In this episode of WorkLife with Adam Grant, the focus is on how generous compensation impacts employee well-being, productivity, and business performance. The story begins with Rosita Barlow, who struggled to survive on a $30,000 salary after college. To make ends meet, she took a second job at McDonald’s. When her employer, Gravity Payments, learned about her situation, they gave her a $10,000 raise. This allowed her to leave her second job, improve her health, rebuild her social life, and thrive professionally.
Her experience prompted Gravity’s CEO, Dan Price, to rethink the company’s pay practices. In 2015, he introduced a $70,000 minimum salary for all employees. This shift led to stronger employee commitment, increased productivity, and business growth, including tripled revenue and doubled customer base.
MIT professor Zeynep Ton highlights that underpaying workers damages their cognitive and physical health, reducing their ability to perform. Studies show that even small, unexpected raises can significantly improve performance, especially among lower performers. Companies like PayPal and QuickTrip have adopted similar practices by focusing on net disposable income and internal promotion to support employee success.
The episode also explores radical compensation models at Semco, a Brazilian manufacturing company where employees set their own salaries. This experiment, based on trust and transparency, led to only a modest increase in payroll but resulted in higher engagement and performance. Managers at Semco also review self-set pay to ensure fairness and adjust salaries when needed.
The episode concludes with the idea that employees should be viewed as assets, not expenses. Investing in generous, fair, and transparent compensation builds loyalty, fosters innovation, and creates a strong foundation for sustainable growth.
