• 01926 353 300

Category Archives: Reward & Benefit

How Structured Company Car Schemes Can Improve Employee Wellbeing

How Structured Company Car Schemes Can Improve Employee Wellbeing

The recent REBA crafted report on wellbeing clearly demonstrates the growing strategic importance of wellbeing strategies and services. There is strong evidence of the high profile that wellbeing now enjoys at board level, and the subsequent clear recognition of the link between employee wellbeing and recruitment and retention, employee engagement and productivity.

It is the firm belief of many REBA members, and report contributors, that a strategic and properly measured wellbeing programme can make a powerful impact. REBA expect the growth of such programmes to soar in the short to medium term, with 45% of companies researched already having a defined wellbeing strategy, and 49% of those without planning to introduce one this year.

Stressful working environments (73% of respondents said a high-pressure work environment is the biggest threat to staff wellbeing) and personal money concerns are widely acknowledged as key wellbeing challenges. As such, companies are keen to explore mental health and financial wellbeing campaigns that can alleviate these pressures and contribute positively to their wellbeing efforts.

Employee mobility and the provision of mobility solutions is one such area that can have a big impact on workplace stress and financial anxiety. Company cars remain a popular benefit perk for many employees, however the industry is seeing a small but growing shift toward cash alternatives, relieving the employer of much responsibility and shifting it to the employee. And in the confusing and predatory world of car retailing, this is not a recipe conducive to employee wellbeing.

Most fleet owners manage their car selection design quite tightly so they can exert some control over their fleet and the type of vehicles driven by their employees. A well organised and correctly specified car fleet provides a more controlled environment for both the employer and the employee; assisting safety, comfort, and productivity.

Company Car Support Network

As the fleet supply chain exists to manage the vehicle, and support the driver, it also removes the personal burden of responsibility for the upkeep of the vehicle, allowing the employee to be free from the distractions and compromises of personal car ownership. However, once this support network is removed and the requirement to source, maintain and eventually dispose of a personal car, albeit with employer financial support, becomes the responsibility of the employee, then the convenience of a company car compared with a cash allowance is drawn into sharp contrast.

Wellbeing implications

If a company decides that a cash allowance is how they wish to mobilise their workforce then there will be a number of implications that could impact employee wellbeing:

Unfamiliar responsibilities
Switching people into a cash allowance scheme will expose them to a number of situations with which they may not have been familiar for many years, such as financing, insurance, maintenance, all of which can cause anxiety, become huge distractions and create financial challenges

Financing arrangement
A personal vehicle needs to be sourced and, unless the employee has the luxury of being able to afford to buy a car outright, it is likely it will need to be financed. (this also raises the issue of exerting some control over the quality and age of the vehicle being used) Car purchases could be private or most likely Personal Contract Plan (PCP) or Personal Contract Hire (PCH) schemes, for which there is usually a deposit required. A cash allowance will provide a monthly fixed sum which can be used to cover the financing payments,  but it will not cover the deposit; something that will need to be covered by the employee.

Minimum term commitment
If the car is to be financed there will be a minimum term to which the employee will need to commit. If their employment circumstances change then they will be committed to the term or likely face early termination penalties.

Insurance
Insurance will need to be arranged by the employee and as most employees may be coming off the back of a company car (it is often difficult to prove no-claims from a company policy) they may struggle to negotiate cost-effective and appropriate levels of cover. And in the event of a claim the typical excesses of £300-£500 need to be paid by the employee.

Maintenance
Company car drivers have the luxury of a centrally applied maintenance arrangement. MOT’s are covered, servicing is just an email away, tyres replaced at the drop of a hat. Dealing with these without the support network of the employer can lead to many hours of sourcing, negotiating and appointment making, as well as creating a serious concern over its financing.

Roadside assistance
Company-wide roadside cover is universally applied to a company car fleet, whilst cash allowance drivers fend for themselves. It is not a particular onerous task to appointment a roadside recovery partner, but it still requires effort and expense.

