Is it the board’s responsibility to steer fleet management?

Historically the company car, indeed personal business mobility, have not always been regarded as a board issue, but that may be about to change, says professor Peter Cooke, head of the Centre for Automotive Industries Management, Nottingham, Business School.

Economist Sir Nicholas Stern’s recent report that stated that global warming could shrink the global economy by 20% but by taking action now would cost just 1% might have an impact on business thinking across the board. In the case of the company car, it is but one of the issues that the organisation, and in particular the board, may justify reviewing sooner rather than later.

Personal business mobility for staff whether through a fully expensed company car, a cash alternative, daily rental or merely as an allowance for casual use of the worker’s own car may also deserve in-depth scrutiny and policy review at board level.

Remember, ‘duty of care’ means the organisation has responsibility for employee safety when travelling on business, whatever form of personal mobility is used. Quite simply, if an employee travels on business, it’s the company’s responsibility to ensure they are travelling with due regard to safety.

Thus, the organisation has responsibility for the employee to be travelling in a car that is fit for purpose. The vehicle needs to be suitable, of appropriate quality, properly maintained, have legal tyres and to be properly taxed and insured for use, and to have an appropriate MoT certificate if necessary.

Any car used on business needs to fulfil all of these criteria and an audit trail should be established. A lot of red tape some might argue, but it is a legal requirement as well as being best practice.

If a vehicle is involved in any form of incident the audit trail may be critical. To complete that audit trail, it is necessary for any employee-provided car, even a casual car, to be checked in terms of suitability for task, service records and quality. Supporting driver documentation, of which the appropriate insurance may be the most contentious and misunderstood, must also be examined. The question is who looks after the documentation and audit trail of vehicles not provided by the organisation? It is normally the fleet manager if one exists, or otherwise the relevant person with fleet responsibility.

The sheer practical issues of creating the transparent audit trail and keeping it up to date for every car used on business is a massive task, both logistically and in terms of potential workload.

Maybe in future the organisation may consider that employees travelling on business may not use their own cars at all but have to use transport provided by the organisation. Personal business mobility may well be focused on two, at the most three alternatives: provision of the fully expensed and managed company car, a company pool car or a daily rental car for the casual user, and a car supplied through an employee car ownership plan provided it is managed.

Tighter rules on car provision and management are inevitable if the organisation is to satisfy rules on duty of care and employee safety. Risk management, in terms of driver quality and monitoring of performance and proactive response to incidents, will also need to move up the agenda.

Health and safety rules, the new legislation regarding corporate manslaughter and duty of care, not to mention environmental concerns, will all bear down on the business if it has not already happened.

The role of the board with regard to corporate governance and employee mobility needs careful examination, and possible action.

Just how aware is the board of the role and management of the company car, and of the policies associated with the use by employees of their cars on business? My research, Cash care and cost control, published by Alphabet (GB), suggests there is significant room for improvement in many organisations. Ongoing research suggests the picture has changed little. The idea of abolishing company cars and letting employees provide their own cars is emphatically not a solution!Historically the company car, indeed personal business mobility, have not always been regarded as a board issue, but that may be about to change.

Professor Peter Cooke, head of the Centre for Automotive Industries Management, Nottingham Business School