Making Sense of Currency Fluctuations

Making Sense of Currency Fluctuations

The Cost of Doing Business
US outbound assignments show no signs of slowing down, despite the continued weakening of the US dollar. In fact, 75% of the companies surveyed noted no change in the interest of US candidates to accept assignments abroad. An even greater majority of those surveyed have no plans to adjust relocation policies to respond to the current conditions, suggesting that programs are already structured to keep their global mobility programs on track.

In keeping with the philosophy of “keeping the assignee whole,” only 9% of companies felt it was the employee’s responsibility to absorb the exchange rate fluctuations. Most companies address exchange rate fluctuations through various means such as adjustments to compensation and at-post allowances at fixed intervals.

Split-Pay
Split pay is an overall compensation method designed to reduce expense related to currency exchange fluctuations and conversion / transfer fees.

In the model, the base compensation is paid through the home country payroll, with at-post allowances paid from the host country payroll in the host currency. Using a predetermined fixed exchange rate, the assignee is protected from daily fluctuations. In addition, split-pay allows the assignee to receive funds directly in the currency required to address the financial obligations.

Survey Results
Have you experienced a decrease in interest of U.S. candidates to accept international assiggnments due to the weakening U.S. dollar?

Often0%
Somewhat25%
No75%

What is your current compensation methodology for international assignments?

Home Country54%
Host Country25%
Split Pay12%
Other8%

According to your corporate compensation practices, who is responsible for absorbing the exchange rate fluctuations?

Assignee9%
Company70%
Other22%

How frequently do you review/adjust compensation and/or assignee relocation benefits to account for currency rate fluctuations?

Fixed at the beginning of assignment17%
Monthly13%
Quarterly13%
Semi-Annually17%
Annually17%
Threshold13%
Other9%

When processing expense reimbursements, which date is used to determine exchange rate?

Incurred43%
Submitted17%
Received4%
Processed22%
Other13%

Do you anticipate any modifications to your compensation approach or international provisions in response to the weakening U.S. dollar?

Yes9%
No91%

Survey Participation
The data represents results from 24 corporate relocation professionals in the following industries:

Industrial Manufacturing42%
Technology12%
Financial Services12%
Other12%
Consumer Products8%
Energy4%
Retail8%