When Gravity Payments’ CEO, notorious entrepreneur Dan Price established a minimum wage of $70,000 at his Seattle company, a media firestorm ensued.
The year was 2015. Mr. Price was all of 31 years old when he announced a radical idea that took the entire financial industry by surprise: He decided to cut his own annual salary down from $1.1 million to $70k and pay his entire team of 120 employees the same amount.
At the time, Dan was called everything from an idealist to a commercial genius by field experts, as he faced praise but also so much backslash for his groundbreaking choice. Some said his employees would end up “in the bread line,” while others, like the guys over at Harvard School of Business, made his company a case study subject.
But even after the relentless attacks from his corporate peers, Price knew he had done the right thing. And now, he had the numbers to prove it. Gravity payments released the results of their 6-year experiment and the answer is simple: Revenue tripled.
It doesn’t take a psychiatrist with a math degree to understand why putting more money in the employees’ pockets actually resulted in more profits for the company itself. Especially when it reported that its workforce’s ability to purchase a home had increased tenfold. Not to mention, the day to day expenses that were a constant struggle for most before but had suddenly become something they did not literally need to lose sleep over.
As it turns out, earning a livable wage to afford a proper life did make all the difference. In 2011, 32-year-old Gravity tech Haley went on a cigarette break outside the office and told Price: “You’re ripping me off…You brag about how financially disciplined you are, but that just translates into me not making enough money to lead a decent life…”
This declaration was traumatizing but also triggered the aha moment Dan Price needed. He then understood that his methods to “save the company” were actually hurting both the company itself and his employees: ”I was so scarred by the recession that I was proactively, and proudly, hurting my staff," he said.
So after a brave cigarette confrontation and 6 years of field testing, we can now add Gravity’s tale of corporate justice and prosperity to the stack of evidence that supports this fact: When you treat your employees like they are the most important part of your company, they will love your company back.
Price’s method did not only change the lives of Gravity workers, it also opened up a long overdue conversation about poverty lines, income equality and the realities of the middle class. Access to affordable healthcare, childcare, education, housing and everyday commodities had always seemed to be exclusive to the top earning Ivy Leaguers and the 1%. In other words, the American Dream had gone from one becoming rich, successful and famous, to merely being able to have a roof over our heads and food on our tables.
Raising the minimum wage to 70k might not be possible for some CEOs, not only because they wouldn’t be able to afford it, but because most might not agree with Dan Price or the data that supports his strategies.
But the proof is in the humanity pudding. It seems like giving your employees enough remuneration so that they can actually buy a car, a home, have a family and go to the hospital without drowning in debt, is not such an far-fetched ideal after all.
And it goes beyond the paycheck. Showing appreciation and support is also crucial inside the workplace. When you offer your team a healthy, efficient, inspiring environment they will feel valued, safe, enticed and actually become more productive and devoted to your brand. It is a two way work street.
When you invest in your business, don’t forget to invest in your people. Because, would you even have a business if it weren’t for them?
When you bend over backwards to offer the best products and services, don’t neglect your best customers: Your team members.
Because if your employees themselves aren’t well-compensated, well-rested, functioning within healthy standards and actually thriving, they certainly won’t believe your pitch. They won’t stand for your business, ideals or projections. And if those inside your own shop aren’t buying what you’re selling, you better believe no one else will.
Written by Kika Pérez for UOF Editorial
Source: November 2015 Issue of INC. MAGAZINE, Gravity Payments Official Statements.
