By: Rachel Heisterkamp
It’s no secret that stock options and equity programs are one of the strongest methods to incentivize and reward employees. These benefits offer a triple reward: They act as an exciting part of employee compensation plans, they build and cultivate individuals’ long-term investment in the organization, and they add extra incentive for individuals to push the company toward success.
If your organization offers PSUs, RSUs, an ESPP, stock options, or another equity program, you’re likely experiencing a lack of employee engagement and participation with your stock plan. Whether from lack of understanding or a feeling of disconnect from these programs, employees need guidance on these benefits in order to know what steps to take. Read on for advice on how to leverage a comprehensive communications strategy to increase employee buy-in and program adoption, and ultimately see the participation you’d like with your equity plan.
1. A one-size, one-time communication won’t cut it
How you communicate your equity program to your employees is critical to their overall level of engagement – including a bullet point about the plan in new employees’ onboarding materials or relying completely on employee award letters leaves a huge gap in communication and transparency. Employees won’t have visibility into how equity programs work, why they’re important, or how to use them unless you prioritize equity messaging as part of your internal communications strategy.
Once you have a communication plan in place, consider the delivery method. For GuideSpark customer Visa, they found that in-person sessions on total rewards were central to employee participation when launching in new countries, and that on-demand content was the perfect tool to reinforce important messaging and prepare employees to make investment decisions. As a result, Visa increased enrollment rates across the globe, including 100% participation in Taiwan, 111% increase in participation in India, and 55.5% global participation. It’s clear – the way you distribute and deliver your messaging is just as important as the message itself, and reinforcement is key for your employees to digest and engage with what you’re sending them.
And if your organization is like many since 2020, you’re likely managing the added complexity of communicating equity to a remote, distributed workforce. Take advantage of digital delivery methods like all-hands Zoom meetings, email, Slack or MS teams, or notifications at key moments like vesting dates. In addition to keeping engagement high with a full suite of digital messaging, use robust functionality to track data like open rates, clicks, and much more – and ensure your message is truly getting through.
2. Start with your employees’ “why”
The key to any successful campaign or communication is to put your value offer at the center. Employees won’t feel the motivation to accept stock awards or exercise their shares if they aren’t clear on why it matters, and how it would benefit them. To get to the heart of why an employee would want to participate in your equity plan, there are a couple strategies you could take:
Reinforce and support the idea that this kind of long-term incentive opportunity is a big deal, and is reserved for high performers at the organization. Leading with the exclusive nature of the award will inherently bake in value, and might add to the gravity an employee feels when they’re presented with the opportunity.
Demonstrate – tangibly – the range of potential financial gains that become available under certain conditions, like when the company meets or exceeds its objectives. To take this even further, tie specific metrics driven by that employee’s role to those outcomes. This will both build excitement around the prospect of a healthy investment, as well as reinforce employees’ individual impact and contributions to the success of the organization – driving the long-term loyalty your organization needs.
3. Education means everything for equity
It’s clear – and unsurprising – that the less employees understand about equity programs, the less inclined they’ll be to actually use them. Not only that, but the relationship between understanding and program adoption goes even farther: the stronger the grasp on equity plans, the more employees will fully incorporate them into their own financial future. A 2020 study by Fidelity of 440 employees showed that employees who consider equity compensation in their financial planning were twice as likely to take proactive steps to manage their stock awards (such as exercising options), twice as likely to work harder, and three times as likely to feel loyalty to their employer. “Including company stock in financial planning is key to unlocking the real value of these awards,” says Mark Haggerty, head of stock plan services at Fidelity, “Not only will employees have a greater appreciation of their company stock plan, but they will understand how company stock awards can contribute to their overall financial well-being.”
In other words, it’s a win-win scenario. Providing education, resources, and tools as part of your ongoing equity communication plan is essential for you to see the adoption rates you’re hoping for, as well as for employees to feel more confident and prepared for their financial future.
Now more than ever, your employees need transparency when it comes to communication on compensation – and that includes equity plans. By equipping your workforce with the tools, resources, and planning support they need to succeed, you’ll start to see a boost in engagement and plan participation – that ultimately benefits both your organization, and its individuals.