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CEO cuts his pay by almost $1M to give his employees big raises

latimes.com

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Re: CEO cuts his pay by almost $1M to give his employees big raises

#51

Post by mattlutze »

smokeyj wrote: post #44
vidarh wrote: post #13

Earlier quoted context omitted.

Then just ignore his reduced salary and focus on the raises he's giving the lowest paid staff. His salary reduction is "just" part of how he's paying for this in the short term.

The team as a whole becomes less sustainable. Profit margins went from 2m to 500k. That's a lawsuit away from being in the red. Is the entire team going to take pay cuts if profits aren't coming in? Does someone get fired? I think those lauding this as a morally virtuous move aren't basing this on principle. Hiring 1 employee for 100k isn't better than hiring 2 employees for 50k assuming equal qualifications. The tea…

If the gambit is that, in the recent future, they expect new business from the publicity to increase profits and cover part of the loss, I think the hit is not so large. And ultimately if it doesn't pan out, he can sell the company to a larger processor and cash his 100% stake out.

Re: CEO cuts his pay by almost $1M to give his employees big raises

#53

Post by chatmasta »

deong wrote: post #40
totalrobe wrote: post #11

Earlier quoted context omitted.

And then those overpaid employees will be laid off...

If you're buying the company for its "goodwill", why would you then very publicly torch that very same goodwill by laying off all the employees?

Because revenue needs to be greater than cost for a business to survive.

Re: CEO cuts his pay by almost $1M to give his employees big raises

#54

Post by cookiecaper »

officemonkey wrote: post #27
bko wrote: post #8

This is a valiant effort but I wonder how the practical allocation of the jobs is determined. If the market salary for an employee is 50k, if you raise it to 70k, you will probably have a lot more applicants than positions. Do the current employees get grand-fathered into the job despite more qualified candidates? When hiring new employees, how do you decide among the increasing rank of equally qualified candidates?…

Think about it: how much does the lowest paid staffer make there? 25,000? 30,000? These lower-paid staff will be very loyal, because they're getting a very significant and possibly life-changing raise. They're not going to quit on you, and they're not going to kill the golden goose. Recruitment has real costs. Hiring and training, and dealing with the hiring mistakes you make, all cost money. Having a happy staff sav…

If you really want to trap someone into working for you forever, pay them way more than they could make anywhere else. The goodwill and loyalty that engenders are really only minor components in keeping the person on-board; since people tend to spend (and get debt based on) however much money they make, you're essentially buying lock-in and making it so even if they want to quit and get an analogous position at a competitor, they probably won't be able to afford to do so.

Re: CEO cuts his pay by almost $1M to give his employees big raises

#55

Post by sickpig »

mayukh wrote: post #41
sickpig wrote: post #35

This is the third time in a week that this article is posted on hn See: https://news.ycombinator.com/item?id=9371854 https://news.ycombinator.com/item?id=9375978 It seems to be a real hot-button to say the least.

The NextDraft effect ?

Dave Pell is really influential among people who read hn imho, so yes NextDraft network effect could have played a role here.

That said I think jurnos really like this kind of narrative and subject, since it's really appealing to theirs audience.

It's a sort feedback loop that time will help to "break".

Re: CEO cuts his pay by almost $1M to give his employees big raises

#56

Post by midnightmonster »

rebootthesystem wrote: post #46

Despite the feel-good angle on this it is a horribly bad and irresponsible decision. Now, if they only have a couple of people doing just below $70K it is a dishonest yet clever marketing move. It is a violation of a CEO's fiduciary responsibility to pay significantly more than market value for anything. That includes salaries. Example: CEO announces the company will pay double for all office supplies. Desks, chairs,…

The CEO also owns the company. "Don't I have the right to do what I want with my own money? Or are you envious because I am generous?"

Re: CEO cuts his pay by almost $1M to give his employees big raises

#57

Post by JTon »

rhino369 wrote: post #47
officemonkey wrote: post #27

Earlier quoted context omitted.

Think about it: how much does the lowest paid staffer make there? 25,000? 30,000? These lower-paid staff will be very loyal, because they're getting a very significant and possibly life-changing raise. They're not going to quit on you, and they're not going to kill the golden goose. Recruitment has real costs. Hiring and training, and dealing with the hiring mistakes you make, all cost money. Having a happy staff sav…

I also wonder if this company even has low paid staffers. The business I work for doesn't directly employ anyone under ~60k. Instead the kitchen staff, the cleaning people, the mail room, document processing people, etc. etc. are all contracted out.

Actually, it's a significant chunk. From the article:

> After Monday's announcement, anybody making less than $50,000 -- more than half of the company's 120 employees -- immediately got bumped up to at least $50,000, according to a company spokesman. The minimum will increase to $60,000 by the end of 2016 and $70,000 by the end of 2017.

Re: CEO cuts his pay by almost $1M to give his employees big raises

#58

Post by colechristensen »

brianfitz wrote: post #32

I responded to this in a previous thread, but I think I can simplify it down to the perception versus reality of the change the CEO has enacted. What many people believe: The CEO has set a minimum compensation bar to help those with market wages below $70k. What has actually happened: The CEO has determined that going forward, he'd rather hire people with higher market wages and more experience versus paying lower wa…

You know what's terrible? How very unwilling nearly every company is to hire and train inexperienced workers while simultaneously complaining about not being able to find talent.

Re: CEO cuts his pay by almost $1M to give his employees big raises

#59

Post by waterlesscloud »

chatmasta wrote: post #36
dragonwriter wrote: post #25

Earlier quoted context omitted.

> The problem is it's unsustainable. The employees aren't providing $70k of market value. How do you know this? Sure, if you make the assumption that the before this one change, the world worked perfectly in line with the kind of simplifying assumptions that you might see in an Econ 101 class, then that would be true, but then, if the world worked that way, this raise wouldn't have happened .

Because they were willing to work for $40k.

If someone volunteers for a non-profit for no pay, does that mean they're providing $0 in value?

After all, they were willing to work for $0.

Re: CEO cuts his pay by almost $1M to give his employees big raises

#60

Post by joshyeager »

rebootthesystem wrote: post #46

Despite the feel-good angle on this it is a horribly bad and irresponsible decision. Now, if they only have a couple of people doing just below $70K it is a dishonest yet clever marketing move. It is a violation of a CEO's fiduciary responsibility to pay significantly more than market value for anything. That includes salaries. Example: CEO announces the company will pay double for all office supplies. Desks, chairs,…

The CEO wholly owns the company. So his only fiduciary responsibility is to himself.
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