Best Buy Finds Social Networking and 401(k)s Can Be a Good Fit
Social networking sites may prove to be powerful marketing tool for 401(k) plans.
At the time, Bender and other members of Best Buy’s HR team were trying to decide how to increase participation in its 401(k) plan, particularly among lower-paid employees in its stores.
The retailer had recently upped the company match of its 401(k) plan and began offering immediate vesting, but was still facing a low 18 percent participation rate. With more than half its workforce under age 24, employees weren’t thinking about retirement.
"To most of our employees, it was still the same boring 401(k)," she says.
So when Bender, who was 26 at the time, suggested using the company’s nascent social networking site, BlueShirt Nation, to market the 401(k) plan, other HR team members in the room seemed interested. But at the same time, they had no idea what she was talking about.
"It was a little bit of shock and awe," Bender says.
BlueShirt Nation had been launched by a couple of employees in the advertising group just a few months earlier and had a small but growing following. Using it as a marketing medium would be somewhat risky, since no one had done anything like it before.
"There may have been one or two people in the room that had been on the site," Bender says. But the HR team listened to Bender. In retrospect, they are glad they did.
In January 2007, Best Buy launched a contest on BlueShirt Nation, inviting employees to create online videos about what 401(k) plans mean to them.
The contest, which also had an in-store competition element to increase 401(k) plan participation, ended in March. By then, Best Buy’s 401(k) participation had jumped to 47 percent.
Best Buy is among the first companies to use social networking to promote 401(k) participation, but experts say that as employers embrace the medium, such campaigns will become more commonplace.
As employers continue to struggle with getting younger workers interested in saving for retirement, social networking seems like a no-brainer, says George Thomas, a principal who leads the communication practice at Mercer.
"You can feel the momentum," he says. "HR is looking at it in terms of how social networking can be used to engage people and as a medium to communicate with them."
That’s not to say there aren’t significant concerns among employers about offering social networking sites to employees, let alone using them to communicate about retirement savings.
A roadblock for many companies is the idea of allowing employees to talk freely in an online forum for all other employees to see, says Sam Templeton, a communications consultant with Watson Wyatt.
A number of technology companies have set up internal social networking sites to foster collaboration among employees, but they remain a minority, Templeton says.
"A lot of companies are afraid of giving up control," he says. "Once you have that social networking site up, what happens when people start complaining? And how do you make sure the information is correct if someone is talking about a specific benefit?"
When the subject is retirement savings, the issue can become more difficult to manage. Inevitably, people want to discuss investing, says Matt McOsker, product development manager for the retirement plan Web site at T. Rowe Price, a Baltimore-based mutual fund company and 401(k) plan provider.
"We have looked at doing social networking for plan participants, and with all of the regulatory challenges, it could be a kind of nightmare for us to pull it off," he says.
T. Rowe Price currently hosts online message boards for its employer clients with 401(k) plans, and often when someone posts a question or comment about investing, T. Rowe Price’s legal department has to review it before allowing the comment to go online, McOsker says.
If the post contains incorrect or false information about an investment strategy, T. Rowe Price could be liable.
Also, under the Financial Industry Regulatory Authority rules, descriptions of returns on investments need to be expressed in a specific way, so T. Rowe Price’s legal department would have to review that as well.
It’s already a significant task for T. Rowe Price’s plan-sponsor site, which has 2,180 registered users. It could be a huge burden to offer social networking for plan participants given the numbers of members and postings that would come in, McOsker says.
By having to review so many comments, T. Rowe Price is worried it would cause delays in posting comments, defeating to some degree the purpose of offering the site, he says.
"I know that if I posted a comment to a site and it didn’t show up for a day, I wouldn’t go back there," McOsker says.
Best Buy circumvented many of these issues by running the 401(k) campaign as a contest, calling for employees to create their own videos.
"It was about allowing them to take a concept and put their spin on it and showcase their work among their peers," Bender says.
Since the BlueShirt Nation was so new at the time, Best Buy expected only a handful of videos, but it received 27 entries, many of which were team efforts among several employees.
"It was wild to see the creativity and talent among our workers," Bender says. "And the buzz throughout the company was amazing. People couldn’t believe that something like this came from HR, which is traditionally more conservative."
The winning video, "Croft and 401(k), a Fictional True Story," was a movie trailer for fake film about a rogue Best Buy manager who refuses to participate in the company’s 401(k) plan. His boss teams him up with 401(k) Man, who shows him the way. Packed with martial arts, stunts and special appearances by a number of Best Buy employees, the video uses humor to stress the importance of retirement savings.
The winners received a three-day trip to Best Buy’s corporate offices, the chance to meet executives and the opportunity to present their video to the board of directors.
Second- and third-place winners won gift certificates, T-shirts and money toward a party for their stores.
For Best Buy, the biggest challenge in running the 401(k) campaign on BlueShirt Nation was using a technology unfamiliar to many employees.
Bender and her team worked with the founders of the social networking site to set up the capabilities to allow for video, which took a bit of work.
Since there was so much interest in submitting the videos, the contest caused the site to crash several times, Bender says.
But these were small glitches and, overall, HR was happy with the campaign and continues to use the site to communicate with employees about the company’s benefits.
Today, there are a number of user groups on the site centered on compensation and benefits questions. And at times HR has run similar promotions to tout a benefit, Bender says. With 22,000 users, the site is a perfect way to get in front of employees to present new benefits or enhancements, Bender says.
And the 15-person rewards team at Best Buy periodically gets on the site to answer employees’ questions about benefits, says Sheila Machacek, a spokeswoman for the company.
As young employees like Bender make their way up the corporate ladder in companies across the country, they bring their generation’s ways of thinking and communicating with them. That means other companies are going to follow Best Buy’s path, experts say.
Despite the concerns and hesitation about embracing social networking, it seems like an inevitable next step, says T. Rowe Price’s McOsker.
"I definitely think this is the next wave," he says. "And it could be used for communicating all kinds of benefits, not just 401(k) plans."