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How One Company Destroyed Its Employee Incentive Plan…

… With one act of generosity

Jack Dunigan
Wed, 09/30/2015 - 16:13
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It seemed like a good idea at the time and an incredibly generous act on the part of the company. When Gravity Payments founder and CEO Dan Price announced that he would raise everyone’s minimum wage to $50,000 a year with $10,000 a year increases until everyone’s minimum was at $70K in 2017, it drew cheers and kudos.

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But it hasn’t worked out so well.

In an Aug. 2, 2015, article in Forbes, contributor David Burkus observed that the company is struggling to “deal with the implications” of the plan. Some of the most valuable people have left the company, and others indicate they are on their way out, too.

Notice the phrase “most valuable people.” Many novice or naïve businesspeople don’t seem to understand that some employees are more valuable than others.

One departed employee said that “she was initially excited about the new policy, but as she thought about the details she began to get dismayed. ‘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.’”

 …

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