When it comes to CEOs and big companies, there is one thing very common about them. All big companies want to pay as little as possible to their employees while trying to make them do more work.
I also worked at this big company for years, that made its employee work extra hours and pay as little as possible. After that, my trust in big companies faded as I found out that most of them tried to use this same strategy.
But a few years back, I was randomly scrolling through the web when I read news about a CEO who raised his staff’s salary by $70,000 per year. At first, I thought this might be a publicity stunt, but as time went on, it was true.
About six years ago, Dan Price decided to raise the salary of his 120 employees by $70,000 per year. Dan Price is the CEO of Gravity payments which is a Seattle-based credit card processing company.
To give his staff salary increment, he cut his salary by a whopping $ 1 million per year. There were many mixed reviews about his decisions.
Price downsized his life by selling a second home he owned to sustain his life and pay his bills. He is still happy and feels very satisfied with his life.
“The employees had a 10x boom in homes bought”, Dan Price shared in his Twitter bio. About 70% of his employees have already paid their debt and are living debt-free.
Since his employees can afford to have a baby and start a family in this economy, Gravity payment has seen a sharp rise in the number of babies born over these past six years.
As a gesture of appreciation, Dan Price’s employees have gifted him a Tesla car. Price feels very humbled to have staff who are like family members.
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How profitable is the company now?
Some people loved the idea of increasing the salary of employees, whereas some critics openly said that his business wouldn’t survive long enough. Some even called him a socialist, and his employees would be on bread lines.
But six years later, his business is still thriving and growing. Since then, the company’s revenue has tripled, and the number of employees has doubled.
They have also become a Harvard Business School case study. According to Price, Gravity is doing well because of highly loyal employees. Raising the salary led to fiercely loyal employees.
Since the employees are staying twice as long in one position, their knowledge on how to help their customers skyrocketed over time. So they have experienced and versatile staff, who know what decisions to take swiftly.
How well did the company perform during Covid-19 crisis?
In 2020, the company was making $4 million per month in revenue but faced a drop of 55% in business due to the COVID-19 pandemic. Gravity was only four months away from bankruptcy when employees proposed voluntary pay cuts to preserve employment and layoff.
By August 2020, salaries have been reimbursed by the company by paying back the salaries lost from the pay cuts.
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