It’s Employee Ownership Day (EO Day) whose reach and popularity has more than doubled in the past few years as more companies are realising the value of employee ownership.
At Eximia, we’re big supporters of employee ownership, whether that’s through an employee ownership trust, or a company share plan. When people can benefit from their hard work, they feel more connected to the goals of the business. And, of course, it improves their financial wellbeing.
Share plans in particular can help ease financial pressures in these turbulent economic times. Yet too often they remain an untapped feature of your people’s rewards package. When the benefits are so obvious, why doesn’t everyone jump at the chance?
Well, just because it’s obvious to us in the share plan industry, it doesn’t mean it’s obvious to everyone. There can be a perception gap between how you see it and how they see it. That’s why good communications are so important.
To help celebrate this year’s EO Day, we’re looking at one specific aspect of communications – nudge theory – and how you can use it to promote your share plans.
Nudge, nudge: tapping the subconscious
When 95% of human behaviour is driven by the subconscious mind, you’ll have a greater chance of influencing a person’s behaviour if you can find a way to tap into it.
By using subtle messages, you can nudge someone into a particular action without them even being aware.
Nudges are used a lot in behavioural communications and public policy. For instance, moving sweets away from supermarket checkouts means shoppers in the queue aren’t tempted to buy them. This helps reduce sugar consumption in the general population and improves our overall health – good news for us, and for our NHS!
This is the result health officials want and they achieve it without removing individual choice. Nudges persuade people into certain behaviour, rather than instructing them.
The greatest nudge: ‘What’s in it for me?’
Everyone loves to talk about things that are meaningful to them. So what could possibly have more meaning to you than your life, your desires, your family, your friends, your job – in a nutshell, you.
Most human behaviour is shaped around how something will benefit us. It’s known as the ‘what’s in it for me?’ (WIIFM) factor.
While you know the WIIFM factor of your company share plan, do your people? If they’re not participating, it might well be part of the reason.
Think about the different groups within your workforce and the things that might be meaningful to them.
For instance, are some of them thinking about getting married, taking a holiday or saving for a deposit on their first home? Do your working parents know that share plans can be an ideal way to save and invest to help support a child through university, or possibly pay for a new car? For your older workers close to retirement, can you emphasise that it could be a good way to begin their work-free life?
The second nudge factor: Social proof
Whether we want to admit it, we’re social creatures and our peers’ behaviour is a powerful influence. It’s known as the social proof factor, or FOMO – fear of missing out – and is the second big part of nudge communications.
In a study of hotel towel recycling in the US, psychologists discovered surprising results according to messages on the signs in the room.
One sign contained the industry standard message that reusing towels helped protect the environment. The second used the social proof factor, with the (truthful) message that most guests recycled their towels at least once during their stay. This saw a 26% increase in towel recycling.
The third sign personalised the message even further from ‘hotel guests’ to ‘guests in this room’. In comparison with the industry standard message, there was a 33% increase!
So how can you use FOMO in your share plan communications? Think about your vesting communications. The people who joined your share plan three years ago are happy. But you could nudge those who didn’t take part, by letting them know that many of their colleagues will gain from the increase in share price, or keep hold of the shares and own part of the company for an ongoing investment. At the same time, remind them they’ve not completely lost out as they can join the next one!
Of course, this needs to be done sensitively – if someone didn’t join the plan because they’re struggling with the cost of living, you don’t want to add to that sense of missing out. But for people who were just a bit undecided, this could be a powerful tool. Never underestimate the power of social proof in persuasion – it pays big dividends.
And talking of dividends, let’s return to how best to communicate employee share plans using a mix of WIIFM and FOMO.
Employee share plan champions
FOMO nudges are most persuasive when they come directly from your peers, rather than from you or your communications team. Is there someone who’s benefitted from the share plan who might be willing to champion it to fellow colleagues?
Think about the methods your champions could use that might resonate well with each employee group, especially in building awareness of the benefits – your WIIFM factor.
Dry figures and percentages are enough to turn anyone off, but demonstrated interactively on a screen can bring them to life. A colourful interactive slider bar that changes according to whether the numbers rise or drop can be a great way to demonstrate how share investments work. This sort of technology is easy to introduce and can be so effective.
Whichever works best for your people, make sure you keep that momentum going by renewing your nudges at key moments in the share plan cycle. After all, financial education is for life, not just for Employee Ownership Day.
For specialist help and guidance in using nudge communications to improve employee engagement with your share plan, contact Eximia for support.