Saints and Scrooges
by Tom Sullivan
“Now, I’ll tell you what, my friend,” said Scrooge, “I am not going to stand this sort of thing any longer. And therefore,” he continued, leaping from his stool, and giving Bob such a dig in the waistcoat that he staggered back into the Tank again; “and therefore I am about to raise your salary!”
CEOs who don't act like CEOs are a rare breed, and newsworthy. Even more so when they are not fictional. Susie Madrak highlighted one the other day at Crooks and Liars. Seems this guy found out it paid off to double the salary of his entry-level employees. Blasphemy! Rush Limbaugh branded him a socialist. Need we say more?
In April, Dan Price, CEO of the credit card payment processor Gravity Payments, announced that he will eventually raise minimum pay for all employees to at least $70,000 a year.
The move sparked not just a firestorm of media attention, but also a lawsuit from Price’s brother and co-founder Lucas, claiming that the pay raise violated his rights as a minority shareholder.
But six months later, the financial results are starting to come in: Price told Inc. Magazine that revenue is now growing at double the rate before the raises began and profits have also doubled since then.
On top of that, while it lost a few customers in the kerfuffle, the company’s customer retention rate rose from 91 to 95 percent, and only two employees quit. Two weeks after he made the initial announcement, the company was flooded with 4,500 resumes and new customer inquiries jumped from 30 a month to 2,000 a month.
As Inc. magazine tells it:
Profit growth continued to substantially outpace wage growth. This spring, he spent two weeks running the numbers and battling insomnia before making a dramatic announcement to his 120-member staff on April 13, inviting NBC News and The New York Times to cover it: Over the next three years, he will phase in a minimum wage of $70,000 at Gravity and immediately cut his own salary from $1.1 million to $70,000 to help fund it.
Time will tell if Price is right or if "Gravity is being run by a well-intentioned fool." Still, it was Heaven Can Wait, wasn't it, where Warren Beatty's character, a quarterback suddenly inhabiting the body of an eccentric billionaire tells a boardroom full of stunned executives he wants to spend more money upgrading their tuna-fishing methods if it will save porpoises? He states the obvious:
Joe Pendleton: We don't care how much it costs, just how much it makes.
Speaking what he knows — football — Pendleton insists, "Let's be the team that makes the rules, plays fair, that gets the best contract, that's popular."
Now, for a little contrast:
SunTrust Banks in Atlanta is laying off about 100 IT employees as it moves work offshore. But this layoff is unusual for what the employer is asking of its soon-to-be displaced workers: SunTrust's severance agreement requires terminated employees to remain available for two years to provide help if needed, including in-person assistance, and to do so without compensation.
Many of the affected IT employees, who are now training their replacements, have years of experience and provide the highest levels of technical support. The proof of their ability may be in the severance requirement, which gives the bank a way to tap their expertise long after their departure.
[ See the follow-up story: Q&A about SunTrust's cooperation clause ]
The bank's severance deal includes a "continuing cooperation" clause for a period of two years, where the employee agrees to "make myself reasonably available" to SunTrust "regarding matters in which I have been involved in the course of my employment with SunTrust and/or about which I have knowledge as a result of my employment at SunTrust."
After the a media backlash, the bank sought to knock down the bad press, saying it had rescinded the clause.
Full Disclosure: I am related to one of those laid-off employees. This news came as no surprise. The bank has been trying to outsource that IT group for years.
The Washington Post explores what millennials love about Bernie Sanders. They're feeling more like SunTrust's IT group than Gravity's employees, if they can even find a job:
“I can’t foresee a future where we’re going to buy a house,” Reprogle said. “It’ll be 10 to 15 years, and by that time, we’ll be too old to have children. I don’t know how people afford to have children these days. We’re exactly the kind of people who should be looking at a middle-class lifestyle.”
They are looking for more Gravitys and fewer SunTrusts. Who is more likely to help them?