Remember this guy? I'm glad it all worked out, because it was a good thing to try:
In April, Dan Price, CEO of the credit card payment processor Gravity Payments, announced that he will eventually raise minimum pay for all employees to at least $70,000 a year.
The move sparked not just a firestorm of media attention, but also a lawsuit from Price’s brother and co-founder Lucas, claiming that the pay raise violated his rights as a minority shareholder.
But six months later, the financial results are starting to come in: Price told Inc. Magazine that revenue is now growing at double the rate before the raises began and profits have also doubled since then.
On top of that, while it lost a few customers in the kerfuffle, the company’s customer retention rate rose from 91 to 95 percent, and only two employees quit. Two weeks after he made the initial announcement, the company was flooded with 4,500 resumes and new customer inquiries jumped from 30 a month to 2,000 a month.
The changes may not come as a surprise to Price. After an entry-level employee got angry with him in 2011 over low pay, he decided to give out 20 percent annual raises to his 120-person staff. While the raises came with a cost, profit still rose as much as the year before thanks in part to a 30-40 percent productivity increase. He decided to hand out the same raises the next year, to the same result. Before April’s announcement, the company reached $150 million in revenue, $2.2 million in profit, and had a 15 percent annual growth rate.Now the company is in the process of instituting the larger pay increases, which immediately raised the lowest salaries to $50,000 a year and implemented $10,000 raises at the bottom each year for the next two years. Those who already earn between $50,000 and $70,000 will also get $5,000 raises.