Best boss in America? (Part 5)

In 2015 I posted an article here about Dan Price, CEO of Gravity Payments. He had just raised the base salary in his Seattle-based company to $70,000. At that time, I admired his intentions but was skeptical about whether he could pull off this move in a competitive market. (His company handles credit card verification.) 

The piece drew half a million views and prompted heated debate. Many commentators cheered Price’s decision, but others were hostile. Some critics said it violated the principle of maximizing shareholder value (though that doesn’t apply here, as the company is privately held). Other senior managers grumbled that his example would make their own employees more demanding. And Rush Limbaugh predicted that the company would crash and burn, calling the big raise “pure unadulterated socialism, which has never worked.” 

I’ve followed the Gravity Payments story ever since, with updates here in 2016, 2017, and 2019. Limbaugh was spectacularly wrong. Gravity Payments has grown and prospered. 

Sure, its payroll is bigger, but their employees are motivated to deliver top-notch service. As a result, they’ve landed—and retained—many more customers. A couple of years ago, the staff chipped in and surprised Price with the gift of a brand-new Tesla. (The picture above is him and his prize on a recent jaunt to the mountains.) 

It’s an amazing and heartening story and certainly no flash in the pan. But in these troubled times, companies like his face a challenges that are beyond anyone's control. The success of Gravity Payments is linked to the success of the local restaurants and retailers it serves. When those businesses shut down or cut back, there’s bound to be an impact on providers like Gravity Payments. Fingers crossed that the high quality of what they deliver is sufficiently distinctive to help them weather the storm. 

Some other, bigger companies that similarly work with mom and pop enterprises have taken a hit, as well, notably Airbnb. A recent New York Times article described the shock that was felt there in early May when 1,900 people there (a quarter of the workforce) lost their jobs. 

Airbnb had prided itself as being like a family. It screened job applicants for empathy, and once new hires were on board, they were embraced by a warm and fun-loving culture. But then this March, when the pandemic hit in full force, the company shrunk their projected revenue down to less than half heir 2019 number. Airbnb took steps to stem the bleeding—slashing marketing costs, eliminating bonuses, cutting executive pay in half, dropping freelancers, plus serious re-financing

But it wasn’t enough. They had to let 1,900 people go, more than a quarter of the work force. The Times reported that when CEO Brian Chesky announced the layoffs, his voice cracked as he said, “I have a deep feeling of love for all of you.”

Given Airbnb’s culture, the firings were a jolt. People felt betrayed. Yes they were given three months severance pay and health coverage for the rest of the year, but they had lost what had become a second home to them. They asked why they weren’t furloughed instead. Chesky answered the things were too uncertain for temporary measures.

Maybe that’s the cold reality. But it left people embittered, including current employees who wonder what’s next. The Times quoted Wharton Professor Ethan Mollick who said that the feeling part of a family is enhanced compensation. “Now the family goes away and the deal is sort of changed,” he said, “it just becomes a job.”

Chesky has subsequently spoken of a “second founding,” including a return to its original business model and mission. I wish him and his employees the very best; likewise for other leaders sincerely committed to providing employees with fair pay and a positive work environment.

I worry, though, that when outside circumstances exact their toll, those companies with the highest aspirations will unjustly take the hardest fall.

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Michael Wheeler is a Senior Fellow of the Program on Negotiation at the Harvard Law School. His Negotiation 360 self-assessment/best-practice app is available for both Apple and Android devices. The Agility at Work podcast he co-hosts with Kim Leary is on iTunes, Google Play and other podcast platforms.