For a fairer business world: When the boss cuts his own salary
- Gravity Payments founder Dan Price, who introduced the 70,000 dollar minimum wage is coming to the Zukunft Personal in Cologne.
- At the exhibition stands, providers will be presenting software for payroll accounting and employee benefits.
Dan Price, co-founder and CEO of Gravity Payments, gave up his million-dollar salary to pay every employee a salary of at least 70,000 dollars. With this announcement he unleashed a broad debate on the extent to which money is a motivating factor and whether profit as the unique corporate goal has become obsolete. The businessman has been invited to the Zukunft Personal, the HRM Expo, as a keynote speaker. The exhibition is presenting specific solutions for wage, salary and incentive systems in four halls.
“My goal is to be a small speck in a revolution where business ceases to be about financial engineering and greed and starts focusing on values, serving others and alleviating problems in society,” says Dan Price. The CEO of Gravity Payments announced in 2015 that he would be raising each of his employees’ salaries to at least 70,000 dollars over three years and in return would be reducing his own salary of over a million dollars to 70,000 dollars. The idea came to him when an employee reproached him for ripping him off and only thinking of business profits. He also experienced from someone in his own group of friends that people that worked as hard as he did, were struggling to make ends meet. “The salaries of our lower paid team members were a burden that had been weighing me down.”
Magic number for happiness and well-being?
When he started thinking about an appropriate salary for his employees, he recalled a 2010 Princeton study by Angus Deaton and Daniel Kahneman stating that the magic number for well-being was somewhere near 75,000 dollars. A salary over that didn’t really have an impact on your emotional health. “Some people thought I was crazy when I told them my idea. But I believed this would have a positive impact not only on business, but on society too,” explained Price.
The company’s figures, currently the subject of a research project by a team from Harvard Business School, are quite respectable. Dan Price reports that the company’s average team happiness has risen from 8.1 to 9.0 out of 10 and he was recently given a new Tesla as a thank-you by his employees. “Of course, not everyone was happy,” pointed out the company founder and CEO. Two employees decided to move on as they didn’t like the fact that new company recruits were earning just as much as those with many years of service. However, the employee turnover rate has now at an all-time company low: minus 18.8% from our six-year average. “Our team is very entrepreneurial, and we adapted to the changes without sacrificing service to our merchants.”
“My thoughts on transparency transcend payroll”
Apparently, Price didn’t have any problems getting used to a new lifestyle: “CEO pay in America is ridiculous.” He did not need such a high salary to live on. The sum represented what it would cost to replace him as a CEO.
“My thoughts on transparency transcend payroll,” Price elaborated. A Gallup poll in 2015 found that 68% of people are not actively engaged at work. The only way to change this is to earn the trust of the workforce and tell the truth. “Businesses today need to become more transparent in general.” Dan Price will be speaking about experiences with his own team, his critics and imitators and his contribution to changing the way we think about business in his presentation “What I learned from my Million-Dollar Pay Cut” on Wednesday, 19 October 2016, at 3 p.m. (with live translation) in the exhibition centre, Koelnmesse.
From accounting software to employee incentives
The Keynote Arena where the US company founder will be giving his speech is an open space integrated into the exhibition like all the other stages at the Zukunft Personal. In the various halls at the exhibition, providers show products and services on all aspects of pay – from accounting software to consulting services and the outsourcing of payroll accounting. Reward systems and non-monetary incentives increasingly play a role in staff motivation and retention – in the form of vouchers for example, a rental bike or free health services. Visitors will also find various offers on these topics at many of the 650 exhibition stands.
About Dan Price
In 2004 at the age of 19, Dan Price co-founded Gravity Payments, a credit-card processing and financial services company. Dan’s recent decision to raise his company's minimum salary to $70,000 has captured headlines and inspired millions around the world. His leadership and entrepreneurship have earned him many awards, notably Entrepreneur Magazine’s “Entrepreneur of 2014” and the 2010 SBA “National Young Entrepreneur of the Year” awarded to him by President Obama. His upcoming book, “The Force of Gravity”, dives deep into his story, with real life examples of business and life lessons learned through his unique upbringing and inspiring entrepreneurial success story. Please find more facts and figures about the million dollar pay cut at thegravityof70k.com.
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