Employee Stock Purchase Plan (ESPP) administrators can often find themselves scratching their heads: Why is my ESPP enrollment rate underachieving?
Which is strange, right? ESPPs are a great benefit for employees as they help to build wealth and achieve personal goals, so there must be a reason for low uptake rates.
Ask yourself: Are your plans employee focused?
There are so many ESPP benefits to employers – increased recruitment and retention, higher job satisfaction and motivation, and tax-efficient earnings. But let’s focus on the benefits to your staff here.
To motivate your employees to participate in an ESPP, you first need to understand the key motivators for them. Based on a recent survey in 2021, growing wealth and saving for retirement are the key motivators for US shareholders to buy their company’s shares.
To grow my wealth: 68%
To save for retirement: 50%
It’s time to build an employee-driven communications plan around how an ESPP can help them achieve their financial goals, thus increasing your ESPP enrollment rates.
6 actionable ideas to communicate your ESPP to boost enrollment
It goes without saying that slick communication is key. You can achieve high participation rates with a robust comms plan that discusses employee equity ownership benefits and provides thorough financial education regardless of the ESPP design.
1. Use online enrollment
It’s proven that online enrollment can achieve better participation results. It also improves administration efficiencies and data accuracy.
2. Create a calendar for ESPP communication events
You can meet with your communication department to create an ESPP calendar of timed sessions. With a schedule, you can roll out your messages orderly to educate your staff, making sure they understand what they’ve signed up for.
Carefully consider what should be put in the calendar and don’t assume everyone understands ESPPs. Some ideas for your calendar could be: ESPP basics, your ESPP key features (e.g. Discount, Lookback), benefits for employees, the lifecycle of the plan, taxation, how to easily track and manage employees’ plan online, etc
3. Use a variety of comms channels
The ESPP ideas suggested above need to be distributed effectively to your employees. A single approach doesn’t work because we process information differently – some prefer to read while some prefer to listen.
It’s a good idea to use a variety of channels to reach your employees such as an intranet, blogs, town hall meetings, zoom meetings, lunch-and-learns, well-designed newsletters and videos, and others.
4. Start from the recruitment process and continue
One of the benefits of ESPPs is to attract top talent in recruitment. So, we shouldn’t have to tell you that you should mention your ESPP during recruitment efforts.
But what we might need to tell you is how much you should mention it. Not only do you need to clearly list it in the job description and mention it in the interviews, but you also want to continue doing it after the hiring process.
There should be a lot of talks during orientation and onboarding about the benefits and importance of the ESPP. It should be clear to the new employees that employee ownership is an integral part of the company.
5. Speak plainly with examples & images
When you’re showing the participants how ESPPs work, make sure to explain it all in clear, jargon-free language. Too often, companies will be worried that they’re not fully explaining something if they’re using language that’s not
Nothing sinks your ESPP enrollment faster than employees not understanding what exactly they’re enrolling in. If they don’t understand it, they won’t trust it.
That’s why it’s always good to explain something complicated with examples or images. For example, if you want to explain the lifecycle of your ESPP, you may find it useful to illustrate it with a graphic as below:
If you want to explain ESPP taxation, you may need to use an example (or a case study) with calculations. Check our Qualified vs Non-Qualified ESPP guide for different tax scenarios.
6. Take advantage of existing participants to promote your ESPP
Invite your participants to provide testimonials. Hearing from peers can help spur others to participate. You should include the testimonials in your communication channels such as blogs, newsletters, and an intranet.
7. Let your employees speak
For some channels like workshops or town hall meetings, it’s easier to interact with employees. Even if you can’t have them in your comms plan, make sure you provide simple ways e.g. email, online form to get feedback from your employees and encourage them to ask questions.
Some common questions we get asked a lot are:
- What is an ESPP (Read ESPP Complete Guide >>)
- How does an ESPP work (Read ESPP Complete Guide >>)
- How are ESPP Stocks Taxed? (Read Qualified vs Non Qualified ESPP >>)
- What happens to my ESPP when I leave a company? (Read What happens to my ESPP When I Quit >>)
- Is ESPP worth it? (Read ESPP Complete Guide >>)
Without this important part, all your communication efforts may be wasted – and there is no point spending time if it doesn’t help your staff. If they don’t find it beneficial, they won’t enroll.
We all learn by trial and error
Communication is a two-way street. Too often, companies focus on throwing out as much information as they could. But the other side – what employees think and feel – is arguably more important.
To communicate effectively, you sometimes need to try multiple times to find the right approaches to reach your audience where they’re at. It could take you a while to figure it out.
If you’ve already tried these, or want to try them but are unsure where to start, contact us today. Here at Global Shares, we have nearly 15 years of award-winning experience in equity compensation, and we’d be more than happy to help you with ESPP management.