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Company Testing Standardized Salaries Is Struggling
jmcbain writes: In April 2015, Dan Price, the CEO of online payments company Gravity Payments based in Seattle, announced that all employees would have their salary bumped up to a minimum $70,000. Slashdot covered this news. Since that time, however, things have not gone well. Some employees quit because they felt it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. Furthermore, after reducing his own salary from $1M to $70K, Mr. Price is now renting a house 'to make ends meet'. On an unrelated note, Mr. Price's brother, who is a co-founder of the company, is suing him.
Imagine that.
Differences in pay exist for a reason: Because different people perform functions of different value to the company.
Wait, so great employees don't like making the same as their mediocre colleagues?! Get the #*@! out of here!
Most linux users don't know this, but the man pages were named after Chuck Norris. Chuck Norris fsck'ing hates noobs!
Those must be some shiny floors.
Minimum threshold fixed. Thanks!
This sounds like something out of an Ayn Rand novel. It's very similar to something that happens in Atlas Shrugged.
Silly quasi-communists.
At least that guy is allrigh as he only wasted own money, as opposed to the actuall communists and socialists, so good riddance.
Nice experiment of price difference as extra motivator...
One thing that often is missing from discussions about raising minimum wage / minimum salary is what to do with those already making more than the new value. I (like most engineers) make more than minimum wage. I've seen minimum wage go up by 40% since I entered the work force, but my own salary has only gone up by 25% in that same period. Minimum wage goes up, but my buying power goes down.
Same thing happened at walmart when they bumped their lowest paid workers up to the minimum wage.
http://business.financialpost.com/news/retail-marketing/wal-marts-pay-raise-creates-thousands-of-unhappy-workers-its-pitting-people-against-each-other
Senior workers got no raise and feel disrespected.
None of them can see the clouds; The polished wings don't care.
It's kind of weird the way this was implemented but I like the notion.
I think that if you are willing to work, you should be able to support yourself comfortably. I am not sure that absolutely equal pay for everyone is exactly right although I do think that people who quit over having someone else make as much as them is pretty petty and entitled.
I would personally not care one bit if a fast food worker got paid as much as me or more.... good for them, I wouldn't want to do that job so why would I complain?
My eyes reflect the stars and a smile lights up my face.
whenever CEO pay comes up on this site, people bitch about how much more the CEO makes vs rank and file. Okay, valid complaint.
Here a CEO bucks that trend, nukes his own salary and gives everyone a *minimum* 70k salary -- which is different from everyone getting 70k. He not only does a commendable thing: paying employees more than necessary; but walks the walk and takes a massive paycut himself.
The real story here is the crab-pot mentality. If I'm making 100k, and my cubicle neighbor goes from 35k to 70k, that doesn't have any impact on me whatsoever*. Why complain?
*small scale, intra-company comparison here, yes I know if the minimum wage was suddenly 70k, that's a different beast.
Having run a company, I can get this...it's a refreshing and seemingly decent approach to sharing the wealth.
Great contrast to all the money-grabbing, "screw the employee" bosses that are in the news all the time.
Maybe where he went wrong is not allowing an "upside".
Sure, not everybody who *thinks* they deserve extra really do.
But in my experience some sure as hell do...the trick is to identify them and give them fair value.
(My top staff regularly got 20% over market rates - they earned me far more, so I was happy to pay.)
Snip: "You can ignore economics, but economics won’t ignore you.
That’s the tough lesson Dan Price, CEO of Gravity Payments, a Seattle credit-card processing company, is learning.
Four months ago, Price announced he’d slash his own multimillion-dollar pay and set a company-wide $70,000 minimum wage.
He got the idea after a friend explained her difficulty paying back student loans and surviving on $40,000 a year — a salary many Gravity employees were making.
Price’s stand against income inequality made him an immediate darling of the left.
But key employees saw it differently.
Financial manager Maisey McMaster liked the idea at first — until she thought about it.
“He gave raises to people who have the least skills and are least equipped to do the job,” she told The New York Times. Meanwhile, “The ones who were taking on the most didn’t get much of a bump.”
She thought it would be fairer to give smaller raises, with the clear chance to earn more with experience. Price brushed off her doubts; she quit.
Also out the door: Web developer Grant Moran. He says, “Now the people who were just clocking in and out were making the same as me.” Plus, having your pay level a very public matter is a problem, with “friends now calling you for a loan.”
Moral of the story: Some people work harder than others; some have stronger skills — and they don’t think it’s fair that they’re paid the same as others.
Price will soon be left only with workers worth his chosen minimum wage — or less.
