- It’s a poignant story, one that I almost wrote. Until I realized Price knew more than he was letting on. The lawsuit couldn’t have been prompted by the pay raise—if anything, it may have been the other way around. And his salary before the big announcement was unusually high. As I read through the court record and media reports, I began to see how Price was writing his own origin myth one interview at a time. With what he says is a $500,000 book deal, he’s solidifying his place as the next do-gooder businessman, joining the CEOs of bigger companies, such as Zappos’s Tony Hsieh and Whole Foods Market’s John Mackey. In the process, he’s surely become the only credit card processing executive to be feted by Esquire, courted by literary agents, and swooned at by women on social media who declared him “yum.” But how it all happened is a little more complicated.
I caught this on my car ride home and couldn't pull myself away. Crazy to think about. “I’m just doing the math, and I’m like, ‘Wow,’ ” Price told me. He figured he could get as many as 700 new customers from the publicity. “That could pay for 10 percent of this crazy thing that I’m doing. … Of course, it became about something way bigger than that in hindsight, but at the time I was thinking so tactically.” This is super interesting - he tested with a low amount, his idea was validated, and he went big.Price had gotten publicity for a previous pay increase, telling the Seattle Times in 2013 that he was raising salaries 2 percent to make up for a federal hike in the employee payroll tax. Ryan Pirkle, who runs Gravity’s communications, says with the bigger 2014 raise, Price told him, “I want the right people to tell the right story. I want exclusivity.” That’s why they invited the New York Times and NBC News to the announcement.
More dirt on Price: CEO Dan Price hasn’t actually mortgaged his homes This guy might be a mendacious publicity hound, but that alone doesn't mean his salary program is a bad idea. Things could go well for Gravity Payments thanks to all the publicity. I think the salary program is a questionable idea in principle, however, which is why I was surprised at the demands that we give it more time. You asked Yet you must. How many janitors do you hire? Zero, one, ten? If you have no janitor you might have to offer more salary to other employees to lure them from cleaner workplaces where they don't have to take out their own trash. One janitor may be cheaper than paying everyone else more to put up with a dirty environment. So you hire the number of CSRs, receptionists, and janitors that you judge will be best for the bottom line. Companies that do a better job at making these difficult decisions will be more successful. It's possible, too, that paying above-average salaries will allow you to hire employees that perform above average. (This seems to be Costco's approach, leaving workers that perform below average to compete for jobs at Walmart.) The business is still getting more value from the employee than it is paying in compensation, just like Ford did after raising wages. I don't see how it is sustainable for a business to continually take a loss on labor any more than it can with any other input.How do you quantify the amount of revenue a customer service rep brings in? A receptionist? A janitor? You can't.