Can you believe it?
Gravity CEO Dan Price had a friend who mentioned how hard it was to make rent on what she was being paid. In that moment, Income Inequality became a very real thing for him.He realized he was part of the problem.So he took a $930,000 salary cut setting his wage at $70,000 a year.But he didn’t stop there. He raised the minimum wage at the company he founded to $70,000.
Why $70,000?
Price had read a study that found the ideal wage for happiness clocked in at $70,000. And the happiness of his employees matters to Price.
That’s called living your values.
All talk no walk:
Lots of companies talk about the values they hold.
Here’s what Wells Fargo says about its values.
Know what’s first on the list?
Their people as a “competitive edge” and “treasured resource” top the list of the values that provide the “foundation for everything” that Wells Fargo does.
Thing is, some of their people don’t feel that valued. Some struggle to make ends meet. Not the CEO though. He took home $19 million in 2013.
Tyrell Oates had worked at Wells Fargo for about six years when he wrote an email to John Stumpf, chairman and CEO of Wells Fargo, and copied 10,000 other employees on it.
Here’s what Oates proposed:
“My proposal is take $3 billion dollars, just a small fraction of what Wells Fargo pulls in annually, and raise every employee’s annual salary by $10,000 dollars. This equates to an hourly raise about $4.71 per hour. Think, as well, of the positive publicity in a time of extreme consumer skepticism towards banks,” Oates wrote.
You can read the full letter here.
But in case you don’t want to read the whole thing, below is another really interesting bit from it.
From Tyrel Oates letter:
“Last year, you had pulled in over $19 million, more than most of the employees will see in our lifetimes. It is understood that your position carries a lot of weight and responsibility; however, with a base salary of $2.8 million and bonuses equating to $4 million, is alone one of the main arguments of income inequality. Where the vast majority, the undeniable profit drivers, with the exception of upper management positions barely make enough to live comfortably on their own, the distribution of income in this company is no better than that of the other big players in the corporate world.”
So what was the upshot?
Oates left the company six months after sending the letter. The only response from the company was old-world PR gobbly gook reiterating thier talking points.
So let’s be real:
Now it’s true, Wells Fargo is doing just fine, thank you very much, and will somehow soldier on without Mr. Oates.
And Gravity Payments, while an awesome alternative to big credit card companies and an even awesomer place to work, doesn’t have Visa quaking in its boots. Yet.
But it will.
And so will every other disruptive business that puts its values first.
Both Dan Price and Tyrel Oates have become folk heroes because they have made a stand for dignity and fairness in our work.
And they are just two of a growing culture of people who believe that good business means putting their values first and living them, not just talking them.
The fact is:
Lots of big businesses (and small ones too) have forgotten that business is fundamentally about people, those it serves and those who serve.
But following the crash of 2008, banks and big businesses haven’t really been investing in people. Banks are sitting on record profits but aren’t really lending.
And that makes it ripe for disruptors to come in and change the game altogether.
Like online lenders.
Economist and Former U.S. Treasury Secretary Lawrence H. Summers says it will be alternative financing companies like The Lending Club in the US and Borrowell in Canada that return the world to profitability.
Smart companies aren’t disruptive because they bring new tech. They’re disruptive because they meet a values-based need that their competitors aren’t addressing.
The Lending Club isn’t successful just because it provides an online service that makes lending faster and easier than banks do. Part of its successful is because it stays true to its values and helps people with good credit get access to money that the banks just aren’t lending. And it does so with more transparency and ease.It’s sad that that makes them disruptive. But it does.
They understand that the tech helps them fulfill the promise of their values to their customers. The tech isn’t the promise itself.
Then there’s these crazy kids:
When a then Canadian bank employee, Brad Katsuyama, recognized that the stock market unfairly favoured big trading firms that practiced High Frequency Trading (HFT), he set about designing a new stock exchange that would make trading stock fair for everyone.
IEX Trading is an alternative stock market that ensures everyone’s trade happens at the same speed and no one has an unfair advantage. It values fairness and transparency and makes its decisions based on its values.
Reinventing business:
And if reinventing the heart of our economic system isn’t exciting enough for you, how about a company (or two) that are trying to reinvent business itself.
Zappos has long been the gold standard for customer experience. That goes right back to its values, the first of which is Deliver Wow Through Service.
Now lots of companies pay lip service to how much they care about their customers. But Zappos means it.
Every person who works at Zappos is empowered to make whatever decision they feel they need to resolve an issue. No kicking it upstairs or waiting for a manager. Any person at the company can do what they feel is right to resolve a situation if they are confronted by a problem.
The Philosophy?
Everyone no matter who they are and what they do is there for the customer and in times of high demand, literally anyone and everyone could be pressed into service.
The next evolution of the corporate structure:
So it’s not so surprising then that Zappos has been an early adopter of Holacracy which does away with the traditional hierarchical corporate structure.
It distributes leadership throughout the company and gives autonomy so that everyone has more ability to fix problems. It organizes people around values and not under managers. Its goal is to drive solutions, collaboration and clarity.
One of our other favourite companies, Buffer, also has made the move to being a Holacracy.
Buffer is a social media scheduling app that has made waves for its storytelling and its rapid but sustainable growth.
All of it was made possible because they put their values first.
And they understand where the world is going. The company is run by millennials and they largely serve millennials.
It’s bound to happen:
Don’t forget, we are embarking on the largest generational shift in generations. 70 million Baby Boomer Americans will be retiring over the next couple of decades as Millenials take their place in the workforce.
Millennials have been raised with different expectations and are also, rightly, tired of waiting until it is “their turn.” Many have to juggle several, low-paying jobs just to make ends meet, unable to get the meaningful work they long for.
One colleague, economist Kaylie Tiessen, talks about living in people’s basements and painting houses to pursue the career she was trained for. Did I mention she’s an economist? This year, for the first time in her life, she was able to file a single T4.
Millennials also don’t want to have to engage in power trips and office politics to get things done. And they don’t want to be a source of cheap, unregulated labour.
So Buffer, like Zappos, truly knows that their strength is their people. And they don’t just say it, they live it.
We’ve become fascinated with the concept of Holocracy. You can read more about it in the book Reinventing Organizations.
And you can read about the Zappos experience more by following this link.
The future:
If I were a betting woman, I’d suggest that companies that haven’t adopted at least some Holocratic principles in their day to day life will be very few by 20/20.
In the meantime, it’s up to Zappos and Buffer to lead the way, with a trail of necessary disruptors behind them ready to change how we live and work.
Susan McLennan
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