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Earlier this year, Seattle-based Gravity Payments CEO Dan Price announced he was setting the minimum wage for his workers at $70k. About 70 of the company's 120 employees would be receiving the raises over a 3 year period and Price cut his salary from $1m to $70k to make the change happen. His reasoning: He read an article that more money for people who make less than $70k leads to increased happiness.
His plan may have backfired:
What few outsiders realised, however, was how much turmoil all the hoopla was causing at the company itself. To begin with, Gravity was simply unprepared for the onslaught of emails, Facebook posts and phone calls. The attention was thrilling, but it was also exhausting and distracting. And with so many eyes focused on the firm, some hoping to witness failure, the pressure has been intense.
More troubling, a few customers, dismayed by what they viewed as a political statement, withdrew their business. Others, anticipating a fee increase - despite repeated assurances to the contrary - also left. While dozens of new clients, inspired by Price's announcement, were signing up, those accounts will not start paying off for at least another year. To handle the flood, he has had to hire a dozen additional employees - now at a significantly higher cost - and is struggling to figure out whether more are needed without knowing for certain how long the bonanza will last.
Two of Price's most valued employees quit, spurred in part by their view that it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. Some friends and associates in Seattle's close-knit entrepreneurial network were also piqued that Price's action made them look stingy in front of their own employees.
To make matters worse, Price's brother and company co-founder Lucas filed a lawsuit less than 2 weeks after the raise increase announcement, accusing his brother of violating his rights as a minority shareholder.
(Score: 3, Touché) by http on Tuesday August 04 2015, @03:46PM
So treating people fairly after a long time of treating them unfairly is cause to quit... you Americans confuse me.
I browse at -1 when I have mod points. It's unsettling.
(Score: 1, Interesting) by Anonymous Coward on Tuesday August 04 2015, @03:52PM
> So treating people fairly after a long time of treating them unfairly is cause to quit... you Americans confuse me.
Sounds like a dick move. But remember we are only getting one version of the story. For all we know those guys just found higher paying jobs (something that happens all the time in the industry) and are being bad-mouthed now that they are gone (something that happens too frequently in practically every industry).
(Score: 2) by Kromagv0 on Tuesday August 04 2015, @05:08PM
and are being bad-mouthed now that they are gone (something that happens too frequently in practically every industry).
Hell when someone leaves where I work I always jokingly remind them that for the next 6 months everything is going to be their fault.
T-Shirts and bumper stickers [zazzle.com] to offend someone
(Score: 1, Interesting) by Anonymous Coward on Tuesday August 04 2015, @04:07PM
No it is more or less the opposite. If you worked your arse off, and were paid more for your extra effort you would find it unfair to all of a sudden see someone else get their salary doubled for doing jack shit while you only get few more K a year. That is essentially what happened here. The people who worked their butts off to make the company successful got up and left after what they viewed as slap in the face.
Is it wrong to expect people to earn what they get? Maybe somewhere... but it sure as hell does not feel wrong in America.
While I admire the guy's ideals and goals as I understand them, a more equitable society where people have the opportunity to earn a decent wage. His execution is piss-poor. This is exactly the kind of shenanigans that led to the brain-drain behind the iron curtain. They tried to fight human nature with ideals, and saw the brightest of them flee like rats off a sinking ship. This guy got lucky and decided to make a mistake tried before work.
There are certainly better ways to go about it. Rather than a 100% equal share, he could have introduced incentives to increase salary overtime to a certain minimum, and allow for more for the people who show real commitment. Instead he just said he will pay you X regardless of performance.
Then again maybe he hated his brother and decided to run the company into the ground while looking like "good guy." In which case, bravo Sir.
(Score: 0) by Anonymous Coward on Tuesday August 04 2015, @04:11PM
So treating people fairly after a long time of treating them unfairly is cause to quit... you Americans confuse me.
Think of it this way. You have worked for 20 years, are the best at your job (objectively the best, everybody knows it and you have the metrics to prove it), and you are earning $80k. Suddenly overnight a new hire from high school is earning $70k. That's still less than you, but the kid is maybe 1/4 as productive, and moreover he hasn't had to work up through the ranks to get to your pay.
Rationally it "shouldn't" matter, but can you honestly not understand why it matters?
It's just like the Ultimatum Game [wikipedia.org]. It may be economically rational to accept $1, but people are emotional and irrational. I'm fully prepared to believe the best performers would leave in a more egalitarian (and less meritocratic) system.
(Score: 2) by SecurityGuy on Tuesday August 04 2015, @04:28PM
I honestly don't care about the working up through the ranks part. I don't think people should necessarily make a lot of money because they've been doing a thing for a long time, but they absolutely should make more money for being 4x as productive. That's the real problem here, IMO.
(Score: 2) by Nobuddy on Tuesday August 04 2015, @06:53PM
Summary: "Fuck you, I got mine. Stay poor so I feel better about my paltry paycheck in comparison!"
(Score: 0) by Anonymous Coward on Tuesday August 04 2015, @08:24PM
No, in general people respect someone for earning their keep and look down on those who get it out of a sense of entitlement. At what point do you feel bothered? What if everyone in the company received a substantial raise but you, that wouldn't bother you? What if they promote people junior to you, say the guy who was the high school intern last summer, as your new boss? You really mean that as long as they didn't change your compensation, you should be happy for them and feel good about your situation? You've got to the the Homer Simpson in your workplace.