Asking the Right Questions

When Dan Price, CEO of Gravity Payments, announced he was going to make his company’s minimum annual salary $70,000, it raised a lot of eyebrows.  Some people loved the idea and some people absolutely hated it.  Years later his company reports an increase of over 80% in customer count, and his employees are happy.  These results all came from his asking of a very specific question to a single employee, “Seems like something’s bothering you.  What’s on your mind?” 

With that one question Dan was able to hear from one of his entry-level analysts what employees were really thinking about their workplace.  They were unhappy with the low salaries while the company raked in money.  He then began to talk with other people outside the company and on a walk with a friend, found she was only making $50,000 for working 50-60 hours a week doing complex work for another firm and was struggling to pay for a rent increase.  That led to his most thoughtful question, how much would she “have to make so she wouldn’t have to worry about a $200 rent hike?”

He had raised salaries 20 percent back in 2012 and he saw a 30 to 40 percent jump in productivity.  He did it again the following year and saw similar results.  Now thinking about the question around how much would someone need to make to not worry combined with his own raise results, he read up on a 2010 Princeton study by behavioral economist Daniel Kahneman that showed that optimal happiness occurred around $75,000.  That is what led him to set the minimum at $70,000 for his company while taking his salary of $1.2 million down to $70,000 to help pay for the changes. 

His question about how much would someone need to not worry anymore about money led his employees to higher productivity and happiness.  His company saw customer inquiries jump from 30 per month to 2,000 within two weeks.  They have also had client retention rates over 90%; way above the industry average of 68%.  Years later those clients have still stayed with the company.  Starting with a meaningful question to his staff, followed by a thoughtful question in how to best resolve the issue backed by data, led David Price to achieve great results.

If Price hadn’t asked the right question initially, he may have never known why turnover of employees was high.  Turnover and dissatisfied staff usually lead to client losses as well.  His subsequent question around how much would it take to remove worry from his employees lives also likely saved the company money.  He was originally increasing salaries 20% a year, and if continued that path he could have ended up paying even more money.  In finding out what the optimal salary was he avoided a lot of potential issues with determining raises, and in so doing, developed a stable financial structure for the accounting team but also employees to thrive in. 

I feel David Price asked great questions and used data to provide insights to improve operations and results.  The productivity increases seen with his raises were impressive enough, but to also reap the benefits of media-hype driving clients to his company was a genius way to utilize salary pay optimization.  I am hopeful that more leaders of companies utilize study information around compressed work weeks, increased salaries, and improved working environments because the results that these studies show are great, and if implemented nationwide could lead to positive changes.

Author: Logan Callen


Keegan, Paul. 2015. “Here’s What Really Happened at That Company That Set a $70,000 Minimum Wage”, January 26, 2020.

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