A Lesson in Unintended Consequences

 In Compensation

The New York Times tells the story of a company owner in Seattle, Dan Price, who decided to raise the starting salary at his credit card processing firm to $70,000 and pay for it by slashing his own million dollar salary. His motivation: he wants his employees to have the security and piece of mind provided by a middle-class income.

The move drew national attention ranging from a multitude of talk show invitations to Harvard professors interested in conducting a case study. The company received thousands of resumes. But not all of the reactions were positive. Predictably, Rush Limbaugh cried socialism. But some of Dan’s¬†customers feared their prices would go up. Some of his fellow business owners felt he was making them look bad. Some of the longer tenured, higher paid employees wondered why they weren’t seeing much of that money, and a few even quit. And his brother and co-founder was upset enough to sue. Meanwhile all the attention was a major distraction from the business.

Speed is an important principle in change management, but a strong communications plan, and thinking through the consequences are equally important.