4 key communication takeaways from the AOL 401(k) announcement

For the last week, there has been uproar over AOL CEO Tim Armstrong’s remarks to employees regarding the timing and rationale for changing the company’s 401(k) match. In a nutshell, Armstrong announced that AOL would not contribute annual matching funds to employees’ 401(k)s in a given year if they left the company before Dec. 31 of that year. That practice is not entirely uncommon or, on its own, cause for such outrage. But, then, in a conference call Friday, he said this:

“We had two AOL-ers that had distressed babies that were born that we paid a million dollars each to make sure those babies were okay in general. And those are the things that add up into our benefits cost. So, when we had the final decision about what benefits to cut because of the increased health care costs, we made the decision, and I made the decision, to basically change the 401(k) plan.”

The Internet went into overdrive almost instantly, vilifying Armstrong and the decision regarding the retirement plan, and prompting the parents of one of the “distressed babies” to publicly respond.

Companies that change or cut their benefits should not be automatically vilified. Benefit changes can always be done in a way that respects the needs of employees and the company. But, the way Armstrong communicated the move was a cautionary tale in what not to do. He violated four key tenets that should guide companies of all sizes through the inevitable benefits changes that will occur over the next several years:

1. Put employees first.

Almost like a physician’s oath to first do no harm, benefits professionals and senior HR leaders should be guided by the principle to put their employees first. Maybe in the face of rising costs, Armstrong and his team genuinely believed this change was the best thing. However, they communicated it in a way that put the needs of the company above those of the individual employees. Even with inevitable cutbacks, there is always a way to put changes in an accurate and appropriate context, and offer concrete, positive action steps for employees. As in, “We have to make X decision about our benefits because of Y and Z factors; you can take actions A and B to minimize the impact to you and your family and get the most from what we offer.”

Now that Armstrong has backtracked the decision, along with his remarks, we’ll never know if it would have worked out for all involved if only it had been communicated in the right way. We do know other companies have implemented this change—and others that are much more challenging—without such backlash.

2. Test your message, your medium and your messenger.

I’m not sure if Armstrong was left to speak off the cuff in general, or if he intentionally tossed aside more tightly written remarks about the 401(k) plan and the reasons for the changes. Perhaps he fell somewhere in the middle, with approved talking points that included linking the plan changes to health care reform, but not newborns.

Either way, the combination of Armstrong, the message he was tasked with delivering and the conference call format was a spoiled stew from the beginning. Benefits leaders must take great pains—especially when communicating benefits cuts, or changes that could be perceived as cuts—to ensure that medium, message and messenger blend flawlessly.

Conference calls and webinars can be a powerful method for connecting with employees and clarifying changes. However, they must be carefully choreographed. If you have an executive that tends to “go rogue” from prepared statements, disseminate his remarks via pre-recorded video, not a live conference call.

3. Be truthful and transparent.

Many benefits professionals immediately concluded that Armstrong wasn’t talking about “distressed” babies, but premature babies, and those—and other high-cost claims—can absolutely create million-dollar medical bills. But high-risk pregnancies and births are nothing new, especially for employers with self-insured medical plans. Blaming new parents for an old problem—how to solve rising health care costs—is simply dishonest.

So is blaming the Affordable Care Act. We know ACA is increasing costs for employers, but blaming the law for a benefit takeaway does nothing to further the dialogue around benefits as a whole or help employees embrace a change. ACA is adding to the cost of doing business, but leaders need to be honest about other factors that are driving change—but not necessarily affecting profitability. As AOL found out, a disconnect between business performance and benefits changes will be noticed.

Talking openly about ACA, rising costs and their impact on the business, while staying focused on the issue at hand, keeps the message from spinning out of control.

4. Use storytelling to include, not exclude. 

Real people using their benefits to solve real problems can help you shape your message and drive new employee behaviors. If high-cost pregnancies are common, storytelling is a particularly effective way to connect with expectant parents eager for a safe and healthy delivery. Tell uplifting stories—of real or generalized employees—about expectant parents who used your benefit programs to reach that goal.

The AOL story highlights how ostracizing one family for high costs isn't furthering a culture where benefits support your employees. Instead, it breeds fear, as employees are left to wonder: Who's looking at my claims? Will I be fired soon because I have heart disease? That’s an outcome that negatively affects health care costs, culture and business results.

Leaders can and should be spokespeople for the positive impact benefits have on the lives of your employees and families. When you maintain empathy for employees and focus on the real problems benefits solve, even tough changes can be managed smoothly.