CEO Dan Price Took $1M Paycut So His Employees Could Have A $70K Minimum Salary And He Explains How It Affected His Business

Aside from good products, reliable services and loyal customers, what essentially keeps a company running is its employees. Indeed, human resources are an integral asset of any company. Unfortunately, blinded by profits, many employers seem to have forgotten what truly lies at the heart of their business. Well, lucky for the employees of the Seattle-based credit card processing company Gravity Payments, their CEO is a notable exception. Meet the CEO Dan Price, one of America‘s “best bosses” who gained worldwide fame for raising his staff’s annual minimum salary to $70K.

At 31, CEO Dan Price used to fit the typical description of a young tech millionaire. He lived in a luxurious house in Seattle overlooking Puget Sound. He even probably dined only in the most lavish restaurants in the city. Having founded his company in his teens, Dan was simply reaping what he has sown, so to speak. However, a hiking adventure with his friend Valerie had changed all this.

 

 

After hearing a friend’s financial woes, tech millionaire and Gravity Payments CEO Dan Price decided to raise all of his employees’ annual minimum salary to $70K

As they were walking, Valerie exposed Dan to a reality that’s unknown to him. She detailed how her life has been miserable lately. Apparently, her landlord decided to raise her monthly rent to $200. Unfortunately, even though Valerie was earning around $40K a year, she was still struggling to make ends meet. After serving in the military for 11 years, Valerie now works two jobs, with a total of 50 hours per week. Knowing all her hard work and struggles just to earn enough, this made Dan angry.

“She is somebody for whom service, honor and hard work just defines who she is as a person.”

Valerie’s story made Dan realize that a lot of his employees might be struggling too. And for someone who was earning $1.1M a year at that time, he knew he needed to do something. So, he went out of his way to do something that many employers won’t—raise his staff’s minimum salary. What’s more, he raised it to a whopping $70K for each of his 120 staff. And to make it happen, he even cut his personal earnings by over 90% and mortgaged his house.

 

Although many people applauded his benevolent act, it had its share of doubtful critics as well

Apparently, Dan’s computation was also backed by a study by Angus Deaton and Daniel Kahneman, which looked into the correlation between income and life evaluation. The Noble prize-winning economists estimated that people need an annual income of $75K to achieve optimal emotional well-being. Although $5,000 short, CEO Dan Price still managed to double one-third of his employees’ salaries.

After doing so, Dan’s company drastically improved before his eyes. Not only has the company’s manpower doubled. The overall payments that they process per year have increased from $3.8B to a staggering $10.2B as well. From less than 1%, more than 10% of the company now has a house in one of the US’s most expensive cities to live in. More importantly, his staff’s overall well-being has significantly improved. In an interview, the company’s director of sales, Rosita Barlow, mentioned:

“When money is not at the forefront of your mind when you’re doing your job, it allows you to be more passionate about what motivates you.”

 

Nevertheless, CEO Dan Price knew he did the right thing when he started seeing how his company drastically improved

 

 

Indeed, CEO Dan Price believed that raising his staff’s salaries was more than just motivating them. According to him, doing so also enhanced their “capability,” to which Rosita agreed, saying:

“You’re not thinking I have to go to work because I have to make money. Now it’s become focused on ‘How do I do good work?'”

 

Lately, more companies are under fire for laying off employees in light of the ongoing pandemic. This prompted Dan to retell his story online, hoping more companies would follow suit

 

 

 

 

 

 

Dan Price’s tweets have ultimately gone viral, stirring up discussions on how employers should treat their employees

 

 

 

 

 

Many expressed their hopes that more companies would follow suit

 

 

 

Source: CEO Dan Price Twitter | Instagram