The man called America’s “Boss of the Year,” at least, by ABC News, is facing problems, including the loss of top talent after giving a massive boost to many of his employees’ salaries.
Seattle-based Gravity Payments CEO Dan Price announced in April 2015 that he would implement a minimum $70,000 salary for all his employees. Back then, ABC, NBC and CBS pounced on the story and praised Price.
Together, they spent 18 minutes, 44 seconds praising Price, but almost entirely ignored the possibility of negative repercussions. Now that “backlash” is here, according to The New York Times. But the broadcast networks are ignoring that story.
During the focus on Price and the salary hike, CBS This Morning used 20 seconds -- barely one eighth of the story coverage -- to point out that many companies cannot increase their employees’ salaries and still make a profit. Rebecca Jarvis of ABC News stated in passing that it “can be risky” to use company profits to pay for raises, like Price is doing. NBC didn’t mention any possible problems that could stem from Price’s decision.
On July 31, three months after the initial announcement, The New York Times ran a follow up story about Gravity Payments [1]. The Times reported that raising salaries so dramatically has caused problems for Price’s company -- including losing customers and employees -- but, so far, the networks aren’t covering it.
Some customers withdrew their business because they feared future fee increases, while others left in protest of “what they viewed as a political statement,” the Times said.
Employees that resigned say they felt it was unfair to double the salaries of the newest hires without giving raises to those who’d worked their way up beyond the new minimum salary rate.
“He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump,” former Gravity financial planner Maisey McMaster said.
The pay increase and media frenzy over it also brought Gravity a flood of new clients, but that has caused other problems.
While Gravity won’t make a profit off of the new customers for at least a year, they have already had to hire a dozen new (higher paid) employees to handle the influx.
To top it off, Price’s brother, Lucas -- a co-founder of Gravity -- filed a lawsuit against Dan Price for violating his rights as a minority shareholder [2] two weeks after the initial salary announcement was made.
“We don’t have a margin of error to pay [the] legal fees,” CEO Dan Price told the Times. Why? Because so much of the company’s profit (and his own salary) is needed to support the newly increased minimum salaries.