US fintech entrepreneur Dan Price – who in 2015 put every member of his firm’s staff on a minimum, annual salary of $70,000 – has been back in the news, with a recent BBC report looking at the outcomes of his decision. [1]

The piece explains that, five years ago, Price was making $1.1 million per year from his business Gravity Payments. However, his friend Valerie – an ex-soldier who was doing two jobs to survive – persuaded him that it was likely many of his staff were having financial difficulties and struggling to make ends meet.

Following a brisk round of accounting, Price determined that a blanket salary of $70,000 for each and every employee would provide them with the necessary resources to improve their lives, as well as stimulating their motivation and engagement.

Price drastically cut his own income from the firm and divested himself of stocks. Meanwhile, one third of his staff instantly saw their wages double.

Since then, the company’s headcount has also doubled and the total, annual value of the payments it processes has grown from $3.8 billion to $10.2bn.

Price told the BBC: “Before the $70,000 minimum wage, we were having between zero and two babies born per year among the team. And since the announcement … we've had more than 40 babies.” Employees are also taking better care of themselves, he pointed out, as in one case of a worker in the company’s call centre: “[This man] was commuting over an hour and a half a day. He was worried that during his commute he was going to blow out a tyre and not have enough money to fix that tyre. He was stressing about it every day.”

Following his salary rise, the call-centre employee moved closer to the office, took up exercise and began to eat more healthily.

“We had another gentleman on a similar team and he literally lost more than 50lb,” Price noted.

In a separate, 3 March article at Non-Profit Quarterly, [2] Price recalled an acquaintance telling him that if he were more traditional in his business approach, he could store up his riches and devote them to philanthropic causes.

Price was unconvinced. “He’s telling me that the world needs another billionaire philanthropist,” he said, “and I just don’t know if that’s the case … we’ve been relying on billionaire philanthropists for so long, and I don’t really think that’s working out very well for us.”

He added: “I think we need to have [more] justice and integrity engineered and designed into our system. I think we need to have companies where … people are tak[en] care of and given opportunities … that’s more intriguing to me than trying to become a billionaire, competing with Mark Zuckerberg or Jeff Bezos on the Forbes list.”

What can leaders learn from the example that Price is setting?    

The Institute of Leadership & Management’s head of research, policy and standards Kate Cooper says: “We know from our work with Business in the Community that financial problems put huge pressure on people’s mental health, and this story highlights some really strong examples of that – particularly the employee who was worrying all the way to work about his tyre bursting.”

She points out: “When you rely on your car to get to and from your place of employment, the thought that your work-related car use could actually incur a massive bill for patching up wear-and-tear issues can be terrifying. The same applies to individuals who are struggling to meet repayments on their loans and are receiving regular, stern phone calls from their creditors. As well as contributing enormously to workers’ stress levels, that sort of communication spawns significant disruption to the working day.”

Cooper notes: “Dan Price is addressing those problems: ‘Let me take the majority of your financial issues away.’ And what he is recognising in turn is that if you’re worried about feeding yourself and keeping a roof over your head, you’re not going to be engaging with what we may consider to be higher-level concerns. You’re not going to be worrying about your levels of fitness. You’re not going to be worrying about self-actualisation. You’re not going to be worrying about learning and development – because all of your energies will be devoted to fulfilling your most basic needs.”

As such, she explains: “It’s unsurprising that, with the security of their $70,000 minimum wage, staff have had the headspace to relax on the basics and focus on having other needs met – for example, to be healthier, to learn and to engage in more meaningful work. Two years ago, a joint study from the Child Poverty Action Group and National Education Union (NEU) [3] examined the impact of poverty on learning, and the results were stark. Almost 90% of the NEU professionals polled for the study said that poverty was causing significant harm to their pupils’ and students’ learning, with one NEU member telling researchers: ‘Parents are in crisis and not managing their children’s emotional or physical needs as they are so stressed about money.’

Cooper adds: “If you are worrying about having the resources to take care of the most fundamental aspects of life, you don’t have the scope to worry about anything else. People encouraging you to learn and develop are unlikely to get anywhere, because you just don’t have the capacity.”

For further insights on the themes raised in this blog, check out the Institute’s resources on developing talent

Source refs: [1] [2] [3]

Image of Dan Price courtesy of Gravity Payments