Going public is busy, stressful, and complex, but also an exciting time for any company. The couple of years leading up to flotation day and the early months as a publicly traded business will be jam-packed, with key executives and other employees grappling with lengthy to-do lists, while inevitably also having to deal with unexpected issues arising on a day-to-day basis.
Just as this can be a challenging time for management, so too can the pre-IPO period be unsettling for employees. The transition to a public company will most likely bring it with big changes for any business, and for that very reason many employees will start to wonder about what the future may hold for them.
Against that backdrop, management – even amid the ongoing swirl of IPO-related activity – must not lost sight of the importance of clear communication with employees, from the earliest moments in the IPO journey, to flotation and beyond. While legal and regulatory obligations tie managements’ hands somewhat in terms of what information can be shared, it will be possible to keep employees informed on many points that directly affect them, and, crucially, to be seen to be attempting to do so.
Strengthening the impact of your communication work as you prepare to go public will help to defuse whatever doubt, anxiety, and unsubstantiated speculation might otherwise ripple through the workforce. A clear people comms strategy will also enable management to set the agenda, and thus guide employees away from whatever understandable fear of the unknown they may feel at the outset to a place where they can see the opportunities presented by going public.
From the management perspective, it’s not just about doing the right thing; a well-thought communication effort also makes sense business-wise. If you can reassure employees that they need not fear the IPO process, then this will have a positive spin-off effect on morale and productivity at a time when the company is navigating its way through perhaps the most significant event in its existence.
So, how can a company go about engaging their employees with respect to going public? What will be the key features of an effective people comms strategy designed to bring employees with you? Different companies in different industries will identify different communications needs, so we can’t necessarily propose a one-size-fits-all solution, but we can point to certain universal points that will likely be common to any internal communications strategy.
It’s never too soon to start
It’s never too soon to begin communicating the upcoming changes to employees. Don’t allow a vacuum to develop in which people turn to gossip in the absence of hard information. People will be more motivated when they feel informed. Schedule a “town hall”-style meeting at the earliest opportunity after making the decision to pursue an IPO and commit to keep employees informed throughout the journey. You shouldn’t gloss over the fact that the journey will bring some element of uncertainty with it, but you can work to reduce that uncertainty by providing relevant information updates on an ongoing basis.
Accentuate the positives of going public… within reason
Truth and transparency will reinforce positive messages, and reinforce trust
It is important to treat your employees with respect, that you don’t talk down to them, and that you don’t look to sell a transparently PR-driven line. If an already anxious group feel they are being condescended to or that their concerns are not being taken seriously, then you run the risk of poisoning relations and needing to rebuild trust even before getting to the meat of the matter.
Yes, you will want to frame your message in a way that underscores the potential benefits of going public, but try to do so without speaking as if reading a Pravda-Esque press release. Of course, you will want to deliver a crafted message designed to provoke the desired response from the workforce… just don’t let that message sound too crafted.
Spell out the benefits of going public to your employees without overselling them. Again, some of these benefits may be specific to your company, but one that tends to cross industries is the ability of companies to offer shares to employees. For example, early employees will most likely already have advantageous pre-IPO equity compensation terms, so they could secure a windfall from even a moderately successful flotation. More recent employees may be offered discounted stock options during the IPO process, with a view towards boosting morale and motivation. That will leave them also poised to benefit, should they choose to sell after the lockup period.
Know what matters to employees when you go public
In the face of change, employees will want reassurance. It is important for the company to not be so focused on the big picture that they lose sight of that simple fact. Employees will have questions. Lots of questions. You won’t be able to deal with every concern in a single meeting, but you should be able to offer some answers and at the very least show that you understand where employees are coming from and commit to offering whatever clarity can be provided as soon as possible.
A common concern for employees in this situation is to wonder what will happen to exist pre-IPO equity compensation plans. This is one of those points that a company needs to try to get in front of as soon as possible. In the absence of doing so, it won’t take employees long to think to enter “what happens to my share options after going public” into a search engine. There is nothing inherently negative about that, but it will only encourage anxiety among employees and is entirely avoidable.
Equity compensation tends to be handled differently depending upon whether a company is public or private, and a private company will modify its existing arrangements in the run-up to and in the period after going public. Explain to employees how this will unfold in your company as soon as you can.
Know what you can and can’t say
As alluded to above, once the IPO process has been initiated, rules and regulations kick in around what can and can’t be said in a public forum. This applies not only to your external communications but also to how you engage with your employees. Logically, you won’t want to share too much information on the company’s financial situation, but not doing so becomes an obligation once in the process of going public.
It is also necessary to explain to employees that they need to be careful about what they say in public settings. Innocent comments made to outside parties or journalists about the company’s performance could be deemed to be inappropriate disclosures. It might be difficult for all employees to understand where the line is, so it may be best to encourage them to say as little as possible about the company to anyone outside the company while the IPO is ongoing.
Keep written communication concise
One of the purposes of a pre-IPO people comms strategy is to remove or reduce the potential for ambiguity within the workforce on what going public will mean for them. This will require a conscious effort to keep written internal communications concise and to the point. Lengthy rambling missives – even if the “house style” up to this point has been for a casual, informal approach to internal correspondence – are best avoided.
This principle will extend even to something as fundamental as email subject lines. State clearly and briefly what the mail is about so that at the very least there has been no misunderstanding by the time an individual click to open the message.
Provide employees with the tools to inform themselves
A screengrab of Global Shares’ participant portal
As mentioned earlier, a company’s approach to equity compensation will by necessity change as they move from private to public. This is one of the areas that will most preoccupy employees, as any individual participating in a plan will be eager to find out how or if they will be affected.
Effective communication isn’t merely about how you speak at a meeting or producing clear internal documents. Sometimes, it will involve steering your audience towards other sources of good information. With that in mind, it is worth creating a resource library and/or FAQs on issues relevant to employees, including how the company’s approach to equity plans will be impacted by going public.
It doesn’t stop when the bell rings
While our primary focus here is on communications pre-IPO, it is important to stress that the need to engage with employees does not stop when the first bell rings on listing day. Depending upon the size and circumstances of your company, the emphasis may shift, but you will still need to keep lines of communication open to employees and help to guide them through the post-IPO period.
Ironically, a successful flotation might create issues around retention and engagement. If you are a tech company and issued options on generous terms as an early startup, those individuals could literally make millions when selling their shares. If individuals have been focused on working hard and reaping the benefit of those efforts when they reap those benefits there can be a sense of “mission accomplished”, and at that point, they may lose focus or might choose to leave the company.
Retaining employees once they’ve gained wealth can be a difficult issue to address, but it points to the need post-IPO to find ways to keep people passionate about their work. Once the extrinsic box has been ticked (money), you need to appeal to employees on more of an intrinsic level (meaning, personal fulfilment). Ideally, the culture of your business will have always highlighted intrinsic as well as extrinsic motivations, as if you attempt to pivot to the former only after the latter ceases to be effective then it might prove to be too little too late.
The process of going public can be time-consuming and all-encompassing. Against that backdrop, companies need to be careful not to lose sight of the importance of internal communications. Employees will have understandable anxieties around how the move from private to public will impact them, but taking the time to address those concerns will help to ensure that morale and productivity hold up as the company moves towards massive and long-lasting change.