The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.

Saturday, April 25, 2015

$70K..Base Salary! Paying Employees "Liberally" Pays With More Satisfied And Happy Customers

Dan Price
Dan Price, Gravity Payments, the
fair and benevolent capitalist,
A few days ago we published a piece about an electronic payments company CEO, who reduced his million dollars compensation while establishing a $70,000 baseline pay rate for his employees.

Yes, the story is very much a Cinderella tale, and a story so rate it drew international attention.

Our version of the story.....

Some Progressive Millionaire CEOs Embody An Idyllic America
Apr 16, 2015 ... Earlier in the week MSNBC's ALL In host, Chris Hayes, interviewed Dan Price. The interview was both an existential non-common reality and a...

We referred to Price as the benevolent capitalist, but know the phraseology has no negative association.  I am reminded of yet another old axiom: 
"Happy employees lead to happy customers and that leads to more and happier customers."
UPWorthy, Patrick Malloy, curated a story about Price and the aftermath of his very public story.


Right after announcing he was taking a pay cut to raise employees' salaries, business is booming.

Parker Molloy Curator: 

Here's a story to show your boss. When it comes to taking care of his employees, Gravity Payments CEO Dan Price is going above and beyond (and business has never been better).
You might have heard a story from a few weeks ago about a CEO named Dan Price and his plan to raise the starting salary for his employees to $70,000 per year.
He told his employees about the change at Gravity Payments, his credit card processing company, during their quarterly staff meeting.
Needless to say, they were pretty excited about the news, giving him a standing ovation.

CBS News interviewed 29-year-old equipment supervisor Jose Garcia about the change. He said that he cried when he told his mom about the raise.

Before the announcement, Garcia's salary was $33,000 per year. The raise was a huge deal to him and others at the company.

Over the next two years, salaries will increase periodically.

Effective immediately, everyone in the company will make at least $50,000 (or, if they already make more than $50,000, they'll get a $5,000-per-year raise). From there, all employees will be bumped to $60,000 next year, and $70,000 the year after.

How is Price doing this? To start, he took a huge pay cut.

He had been making $1 million per year. But now? He'll take home just $70,000 per year.

Price was motivated to change the salary structure after reading a 2010 study that suggested people have the highest emotional well-being at $75,000.

Would raising the salary of someone like Jose Garcia from $33,000 to $70,000 have a tremendous impact on his happiness? Likely! Is it the same for someone already making well over $75,000 per year? According to this study, no.

Business has never been better.

Price tells CNN Money that in the 11 years he's been running Gravity Payments, he's never seen a better week for new business after bringing in dozens of new clients.
 "In the short-term, [news reports about the pay] could help demand for our services, but clients won't stay with a company that's not providing a superior value." 
— Dan Price

Morale is high, and applications are flying in faster than ever before.

It turns out that offering people a living wage with competitive benefits makes people want to work for you. Who knew?

They've received about 3,500 job applications for the company's two open positions (a sales representative and a support staffer), which is around 10 times as many as they're used to.

He's putting people before profits.

Based on that study, he realized that making less than ideal wages is emotionally taxing on a person. So if he's in a position to help make the world a better place for the people around him, why wouldn't he?

He cut the company's immediate profit projections in half, but he seems pretty happy with how that's working out so far.

After all, there's a reason Price was named 2014's "Entrepreneur of the Year" by Entrepreneur Magazine.

And it probably has to do with making gutsy decisions like this (and possibly looking ridiculously good in a blazer).

Check out the CBS News report about Price:

Business can exist without employees as underpaid product or services producers. Yet, business cannot exist without employees. While rices experience is unique and accompanied by progressive thought, reasoning and data, most companies can stand to advance the level of wages and compensation. When we consider images like those that following, the rational person would ask the question: "Why do US CEO's have to exist as corporate rock stars or overpaid professional athletes?" Are their contributions so significant less compensation wouldn't attract comparable competency.

On the liberal side of compensation data.

And, on the conservative side of compensation data.

While 2008 is ions ago, the following graphic stands out as one of my most cherished depictions of the CEO/worker pay disparity.

Now for that conservative compensation estimate I reference above. In 2013, The Daily Kos and other media reported average CEO compensation at $12 million plus per annum. 

The image is purely horrific, and US workers nor the public are clamoring for more fair and balanced compensation considerations.

Fortunately, executives like Dan Price and Nick Hanauer are few and very far between.

No comments :

Post a Comment