Several months ago, thenewgreen shared an article about the CEO of Gravity Payments, after he decided to raise the salaries of all employees to at least $70,000 per year, and also reduce his salary from nearly a million dollars to $70,000.
The CEO, Dan Price, had read an article on happiness and decided that paying all employees at least $70,000 would promote happiness.
Which of the following scenarios best describes Gravity Payments today?
1. The change was a fantastic success. Gravity Payments won many new clients with the publicity of the policy change. Employees are loyal to the company, fiercely supportive of the salary policy and the CEO, and most of all, happy. Finances are good with business revenue and low executive salary more than covering the salary increases.
2. The change was somewhat successful. Gravity Payments enjoyed a publicity boost and some new clients. Profits are slightly down as the executive pay cut was not enough to cover the new minimum wage policy. Employees enthusiastically support the policy.
3. The change had negligible effect. Gravity Payments received a mixture of positive and negative publicity. Existing customers agreed to continue with Gravity Payments after receiving reassurance that their prices would not increase due to the salary policy. Employees are supportive of the salary policy.
4. The change was somewhat detrimental. Some veteran employees who did not see a raise due to the salary policy have grumbled about fairness. One customer left Gravity Payments in response to what they saw as a political statement. Most employees are supportive of the salary policy.
5. The change was disastrous. A few customers left Gravity Payments in response to what they saw as a political statement. Other customers left fearing price increases, despite reassurances to the contrary. Some of the company's most valuable long-term employees quit, citing unfairness of the salary policy. Previously lower-paid employees have also expressed discomfort and concern over their raises under the salary policy. The CEO has rented out his house to try and make ends meet. A large shareholder has sued Gravity Payments, potentially threatening the company's existence.
Guesses and reasoning welcome, but no spoilers, please. I will update this post with the answer and sources after a time.