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What Are You Doing with Your Dollar-Paid Expats?

What Are You Doing with Your Dollar-Paid Expats?

by Frank Roche on September 24, 2007

in Pay, Policies

Several years ago, when I was with a a big consulting firm, I had a job in Europe. I was based in Amsterdam and spent my time flying all over Western Europe doing work. Things were good. Then the idea of a long-term assignment came up.

Expat assignments are messy no matter how you slice it. They can be good, but the odds are not on the side of the expat. It’s easy to bargain when you’re getting a job in your home country. You know the place and you know the risk. Plus, you don’t have to know currency arbitrage.

In my situation, the firm wanted to fix my pay in U.S. dollars. At the time, the exchange rate was 1 euro to $0.85. The euro was at a discount and life seemed pretty good. But I asked around to many people I knew who were expats. They all told me the same thing: Get a currency exchange guarantee. Without it, they told me, you’ll regret it.

Well, for any number of reasons I turned down the long-term assignment. One of them was the unwillingness to offer a currency correction. And when I saw the news this past week that the dollar was at its all time weakest against the euro — trading at 1 euro for $1.40 — I breathed a sign of relief. Can you imagine the price of goods increasing 65% and your play staying flat? Now that’s some kind of inflation!

Note to companies offering expat assignments: Your expats aren’t currency arbitragers, but they can read the newspapers. Do it right, and provide currency fluctuation protection. Your expats are working hard for your company and you would never ask your local employees to take a 65% percent haircut and expect them to stay, would you?

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