Gearing up for a review of fleet policy

Now may be a good time for organisations to conduct a review of their internal fleet policy, but they must be clear about their objectives and listen to their employees’ views, says Nick Golding

Now there appears to be some stability in the tax treatment of cash allowance cars and mileage payments, and the government has set out how more environmentally-friendly business cars should be taxed, it finally seems a good time for employers to conduct an internal fleet review.

Despite much speculation, this year’s Budget announcement did not include any changes to the tax-free authorised mileage allowance payment (Amap) rate, which organisations tend to use to reimburse drivers in cash allowance schemes for miles covered, however, it did introduce cuts to company car tax on vehicles with lower carbon emissions.

Coupled with the introduction of the long-awaited Corporate Manslaughter and Corporate Homicide Act 2007 in April, this may persuade employers it is a good time to revamp their company car policies, while no key tax or legislation decisions are looming. Alastair Kendrick, partner at Bourne Business Consulting, says: “The Budget introduced significant changes for the company fleet, and these changes will have a long-term impact on how car schemes can be run.”

Clear objectives

It is essential for employers to have clear objectives from the outset of any review, whether to deliver a more cost-effective, green or risk-free fleet. Andrew Cope, chief executive at Zenith Vehicle Contracts, explains: “You have to know what it is you are trying to achieve with your company’s fleet, as this will shape the whole review. If you want reduce the cost of your company car scheme, your review will be quite different than if you wanted to offer more choice around cars.”

Before computer giant Microsoft embarked on a review to identify and resolve heavy risk and cost issues within its fleet, for example, it set a number of all-important objectives. Simon Heath, HR vendor services manager at Microsoft, explains: “We conducted a large review into both fleet cost and risk, and were sure to take the ‘think first’ approach. As a company, we had to know exactly what it was that we wanted to achieve from the review.”

By setting clear objectives, employers can ensure the right groups within the company are consulted. However, they may find that these change during the course of a review. If, following a benchmarking exercise, an organisation wants to increase the list of vehicles from which employees can choose in order to be more competitive, for example, it should consult drivers to identify which reasonable additions they would value.

“If the purpose of the review is to add more flexibility to the fleet, it is pretty obvious employees should be consulted, because they are the ones who will be directly affected,” adds Cope.

Reaching the right people can also be tricky in a large organisation, but many fleet management providers can conduct online questionnaires among drivers as part of a review, and, assuming staff have sufficient access to the internet, this is the most effective way of reaching the greatest possible number.

“An online questionnaire is a good way to attract as much attention as possible. In the past, we have conducted online surveys for thousands of employees at a time,” says Cope.

Staff engagement

Realistic objectives are also imperative. It is important that organisations can deliver the necessary change at the end of the review exercise, as this can impact on staff engagement. Employees could become demoralised if they have taken part in a consultative company car review only to find that nothing constructive comes from it. They may also be deterred from participating in future reviews.

If employees’ suggested course of action simply isn’t practical, the reasons why it would not work should be clearly explained to staff so they do not think their ideas have been ignored, says Kendrick.

“On many occasions, organisations don’t like the outcome of the review results and many are simply put in an envelope and filed away, so it is imperative that there is buy-in to all eventualities at the outset,” he adds.

If done well, however, conducting a review of an organisation’s fleet policies can help employers ensure they are offering the best option for their business, which could become ever more important in the current economic climate.

If you read nothing else, read this…

• Many employers may opt to review their fleet after this year’s Budget introduced lower tax rates for greener cars, but made no changes to authorised mileage allowance payment rates (Amaps).

• Employers should set realistic and clear objectives at the start of the review about what they want to achieve and which drivers should be targeted.

• If consulting staff, employers should ensure they act on feedback or clearly explain why suggestions are not feasible.