CEO who gave all employees $70k salary says staff saved company by taking voluntary pay-cut
The CEO has since increased his staff's wages
Staff at credit card processing company Gravity Payments volunteered to take dramatic pay-cuts after the pandemic ravaged their bottom line, reports CBS.
Six years ago, CEO Dan Price increased the salary of everyone at his company to at least $70,000. He did this by slashing his own salary by $1 million, which brought him both criticism and praise.
But the Pandemic caused Gravity Payments to lose 55 per cent of its business in March of 2020 alone. That was until employees volunteered to take pay cuts.
Carrie Chen and Alex Franklin were two staff members who willingly dropped their salaries to $40,000.
The employees have since had their salaries increased and have been paid the difference from their initial pay-cut.
"We are right on track for the American dream, you know, we have a beautiful baby boy, a wonderful home, a beautiful life. We're not only just living, we're able to thrive," Chen said.
In 2015, after his historic decision, Price's Seattle-based credit card processing company Gravity Payments did not fold as many predicted, and in fact, succeeded.
Price told CBS that he had tripled his workforce and is still paying his employees $70,000 a year, including himself.
Taking such a monumental pay-cut meant that Price had to downsize his life. He sold his second home and tapped into his savings in order to finance the changes he had ushered in.
"It does go against what people expect and what we usually see in terms of corporations and companies," said Andrew Hafenbrack, assistant professor of Management & Organization at the Foster School of Business.
The average CEO salary is likely 320 times more than the salaries of their workers, says the Economic Policy institute. For comparison, in 1965, the average CEO salary was still miles above Price's at $924,000. Then, in 2018, CEOs at major companies made an average of $17.2 million.
"This shows that isn't the only way for a company to be successful and profitable," Hafenbrack said in relation to Price's landmark finance change.
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