(Newswire.net — August 3, 2015) — While people called him a financial hero, some entrepreneurs called him a socialist and a fool, for his decision to improve the quality of life for every worker in his company, on his own account. The employees greeted the decision with a long lasting round of applause and cheers, and Dan Price, the CEO and owner of the Gravity Payments, instead of major success, experienced the unexpected gravity of his own move.
Only three months after he was proclaimed a social chevalier, 31-year-old CEO started losing not only clients, but employees too.
“I’m working as hard as I ever worked to make it work,” Price told the New York Times in a video that shows him sitting on a plastic bucket in the garage of his house. “I’m renting out my house right now to try and make ends meet myself.”
After he announced the new salary minimum for all 120 employees at his Gravity Payments credit card processing firm, Price slashed his $1 million pay package to pay for it. He said he was doing it to set an example of how a responsible CEO should behave addressing the wealth gap.
The move cost him a few clients, who disapproved of his method, but what hurt him the most was two of his the most valuable workers leaving him because the salaries of less valuable employees were now closer to their salaries.
“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,” New York Times cited 26-year-old Gravity financial manager Maisey McMaster.
After Price told her that she was being selfish and only thinking about herself, she left him as well.
“That really hurt me,” she said. “I was talking about not only me, but about everyone in my position,” McMaster told the NY Times.
Grant Moran, 29, also quit, arguing that people who were “just clocking in and out” were getting the same paycheck as he. “It shackles high performers to less motivated team members,” Moran said.
Price agreed that McMaster and Moran, or anyone that criticized the move were not wrong, however it doesn’t make them right either.
“There’s no perfect way to do this and no way to handle complex workplace issues that doesn’t have any downsides or trade-offs,” he said.
Living through a similar story as the movie character Jerry Maguire, Price’s company has coped with severe losses. Although he received new clients inspired by his move, those accounts won’t start generating profits for at least another year, according to NY Times.