Dan Price, the CEO of Seattle-based credit card processing company Gravity Payments, made headlines five years ago for voluntarily slashing his million-dollar salary.
He took the salary cut to pay his entire staff a minimum wage of $70,000, believing it was the right way to give his employees a morale boost while making sure they receive a fair and livable wage.
The extraordinary move gained worldwide recognition, yet Price thought he shouldn’t have gotten that much praise for what he did. Instead, he believes it should be the norm for all businesses and employers.
Gravity Payments, which also has a location in Boise, caters to small and medium-sized businesses. The company helps reduce the costs and problems encountered by enterprises accepting credit cards for payment.
Gravity also assists small businesses to dive into the world of e-commerce to compete with more prominent companies.
Like many businesses, Gravity’s revenues took a nosedive in the first two months of the pandemic.
“We were losing on average, about $50,000 per day, or $1.5 million a month,” the CEO told Yahoo Money. “We had literally three to four months to survive.”
He informed his staff about the company’s financial woes and asked them how they can avoid laying off people. And his 235 employees in Seattle and Boise came together with an excellent solution.
“They came back to me and said, why don’t we see what every individual on the team can do in terms of working extra hours, and volunteering for a pay cut,” Price said.
The CEO was blown away by his team’s response. Ten of his employees elected to receive no pay at all. Two to three dozen employees volunteered to slash over 50% of their salary.
In total, 98% of Gravity staff participated in the pay cut, giving up a total of $750,000 in wages. To help his employees, Price also cut his salary to zero during this tough time.
Because of their collective sacrifice, the company went from losing a million and a half dollars a month to losing only half a million dollars.
If it weren’t for his team’s effort, the company would have been forced to lay off employees or raise fees by $20 per client to earn the additional $400,000 the company needed.
However, Price didn’t want to do that knowing that most of their patrons are small business owners who surely took a hit during this pandemic.
“I’m sure it would be a big loss of trust if we, all of a sudden, decided to do layoffs. It would undercut exactly the heart of how the company is supposed to work,” he said. “This company has always been about sticking up for people over money, over greed, over corporations.”
Gravity is getting back on track by helping their clients do the same. Aside from assisting with their recovery, they want to make sure they’re also prepared for the future.
The company is working on getting clients the technology and tools required to get their businesses online since the pandemic isn’t ending anytime soon.
Now that the company’s financial situation has improved, Gravity used its company savings, available debt, and recovering revenue to repay their employees who volunteered for a pay cut. The average employee received about $4,300 in back pay.
“With the concern that we have, which is that the pandemic could go on for quite a lot longer, we just felt like we owed it to really trust those employees and give them that money back,” Price said.
The company lost 55% of its customers’ base volume in March. Since then, it has grown and is now down to just 20% from its pre-pandemic levels.
Gravity added more clients during the pandemic than ever before, which helped with the recovery of their customer count.
Aside from significantly reduced salaries, his staff also doubled their productivity and worked more hours than required to serve their growing number of clients. Some employees also volunteered to do during the weekends.
This is what happens when a company takes good care of its employees. Other businesses should definitely take notes from this incredible CEO!
Updated: Six years after raising his employees salary to $70K the company continues to thrive. See video below: