The Washington Post

AOL chief’s foot-in-mouth disease

(Pete Marovich/Bloomberg)

AOL CEO Tim Armstrong might want to think twice before doing another public conference call with employees.

The same chief executive who publicly fired someone during a conference call last year has now had a relapse of CEO foot-in-mouth disease. After the Washington Post reported Tuesday that the company was shifting employees' 401(k) match to a once-a-year contribution — a move that negates the dollar-cost-averaging benefit of 401(k) plans — Armstrong went on CNBC to explain that the company needed to decide whether to raise health-care premiums in response to Obamacare or cut benefits elsewhere.


Then, Armstrong went on to say in a subsequent conference call with employees that health-care costs rose because of two employee pregnancies. "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 OK in general," Capital New York reported Armstrong as saying, according to a transcript provided by an AOL employee. "And those are the things that add up into our benefits cost."

Armstrong probably thought he was demonstrating how generous the company was in covering the medical bills of these complicated cases. And the instinct to provide some transparency to employees about how business decisions are made is often a good one. But when that's discussed at the same time the company reports better-than-expected quarterly sales, and when two employees are singled out for increasing costs for everyone else, the words are a lot harder for employees to swallow.

Next time, leave the babies out of it.

Armstrong released a memo in response to the flap, the technology site Re/Code reported. It's copied here:

From: “Armstrong, Tim”

Subject: AOL Town Hall Follow-Up

AOLers –

As we discussed at the town hall, we care about you and the company — a lot. This morning, I discussed the increases we and many other companies are seeing in healthcare costs. In that context, I mentioned high-risk pregnancy as just one of many examples of how our company supports families when they are in need. We will continue supporting members of the AOL family.

We provide a wide range of benefits — including our 401k plan — and conduct open information sessions each Fall on all available benefits as well as any changes being made. We will continue to do that.

The spirit of the town hall and the spirit of how we choose benefits are the same — we want to be open and transparent about the choices we make and why we are making them.

As I have said over and over again, our employees are our greatest asset. Let’s move forward together as a team.

– TA

Read also:

Do your employees think you play favorites?

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Jena McGregor writes a daily column analyzing leadership in the news for the Washington Post’s On Leadership section.
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