The company is already in chaos thanks to the policy — but the big problem is ahead, as it tries to keep growing and innovating with only mediocre talent"
I quit my 7-11 job when I was in first year university exactly because I had just gotten a raise to $0.50 above minimum a few months before the minimum was then raised by $0.50. When told that I wouldn't benefit from the raise of the minimum wage, and then found out I would now be making the same as the new just-hires, I basically walked.
Having said that, I do long for the coming days of post-scarcity when a living wage is all one will need, and work will be voluntary, and won't even be considered work. Any manual labour will be automated, including production. Energy, food, and living expenses will be near zero, and humanity will enter a new golden age of freedom from the drudgery that is 'work'. People will be free to create, and be on perpetual vacation.
Ah, one can dream.
...and as soon as job was out of the picture, it failed horribly right?
Oh, wait...
BeauHD. Worst editor since kdawson.
Yeah, how dare he try to put his employees first - even ahead of himself. What an asshole!
BeauHD. Worst editor since kdawson.
Steve Jobs had two main feelings/opinions;
1. Steve Jobs always has the right answer.
2. Apple employees and customers exist for the sole purpose of making Steve Jobs lots of cash.
You should not expect any kind of loyalty from your employees, so you have no obligation to have any for them. Use them, work them down, toss them, replace them.
They do the same with you.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
To a degree In Next - look it up. Two tier system, 75k seniors, everyone else 50k. The concept can definitely fly, as long the company operates like that from the get go. In the RTFA case the problem was the abrubt switch and not factoring senior employees at all, but that does not mean the model itself is flawed.
I think you must have made a typo there somewhere, I tried to understand what you were saying, but I'm unable to reconcile it with all of our economic models based on rational actors. Since clearly the economic models are correct, whatever you're proposing is just wrong.
If I have been able to see further than others, it is because I bought a pair of binoculars.
To be fair, Next was just expensive toys company where a lot of the employees there were not exactly motivated by the money (perhaps that was even the whole point). It was certainly not consumer electronics moneygrab as Apple after that. AFAIK in that case, socialist payroll was no longer on the table.
LOL! All CEOs have known this at least as long as I have been alive.
It's many of the workers who still haven't figured it out the true nature of the interaction.
Do what thou wilt shall be the whole of the Law
The 'trouble' this article talks about is some drama amongst the workers, part of that fueled by the public spectacle of what happened. A critical ingredient of what's missing from this story are the answers to questions like: "Did the increase in pay cause profit margins at the company to drop?" and "... by how much?"
All this article really says is extreme actions have consequences.
"I like to lick butts!" by MobileTatsu-NJG (#32700246) (Score:5, Informative)
Gee, who didn't see THAT coming! Socialism does not breed happiness. Paying EVERYONE the same breeds resentment. Those that worked HARD, and worked their way up the ladder, are now ticked off, because all of their hard work was for nothing, because now the new hire, off the street that knows NOTHING, gets paid the same. Those that goof off, don't work hard, get paid the same as the person that will bust their butt. Customers, some of which already left, are worried that paying everyone the same, will result in the fees going up. Great job! You backhandedly once again showed that socialism DOES NOT WORK, never will work!
Matthew 20:1-16
“When evening came, the owner of the vineyard said to his foreman, ‘Call the workers and pay them their wages, beginning with the last ones hired and going on to the first.’
“The workers who were hired about five in the afternoon came and each received a denarius. So when those came who were hired first, they expected to receive more. But each one of them also received a denarius. When they received it, they began to grumble against the landowner. ‘These who were hired last worked only one hour,’ they said, ‘and you have made them equal to us who have borne the burden of the work and the heat of the day.’
“But he answered one of them, ‘I am not being unfair to you, friend. Didn’t you agree to work for a denarius? Take your pay and go. ... are you envious because I am generous?’
And then some workers pouted, and stamped their feet, and said, "my value is my pay, and you have taken away that margin that distinguishes me from the low", some said "only my pay reflects my performance, and if you pay me decently, I might not have an incentive to perform, or the pressure to perform will be too high" contradicting themselves at every turn, and they left in a huff. Or a minute-and-a-huff. And they complained that the man who owned the vineyard was a socialist, and was not out to screw as much money out of his vineyard workers as possible, and was therefore a weak man, and not fit to rule them.
Those who can contribute significant, above-and-beyond value naturally feel that people should be rewarded in proportion to their contributions.
Those who cannot contribute significant, above-and-beyond value naturally feel that everyone should receive equal rewards, regardless of their contributions.
By setting policies that pander to the second group, you wind up losing members of the first group, resulting in a company full of under-performing slackers. No surprise such a company doesn't do well.
Dickhead.
Anoxia can hit very quickly. So you won't be any use to your stupid kids as you'll be passed out, and both of you will die. Put on your own mask. As a functioning adult you'll be able to do it much faster than the kids. Then help the kids. Fussing with the kids first will get you (and them) killed.
