September 26, 2021
Gravity Payments CEO Dan Price was hailed a hero after he cut his own salary by $1 million to increase his employees' wages.
Some of the companies that thrive today are headed by selfless leaders who choose to invest in their employees. Among them is Dan Price, CEO of Gravity Payments.
Six years ago, Price learned that one of his employees had to work an extra job at McDonald's to make ends meet. According to the employee, her salary was not enough to cover the bills in Seattle.
Wanting to retain talent while helping his employees, Price made a bold move and cut his own salary by $1 million. The allocation helped raise his staff's salary to at least $70,000 a year.
Slashing his pay meant changing his lifestyle as well. That meant selling a second home and using his own savings for personal expenses. While some called him a hero, others believed Gravity would go bankrupt.
However, the opposite has happened, and the company has since nearly doubled the size of its employees. In fact, Gravity is thriving and has since tripled.
Foster School of Business assistant professor at the University of Washington, Andrew Hafenback, claims Price's decision goes against the norm.
In fact, there are several ways for a business to have both success and profit. He added:
"Do you pay what you can get away with? Or do you pay what you think is ideal, or reasonable, or fair?"
Gravity's turnover rate has also been cut in half, allowing talent retention and skill development to increase. The company's loyal employees have since helped the business boom.
"Zero big companies are following suit because the system values having the highest return with the lowest risk and the lowest amount of work," Price said about his leadership style and decision.
Still, Gravity was spared from the effects of the pandemic. In March 2020, the company lost 55% of its business and saw failure down the line.
However, its employees helped save Gravity by voluntarily taking salary cuts. When the company bounced back, they were given back what was lost.
Many Gravity employees are grateful for their boss' sacrifices and leadership style. As a gesture of gratitude, they all pitched in to buy him a new car. Price shared:
"My employees have done way more for me than I could ever do for them. So the fact that they wanted to get me such an unreal amazing gift."
Price is not the only business leader who recently made a kind gesture toward his employees. Recently, Pio Imperati, Connecticut's New Haven salon owner, sold his business to an employee for $1.
Kathy Moura, the lucky hairstylist, was thrilled to be the first to have a business in her family. At the time, Moura had worked in the establishment for over a decade.