Gravity Payments: Case Study

                          CASE ANALYSIS: GRAVITY

Introduction

Dan Price, CEO of the Gravity Payments announced in April 2015 that he would raise the minimum salary of his employees to $70,000 by slashing his own million-dollar package to do it. He would pay for the wage increases by cutting his own salary from nearly $1million to $70,000 and using 75 to 80 percent of the company’s anticipated $2.2 million in profit this year. This move was triggered by a study he read that found that emotional well being increases with income level until you make $70,000 and then after that it has no measurable effect on happiness. The announcement created a huge stir in the corporate world and social media. Mr. Price received appreciation and backlash at the same time. Some called it a publicity stunt, a social agenda while others believed it to bring a new change in the controversial issue of income inequality.

Mr. Price wanted to address the income disparity between income levels of CEO’s and other employees of the company. As a leader he believes it his moral duty to set an example and make changes where necessary. He was deeply disturbed by the wealth gap he saw in front of his office everyday. While most companies would put all their focus on customers Mr. Price main focus is to put his employees first, make them happy because he cares about them.

The main question arises is that whether this is ethical leadership or not. According to me the answer is yes. Mr. Price wants “to fight for the idea that if someone is intelligent, hard working and does a good job then they are entitled to live a middle class lifestyle”. Ethics are standards of right and wrong. Ethics are an extremely important of every organization and they are usually laid down for everyone. A person’s ethical behavior stem from their personality traits, attitudes, situations and morals.

In this case, Mr. Price leadership has an ethical behavior attached to it because it is personal belief and judgment that if his business continues to prosper his actions would have a significant impact on not just his business and employees but the whole society at large. For him money is the driver of good performance and at the same time bringing happiness.

Causes

Ethical leadership can be influenced by your personality traits, moral development and situational factors. In this case, Mr. Price has based his decision on his own morals he has developed over the years. It is his moral development that has led him to give up his own pay for the sake of his employees. Moral development is when you think what you’re doing is right because your values and beliefs says so. As a leader, Mr. Price thinks he has a moral duty to help out his employees. He doesn’t identify with the idea of giving bonus to employees to make them happy. For him it’s about having a purpose and setting an example in the business world for a good cause. And that cause is reducing the wealth gap between the leaders and employees otherwise he would not have been able to take such a bold step of cutting his pay.