Vanguard Revamps Staff-Benefits Revamp
The Vanguard Group Inc., the investment giant that rarely attracts negative attention to itself, had a minor scrape this week. It was interesting to watch how quickly it dealt with the situation. But how the problem arose in the first place is a head scratcher.
On Mon., Oct. 4, Vanguard, based in Malvern, Pennsylvania, and with $8 trillion under management, told employees and retirees it was nixing — on that very day — certain benefits. These included a retiree medical account, a life-insurance program and a Cobra subsidiary newly retired staffers use to buy health insurance. The company planned to offer instead a $40,000 lump sum, when some retires had reportedly accumulated much more than that.
Employees and retirees weren’t happy with the cost-cutting effort and let the company know via social media, phone calls and emails. And you know what? The company did a quick about face. The next day it said current retirees could keep the benefits, according to The Wall Street Journal. Then on Fri., Oct. 8 it decided to extend the programs for current employees through 2022. It’s evaluating what to replace them with.
Vanguard CEO Mortimer J. “Tim” Buckley was contrite. He apologized both by video and an email late Friday night, according to The Philadelphia Inquirer. “We apologize for the abrupt timing of this week’s announcement and any anxiety or stress this announcement may have caused,” he said in the email. “We appreciate your sincere, direct and honest feedback.”
“I sincerely apologize for the anxiety and stress this decision has caused,” Buckley said in the video, according to the Inquirer, citing a transcript. “We know we missed the mark.”
“Thank you for your patience as we correct our mistake,” Buckley said.
So, well done, especially in admitting fault. But how did the problem arise in the first place? Shouldn’t Vanguard have predicted this would become a crisis?
Vanguard founder Jack Bogle, who died in 2019, invented the index fund and championed the passive individual investor. He was known as a straight shooter. We’re pretty certain this little episode would have had him flummoxed.
Image Credit: Vanguard Group
Sign up for our free weekly newsletter on crisis communications. Each week we highlight a crisis story in the news or a survey or study with an eye toward the type of best practices and strategies you can put to work each day. Click here to subscribe.