That Gravity of Dignity from Leaders
When Dan Price, C.E.O. of Gravity Payments, surprised his 120-person staff by announcing that he planned to raise the salary of every employee to $70,000 a year — he did something innovative in the field of leadership that has been sorely missing.
As originally reported by the New York Times Price, the founder of Gravity Payments, began percolating the idea after he read an article on happiness. It showed that, for people who earn less than about $70,000, extra money makes a big difference in their lives.
I’m not saying his employees felt undervalued or that there was gross inequity in a toxic organizational culture. In fact, from all accounts, Gravity Payments had been a pretty typical company built by an entrepreneur from the ground up. As a CEO however, Price departed from the status quo when he implemented his new company minimum wage.
He restored dignity
It takes real leadership to “see” people in their humanity, beyond their circumstance and to their, sometimes, un-tapped potential. For many of the employees at Gravity Payments, the announcement means they will more than double their salaries (the average salary had been $48k per year), even to the entry level sales and support positions.
When people are valued for their person-hood, not their position, they experience this as respect, mutuality, positivity in attitude – to name a few. Knowing that you matter is a core human need that we all share, and we all gravitate towards environments that will reinforce and support our personal sense of worth.
Mr. Price, who started the Seattle-based credit-card payment processing firm in 2004 at the age of 19, said he would pay for the wage increases by cutting his own salary from nearly $1 million to $70,000 and using 75 to 80 percent of the company’s anticipated $2.2 million in profit this year.
Leading by example
Servant leadership is about being willing to set the tone and take the same actions, as the leader, that you would ask your reports to take. It’s an attitude-shift that says “nothing is beneath me.” By Price funding the majority of his employee’s pay increases by reducing his own salary, he is reinforcing an employee culture of value, respect, empowerment, and collaboration – to name a few. How do you think his employee morale, productivity, and buy-in are going to be now?
I don’t really care that the United States has one of the world’s largest pay gaps, with chief executives earning nearly 300 times what the average worker makes, according to some estimates. That is much higher than the 20-to-1 ratio recommended by Gilded Age magnates like J. Pierpont Morgan and the 20th century management visionary Peter Drucker. As a capitalist my opinion is that we all have choices, and if you built the company (or run it) it’s fine to be paid whatever your revenue can justify and sustain.
However, I do believe wholeheartedly in parity and an equitable pay for performance system that is based on measurable results. People are always more motivated when they know what is expected and what the goal is. What I’m most supportive, and an advocated for here in this case is the cultural value of dignity in the workplace — the unspoken KPI’s of a companies culture will always be “felt” by the employees. Good leaders coach towards “attitude and effort.” As Mr. Price stated:
“The market rate for me as a C.E.O. compared to a regular person is ridiculous, it’s absurd,” said Mr. Price. Of all the social issues that he felt he was in a position to do something about as a business leader, “that one seemed like a more worthy issue to go after.”
The happiness research behind Mr. Price’s announcement came from Angus Deaton and psychologist Daniel Kahneman. They found that what they called emotional well-being — defined as “the emotional quality of an individual’s everyday experience, the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one’s life pleasant or unpleasant” — rises with income, but only to a point … that point turns out to be about $75,000 a year.
1. How do I reflect a “servant-leader” mindset?
2. Do I “see” people based on their person-hood or position? Why?
3. What ways have I contributed to my workplace culture being positive, or negative?
I would love your thoughts! Please share in the comments below, or connect with me directly through my website. I’m piloting and BETA testing an online ecourse on the topic of Authenticity using a learning management system on my website, and would welcome your contribution to that as well.