In-Life and End-of-Contract Damage
If indeed the employee arranges their vehicle on a PCP or PCH, unforeseen operating costs such as damaged tyres and wheels, minor scratches and non-routine maintenance costs are typically not covered under either the maintenance or insurance programmes. Employees will be liable to a recharge if their vehicle is returned with what is classed as unfair wear and tear, a set of tyres for a typical fleet car can cost between £800-£1000.

Excess Mileage
When the employee negotiates their vehicle financing they can be easily lured into an attractive deal with relatively low contract mileage, often overlooking the punitive penalties that are imposed if they exceed the contracted amount on vehicle return.

And even the offer of a cash allowance can have consequences for company car drivers. If a company car driver has deliberately chosen a more energy efficient car with a lower BiK tax point, and their employer offers a cash alternative, then the employee will be charged at the higher of the cash or car benefit value. A consequence that the driver may not even be aware of, and ill-prepared for, until they get their tax bill.

The positive impact on employee wellbeing of a well-designed and carefully administered company car programme compared to a cash allowance scheme should not be underestimated. Personal car ownership brings with it a whole host of challenges that employees need to manage, adding anxieties and pressures that can be hugely distracting and stressful.

Fleetworx can design and implement a range of company mobility solutions that will deliver long-term savings and provide a structured framework of employee mobility that can deal with the ever-changing demands of modern business.

To understand more visit www.fleetworx.com.

Share this Article

How Company Car Fleet Operates as an Enabling Function in a New Strategic Era

How Company Car Fleet Operates as an Enabling Function in a New Strategic Era

Over the past decade the corporate support function has begun to play an increasingly important role in the strategic requirement of an organisation. Prior to this change in emphasis, support services would do exactly that: support the organisation in the day-to-day transactional types tasks that made the wheels turn. Finance would manage the accounting, process the invoices and ensure the business got paid. Human Resources would deal with the myriad employment issues inherent in complex organisations and manage recruitment and retention, whilst large organisations would also employ a fleet department to manage the company car fleet and keep their people mobile.

As market dynamics change, competition intensifies through the emergence of disruptor brands and technology increases consumer expectations, organisations are looking at how support functions can add more value and play a more strategic role; becoming enabling functions that add more and deeper value to the organisation.

Strategy& from Pwc looked at the reasons for this change with interesting results, suggesting, among others, the following:

  • Innovative new companies are emerging which force massive changes in the competitive landscape. Organisations need to respond with greater flexibility and agility
  • Companies are following the principle of the “coherence premium”: the competitive advantage of only doing a few things but delivering them exceptionally well. Everything within the business is being brought in-line with the core capabilities. The support functions are becoming critical enablers of competitive differentiation.
  • Outsourcing and process improvement has resulted in routine tasks becoming slicker, freeing up resources for more strategically focused activity which makes the organisation more competitive.

As many fleet departments have been lost to outsourcing activity and the responsibility for fleet has been absorbed by HR, finance and/or procurement the enabling capabilities of company car fleet may not now be as obvious as marketing or IT. However although it may be an outsourced activity, an efficiently run car fleet can still provide robust strategic support and assist in developing much sought-after competitive advantage.

Car fleets enable a business to carry out the 3 S’s necessary to grow a business and deliver long-term growth

  • Sales
  • Service
  • Support

Many businesses could not function without boots on the ground, and although technological advances mean less time travelling and more time skyping, human contact and personal service still rules and transportation is always necessary.

Functional support

At the very least the car fleet needs to offer basic reliability to the workforce. The fleet needs to be modern, maintenance free and fit for purpose. If issues occur then systems needs to be in place to ensure smooth replacements, minimising downtime and ensuring no disruption to the customer. The fleet needs to meet the demands of the job and add value to the reward package offered to prospective employees.

Employee Wellbeing

Car fleet is a huge contributor to an organisations duty of care toward employee wellbeing. A well organised and correctly specified car fleet provides a more controlled environment for the employee, assisting safety, comfort and productivity. As the fleet supply chain exists to manage the vehicle and support the driver it also removes the personal burden of responsibility for the upkeep of the vehicle, allowing the employee to be free from the distractions and compromises of personal car ownership.

