• Dan Price’s Extraordinary Wages Policy

    Date: 16 April, 2015 | Author: | Category: General, Industry News

    “We’re completely transparent. We gladly choose long-term relationships over profit… The most compelling reason businesses switch to us is our team of dedicated, local, customer service members… When you call us, you’re not talking in a call center overseas, they’re in our office, standing by and ready to help when needed.”

    Sound familiar?

    No, it’s not Hunt4Staff, you could tell that by the American ‘center’, but it’s part of the Mission Statement of Gravity Payments, a US company that has attracted a lot of publicity in the past 24 hours following the announcement by its CEO & Founder, Dan Price, that the company is to set its minimum salary at $70,000 (apx £47,000). To part finance this initiative, Mr Price has reduced his $1,000,000 salary to the company minimum until such time as company profits exceed their 2014 level.

    Mr Price, whose company employs 120 staff, has been accused of conducting a publicity stunt, but so what if it is? In a marketplace where CEO salaries have risen exponentially in comparison to lowest-paid workers over the past three decades, it is refreshing to witness a fresh and radical approach to employer-employee relations.

    I came across the story online via The New York Times, but thought I would contact Gravity Payments’ marketing department to get a little more detail on their CEO’s thinking behind his strategy.

    Gravity Payments was set up as an affordable alternative for “the thousands of hard-working business owners being under-served and over-charged by credit card processors.” With a client base of more than 10.000 merchants across America they treat each of their customers as if they were their first and its CEO sees each team member as an important, strategic decision maker.

    Dan Price explains; “Bold action creates incredible progress for our company, especially bold action that benefits our clients. Leadership carries a moral imperative to do the right thing, not just follow what everyone else is doing. So far, our company has experienced incredible results based on doing what is right for our clients and choosing service over short-term profit. This strategy will continue to create great results. Mutual trust within our team is creating incredible success for our clients and for the company. Over the past few years, our profits have doubled, and I think we can do it again if we continue to put our clients first, and do whatever it takes.

    “Personally and professionally, we should aim not just to survive, but thrive…however we each have a different way to defining what that means (i.e. personally: Investing, volunteering, philanthropy, visiting family in other places, relocating, saving for college, buying a house, taking a dream vacation, etc.). There are also things in life not fully anticipated (Marriage, kids, illness, aging parents). Most people need to make between $40,000 and $70,000 per year to get by in Seattle and other markets where we have teams. If you are smart with your money, you can thrive in big ways once you start getting significant raises over $70,000 per year. In fact, a 2010 Princeton study shows happiness is positively impacted up to $70,000 or $75,000 per year, but increases above that figure do not have a significant positive effect on happiness.

    “When Gravity first started, all we could afford to pay was $24,000 per year even for important senior positions. I was paid less than that for the first five years in business. Many who started their career with the company now have very senior roles within Gravity or elsewhere including Amazon, Zappos, and Porch. Gravity has attracted top tier talent in spite of our lack of ability to pay for it at every level. We attract people who want to serve, are emotionally connected to serving our clients, and do more without thinking about how they’ll be compensated for this. Many top tier talent at Gravity have taken significant pay cuts for the opportunity to make a genuine difference for small business owners.

    “We need to remember the most important thing we give each other is growth opportunity, and pay should never come before that. Gravity has benefited greatly by the fact our people trust that if they help create success for our clients, we will all benefit in the long-run. As CEO, part of my job is to look out for what will benefit the company in the long-run. In the past, doing what is best for our clients has benefited the company greatly.

    He concludes; “I  know our clients greatly benefited from today’s decision. I believe we will greatly increase company and shareholder value (over the next five years). Most importantly, I believe our impact will increase exponentially due to this change. We will continue to push the boundaries by significantly reducing the costs and headaches independent business incur by accepting credit cards.

    “One additional point, is that local businesses are more susceptible to economic ups and downs than national corporations. Our local independent businesses need a strong middle class to thrive. Part of why we are doing this is to support them by giving them more customers capable of paying for their unique and wonderful experiences.”

    Dan Price’s Wages Policy for Gravity Payments’ Staff

    • For the purpose of benefiting the company and our clients, I would like to announce a $70,000 minimum wage for Gravity team members. This will be phased in with an absolute deadline of December 2017.

    • Effective immediately, anyone making under $70,000 per year will receive the greater of a $5,000 per year raise or be paid a minimum of $50,000, whichever is greater.

    • By December 2016, everyone will be required to be at $60,000 per year or more. By December 2017, everyone will be required to be at $70,000 per year or more.

    • To help facilitate this change, I am taking my salary to the company minimum until or unless our profits have a greater dollar value than 2014.

    [With thanks to the Marketing Team at Gravity Payments]

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