Written by Lindsay Shafer, with Meredith Fiocchi, Associate Vice President – Investments, Fiocchi McCarthy ESOP Group of Wells Fargo Advisors for The ESOP Report, January 2024

Communication is incredibly important to help employee owners understand both the financial benefit of the ESOP and shared ownership culture. But when you look around at your company, you may see a multigenerational workforce with varying degrees of knowledge – and comfort – with the ESOP and financial terms. So how can you effectively communicate the value of the ESOP, and ultimately strengthen your company's ownership culture, when you have a multi-generational workforce? Here are a few key steps that we've seen work in a variety of industries.

1. Create a Common Language
   It's important to talk about the ESOP using terms that hold meaning for employees. Older employees who are actively thinking about retirement may easily connect with the phrase "retirement plan." Members of Generation Z may think of retirement as something decades in the future and feel more connected to the phrase "building personal wealth." Whatever the phrase, make it a part of the company's language. Some companies will create a glossary of ESOP terms and definitions, an evergreen document published on the intranet or other internal website. Other companies create different recruiting and retention messages based on generation, tailoring the language to terms and phrases that connect with folks in different age groups.
2. Make Information Manageable & Consistent
   Regular, small bites of information tend to stick with people better than a long lunch-and-learn with 30 minutes of information and data. If your company already has weekly touchpoints such as a happy hour, lunch, or even just a Monday huddle up, including 5-10 minutes on one simple idea, (high yield savings accounts vs passbook savings at the bank, or ways to connect performance to the Value of the ESOP, for example), can give a takeaway 22 "stupid" can be really helpful. Otherwise, management who does not want to show a lack of knowledge in front of subordinates, or conversely a lower-level employee who does not want to appear uneducated in front of their manager, will not raise their hand to ask what is truly on their mind. In a regional trucking company, drivers who feel comfortable talking about the ESOP hold informal "office hours" at the shop. This allows other truck drivers to stop by after their route to ask any questions they may have in an environment that feels less "corporate".
3. Compare the ESOP to Something Familiar
   The ESOP – and financial education – may seem daunting to employees who don't have a lot of knowledge in this area. One way we make concepts easier to grasp is to use analogies to things from their everyday lives. When describing how an ESOP transaction comes together and where the Section 1042 tax deferral can fit within that context, we often describe it as a freight train that may or may not have a caboose attached. When applying this concept to personal financial planning it can be as simple as drawing a train with many cars on a white board. If the first car of the train represents the first year they contribute to an IRA or 401(k), the last car represents the year before they retire. We illustrate the same small contribution every year, and a conservative compounding return. For every year they delay in starting to contribute, it erases the last car from the train, not the first. The numbers at the end are huge and they see what compounding returns over time can do, (or not do), for them.
4. Be Patient
   Change takes time. Becoming comfortable in the language of the ESOP likely won't happen overnight, and that's okay. As employees learn more over time, in ways that are meaningful to them and that they can connect with, they'll begin to feel more comfortable with the ESOP and financial information. It's also important to remember that not every idea may be successful; what works for one company may not work for yours. However, there is still value in taking a step back and reflecting on lessons learned.

Research has shown that differences between generations can be quite small, much smaller than the differences in preferences and values within any individual generation. While values may be similar between generations, how employees express them, and connect to them, can be completely different. It may take a bit of time, and trial-and-error, but finding what works for your company and your employees will only help strengthen employee knowledge around the ESOP and financial information, thereby helping them feel more connected to the company.

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Disclaimer from Fiocchi McCarthy ESOP Group of Wells Fargo Advisors:

Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company. PM-04172026-7201270.1.1.

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