On April 12, people from 23 employee-owned companies gathered online to talk about business literacy, stock value, and ESOPs for employees. Beginning with some thought-provoking ideas from volunteer leaders of the Finance Working Group and from NCEO staff, the group split up into breakout rooms to talk, peer-to-peer, about challenges and solutions to improve business literacy at their respective companies.  

No summary can capture the richness of those conversations, but here are some takeaways from the breakout sessions: 

1. Keep financial information simple. This can be accomplished by relating business finances to personal finances. Member company NHS Northstar does this by showcasing a personal enterprise value to help employee-owners understand internal and external risk factors impacting their personal finances, and how that relates back to company finances. Another suggestion is to use a maximum of three key performance indicators, or KPIs, with the measures of Not Met, Met, Exceeded (based on intervals of 5 or 10 percentage points). Put the financials in perspective. Show total earnings statements and use calculators to show the wealth-building potential. 
2. Continuous communication is key. Some companies have quarterly meetings to discuss and answer questions about the ESOP, one of which is designated to make a larger deal about the valuation and have a person of the year type of celebration.
3. Relate employee actions to share value. Have supervisors bring up the actions that employees can take to help build their ESOP wealth in regular meetings. 
4. Split employees into groups by tenure. One participant’s company shares the annual stock price with small groups of employees that include people at similar stages of their ESOP journey: new employees who are not yet eligible, people who are partially vested, people eligible for diversification, etc. The company also shares the average account value for each group, so new employees can see the typical value for employees who have been at the company longer.
5. Make the ESOP concrete. Alaska Mill & Feed breaks down the ESOP contribution into an hourly rate and combines them with wage or salary to create total compensation statements as a way to show value.  Others hire financial advisors to help their employees plan their finances and understand how the ESOP fits into those plans.

This meeting is part of a series of volunteer-led meetings exclusively for company members of the NCEO. The Finance Working Group is led by volunteers who work at employee-owned companies and are supported by NCEO staff, and it hosts meetings on a variety of finance-related topics throughout the year, both virtually and in person at our Annual Conference and Fall Forum.

Additional Reading:

• Looking to Jump Start Open Book Management? Quick Takes on Sharing the Numbers
• Community ESOP Valuation and Company Values

Want to join a meeting?

The next open forum of the Finance Working Group is on June 14 where the topic will be compensation, benefits, and ESOP contribution levels, which will include the interaction between compensation, stock value, and repurchase obligation planning. We will share a few highlights of the NCEO’s 2023 repurchase obligation survey. To stay informed about the 2023 open forums for this group, please complete this form.

Please note, this group is a benefit of NCEO membership. All employees in finance-related fields who work at companies with active NCEO memberships are welcome to join. Not an NCEO member? Join today to receive this among other benefits.

Have additional questions? Please reach out to me at [email protected] for additional information.