The 2017 NASPP/Deloitte Consulting survey found that 62 percent of respondents had less than 40 percent participation in their Employee Stock Purchase Plan (ESPP) qualified plans. Numbers were even lower for nonqualified plans. Why aren’t more employees taking advantage of this benefit? The answer might be simpler than you think: they don’t know about it.
An ESPP could be new to employees and they may not understand how it differs from a 401(k) and its long-term potential.
Make your ESPP a must-have
Companies that offer employee stock plans gain dedicated, motivated employees who are working toward a joint goal of company growth. The win-win of an ESPP for companies and employees means that effort should be put into promoting it. Look at your current communications and consider some of the following.
- Detail your ESPP in new hire materials, recruitment efforts and all employee benefit documents in a clear, easy to understand way.
- ESPPs and 401(k) plans are similar in the sense that they are broad-based, voluntary and payroll deducted. Employees may not differentiate between the two and simply choose to participate in one. Equip employees with the knowledge that they can participate in – and benefit from – both investment platforms.
- Create and distribute a video of leadership talking about their vision behind the ESPP and why your company chooses to offer such a rich benefit.
- Post information on the main page of your company intranet, directing them to learn more about the plan.
- Host lunch and learns or webinars for employees to get more information about your particular offering with time for Q&A.
- Connect with your plan administrator about providing tailored, on-site education.
- Meet with your Corporate Communications department to create a calendar of timed messages so it is on their radar to promote well in advance of the enrollment period.
- Ask plan participants to provide testimonials. Hearing from peers who employees identify with can help spur others to participate.
- Reevaluate your plan and consult with your plan administrator about how your ESPP could be more effective. Is participation low because there is a long restriction period? Is your discount not appealing enough? Do you offer lookback pricing?