About six months ago, a story broke that a truly egalitarian CEO of a credit card processing company was doing something radical and revolutionary with his company – he cut his own wage from $1M a year to $70k a year and increased every single one of his employees’ salaries to the same level.
Not everyone was happy with the decision made by Dan Price of Gravity Payments in Seattle, Washington. In fact, his brother, as a minority shareholder, sued him and conservatives denounced the decision as “socialism.”
(Harvard Business School professor Michael) Wheeler isn’t as positive about Gravity Payments. Instead of being lauded as a visionary, Wheeler notes how Price became the victim of backlash when Fox Business’s Stuart Varney asked if he was a socialist, and Rush Limbaugh proceeded to do a takedown. “Some customers left, either unhappy with what they saw as Price’s political agenda or worried that the added costs would be passed on to them. Heads of other tech companies complained that he has made them look bad by comparison,” Wheeler writes.
Source: Fast Company
While the court date is still more than six months in the future, Dan’s brother Lucas might want to reconsider and Rush Limbaugh and friends might just want to shut up. While Price might have lost some business, as a net, he gained. In fact, he doubled his business.
Revenue is growing at twice the rate it was before Chief Executive Dan Price made his announcement this spring, according to a report on Inc.com. Profits have doubled. Customer retention is up, despite some who left because they disagreed with the decision or feared service would suffer. (Price said he’d make up the extra cost by cutting his own $1.1 million pay.)
Not surprisingly, his well-paid employees are also sticking around.
Barely any employees have left — although some outsiders, including some commenting on a MarketWatch article about the decision earlier this year, warned that employees could start putting in less effort because everyone is being paid the same regardless.
Perhaps not surprisingly, plenty of people want to work for Gravity. One who now works there is a former Yahoo executive who says she took an 80%-to-85% pay cut to take the job, according to Inc.