If you're like many company vehicle managers, unless you currently reimburse, you've wondered at some point whether it might be a good idea to reimburse employees for the use of their personal vehicles rather than providing company vehicles. After all, wouldn't it be a relief to no longer worry about the maintenance and repair of all those cars?
It's truer today than ever that any business must minimize costs to survive. At first glance, shifting the burden of your company vehicle program to employees may appear to be an ideal solution to reducing vehicle-related costs. Some managers feel that a company spends less with an employee reimbursement program.
But, as is usually the case, it pays to take a second look before you leap. When everything is considered, driver reimbursement may be your most expensive option.
Image is Important
Since you're reading this magazine, vehicles are likely critical to your company's success. And since company vehicles can make or break you, it pays to remember that financial issues are only part of the bigger picture. Company-provided vehicle programs give you the power to control the suitability and appearance of the vehicles used in conducting your business.
When your employees provide their vehicles, you don't have this control. With driver reimbursement, there's no guarantee that your employees' vehicles will be conducive to the image your company wishes to project to clients, customers, or prospects.
To be perfectly frank, the wrong vehicle can definitely send the wrong message. Consider the possible ramifications of an employee representing your company in a poorly maintained, rusty, unwashed clunker. Just one of your employees' cars can create a long-lasting image in a client's mind. And you don't want that image to be the wrong one.
Liability Issues
When employees provide their vehicles to conduct company business, maintenance is, of course, their responsibility. But what if your employee balks at the out-of-pocket expenses associated with safety repairs?
Your company could possibly face liability in an accident due to this deferred maintenance if the accident occurred while the employee was on company business. And it's an unfortunate fact in today's legal environment that lawyers can be counted upon to go after the "deep pockets" in any given accident.
For those not following along closely enough, here's a short version: Hold on to your wallets.
Little Things Add Up
Company-provided vehicles remove the burden of maintenance and repair from the employees' time and allow them to concentrate on being productive. And group vehicle insurance through the company can normally be obtained at much more favorable rates than individual insurance.
A perception on the part of your employees that vehicle expenses are being unfairly shifted to them can decrease morale and increase attrition. Employees view a company car as a status symbol--thus increasing morale. And you'd better believe that employee morale can and will affect your bottom line.
Providing company vehicles can give your company a competitive edge in hiring talented salespeople and managers. A company car consistently ranks above health and pension benefits regarding enticements for job candidates.
Making the Decision
There's no doubt that for some companies, driver reimbursement plans work effectively. If you have one working well right now, there may be no urgent reason to change. Don't forget, however, that if hidden costs are burdening employees, those costs will eventually come to the surface in some form.
Most of you would agree it is an employer's responsibility to provide the tools an employee needs to do the job. If that job includes much driving, one of the tools should usually be a company vehicle.
About the Author: Steve Elliott is a former executive editor at Bobit.
