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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: 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.