also effective.
Phil Ainsley, head of employee share plans at Equiniti, says segmentation can be carried out in a variety of ways, including by age group or business unit. Similarly, employees already in a scheme could be separated out from those who have yet to join.
BT Group has used this technique to deliver personalised emails to employees around its share schemes. Francis O’Mahony, shareholder services manager, explains: “I think that the targeted and personalised [messages] work really well, because people think they’re being singled out [and are] being treated individually.”
O’Mahony adds that the last personalised emails sent out were statements about their sharesave scheme, which included details of staff members’ individual contracts and an indication of their potential worth. For those in its partnership share scheme, Directshare, BT sends out individualised emails indicating how employees can personally maximise tax allowances.
But on a more micro level, relatively simple techniques can help make the share scheme message more employee-friendly. Incorporating glossaries and jargon busters, timetables and frequently asked questions into communication materials, can help employees understand the technical details of share schemes, including the length of time they have to hold on to the shares, tax implications, application deadlines and the consequences of leaving the organisation and scheme.
Employers must also ensure that any risks associated with the share schemes they operate are made clear when appropriate. As the market has recently demonstrated, share prices can drop significantly and employee expectations must be managed.
Organisations that offer more than one scheme could use a compare and contrast approach to help clarify the differences between the schemes and the risks involved for staff. Ainsley suggests colour-coding can be a strong way of differentiating schemes where allied plans are offered.
Colour-coding can be used in other ways too, such as keeping all the communications sent to a particular section of employees blue; or using colour-coding within a plan, so that all the information relating to tax is purple, for example.
Ainsley suggests calculators are another useful tool - be they physical or online. This could include card wheels, for example, showing various potential outcomes from different contribution levels.
Downes says operating a helpline is also an important part of effective communication, whether it is via a phone, email or a website that employees can access with queries. She also points to the effective use of employees as share plan heroes who are recruited to pass on the benefit of their experience of the scheme to others.
However, Edmondson points out that the success of this method depends on the sophistication of the audience. While it can work well, it can also come across as patronising.
Technology is proving an increasingly versatile tool in the share scheme communication kit-box. Text messaging, for example, is being used to alert staff to their eligibility to enter a plan, as well as sending scheme updates and reminders. BT has even used the technique to enable staff to apply to join its UK Allshare scheme. Last year, 212 employees joined up via this new text facility, despite having been eligible in previous years.
Ainsley adds that text messaging particularly appeals to younger people, a group that has traditionally low participation rates in schemes such as sharesave and Sips.
Online chat rooms, podcasts and webcasts are also being utilised. Podcasts consist of audio that can be downloaded, while webcasts involve video broadcasts online, which can be live or recorded.
However, ifs ProShare’s Downes warns that there has been a slight backlash against more modern online communication methods, with some employees preferring to receive information in printed form rather than all online.
“But it differs from employer to employer. You’ve really got to do what’s right for your company,” she says.
When it comes to communicating messages around more complicated issues, such as scheme maturity and tax, even more care needs to be taken to ensure information is kept clear and simple.
Downes says: “Tax is an important element, but obviously that is a complex area so you’ve got to break that down. Again the message is simplicity. Make sure it is simple for them to understand and make sure they’ve got someone they can talk to if they’ve got any queries that they want explained.”
Jonathan Watts-Lay, a director at JP Morgan Invest, believes that explaining more complicated issues such as tax is best done in face-to-face seminars. “If you do a pecking order [of communication methods], number one is seminars, without a doubt. Number two is probably either a live webinar, where people can interact even if they are dotted around the country, or a webcast, which is the same but you can’t interact with it. After that you probably get into things like podcasts and then more traditional [methods] like booklets and brochures, which I have to say I’m a bit of a cynic on,” he says.
Watts-Lay suggests it is also a good idea to hold individual clinics for staff, even if they have attended a seminar, so they can ask more personal questions in private.
As Edmondson concludes, communication is “an art not a science” and therefore employers need to be able to react to the nature and culture of their specific audience. Downes too stresses that different techniques will work for different firms, making surveying employee feedback vital.
So while simplicity and clarity may prove the pivot points for successful communication of share schemes, employers will find there is no one-size-fits-all approach.
Case study: Telecoms firm KCOM boosts take up with messaging
Yorkshire-based IT and communications service provider KCOM Group has just under 3,000 staff based around the UK and, last November, won an ifs ProShare award for the effective communication of its employee share scheme.
Having run sharesave schemes and a share incentive plan (Sip) in the past, it decided to place a greater emphasis on share ownership when it launched a new-look Sip called “MyShare”, administered by Yorkshire Building Society last August. It offered 200 free shares to all employees, which resulted in 78% take-up, as well as a more attractive matching share arrangement, weighted towards the lower end of contribution levels. While its previous Sip scheme obtained a take-up rate of just 9%, take-up for the MyShare partnership shares rocketed to 72%.
The firm communicated the scheme online, in a booklet and through workshops. Staff were also sent reminders about the scheme via text message.
Terry O’Brien, group director of HR, says: “Share plans are notoriously complicated [so it was key to use] plain English.”†
Top tips
1. Give share schemes an identity every employee will instantly recognise.
2. Ensure everything is in plain English.
3. Operate a helpline.
4. Use online procedures as online enrolment increases take-up, while online exercise simplifies maturity.
5. Find real employees for whom a scheme has proved beneficial and use them in communication materials.
6. Get senior staff on board as enthusiasm for share plans from executive and senior management helps increase take-up.
7. Get feedback from employees to find out why they join a scheme and why they don’t, then target those who don’t.
8. Put the daily share price on the home page of the intranet and email out increases in the share price as widely as possible to generate staff interest in the scheme.
9. Cascade to line management – help managers to become “ambassadors” for the scheme.
10. Ensure the 90-day ISA transfer period after maturity covers two tax years to double the capital gains tax benefits.
Source: ifs ProShare’s 10 Top tips for communicating
employee share plans