Magazine article HRMagazine

Learn from AOL's 401(k) Mistakes

Magazine article HRMagazine

Learn from AOL's 401(k) Mistakes

Article excerpt

When AOL Inc. CEO Tim Armstrong announced that the company would switch from matching employee 401(k) contributions each pay period to providing a lump-sum match at the end of each year, the way he framed the announcement could not have been worse.

So, based on AOL's experience, here are some lessons learned about executing and communicating benefits changes:

Don't put the company's needs ahead of the employee. Instead of explaining the change to employees in terms of how and why they would occur, Armstrong revealed that two employees' premature babies had cost the company more than $2 million. "The company needed to talk about changes from the perspective of the average employee, not the company," said Jennifer Benz, president of Benz Communications in San Francisco.

Don't talk about employees' individual medical situations. Many observers have questioned why Armstrong had access to employees' personal information in the first place and whether that violated privacy laws. …

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