While recent news of layoffs at Google, Salesforce, Amazon and Salesforce, among others, might give the impression that tech companies are looking for ways of shedding talent, many are still very much on the frontlines of the “war for talent” and engaged in efforts to attract and retain employees. For these companies, culture perks and upskilling programs have been popular go-to approaches, but few businesses have addressed one of the largest causes of employees leaving their jobs: unsatisfactory pay.
Now, inflation (domestically) and a decrease in the value of currency (internationally) are only exacerbating frustrations among employees who already believe they are paid less than they deserve.
Over the past year companies including Virgin Media O2, Monzo, Nationwide, Barclays, and Lowes have implemented temporary solutions, such as one-time payouts or bonuses, to ease the financial worries of employees. As the economy continues to struggle, however, employees are looking for a fix that lasts as long as market forces affect their finances.
When Mobile DevOps company Bitrise, whose international expansion to Japan I wrote about last year, discovered that some of its European and APAC employees were in regions where currency had depreciated as much as 16% – 26%, it set out to create a formula for calculating the effects of currency depreciation, by region, and then compensating those employees for the loss in value to their wages.
They’re now sharing a look at how they’re doing it for other companies with international employee bases.
Step 1: Track currency depreciation, quarterly.
Bitrise does this using data from the US Federal Reserve, European Central Bank, and National Banks. Once it’s gathered this data, the company calculates an”average quarterly foreign exchange rate” against the US dollar for each employee’s local market.
Step 2: Account for day-to-day fluctuations in foreign exchange rates.
Because exchange rates are changing daily, but Bitrise is calculating them quarterly, the company recommends applying a 10% “tolerance adjustment” to address potential shifts throughout the quarter. Should currency in a region exceed this 10% buffer, affected Bitrise employees will receive an extra payout in their next salary to account for the difference.
For example, when Bitrise reviewed the currency rates at the end of Q4 2022, it discovered that staff in Hungary, Japan and Ukraine – three countries where 47% of the Bitrise staff are based – had experienced currency depreciation beyond the 10% tolerance. Each employee in those countries will be compensated for the difference between what they received and the actual depreciation rate by the end of the month.
Step 3: Keep going until fluctuation stabilizes.
As Bitrise begins seeing currency rates stabilize, it will move from quarterly currency rate reviews to bi-annual reviews to ensure that it is still providing value to employees. The policy will continue as long as currency rates are fluctuating in the unpredictable manner they are now. While one quarter may result in minimal payments to offset depreciation, others may require more, depending on the economic situations in each country.
When asked about concern around employees becoming accustomed to increased payments—even once currency rates stabilize— Paul Brien, VP of Bitrise, told Grit Daily, “We have been transparent with everyone about how we are running the calculation for the depreciation policy, and have explained that there is no guarantee of payment as it depends on the economic situation. While there is a chance that some people will become accustomed to the payments from the policy, we believe that the benefits far outweigh the risks.”