Almost seven years ago, The Optimist Daily did a piece on Dan Price, CEO of the credit card processing company Gravity Payments. At the time Price was making news by raising the salaries of all of his employees to a minimum of $70,000 a year. This moral decision was applauded by many, but critics and even some experts said that Price and Gravity were doomed for bankruptcy.
That hasn’t happened.
Gravity’s high wages ensure loyalty
Dan Price took a risk doing the right thing and increasing all of his employees’ salaries like this. He took a $1 million pay cut himself, scaled back his own living costs – his own salary now being $70 a year – and sold his second home to afford the raise in salaries. It was worth the cost, however.
Gravity has doubled its number of employees, greatly reducing turnover, attracting and retaining skilled staff, and increased in value, while still maintaining a $70,000 minimum salary. Loyal Gravity employees stay on much longer and gain experience which helps them better serve their customers.
Andrew Hafenbrack, assistant professor of Management & Organization at the Foster School of Business, said to CBS News, “It does go against what people expect and what we usually see in terms of corporations and companies.” CEOs’ personal salaries have skyrocketed in past decades, now averaging more than 351 times the average employee.
“This shows that isn’t the only way for a company to be successful and profitable”
In troubled times, the moral way is still the right way
Like many, Gravity faced hardship during the pandemic, losing half of its business in March 2020, but because Price had his employees’ backs, they had his. Gravity’s employees voluntarily took pay cuts of up to 40 percent to keep the business afloat.
Being at a company that values its employees, Gravity employees have been able to afford homes and raise families in Seattle, a city with a high cost of living. It seems that Price’s gamble paid off, not only helping his employees but incentivizing his employees to help him when he needed it.
This story was part of our Best of 2022 series highlighting our top solutions from the year. Today we’re featuring business-focused solutions.
