Social Media 1.0

With all due respect to my 16-year-old daughter, her generation did not invent social media. They may have been part of the exponential growth of the internet, but they were not the inventors.

In fact, social media is not new – not even close.
Defining a precise time that it came into existence is probably impossible. For instance, when I was growing up my home was on a party line.  Many of you probably have no idea what a party line is. A party line is a phone line shared by several homes (these continue to exist in some rural areas, but are becoming increasingly rare) and each house has a different ring so that you know who the call is for.

Party lines share several important characteristics with today’s social media applications:

(1)  Connecting people with a similar interest together (this similar interest is geography for party lines)

(2)  Infrastructure to allow interactions (the phone line)

(3)  Transparency – your business is everybody’s business (the party line perfected the art of eavesdropping as anyone on the line could listen—although it was considered very poor form)

Recognizing the similarities between the party line and current social media applications leads to the question of where else can we find similar characteristics? Employee stock ownership plans (ESOPs) share some of the same features, and these similarities have made ESOPs very successful at many organizations—much as social media has been successful.

Social Media1.0 Blog Art

ESOPs connect people with similar interests.
In fact, the ESOP helps create a new, powerful connection for ESOP participants who are already connected through a similar employer. The ESOP also connects them as beneficial owners of the company. This new connection provides an enhanced shared purpose with the company’s performance impacting their financial futures. The success of one enhances the success of all.

The ESOP encourages participants to interact through a comprehensive education and communication strategy. Employees are encouraged to interact to solve problems, innovate and chart new paths. The ESOP leverages current infrastructure, enhancing it where necessary, to produce results.

Annually the company sponsoring an ESOP gets an outside valuation that establishes a share price. The share price (and the trend of the share price) sends an important message to participants about the health of the company. For many, the share price is the ultimate in single number transparency. The company can elect to share greater amounts of information, but the decision is completely at their discretion and the company is not required to reveal more.

My family and I lost our party line in the early/mid 70’s – about the same time that ESOPs were enabled in federal law. And, much like party lines have evolved into the popular social media applications of today, ESOPs will also continue to evolve—there are just too many benefits not to.

In addition to blogging here, I also tweet regularly about topics of interest to ESOPs. Click to follow me on Twitter-  @jlripperger.

Click here to follow my ESOP blog

Affiliation Disclosures

No investment strategy, such as asset allocation or diversification, can guarantee a profit or protect against loss in periods of declining values. Company stock is not a pooled investment. Stock may experience greater volatility and should not be directly compared to investment options that have a more diversified investment mix. It is not intended to serve as a complete investment program by itself.

Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.

t12121804cq