In 2015, the CEO of the credit processing company Gravity Payments, Dan Price, decided to give all his employees a pretty hefty raise – a $70k salary, to be exact. At the time, the move was met with equal parts celebration and disdain – so what came of this choice?
Before we dive in, though, it’s worth noting that Price’s move isn’t exactly feasible for every business – and it might not even be necessary.
The cost of living in Seattle (where they are headquartered) is much higher than other places in the US and the business, nestled in the tech field, wasn’t facing some of the struggles that other small businesses must tackle. Not to mention, Price was in a position where he could actually make this sacrifice.
Many small business owners are just struggling to get by.
Still, as an individual case study, the story of Price and Gravity Payments is pretty interesting.
Price was first inspired to make the raise when confronted by his own struggling employees. At the time, Price was paying market rates for salary – starting at $35k – but in the face of expensive Seattle real estate, many of his employees were struggling to get by.
It wasn’t easy.
Price slashed his own salary, sold his stocks, mortgaged his home and prepared to rise or fall alongside the company.
Early on, he also lost several high level employees who were frustrated that junior employees were suddenly making as much as they were. Add in the backlash Price faced when his move made national headlines and it’s safe to say the decision wasn’t all smooth sailing.
Despite the rough start, though, Gravity Payments is doing better than ever. The business has practically tripled in worth and they’ve doubled their employee count to boot. Price is on pretty good terms with his employees too.
In a reversal of the traditional “charity” type story (you know the ones, where people already struggling help a co-worker who has it worse), Price’s employees recently banded together to buy him a new car.
Still, there’s one metric Dan Price is most proud of: How much his employees have been able to grow in their personal lives. Employees able to purchase homes has jumped from 1% to 10% and they’re not just settling down, they’re starting families too. Since the announcement, the team has had over 40 babies – a huge increase from the “zero to two annual babies” from before.
Again, what Price did is in no way the only way to improve business and employee happiness, but kudos to Price for putting his money where his mouth is when it comes to trying to improve the lives of his employees.