Eight months ago, Dan Price, CEO of Gravity Payments, announced a new minimum wage for his employees – $70,000. In order to pay everyone’s new salary, Price cut his own paycheck from $1.1 million to match his employees, and it’s paying off. Sales are rocketing and customer loyalty is at its finest.
In April, Dan Price of Gravity Payments, a credit card payment processing company in Seattle, cut his $1.1 million annual salary to ensure everyone in his company earned a higher, more reasonable salary. Every employee would benefit from a new $70,000 minimum, which amounted to some raises of an additional $40,000 a year. Within seven days of the announcement, the company was flooded with new customers and people who wanted to become an employee.
Now, half a year later, Price has created 10 new positions to help handle the increase in customers and business. He’s established a loyal customer base, and they’re sticking with him. Price has noticed a 4% increase in his customer retention rate, which is 37 points higher than the nation average.
Price decided to phase out employee raises over a three-year period. Current employees would earn $50,000 this year. Over the next two years, they would receive raises in $10,000 increments. The money from Price’s pay reduction covers most of the employee raises.
The pay cut has yet to faze Price. He believes his decision to pay employees more will result in higher productivity and will benefit the company in the form of increased earnings.
Watch how happy employees were when they first heard the news.