The CEO of a recruitment firm did just this after hearing how Dan Price had successfully implemented a large wage increase and improved his business.
Dan Price, the CEO of Gravity Payments, took the decision to increase the minimum salary paid to his employees to $70,000 (just under £56,000). Although this was greeted by controversy in some quarters, it also secured him a great deal of attention from the media and an agreement to publish a book.
After hearing Price speak, Megan Driscoll, PharmaLogics Recruiting’s CEO, made the decision to implement the same changes in her business; in doing so, she has managed to keep the profits up.
The 28 recruiters at the firm also gained commission on top of their base salary. After increasing their salary to $50,000 from $37,500, they had the opportunity to earn $70,000 a year.
The changes were put in place last January; since then, Driscoll has seen a fall in employee turnover, an increase in revenue, and profit margins have been maintained. In January 2016, the business made revenue of $6.7m, with Driscoll expecting this to hit $15m in 2017.
Before taking the decision to increase salaries, Driscoll had implemented a number of changes to attract and hold on to the large percentage of millennial employees in the business. These included providing food, introducing yoga classes and having a gratefulness board, whereby employees put up the names of others who have done something nice for them.
Alongside putting up the base income of those at the bottom of the company, Driscoll had to increase the salaries at the higher end to maintain equality; altogether, this totalled around $460,000. In addition, she had to look at how she would maintain this for the additional staff she intends to recruit as the business grew.
More successful business
At the outset, the increases were paid for out of the profits; however, the revenue increasing by 40% enabled the profit margins to be maintained.
One of the biggest changes the company has seen since the changes were brought in is the reduction in the turnover of staff. In 2015 this was at 60%; however, this has significantly decreased and now stands at just 20%.
There was also a rise in the number of submittable clients that recruiters were coming up with. This grew from 4.5 a week per recruiter to 5.94 per week following the wage increases.
Driscoll’s business has constantly been looking at ways in which it can offer uniqueness within the recruitment industry and already had a different type of fee structure for clients when it made alterations to how it reimbursed its employees. It has managed to successfully integrate wage increases into the business without having a detrimental effect on the bottom line.
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