Dan Price, CEO of Gravity Payments, made waves when he announced back in April that his company would pay their employees a minimum of $70,000 per year phased in over two years.
The press was giddy. The DailyKos was happy.
Dan’s smiling face was all over the place (a PR stunt?)
Fast forward just a couple of months…
Gravity Payments is having troubles. Severe troubles. Some clients, fearing price increases, decided to leave. And then there was Gravity’s own employees…
…some of the most valuable employees at Gravity Payments have started to leave the company. The Times reported that two employees have left directly because of the policy. One told the paper she was initially excited about the new policy, but as she thought about the details she began to get dismayed. “He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump.”
She said she presented the issue to Price along with an alternative way to raise salaries, but was met with an accusation of selfishness. So she decided to quit. Another employee, on the lower-end of the former pay range, also decided to quit after thinking through the policy. “Now the people who were just clocking in and out were making the same as me,” he told the Times. “It shackles high performers to less motivated team members.” (Source)
Bottom line: people want to be rewarded for their efforts. They want to be appreciated.
Now, some might think I’m just a tad too happy to see this company experience failure. I’m not. BUT…I am happy to see that dumb (or shortsighted) decisions have bad consequences. Had Mr. Price only thought through his decision, he might have saved himself and his company a lot of pain. I would suggest Mr. Price invest in a copy of Thomas Sowell’s Basic Economics*, which does a nice job explaining how the real world works.
Ironically, the DailyKos hasn’t followed up on the story since their original post back in April. I know, I know…it doesn’t fit their narrative.