Published on MediaPost, 12 March 2021.
In 2015, Dan Price, the CEO of financial services company Gravity Payments, had an uncomfortable insight: The amount he was paying some staff members was so low they were under constant stress.
That insight had lots of angles to it: legal, business, moral.
From the legal angle, Dan was fine. He was paying more than minimum wage and providing all the benefits he was required to.
From the business angle, Dan had originally assumed he was fine as well. After all, he had researched the market and attempted to pay fairly. But he also recognised that, even if the market supports it, it’s hard to do your best work if you’re worried about a rent hike or an unexpected medical bill.
But the moral angle was the worst. His company had almost died during the GFC, and Dan had continued the austerity measures he had put in place at that time — despite drawing a salary of $1.1 million himself. “I was so scarred by the recession that I was proactively, and proudly, hurting my staff,” he said.
Now, some people would choose to rationalise an insight like this. But Dan acted on it. He implemented a $70,000 per year minimum wage at his company, phased in over three years.
He also cut his own salary to the company minimum, $70k. "Most people live paycheck to paycheck," he says. "So how come I need 10 years of living expenses set aside and you don’t?”
Dan’s gamble paid off big time. And immediately: Prior to the announcement, Gravity typically got around 30 sales inquiries per month. After the announcement, it got 2,000 inquiries in two weeks.
And the payoff hasn’t stopped. In the years since, the company’s headcount has doubled, and it went from processing $3.8 billion in payments per year to $10.2 billion. It also moved from less than 1% of staff owning their own home to more than 10% of staff, and the number of babies the team was having jumped from 0-2 per year to around 10 per year.
Dan’s story has a stylised, Disney-esque quality to it. He is as cool a dude as you can imagine. His Twitter feed is as heartwarming as they come (sample tweet: “If people were really paid by how hard they work, restaurant workers would be millionaires and CEOs would be middle-class. — A CEO who used to work in a restaurant”).
And yet, I believe what he’s done is possible. The massive positive press has been nothing but spectacular for the company, and probably the best marketing investment Dan could have made. Being “the $70k CEO” is now his identity, and it’s working for him.
The tidy Disney moral here seems to be that, if you dramatically increase your staff pay, you too can reap huge rewards for your company.
But I think that would be the wrong moral. Yes, sometimes the market rewards good behavior and punishes bad — but sometimes it does the opposite. Mark Zuckerberg is the fifth richest person on the planet, worth north of $100 billion, despite running a company that demonstrates a blatant disregard for either its employees (oh, sorry, I meant CONTRACTORS) or its users.
No, the moral of Dan’s story is not, “Do good and you shall be financially rewarded.” The moral of Dan’s story is, “Choose what’s important to you. Is it more important to uplift the dignity of those around you, those you have the power to influence? Or is it more important to amass more power, more wealth, as much as you possibly can, even if it means causing some harm along the way?”
I know what’s important to me. Do you?
Ngā mihi mahana,
Kaila
Kaila Colbin, Certified Dare to Lead™ Facilitator
Co-founder, Boma Global // CEO, Boma NZ
