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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

#31

Post by albinoloverats »

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…

> They're not going to quit on you, and they're not going to kill the golden goose.

Especially if by going somewhere else they have to take a significant cut.

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

#32

Post by brianfitz »

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 wage workers.

Over the next few years, the company will slowly shift to one with a more experienced workforce. This could pay off, and would not be that unusual. What is different is he drew a specific line in the sand and grandfathered in his hires prior to the change.

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

#33

Post by AndrewKemendo »

This company is not big enough to generate that kind of media attention organically, which tells me they made it into a press event.

In that sense it rings hollow because it is clearly a publicity stunt.

I think this is a general issue with all of these activities, and really any activity in a company, that you shape the message that you want to send to the world rather than there being an accurate representation of what is actually happening.

I wonder if there is a way technologically to bring radical transparency to the workplace so that this kind of stuff is discoverable without the company needing to put out press on it.

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

#34

Post by invisible »

chatmasta wrote: post #21
nearmiss wrote: post #6

Earlier quoted context omitted.

Great! Here's hoping the PR pays off. Imagine if other companies noticed it was a net gain to do this sort of thing and the practice picked up steam (unlikely/impossible I know). The horror of it all!

The problem is it's unsustainable. The employees aren't providing $70k of market value. The CEO is changing his pay to attract attention and build customers. Companies are not going to adopt paying 2x market salary as a standard business practice. If people will work for $40k then that's where the costs will "gravitate" (hah) to.

So you're saying that the CEO is providing $1 million in market value to the company? Maybe (and if we're being pessimistic maybe not) the CEO is doing this because he's already made $100 million and realizes it's the right thing to do. I think it's only unsustainable because of greed.

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

#36

Post by chatmasta »

dragonwriter wrote: post #25
chatmasta wrote: post #21

Earlier quoted context omitted.

The problem is it's unsustainable. The employees aren't providing $70k of market value. The CEO is changing his pay to attract attention and build customers. Companies are not going to adopt paying 2x market salary as a standard business practice. If people will work for $40k then that's where the costs will "gravitate" (hah) to.

> 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.

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

#37

Post by svisser »

dragonwriter wrote: post #25
chatmasta wrote: post #21

Earlier quoted context omitted.

The problem is it's unsustainable. The employees aren't providing $70k of market value. The CEO is changing his pay to attract attention and build customers. Companies are not going to adopt paying 2x market salary as a standard business practice. If people will work for $40k then that's where the costs will "gravitate" (hah) to.

> 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 .

Companies do made decisions that cause them to go out of business later on. If this decision doesn't work out then somehow they must cut salaries, let go of people or go out of business.

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

#38

Post by jeremyt »

dragonwriter wrote: post #25
chatmasta wrote: post #21

Earlier quoted context omitted.

The problem is it's unsustainable. The employees aren't providing $70k of market value. The CEO is changing his pay to attract attention and build customers. Companies are not going to adopt paying 2x market salary as a standard business practice. If people will work for $40k then that's where the costs will "gravitate" (hah) to.

> 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 .

Oh come on. I can't figure out whether you're feigning ignorance or whether you really didn't pay attention in Econ 101.

Basic economics certainly does not claim that every product will be sold at the equilibrium price. In fact, if that were so, then it wouldn't work.

In a free market, some products are sold above the equilibrium price, and some are sold below. It's free, because people can offer the product at any price they wish. What basic economics does say is that a price above equilibrium cannot be sustained without some corresponding market advantage.

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

#39

Post by srtjstjsj »

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.

this one is a different article, but same story.

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

#40

Post by deong »

totalrobe wrote: post #11
nearmiss wrote: post #6

Earlier quoted context omitted.

Great! Here's hoping the PR pays off. Imagine if other companies noticed it was a net gain to do this sort of thing and the practice picked up steam (unlikely/impossible I know). The horror of it all!

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?
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