By Eric Dehm
When the 350-plus employees of the military themed clothing company Grunt Style checked their most recent paychecks something didn’t look right. There was less money, and no explanation, so they reached out to the personnel director to let them know there appeared to be a mistake.
That’s when the explanation came: there was no mistake.
Illinois enacted a 32% raise of their personal income tax (from 3.75% to 4.95%) and that was now reflected in their pay. Grunt Style’s employees were not happy with this change, nor was the company’s founder and CEO Dan Alarik, but only the latter had the ability to do something about it.
“That’s not their fault, they’re working hard,” Alarik, a former Army Drill Sergeant, tells ConnectingVets. “So I talked to him (Grunt Style’s personnel director) and some of our other officer’s and I’m like ‘listen, guys, this is my estimate of what it’s gonna cost us, let’s just go ahead and do it.”
And with that, Grunt Style had decided to make up the difference in their employee’s losses by raising their pay to offset the tax hike.
Alarik and Grunt Style went so far as to raise the pay by 1.5% to ensure that each employees take-home cash wouldn’t change from before the income tax raise. This decision was despite the corporate income tax rising even higher than the personal rate, by 1.75%. But the corporate rate hike wasn’t something Alarik even considered using as an excuse not to give his team a raise because when he did the math, he found that the company could afford it.
“My job is to lead the company,” Alarik says. “My job is to make sure that we’re frugal and we’re disciplined and have a good strategy in place. The employees, the team, their job is to do what’s in front of them… it’s my job to make sure, along with our other officers within the company, to make sure we’re still viable.”
Another thing some corporations have done in the past, when faced with significant tax hikes, is to head for greener pastures. That’s something Alarik says he isn’t willing to do, even if he disagrees with the fiscal decisions made by the state government, he says he’s got a good reason to stay.
“I’m not loyal to the state at all,” Alarik says “I’m loyal to the guys that helped get us where we are today. It would be easy for me to say ‘hey guys, we’re gonna pick up and move’ okay? But I’m not gonna abandon everyone who helped get us to where we are. We were successful because we’re a successful team so that’s important to me.”
Still, he’s not necessarily happy to be staying in a state where he sees leadership that, when it does any leading, leads Illinois residents down what he considers the wrong path.
“I could care less about politicians, they’re all pretty much the same,” Alarik says. “So this is not a political thing for us at all. but I can tell you that if I ran my business like some of the guys that are elected are running the state? I would’ve never gotten off the ground, it’s obvious.”
If things were to continue in the same direction, and the politicians were to heap more and more tax burdens on Grunt Style, Alarik says his employees will know it’s gotten really bad by one obvious sign. He won’t be there, and he doesn’t mean he’ll be hiding from the wrath of his employees.
“If I ever lay off anyone I’ll be the first one to go, that’s my job,” Alarik says.
“If our company hires you it’s because I set the strategy in place with my team to be successful, so if I have to start laying people off? I should be the first person to go. That means I didn’t do my job, and I don’t understand how CEOs could lay off tens of thousands of people and keep their jobs, it doesn’t make any sense.”
While that is a noble position to take, it’s not likely something that Grunt Style will have to deal with anytime soon. With new products including a fitness app and small-batch bourbon whiskey joining their popular stable of clothing and accessories, the company is currently in a growth period and is actually planning to open a new facility and expand their staff.
“We’re actually expanding down into Texas probably,” Alarik says. “I’m not abandoning our team here, these guys are so important, but (this is) involving a lot of hiring. We have at least probably another 70 or 80 people to hire this year.”
Those hires would put Grunt Style’s total number of employees over 400 in total, the majority of which are veterans. Alarik says his recent moves to offset taxes and expand the business are something he would like to see from more CEO’s around the country, but all he can worry about is his team and making sure they hear his message, and in doing so sets a good example for other CEOs to follow.
“I did it for our guys, our team, the guys that work hard,” Alarik says. “They need to know that we pay attention, that they’re important to us. I don’t care if you’re screenprinting, folding shirts, shipping, customer service, you matter to us. You’re important.”