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Move to raise employees' minimum salary to US$70,000 reportedly backfires on US company
2 Aug 2015
Lee Min Kok
SEATTLE - Things are not looking quite so rosy at US company Gravity Payments, less than four months after it made the news for a groundbreaking move to erase income inequality.
In April, the Seattle-based credit card payment firm announced it would be raising its employees' pay to a minimum of US$70,000 (S$96,028) across the board, earning praise from its 120 workers.
CEO Dan Price, who took a US$930,000 paycut to sanction the move, had said then: "Everyone started screaming and cheering and just going crazy."
But The New York Times, which first broke the story, is now reporting that Mr Price's decision has generated internal strife within the company.
"... Mr Dan Price took the drastic step of taking a
whopping paycut of US$930,000 (S$1.26 million) from his US$1-million
annual salary in order to elevate his employees' pay to a minimum of
US$70,000. The founder of Seattle-based credit card payment processing firm
Gravity Payments now earns the same as the rest of his 120 staff
members, reported The New York Times earlier this week."
Despite the overwhelming publicity generated - it has been besieged by job seekers and new clients - two of Gravity Payment's "most valued" employees have quit over what they viewed as an unfair practice to treat employees equally.
Maisey McMaster, who joined the company five years ago and became a financial manager, said she was initially "swept up in the excitement" but soon began to have doubts.
"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," said the 26-year-old, who helped Mr Price do the sums on whether Gravity Payments could afford the move in the first place.
Ms McMaster, who felt it would have been fairer to give smaller increments pegged to the employee's experience, has since quit, citing "burnout" from working long hours.
Another skeptical employee who left was web developer Grant Moran.
While the 29-year-old's salary was increased to US$50,000 from $41,000 (first stage of the raise), he found the policy "disconcerting".
"The people who were just clocking in and out were making the same as me," he told the paper. "It shackles high performers to less motivated team members."
Self-doubts have also crept into the employees who stayed, with some saying they felt the increased pressure at work as they questioned if they really deserved the raise.
To add to Gravity Payments' problems, Mr Price's older brother and the company's co-founder, Lucas, has also filed a lawsuit over the pair's "longstanding differences".