$70K bring trouble

By Chris Matyszczyk via http://www.inc.com   Article

What You Can Learn From the CEO Who Raised Salaries to $70K and Then Hit Trouble

“Big ideas always seem like good ideas at the time. …When Dan Price, CEO of credit card processing company Gravity Payments, decided to make Gravity’s lowest salary defy gravity, he must have felt sure this was a big idea. And a good one, too.

In announcing that the lowest-paid workers would earn $70,000, he said he realized that many of his employees simply couldn’t live on salaries that hovered below $40,000. …

Now, though, Price’s big idea has enjoyed some painful consequences. These might bedescribed as human consequences. Some employees were miffed that those whom they saw as making a lesser contributionwere suddenly making far more money. As Price told The New York Times, two important employees have already quit. They may not be the last.

This is troubling because Price’s Seattle-based business depends on the excellent service he offers. There’s only one way to deliver that: good, motivated people. Money doesn’t necessarily motivate. It might merely inoculate. It might merely cause people’s efforts to stagnate.

One web developer who quit, Grant Moran, told the Times: ‘Now the people who were just clocking in and out were making the same as me. It shackles high performers to less motivated team members.’

Somewhere inside the twisted human psyche is a vague sense of personal value and justice. But only some. Feeling that you’re overpaid doesn’t necessarily make you want to contribute more. Perhaps it just makes you feel luckier.

The best employee is the one who feels she’s being paid fairly and believes that, if her performance is excellent, there’s the prospect of more money, more responsibility, and the occasional vacation to Australia when the boss doesn’t call.

Price acknowledges that his big idea isn’t perfect. … He’s now forced to deal with the fallout not just internally, but publicly and among his customers. Some have left, fearing that he will inevitably have to raise his prices. Some are disturbed because they believe he’s trying to affect the business culture more generally. New customers, though, have apparently arrived. …

He claims he’s now having to rent out his house. He’s also being sued by his own brother Lucas, who owns 30 percent of Gravity and has grave misgivings about how much money Dan has taken out of the company.”

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