Musings from the CU Suite

Written by Anthony Demangone

You may recall the "heroic" CEO who took a pay cut and reduced profits to give starting employees at his payments company a $70,000 salary.

The CEO was trying to address income inequality. The initial feedback was overwhelmingly positive from employees, civic leaders and the general public. 

But there were doubters. This feedback comes from a NYT article written at the time of the announcement:

Sandi Krakowski, an author and Facebook marketing expert, posted on Twitter: “His mind-set will hurt everyone in the end. He’s young. He has a good intent, but wrong method.”

Patrick R. Rogers, an associate professor of strategic management at the School of Business and Economics at North Carolina A&T State University, wrote in an email: “The sad thing is that Mr. Price probably thinks happy workers are productive workers. However, there’s just no evidence that this is true. So he’ll improve happiness, only in the short term, and will not improve productivity. Which doesn’t bode well for his long-term viability as a firm.” 

It has been three months.  How has the "experiment" fared? 

Two of his most valued employees quit, thinking it was unfair to double salaries for starting employees without touching salaries of veterans. 

Here's how one employee put it:

The new pay scale also helped push Grant Moran, 29, Gravity’s web developer, to leave. “I had a lot of mixed emotions,” he said. His own salary was bumped up to $50,000 from $41,000 (the first stage of the raise), but the policy was nevertheless disconcerting. “Now the people who were just clocking in and out were making the same as me,” he complained. “It shackles high performers to less motivated team members.”

In addition, the Gravity Payments is being sued by his own brother for breaching his duties. The pay increases may play a role in the lawsuit, according to an attorney for the plaintiff sibling.  And here's a problem- Gravity Payments is cash-strapped now, with most profits being rolled into salaries. There's little left to fend off the legal challenge. 

Things are so tight, the CEO of Gravity Payments is reportedly renting out his home to help make ends meet at the business.

All of this gets one thinking.

• How much does salary contribute to employee engagement?
• Is it salary, or how much an employee feels valued? 
• Is employee happiness tied to salary? 
• Is employee happiness tied to success? 

What do you think of all of this?

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You might be interested in the following posts.

• Engagement.
• Respect and engagement.
• What comes first? Happiness or a strong corporate culture?