Faith Addicott
Case Western Reserve University - Weatherhead School of Management
Ron Fry
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For most American businesses, money is the motivator. The drive to increase profits at all costs has left many employees in pain, as their salaries are seen as expenditures to be kept as low as possible. People, employees, are relegated to a column in a spreadsheet, their lives characterized as ‘human capital. While this is true in many places, it is not true for Gravity Payments.
In 2015, CEO Dan Price decided to do something unheard of – he implemented a plan to raise salaries to $70,000 for every one of the 120 employees of his company, in part by taking a pay cut himself. Dan had come to believe that the company would be better served by happy, dedicated employees who felt valued, lived free of economic stress, and ultimately stayed at the company longer. He was right.
This is that story, as told to me by Jessica Moore, Director of Sales for Gravity Payments.
According to Jessica, Gravity Payments has always been about providing the best service and treating people as people. They always wanted to take care of both internal people and external people, creating happy employees, better customer service, and better continuity with lower stress all the way around. The innovation of Dan Price to pay all of his employees a living wage has furthered this ethic. This has become a company that grows talent and relationships through showing a real, tangible commitment to the well-being of all its people.
Although he's been criticized for what some consider his radical policies on pay and equality, Dan believes businesses have enormous power to promote social good, regardless of what industry they're in, by serving communities instead of shareholders and putting people over profits.
The real testament to the success of Gravity Payments' decision isn’t just in their business outcomes, or even in their employee retention. It’s in the stories people like Jessica tell about working there, the glow in their voices, and their conviction that they matter to the company. Jessica moved to Seattle from Georgia, a huge move that left her family far behind. When she got sick in the first August after she moved, she was pretty much trapped in the house. With no family nearby, she felt alone and thought she would have to tough it out on her own. Bedbound and achy, she posted a note to Facebook asking if anyone could help. Almost immediately 10 folks from Gravity wrote her back with offers of assistance. They brought food even though it was mid-day - they were able to leave work to help her, because of the flexibility leadership showed in valuing the human experience of their employees. Jessica shared that it was “amazing to feel supported, as part of a team and a family.” The overall culture of this company isn’t just in how wages are distributed, but their commitment to walking the talk shows at every level of employee experience.
When Jessica started at Gravity Payments 4.5 years ago, the $70k policy wasn’t across the board yet. As the implementation accelerated to encompass the whole company, she says that happiness has become greater. For people like her, Gravity “immediately became a more long-term commitment, with people are making plans about how to grow their work into the future. People feel more invested in the company and invested in the future of their place with the company.”
This group feels like it’s a great thing, that Dan really cares about business and the people he works with. While some of Gravity’s business clients expressed worry that the living wage would affect the rates Gravity charged for card processing, that hasn’t happened. Gravity keeps the wages flatter across the organization so that the highest-paid and lowest-paid employee wages are barely different. Overall wage expenses are the same as they were in the previous model, but everyone is happier.
The $70K decision has given them a bigger platform to spread their message of putting purpose and people before profit. It’s also given them the opportunity to attract amazing talent to the team who help support small business owners in any way possible. “Since April 2015, we’ve received over 30,000 resumes and added 50 new team members!” Jessica points out that businesses have always needed to cut expenses in other areas – this is nothing new. According to her, the move at Gravity has resulted in a new culture of increased fiscal caution, and a sense of responsibility around travel and entertainment expenses, and an overall increase in budgeting thoughtfulness. The move has had them become really conscious of the need to always put people's expenses FIRST, rather than other traditional expenses.
Many detractors, people in big business who follow the traditional thinking of keeping wages low, were vocal in their criticism of Dan’s move to pay everyone more. They said loudly and to anyone who would listen that this kind of wage equity would cause the business to stumble, if not fail altogether. In fact, the results have been exactly the opposite. The company has seen significantly lower client attrition, increased profits, and a consistent increase in the volume and quality of business clients overall since shifting to their current wage policy.
The changes Gravity made may have been internal, but the effect has had benefits that ripple far into the community. “The worries of not being able to pay for something have disappeared,” wrote one employee when asked how Gravity’s wage policy has affected their lives. “I don’t have to make a choice between fuel or groceries. I don’t have to worry about an unexpected emergency.” Gravity employees have bought more houses, had more children, and invested more across the board, leveraging their increased financial stability in ways that lift the community as a whole.
As these results have become clear over the last 6 years, it has inspired other CEO’s to do the same thing. It has raised the profile of the wage equity conversation and given proof to the concept that business can more than survive while giving employees the money they need – it can thrive.
While the move Gravity made is more about people than the environment, the financial securing that employees have gained has allowed them to be more altruistic as well. The company developed a program called Gravity Gives which allots money for each employee to put towards a nonprofit of their choice, and many choose to give to both social and environmental nonprofits. Internal tracking shows that a large part of this money goes to environmental groups, another positive impact of treating people well.
Dan Price wrote a book that was released last April, Worth It: How a Million-Dollar Pay Cut and a $70,000 Minimum Wage Revealed a Better Way of Doing Business. The company encourages you to look for it through Bookshop.com so that a portion of the proceeds can benefit small, independent, and local bookshops. Because giving back is just the Gravity way.
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Jesssica Moore, Director of Sales
Gravity Payments is a credit card processing company focused on supporting small and micro-businesses through fair card processing rates. They saw independent businesses being overcharged and under-served by their credit card processors. "We knew that wasn’t right, so we decided to lower costs, be completely transparent, and provide better service for community business owners," says Dan Price, CEO, and founder.
