Newsletter Article
May 2024

Ownership Culture Insights: Building a Communication Committee

There are different types of committees, the first most commonly known as the ESOP committee or ESOP administration committee. This committee is typically appointed by the board of directors and delegated the responsibility to oversee the day-to-day operations of the plan.

While there is no legal requirement, most plan documents specify the requirement for having an ESOP committee to administer the plan and oversee its operations (for more information, read this article). Many companies designate the board as the ESOP committee.

In addition to the ESOP committee, companies often have some type of communication committee. Sometimes called the ESOP communication committee, this group could also be called the employee ownership culture team, the employee ownership committee, the ownership culture team, and the ESOP education and communications committee. With some crossover of how these committees are named, they can easily be confused with the ESOP committee, but the scope of each team is quite different. The communication committee is designed to support the company’s efforts in building and strengthening their ownership culture through education, communication, and engagement.

Getting Started

It is worth noting that regardless of where you are in your company’s ESOP journey, it’s never too late to get started. Even for companies who have been running a communication committee for some time, there may be a need to assess the current committee and determine whether it is still meeting the needs of the organization.

For a company starting a communication committee for the first time, it can be a bit of a “chicken and egg” conundrum—you need to select a team to then build the charter that in turn defines the team. Stepping back, it is important to begin with the end in mind. Start with the culture you are trying to create and how you can build a committee that supports those goals.

One helpful exercise is to think through what the organization will ideally look like in five years—and to think through the types of activities that will start to move the needle in that direction. For example, if the goal is to create a culture of financially literate employee-owners, what are the building blocks that need to be put in place over the next five years to achieve that goal? This activity can also help to inform the establishment of the committee’s mission statement.

From here, creating a charter is an important piece to ensure the long-term sustainability and operation of the committee. A charter is a document that defines the purpose and goals of the committee, the roles and responsibilities of members, and the rules of participation. Below are some considerations when building a charter:

  • How many committee members are there, and how are they selected?
  • How long do members serve, and are there term limits?
  • Are there attendance requirements?
  • What are the leadership roles in the committee?
  • How do you build continuity into the committee while also allowing new members in?

Weaving the answers to these questions into the charter creates clarity and structure. The charter ideally should be a living document that is revisited annually.

Building the Team

When building the team, there are several factors that should be considered. The first is representation: how do you make sure that committee members are representing the various businesses, departments, and/or locations of the company? Representation of role also matters, so ideally, a mixture of management and nonmanagement employees should be included in the committee makeup.

The next consideration is diversity, including gender, race, age, and company tenure. It is especially valuable to have perspectives from both new and longtime employees. One way to think of this is adding voices at the table to represent the various points of the employment life cycle, such as being new to your role, having just entered the ESOP, receiving the first stock statement, becoming fully vested, diversifying, and thinking about retirement. This will be especially helpful as the committee plans and develops their education and communication to ensure they engage employees throughout their ESOP journey.

Committee Activities

After developing the charter and building the team, the next focus area is the types of activities that support the ownership culture at your company and improve communication and education. This list is certainly not exhaustive, but below are some ideas to get you started.

The first priority should be educating the committee members on the ESOP and ownership culture. Some ways to achieve this include having the committee meet with members of leadership and/or the administrative committee to learn about your company’s plan. They should also be trained on how to find resources internally. Committees often watch webinars, read publications, and attend events to learn more about employee ownership.

From here, the committee should focus on achieving simple and small wins first, which they can later build upon. Some examples include ESOP basics, vesting, reading your stock statement, and ownership rights and responsibilities.

Next Steps

The NCEO has resources for those at any stage of the communication committee journey, whether they have just established their committee or are looking to revamp their existing committee.

  • The ESOP Communication Committee Guide is a complete guide to developing and improving ESOP committees that also includes case studies.
  • For a hands-on deep dive into committees, the NCEO’s Communications Committee Crash Course will be returning in August 2024 after a sold-out program in March with over 100 attendees. This four-week program offers a way to learn, engage, and network with others in the employee ownership community. Each week offers a mix of facilitator-led training and breakout sessions.