Everybody remembers Dan Price, the CEO of a Seattle credit card processor who slashed his own $1 million salary to make his company’s minimum wage $70,000.
The 32-year-old announced the decision in April of 2015 after realizing that about one-third of his 133 employees were earning less than $40,000 and making tremendous sacrifices to continue their careers at Gravity Payments.
“I was so scarred by the recession that I was proactively, and proudly, hurting my staff,” Price told Inc. last year.
Before establishing the new policy, Price talked to his employees to learn about how far they were pushing themselves out of dedication to their work.
It turns out that many of the hardships they were experiencing could be solved by small business loans. Business owners should only seek loans if they plan on increasing revenue, and Gravity proved that employees who feel valued and less stressed work a hell of a lot harder. Profits doubled just six months after Price’s announcement, and the company’s customer retention rate rose to 95%, well above the industry average of roughly 68%. Potential customers must have had a feeling the strategy would pay off since new customer inquiries rose from 30 per month to 2,000 within two weeks.
Price did not anticipate such incredible success but other business owners with employees facing similar problems should consider the outcome of quickly eliminating them.
BRINGING WORK TO HOME
One of the most widespread hardships of Gravity employees was the location of their workplace. Numerous employees were commuting over an hour or staying at friends’ houses that were closer to the office. Gravity Payments is located in Ballard, a popular Seattle neighborhood that is notorious for its astronomical rent prices. Once the raises took effect, some of these employees were able to move closer to work, putting themselves in a better area to start or maintain a family.
Securing office space that is located within a modest proximity of your employees’ homes can be expensive but also profitable, which is why you should cover this investment with a small business loan. Employees cannot perform to the best of their abilities if they have to worry about getting to work on time or rising transportation costs. It’s only natural for employees to believe they should be compensated for long commutes, and if they are not reciprocated for having to wake up at the crack of dawn to sit in traffic, they will most likely seek more convenient employment options.
Allowing Gravity employees to move closer to work also gave them more spending money, proving that this investment is a wise choice for business owners who can’t afford to give raises to dozens of employees just yet but wish to increase their standards of living. Employees with minimal commutes are healthier, too. A variety of studies have revealed that longer commutes make employees more susceptible to obesity, back pain, and of course, a sour mood.
SPREADING EACH OTHER TOO THIN
Another sacrifice several Gravity employees were making prior to the salary hike was working far more than eight hours a day. Price told Today that some of his lowest-paid workers were staying up all night answering phone calls from clients and canceling weekend plans to handle clients stuck in emergency situations. These were the same employees who repeatedly strayed outside their job descriptions to make sure their clients’ businesses were running smoothly.
In other words, Price was desperately in need of new hires. Taking out a small business loan to expand your team ensures that current employees can put 100% of their focus into their paramount responsibilities, and you won’t have to worry about covering monthly expenses in the likely event of operations slowing down during employee training. According to Inc, Gravity employees were doing enough work to boost productivity by 30 to 40% before the raises. Imagine how much profits would increase if employees were able to get all the sleep and relaxation they needed?
Learning about how often employees went above and beyond to satisfy customers confirmed to Price that his teammates didn’t just view him as a boss. They were depriving themselves of free time to do favors for a friend, so it would only makes sense for their boss to acknowledge their uncanny devotion. And if your employees aren’t able to let loose on their own time, you might as well turn fun into a work-related activity. Use a small business loan to reward employees, be it with a company party, field trip, or a retreat featuring team building exercises. Your employees will continue to exceed your expectations with pride because they will finally have learned that these are the habits of people who get the best rewards.
A SIMPLE CASE OF SUPPLY AND DEMAND
Paying off a small business loan on time puts you in position to receive a second one shortly after. There’s a good chance you’ll need that second loan, too, since improving productivity tends to increase business. This is exactly what happened to Gravity Payments. Price was forced to hire ten more people than anticipated after the salary hikes in order to meet the new level of demand. He wasn’t prepared to spend this much on new hires but lucky for him, alternative lenders can approve loans in as little as 24 hours and put funds into your bank account in a matter of days.
The success of Dan Price’s salary hikes is concrete proof that investing in your employees is the quickest way to increase revenue. But in the the absence of a $1 million salary, small business loans are the next most appropriate way to eliminate restrictions of employee performance. These problems may seem like minor inconveniences but Price revealed that solving them can have major outcomes. The more stress you take out of your employees’ lives, the more work they will be able to get done. Price ultimately intended to position his company for expansion, and as his employees can attest, this involves directing the entirety of their focus on what it is they do best.