Jarred by the pressures of the current labor shortage, an increasing number of employers are realizing that if they want to retain top talent, they need to share the wealth.
Stock purchase and stock option plans have become widespread at many publicly traded companies. The plans are relied on to motivate employees by making them part owners, and, in essence, more accountable for the success or failure of the company.
While this perk has been universally lauded, the growing ranks of employee stock holders are now necessitating carefully crafted and executed communication programs. This need can be particularly evident during times of stock market volatility - as has been the case for the past couple of months.
One high-tech company with many employees eligible for stock options last year found that employee job satisfaction dipped noticeably when the company's stock price dropped, says Alison Davis, president of Davis & Co., a New Jersey internal communications consulting firm that surveyed employees of the company.
"I think [addressing stock price swings] is going to be an issue, particularly in high-tech, where people are jumping across the street" to get better stock options at other companies, she says.
Talking Long-Term
When a company's stock is doing fine, employees may have few questions or concerns. But when there are dramatic swings, it's only natural that employees might become anxious. That's why companies need ongoing "education campaigns" rather than episodic communications, believes Roger Rittner, a senior vice president with internal communications consulting firm Sheppard Associates, Glendale, Calif.
Paul Sanchez agrees. He is a practice director at internal communications and benefits consulting firm Watson Wyatt Worldwide, New York. "We really have to create a degree of understanding about being an investor," he says.
To this end, manufacturer Allied Signal has launched a full-scale education effort which includes financial planning workshops and a quarterly newsletter for employee stockholders. The theory behind this practice is that there are benefits beyond supporting employee stock ownership, per se.
"It helps to enlighten employees on the principles behind business operations and make them more aware of the business of the business," says Tom Crane, director of corporate media relations at the diversified manufacturer.
Communication During A Downturn
What should a company say to its employees when its stock takes a dive? Employees should receive information about top officers' judgements on why the stock price has dropped.
Without recommending that employees hold or sell any stock, leadership can communicate through newsletters, memos or other means "the industry problem or specific business challenges you're facing," says Rittner.
Allied Signal addressed the topic of volatility in a recent employee stockholder newsletter, says Crane. One of the messages (which the company emphasizes in all of its communications) is that it's important to spread risk around.
"We encourage employees to diversify their portfolios" and not to rely on any single stock or investment.
(Sheppard Assoc., 818/247-9877; Watson Wyatt, 212/251-5615; Davis, 201/342-7288; Allied, 973/455-4350)
Biggest Mistakes in Communicating to Employee Shareholders
While it's imperative that companies maintain carefully planned communications with employee stockholders, there are two things they should not do, according to Roger Rittner, a senior vice president with internal communications consulting firm Sheppard Associates, Glendale, Calif.
Mistake #1: Cheerleading for the company's stock. According to Rittner, some companies "paint a rosy picture of stock ownership" to encourage employees to participate in the company stock purchase plan. Instead, he says, companies should communicate objective information about the opportunities and risks of investing in the company's stock and in the market generally-keeping in mind that the goal of employee stock ownership is for employees to "feel like owners."
Mistake #2: Becoming quiet during bad times. "When things start to get a little dicey, too many companies tend to hunker down and not say anything," says Rittner.
"Without giving any stock [market] advice, you still can explain what's going on...and what makes a stock go up and down."