Marie C. Cassandra

In this episode of the TED interview podcast Dan Shulman, CEO of PayPal, argues that of all the stakeholders that a CEO answers to, his most important should be to his employees.

I am a huge believer in the “employees first” mindset for successful corporations. Once an employee is taken care of by their company all the benefits flow from there: they have the mental energy to take on challenges, they take better care of customers, more investment and commitment in the success of the company and are way more productive. But don’t just take my word for it, famous leaders such as Jack Welch also endorse this approach to leadership. (see this great interview with him as part of the Freakonomics Secret Life of CEOs series)

PayPal has pioneered research into Net Disposable Income (NDI), which is the amount of money that a person has left over after paying taxes and necessary living expenses, such as taxes, food, housing and transportation. In other words, NDI is the money that they can spend on extra stuff, or event more importantly invest/save. As PayPal makes it a point to pay above-market salaries and offer generous benefits, they were shocked when they measured the NDI in their employees and found a lot of their staff were at a NDI of 4-6% which meant 65% of their staff were living paycheck to paycheck.

After finding this, they committed to bringing all employees to an NDI of 20%, so at the end of 2019 PayPal announced their Employee Financial Wellness Initiative which would:

1. Reduced the cost of healthcare (in some cases up to 58% to make them more affordable for all and to ensure no one was passing on these benefits due to cost.)
2. Reviewed and raised wages where appropriate
3. Made everyone a shareholder and long-term beneficiary of the collective success of the company
4. Provided a long-term financial education and planning program.

This last point was a surprising and I think incredibly important and responsible choice by PayPal as they gave their employees stocks and raised the amount of money they could save/invest – that they also provided the financial education to help them understand these investments.

In terms of how the capitalist market should (and hopefully will) support these kinds of values for corporations to invest in their employees financial well being, Dan and myself hope that over time it will be in the interest of companies to take this approach as companies such as PayPal prove that this approach gives companies a competitive advantage.

If you want to take a listen, here’s the link to this episode on Apple podcasts (or you can find on any podcast distributor of your choice). Or if you prefer to read, this TED ideas article “How can you ensure your workers are not just surviving — but thriving?” which captures a lot of the same ideas.