A few employees quit, big deal. They were clearly entitled and apparently do not mind not having a job.
In my experience, when a company makes a move that's likely to drive it bankrupt, the first to leave are the ones smart enough to see it coming. They know they can easily get another job somewhere else.
Proof that self-entitled cockbags can fuck up anything.
Chas - The one, the only.
THANK GOD!!!
Next was just expensive toys company where a lot of the employees there were not exactly motivated by the money (perhaps that was even the whole point). It was certainly not consumer electronics moneygrab as Apple after that.
It was certainly not successful, and part of that was that NeXT machines were as much more expensive than Macs as Macs were than PCs at the time. The differences seem relatively minor now, but at the time, they were massive, especially as you got up into machines with video cards and big monitors. Only IBM's pricing approached Apple's in the PC world. But NeXT systems were in a whole other pricing class, up with the Sun workstations which had a whole lot more CPU than they did. They were, in fact, perhaps the first Hipster computer.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
In my experience, when a company makes a move that's likely to drive it bankrupt, the first to leave are the ones smart enough to see it coming.
Exactly how much experience do you have helping run shifty companies into the ground?
There are other possibilities. He could have repeatedly been one of the first to leave. Or he could be experienced, but not as smart as the first to go, and be one of the second to leave.
Personally, I think that laid off is better than quit, because then you get some of your unemployment insurance money back. Usually, a pittance. Still, it's nice to get some back when so much of your tax money is spent on moral atrocities.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Henry Ford was noted for paying more than his competitors. This allowed him to have his pick from the labor pool and reduce absenteeism. An actual capitalist is willing to pay what something is worth.
Gravity Payments is a privately held company. The majority owner is doing what he wishes with his property. If he was being miserly with his property many would stand up for his property rights. (His brother is the only one that might theoretically dispute his use since he is the minority owner, but that is not a given depending on how they agree to the split of ownership.)
People claim to left because the longest-serving people got little increase. But those people were making the same or less just before. If what the are being paid now is not what they are worth, why was it what they were worth before?
These anti-capitalists are cutting off their own noses to spite someone else's face.
“The salient fact of American politics is that there are fifty to seventy million voters each of whom will volunteer to live, with his family, in a cardboard box under an overpass, and cook sparrows on an old curtain rod, if someone would only guarantee that the black, gay, Hispanic, liberal, whatever, in the next box over doesn’t even have a curtain rod, or a sparrow to put on it.” -David X Machina
What they are doing is highly unusual.
If they want to succeed in doing something so unconventional, then they best be prepared to quickly "tweak" their plan/arrangement in different ways to deal with issues.
For example: putting everyone at exactly $70k is not going to work in the long run. Not unless you also have a way of rewarding and motivating employees to be productive AND punishing employees who aren't productive.
I don't see it working, unless they adjust so significant rewards can be available, and those who make the "minimum" can Lose money or be required to pay back, If they fail to achieve some set minimal objective
This has nothing to do with socialism. This is not a farmers co-op or whatever that "hasn't been working" for 100+ years, this is a company that has fucked up the concept of pay scales despite it being what every large company used to do and what a lot of governments do for their workers today.
It's not rocket science. After so many years you go from a band 1 whatever to a band 2. If you are shit-hot and clearly work above your grade you either get a promotion in pay grade, a temporary promotion, or a bonus. Just because HR weenies can't be bothered to stop playing Facebook games and can't learn from the past doesn't mean that it's difficult.
Disclaimer (since so many people here like shooting messengers), I work in a small place with a complete lack of HR weenies and have a negotiated salary but I have worked for a multinational (extremes of both reason and insanity), a government owned corporation and a university in the past - all of which had known salary scales and did not fuck that part of things up. I'm not advocating it (for all those messenger shooters out there) just pointing out that there is a very long list of places that do not fuck it up.
It's not actually the minimum wage - it's the "illegal alien employment threshold wage"
When government created (and now occasionally raises) the minimum wage, it does not change the value of the work the employees perform per hour, nor does it alter the value of having those tasks performed. In other words: If a shopkeeper needs his floor swept, that task has a particular value to him and if he can pay somebody below a certain rate to do he will hire somebody to do it and the task will be done. Having the government order him to may more per hour does not magically make the task more valuable nor does it provide more money to pay for the task. The shopkeeper must either pay somebody "under the table" (off-books) to do it at the realistic wage or let the task go unperformed.
Minimum wage hikes only provide four groups with a benefit:
1. Politicians who use it to appeal to certain groups
2. Minimum wage workers who get a small temporary bump in their pay - their pay goes up but then their job goes away or promotion options evaporate or the resulting inflation ripples through the economy and then prices rise so their new bigger salary buys no more than it used to.
