PayPal CEO says investing in low-level employees will drive shareholder returns

Dan Schulman

Mark Neuling | CNBC

PayPal executives were shocked to learn that some of its employees were financially insecure. Here’s how the $225 million company sought to fix that and why it believes the changes will improve stock returns.

PayPal CEO and President Daniel Schulman said two thirds of entry-level and call center employees revealed in a survey that they were living paycheck to paycheck with about 4% to 6% disposable income, money left over after taxes and essential living expenses.

“This was a real wakeup call for us. It was like wow, capitalism is not working for this segment of the population,” Schulman said Thursday at the CNBC Workforce Executive Council Virtual Summit.

Schulman said he wanted the mission of the company to include all of its employees.

“Our mission as a company is to democratize financial services which is a fancy way of saying that managing and moving money should be a right for all citizens not just a privilege for the affluent,” Schulman said.

Despite paying market or above market rates for its job offerings, employees were “one crisis away from a real problem,” Schulman added. He said the company sought to get the net disposable income to 20% through a series of new initiatives.

PayPal first worked to lower healthcare costs for its struggling workers. Then, the company found tailored financial health education services for employees. The payments giant also created avenues for more employees to receive equity in the company to promote long-term saving.

“Its an investment in your employees but what is the payback for that? The payback is there is much less attrition, much less absenteeism, much more engagement and pride in terms of what they’re doing and in terms of the success of the company,” said Schulman.

“That translates to lower costs in other areas. It also translates to greater focus on customers and greater customer satisfaction. For any company to have the chance to move from good to great, they need to have the most talented, passionate, secure employees working there,” he said.

Ultimately, Schulman and other PayPal executives see the changes as an investment that will be paid out in financial returns.

“They need to believe that the company will take care of them and that they can share in the success of the company. If they think that, we will service customers better than anybody else and if we do that, we’ll serve shareholders better than anyone else as well,” Schulman added.

Shares of PayPal are up more than 75% this year.

This year has proven that work can be done from anywhere, at any time. Heightened connectivity is critical, and the growth of 5G elevates organizational connectivity to revolutionize work across entire industries, around the globe. Join the CNBC @Work Spotlight event on December 10 to hear from business leaders prepared to propel into this new, transformative era of work and innovation.

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