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posted by martyb on Tuesday October 27 2015, @10:25PM   Printer-friendly
from the sydney-morning-herald-wrong-again dept.

The Center for American Progress reports

In April, Dan Price, CEO of the credit card payment processor Gravity Payments, announced that he will eventually raise minimum pay for all employees to at least $70,000 a year.

[...]Six months later, the financial results are starting to come in: Price told Inc. Magazine that revenue is now growing at double the rate before the raises began and profits have also doubled since then.

On top of that, while it lost a few customers in the kerfuffle, the company's customer retention rate rose from 91 to 95 percent, and only two employees quit. Two weeks after he made the initial announcement, the company was flooded with 4,500 resumes and new customer inquiries jumped from 30 a month to 2,000 a month.

Previous: Gravity Payments: CEO Takes Cut and Makes $70k/year New Minimum Salary
All Staff Pay Raise Backfires on Credit Card Processing Firm


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  • (Score: 2) by M. Baranczak on Wednesday October 28 2015, @04:00PM

    by M. Baranczak (1673) on Wednesday October 28 2015, @04:00PM (#255647)

    So basically, you're asking "can they afford it?".

    If they could afford the raises when they were first put into place, then they'll still be able to afford them once the publicity bump wears off. The alternative scenario is that the boss knew that the raises would put him into the red, but was hoping that the publicity would offset that by raising revenues. That would be a pretty risky move - not totally implausible, but unlikely.

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  • (Score: 2) by vux984 on Wednesday October 28 2015, @04:21PM

    by vux984 (5045) on Wednesday October 28 2015, @04:21PM (#255664)

    Not really. I'm asking how much intrinsic benefit there is to paying the employees more. It might well be a net benefit to the company. But right now, its really hard to know because any benefits of the program itself are comingled with the benefits from the hype about the program. Eventually the PR-hype-bump benefits will fade.

    I'm just not impressed with the journalism and analysis fail around it so far.

    First they write OMG! Company XXX is paying its employees a bunch! and they plaster that all over the internet.
    Then they write OMG! Its totally working, profits are way up, customers are calling them left and right.
    What's next? Three months from now, "OMG, the company we simply can't stop writing great things about and providing free advertising for is still doing great!! It must be because of how much they are paying the employees!!"

    The truth of the matter is that it might actually be working to some extent, but right now we can't factor out the effect the journalism about the incident has had on it. And the journalists are failing to realize their part in the success.

    Heh, its like some macro heisenberg uncertainty principle in action; where the journalists change the outcome due their part in observing the experiment.

    • (Score: 3, Insightful) by Joe Desertrat on Thursday October 29 2015, @06:56PM

      by Joe Desertrat (2454) on Thursday October 29 2015, @06:56PM (#256168)

      The truth of the matter is that it might actually be working to some extent, but right now we can't factor out the effect the journalism about the incident has had on it. And the journalists are failing to realize their part in the success.

      For their type of business, long term service contracts, there is no reason to expect that business will tail off after the publicity dies down, providing they continue to provide a high level of service. The growth rate may slow, but if they are making money now they should continue to do so at an increasing rate.