Company cars. Sigh. My shoulders sag whenever the subject comes up. Cars mean war around here, and I am still battle-scarred from the last policy review, but Big Bad Boss insists it is time for another one.
I can guess what has prompted this just now. We’ve just hired a new Higher Being into the executive management team and he kicked off massively about our ‘pathetic’ car allowance on offer. He says it won’t give him the class of Mercedes that he had in his last company. Aw, diddums. In the end, we had to give him a sign-on bonus to stop him whinging on about it. Now he’s on board, I reckon he’s been stirring it up with the other Higher Beings. There is nothing more likely to bring about change than a self-serving executive.
When it comes to actual physical cars, we only give them to a very select group of salespeople, and then the policy is based on market data prevalence for sales cars in each country. This varies substantially. Hardly anyone gets a car in the US. It just isn’t done. In the UK, company cars became such benefit tax burdens that even some of our salespeople have elected to take the money. Not so in mainland Europe. Each country has it’s own little status game played out with cars and the rules don’t translate across borders. Unfortunately, when the sales leadership team gather and compare the size of their vehicles, they all start bleating about inequity.
Cheapest car
I’d love to make it fair, I really would. I’d give them all the cheapest, greenest car offered by the fleet and watch them drive away fuming. But even if you wanted to give them the exact same car, you can’t. Car models are subtly differently in each country and often not even available in all places. Employees are strangely patriotic about cars; Swedes will only drive Volvos, Germans view Mercedes as minimum. Some countries give very nice cars to the most senior sales, and nothing to the rest. I work with our provider’s grid to show the cars that the sales team can choose from. The Fleet Management company groups cars into certain categories by country and I match that to our sales management grades. I’m not about to do anything different now, as it gives me an external benchmark to point at. I used to refer to Smarmy Consulting car survey for most prevalent models but I have found it to be inconsistent with their own other benefit surveys, and it doesn’t really help me when it comes to specific cars that can be chosen from our provider. So, for this review, I’m simply going to republish the same rules with the latest grid from the provider. For sure, not everyone will like it.
Apoplexy
Allowances are going to be another battle. Again, the amounts are not the same everywhere. I can tell you this has the Higher Beings in apoplexy. They even get in a state if they hear that the base pay range in Switzerland is nearly double that of some of the others. I’m pretty sure the MD in Zurich gets hate mail about it, I know I do. They certainly can’t see why different parts of the business should get higher or lower allowances. I have explained over and over that cost of living, taxes, and even simple market expectations differ by country, and we aim to match the local market to attract and retain people. The only way to achieve exactly the same pay and benefits across the world would be to pay everyone at the highest rates, which would increase pay costs exponentially. Oh no, cry the Higher Beings, we need to reduce global costs. Well, you can’t have it both ways!
The trend towards remote working adds another level of ambiguity. If employees don’t need to go anywhere, why do they need an allowance? Well, we don’t really offer allowances to enable transport, we give them because it has become market practice to do so at certain levels in most countries. Big Bad Boss will argue we might as well do away with them and just pay people more salary. This from a man in charge of reward. It is shocking. I point out, not for the first time, that moving allowances to base pay would make them bonus-able and pensionable, as well as subject to the usual annual increases. I reckon it would add at least 25% to the cost. That puts him back in his box.
Data driven
You might be able to argue that our salespeople are doing more deals online than in person and they should move to allowances, but it’s too early to say how that will pan out in the long term. I would argue that where we give an actual car it is based on prevalence data for the job and when those patterns change in the data, we’ll have a rethink.
I still need to review the allowances we offer to general management. I prepare a chart with the latest reference data from Smarmy consulting. I know their data is flawed, but it is data, and luckily it is still a good match to the policy. I used to add a reference car to show what that would pay for in each country, but I am wiser now. That just threw up all the same inequity arguments we get from the sales team. All that remains is to present the report to the Higher Beings in C-suite. It’s either me or Big Bad Boss. If I do it, the message is more likely to get across clear and undiluted, but I will have to suffer all their inane questions and bluster. I hate it when Big Bad Boss takes the credit for my work, but this is one time when I am happy to let him.
Next time... Candid improves her financial wellbeing.