3. Illegal workers who see an explosion of opportunities doing illegal work at below the minimum wage line (which has risen).
4. The most important element of the Democrat party: Labor unions who are generally not paid minimum wage (so most people would not suspect a link) but whose contracts often link their levels of pay and benefits to the minimum wage (so when minimum goes up, union members automatically see their wages and benefits inflate).
Atlas Shrugged was about a path to her fantasy about what Tsarist Russia was like when she was too young to read. The bit about all the great men going "on strike" of self imposed exile and the nation collapsing was very much what she wanted to happen to the USSR, total collapse and the nobility moving back, and she was not only naive enough to think such a thing was going to happen by magic even 40 years later but so naive that she thought Tsarist Russia was a better place to be than 1950's USA! It's hard to get to be more anti-American than Rand with her great men who should be in charge and serfs that should never be allowed to vote.
Confusing elements of the USA with very different elements of the USSR was the part of the work that renders it worse than worthless. I wonder if the loud "Randians" really understand that they are calling for the overthrow of what George Washington delivered to be replaced by what King George had in place?
Enough venting on my part - If you want an entertaining and easy to read fictionalized account of what it was like in late Tsarist Russia from an unbiased contemporary source then Joseph Conrad's "Under Western Eyes" is very good. It's as fresh a spy novel as anything by Tom Clancy despite being a bit over a century old.
If you quit without having a new job lined up you're an idiot (unless you have substantial savings your ok with living on making it a vacation).
No sir I dont like it.
Ah, some sort of politically fixated person has decided to insult my intelligence in an offensive way as if I was born yesterday - and the "correction" is spectacularly wrong.
How is it possible to get things so badly wrong?
This is how, if all you have is a hammer everything looks like a nail.
There is no point being polite to such folk, if you disagree you are an enemy, and if you politely disagree you are a weak enemy.
Above poster, I suggest you get a bit more perspective on life instead of spouting ridiculously naive bullshit all over the place, unless of course it's deliberate sarcasm designed to look incredibly idiotic. Another alternative is some sort of political wonk paid as a "social media worker" to twist the minds of the kiddies to a political view, your UID looks a bit low for such scum but the comment really fits the "narrative" of such manipulative pricks. So above poster - WTF are you and why are you pretending this is all cold war bullshit that you should have either grown out of decades ago or never knew in the first place?
The topic is very obviously an implementation problem in an organisation and no "ism" of any sort applies since even countries with "socialism/communism" have different pay grades at different ranks (using an army example for simplicity).
This is as fucking stupid as the people who called the millionaire filmmaker Charlie Chaplain a communist - just about the biggest capitalist at the time and that label was put on him.
Can we have our tech site back instead of warring political shills or utter losers of clueless fanboys who do it for free?
that socialist utopias don't work. This idea that everyone should be paid the same is utter nonsense. In any given organization there are achievers and there are slackers. It has been my experience that the top 20% of workers often do at least 50% of the work. Many people will do just enough to get by. Others will find ways to get other people to do their work for them. Others will find their way into jobs that really are not needed but somehow exist anyway.
I'm not suggesting that all CEO's should be making 5000x the average workers salary (or whatever the actual figure is). But clearly there are people in an organization that simply contribute more than others and should make more money.
The problem becomes how do you measure productivity and worth? Traditional methods seem to leave themselves open to gaming the system, for those that are cunning enough to do so. Many people make big contributions but are not recognized sufficiently. Others take credit for the work of others. Management tends to attract self promoters and some of them get a disproportionate amount of credit (and therefore money) off the backs of others. Interesting problem.
Rich people aren't supposed to believe the socialist lies. They spread them, then embezzle the money for themselves and seize power. What was he thinking? Actually take a 70K job after having a 1M job? I know people who make 80K and have to live with one car, in a trailer. No buffer in case something happens. Product of the raising the minimum wage - which hurts poor and mostly black people. Not trolling here, it's a fact.
As for publishing what people make - that was very very stupid. It never goes well when people know. Just human nature. Well that guy isn't as smart as I am... I work far harder then she does... and so on. Mind works on this and it can really generate resentment. I've seen people that made half what I do work very hard. I've seen a guy that made over 200K as an oracle DBA... and he is no where near as useful as the guys making 100K.
Just worry about yourselves. Better that way.
How did Nadella emerge from this minefield of candidates?
In addition to being a Microsoft loyalist, he was perceived as being willing to change things and look outside an insular culture. More importantly, perhaps, heâ(TM)s a âoegenuinely niceâ person who both Steve and Bill love, and who people seem to actually want to follow. Gatesâ(TM) decision to take a more active role also required someone he could work closely with. Most
http://qz.com/278237/heres-how...
In GS everybody is VP with different payouts