Why Communicating Is So Hard—and What You Can Do About it

Why Communicating Is So Hard—and What You Can Do About it Corey Rosen National Center for Employee Ownership

Plan for this session • Some brief remarks on communications • Group to seek ways to explain various key issues • Harry the Horse P/E Game • Generating specific ideas NCEO

Ben Was Right • "Tell me and I forget. • Teach me and I remember. • Involve me and I learn." Ben Franklin NCEO

And So Was Satchel "It's not what you don't know that hurts you, it's what you know that just ain't so." Satchel Paige NCEO

And This Guy Too It’s hard to remember what you didn’t once know Corey Rosen NCEO

“Tell Me” Communications • Letters to employees • Summary plan descriptions in legalese • Annual statements • Newsletters (unless employees write for it) • Flyers, payroll inserts, posters NCEO

“Teach Me” Communications • Employee meetings with officers or advisors • Orientation sessions • Web sites • Summary plan descriptions in ordinary language NCEO

“Involve Me” Communications • Role playing • Employees teaching other employees • Games (Jeopardy, Wheel of Fortune, etc.) • Interactive Web programs (quizzes, road maps, games, etc.) NCEO

Start from the Beginning • Explain what a company is • Explain what stock is • Explain what profits are • Explain how profits relate to stock NCEO

What’s A Company? Group to define NCEO

What is Stock? Group to define NCEO

What Are Profits? Group to define NCEO

How Do Profits Relate to Stock Price? The horse race game: Half of the table owns Harry the Horse and wants to sell him.The other half is considering buying Harry. Harry is three years old and has a few good years left. He’s in good health. In the last year, Harry has won $300,000 in prizes; the labor, stabling, food, transportation, insurance, and other costs for owning him are $250,000. Sellers meet for five minutes to come up with an asking price. Buyers decide what to pay. Then take five more minutes to negotiate. NCEO

How Did You Decide the Price? Did you consider: • Risks (health, better competition, race track closings) • What else you could do with the money and how much you’d make • How risky Harry is relative to other investments • The rate of return you want from owning Harry NCEO

Harry’s Sale Payoff • The price is a multiple of earnings • Buying a company is much like buying Harry—there are risks, rewards, and other things you can do with the money • Because the price is a multiple of earnings, increasing earnings makes the share price go up (or down!) by much more than each dollar earned. NCEO

Miscellaneous Tips • Write in plain language, field test, and refine • Post q&a’s on a web site and in written communications • Repetition and variety are key; do a lot of different things often • Use multiple media; people learn in different ways (audio tapes, flyers, cartoons, meetings) • Tell stories • Laugh and have fun NCEO

Don’t Forget to Unteach There are a lot of common misperceptions: • Profits equal sales • Company owners never have to sell • There’s a hidden set of books • Management is overpaid • There’s a hidden motive in this • We’ll never get paid out anyway NCEO

Worst ideas • Worst communication ideas • Introducing the plan without some kind of fanfare to make it seem as big a deal as it really is. It’s important not to oversell, but employees need to know this is a major change. • Giving out too much information all at once, especially in the first time or two an employee encounters the ESOP. • Relying on annual meetings alone. • Failing to get other employees engaged in communication processes along with experts and management. • Running programs longer than people’s boredom threshold. • Relying too much on voluntary evening programs when people have other commitments and interests. • Allowing meetings to become gripe sessions. • Not inserting communication packages with something that employees will open anyway, such as pay packages. NCEO

More worst ideas • Celebrating the ESOP before explaining it. It’s important, as noted above, to roll out the ESOP in a meaningful way, but it’s equally important that the plan be explained, not sold. If you build an ownership culture, people will become excited later and then you can celebrate. • Not specifically addressing and assuaging concerns that if the ESOP is being used for business transition, the company has plan for replacing the departing owner with top-level management who employees trust or believe can do the job. • Developing a mission statement before clearly orienting employees on what the purpose of the process is. • Summary Plan Descriptions written in legalese will be read by almost no one. • Making orientation voluntary is a mistake—everyone needs it! • Using blanket training approaches when knowledge and skills vary—tailor the message to the audiences. • Not explaining how bonuses might go in one direction and stock another in the same year. NCEO

Good ideas • National ESOP month is a good excuse to have fun—create prizes, games, celebrations, and other events. • Create a “certified employee owners program.” Either every employee or employees who are interested go through a training program and get a “CEO” business card at the end. When they graduate, have a celebration that everyone in the company or department attends. One company asked employees to write essays from participants in the program on how to make more money. In this company, training session were 60-90 minute once of twice a month over a few months. • Have monthly, quarterly, or annual meetings to go over profits and performance, keeping the numbers in terms employees can understand. • Point to examples of ESOP distributions to retired employees or, better, have them come back and tell their stories. NCEO

More good ideas • Invite owners or employees of other ESOP companies to talk about why they set up their plan or how it is working. • Use games or skits. • Try “lunch and learns.” Provide some food and have a company leader run a discussion of a particular ESOP or company issue. • Instead of trying to explain about ownership culture from the start, begin with explaining how you can own your job by making more decisions about it. • Get silly. Have the CEO and/or managers act foolish, serve dinners in waiters’ uniforms, or agree to wear a funny outfit if a goal is met. • Play “guess the stock value.” Let employees guess the next valuation or, better, have employees break into teams to discuss it and come up with a guess. Give prizes to the winners NCEO

Still more • Create “lunch buddies” by assigning long-term employees to take a new employee out once a month for lunch for a few months. • Don’t just limit orientation to new employees; let anyone come who wants to brush up. • Start a “lunch with the boss program,” either one-on-one or in small groups. • Try video testimonials from current and retired employees about what the plan means to them. • Send sample annual statements to employees not yet in the plan. • Use multiple media: newsletters, brochures, videos, tapes, meetings, games, etc. Different people learn in different ways. NCEO

Why Communicating Is So Hard—and What You Can Do About it