Image

Driving the right type or vehicle adds to the strategic value of the brand building efforts of the business. The vehicle needs to reflect the brand image and personality that the business is projecting. Sports cars may be desirable to the employee but if they contradict the understated, professional and level brand image that is being communicated then the customer may be left confused about the brand and its real values.

Recruitment & retention

Exciting car choice can act as a powerful recruitment enabler. Many mature businesses struggle to match the car reward offered by niche operators on a pound for pound basis. Niche and disruptor brands are known to offer company car reward in the 95th centile, causing issues for many businesses trying to compete in a shrinking employment market. Introducing smart car fleet policies can help companies improve their car value without increasing their investment, actively assisting the recruitment and retention efforts of the organisation.

CSR – ESOS obligation

Under ESOS regulation companies which are classed as “large undertakings” need to identify their total energy consumption and recommend their energy saving opportunities. As this includes transport, having a well managed and transparent car fleet means this obligation can be met and the subsequent CSR value is maximised.

Grey fleet challenges

Making business journeys in driver-owned vehicles can challenge all the hard fought for strategic gains made by organisations. It is estimated by Energy saving Trust that there are 4 million Grey fleet cars in the UK and in the public sector the use of grey fleet is actually the norm, not the exception. Using grey fleet invariably means older vehicles, that are less reliable, less efficient and from a hugely diverse mix of manufacturer and model. Using a managed car fleet removes all the challenges intrinsic to a grey fleet and affords far greater control over the ability to use it as an enabling function.

Company car fleet management has progressed hugely over recent years and has much to offer a progressive and ambitious organisation. When operated efficiently, the company car fleet is a valuable enabling function, providing support to business growth and adding strategic value in many areas.

Share this Article

The Emotional Impact of Company Car Benefit Design

The Emotional Impact of Company Car Benefit Design

When we talk amongst ourselves about company car fleet and discuss the rewards and challenges of working with car fleets, we often describe it as an emotive subject. We kind of just know that it is emotive. We have been involved in car fleets for so long we are conditioned to accept that it is emotive. But what does this really mean? What emotions are involved and how does it impact the fleet and the way in which it is supplied?

Natural human emotions can be laid very bare when discussing company car reward. The most base emotion tends to be status and recognition. A company car is a very obvious reflection of status. Downplay the importance of this and you could enter a very dangerous place, where competitors will be quick to pick up on a weak car policy and exploit it to their advantage.

Studies by Lex Autolease show that the company car remains an important recruitment tool. Their research found that 64% of employees say the company car is important in their decision to accept a job offer, with nearly 1 in 3 saying it is very important. Indeed, our own clients tell us that the company car element of a total reward package is extremely important and is being increasingly used a recruitment differentiator. In some cases disruptors in the technology sector are offering company car packages in the 95th centile and using it as tool to shake up the market place.

Generating a sense of worth amongst employees is a powerful consequence of a valued company car programme. The same study highlighted that 45% of company car drivers expressed getting a company car as a mark of achievement. Capitalising on this emotion can be a powerful addition to an employer brand. Company cars can be such an emotive subject that failure to acknowledge its impact can easily lead to disharmony in the team. Striving to offer best-in-class car reward can be a valuable aid to recruitment as well helping to manage retention. Why would a company looking to be an employer of choice not want the best reward package that they can deliver? Being seen to take a proactive and progressive approach to company cars can be a powerful tool for retaining key talent and satisfying their wanderlust.

Although we understand the need to manage the emotions around the company car fleet, we also acknowledge the need for cost containment: the sweet spot of actual value balanced with perceived value. This is why we have produced a guide for HR departments to improve the company car offer without increasing the cost. The guide is based around 5 smart policies that will help a company increase the value of the cars they can offer by as much as 50%, but with no additional spend. Now that’s emotional.

Share this Article