Fleet & HR
How an understanding of HR issues can help you to improve driver behaviour and boost staff loyalty
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INSIDE
Salary sacrifice
What does the future hold for the increasingly-popular funding method?
Influencing choice
Fleets need to reconcile an attractive car benefit scheme with best practice.
Grey fleet
A policy to manage employee-owned vehicles can help reduce fleet costs.
Driver behaviour
Handling difficult drivers can be a major headache. Here’s how to improve them.
£
Driver policies
A clear driver safety policy is an essential part of running a fleet, but what should it cover?
HR: S A L A R Y S ACRIF ICE
SALARY SACRIFICE: Is it the future of car ownership in the UK? Global strategy consultants OC&C predicts that salary sacrifice could account for up to 10% of new car sales in the UK by 2025. Here it analyses its potential
R
By Mark Jannaway and Nicholas Farhi, OC&C partners eality TV, bloodflow-restricting trousers, wittering on social media – there are more obvious generational differences as Generation Y takes its turn at the wheel, but none are as potentially pivotal for businesses as the rise of the subscriber. From phones to films, consumers’ desire to ‘pay monthly’ (ideally a known amount) in order to access an asset or service has transformed the way many industries operate, fuelled by historically low interest and savings rates. Trends in car purchasing have been no different, with the relative share of new cars sold to consumers purchased using finance at point of sale growing to 74% in 2013, many of which were through PCPs that do not require long-term ownership of the vehicle. In OC&C’s work with both contract hire and leasing providers and fleet owners, we have seen the significant recent growth in awareness of salary sacrifice schemes in line with this trend. The growth in the number of organisations offering a scheme – now more than 10% of fleet operators offer a salary sacrifice scheme – is evidence of a potential ‘category killer’ in the making. Guy Roberts, of SG Fleet director, says: “We used to have to proactively sell the novated lease solution, now we are getting a lot of companies contacting us wanting to find out for themselves.” Andrew Kirby, Zenith commercial director – employee benefits, adds: “Now in particular with auto-enrolment out of the way, we are seeing more companies turning their attention to launching salary sacrifice schemes.”
“We are seeing more companies turning their attention to launching salary sacrifice schemes” Andrew Kirby, Zenith
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Contract hire and leasing providers are increasingly being drawn to this market, with some innovative propositions already emerging which allow the more nimble or specialist providers to win large employee bases to whom they can market the benefits of their salary sacrifice schemes. Specialists such as Tusker and SG Fleet have grown rapidly over the past three years – 50% year-on-year according to Tusker’s CCO Iain Carmichael, who says: “The fact that we are specialists helps. Unless you have a good B2C capability, you’re going to find salary sacrifice challenging and that hasn’t been the focus of the older contract hire and leasing suppliers.” That has not stopped some of the more innovative fleet providers quickly developing their propositions, with Kirby’s appointment as head of employee benefits at Zenith demonstrating its eagerness to build on early successes. Cheaper and more convenient than PCPs and car loans, easier to administer than a corporate fleet scheme, and encouraging fresh demographics to buy new cars, they can offer something for everyone. The list of potential benefits that salary sacrifice schemes could provide reads like a wish-list for drivers, employers and suppliers alike. Based on the growth in adoption of salary sacrifice schemes within large employers and the current adoption rates of up to 12% being seen among their staff, we believe that is possible to foresee within the next decade 200,000 new cars being bought every year using salary sacrifice, representing 10% of UK new car sales. This represents significant headroom above the currently acknowledged 50,000-70,000 salary sacrifice cars on the road, but comes as no surprise to Roberts who cites SG Fleet’s experience in creating the 25-year-old salary packaging market in Australia in saying: “We see plenty of room for us to grow in this market.” The advantages for corporate fleet managers from salary sacrifice schemes are clear – the scheme manager at a major professional services company told us that “salary sacrifice offers better value, more flexibility and wider appeal than a company car scheme”.
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SPONSORS’ COMMENTS Matt Bristow, general manager, corporate sales BMW is proud to sponsor this HR dedicated section of Fleet News. An increasing number of HR departments are now juggling the pressures of organising fleet and company cars in addition to internal responsibilities. This special edition provides valuable insight into understanding the challenges involved with fleet management, helping you to smoothly manage operations. BMW’s range of fleet vehicles is bigger than ever, so whatever your businesses requirements there is a BMW to suit. Reduced emissions means lower benefit-in-kind tax, thanks to BMW EfficientDynamics technologies, while BMW’s latest safety features protect your drivers while out on the road. What’s more, our high level of standard specification keeps P11D costs down. Whether you have a large fleet of more than 50 vehicles, or just a handful of cars, we can cater for all your needs.
10%
of fleet operators offer a salary sacrifice scheme
12%
current adoption rate of salary sacrifice schemes of staff at large employers
Fleet managers are beginning to see it as an efficient and less administratively demanding way of running a perk fleet, with the additional benefit of gaining more control of the grey fleet, lowering corporate risk and increasing compliance with CSR targets at the same time. For many organisations, these benefits are just the beginning; salary sacrifice schemes can also materially improve an employer’s ‘proposition’ to its current and future staff. In the ongoing war for talent, many brand-name employers are rushing to start their own scheme to keep up with their competitors, with one HR director at an insurance company telling us: “The main benefit that makes salary sacrifice so attractive is the potential impact it can have on employee recruitment and retention. We want to be an employer of choice – a great place to work for exceptional people.” The early evidence indicates that in some organisations salary sacrifice cars are the single most effective voluntary benefit for fostering retention. Carmichael says: “In areas with strong take-up, it is becoming a hygiene factor in whether someone is willing to move from one organisation to another.” Suppliers have increasingly found ways to adapt their products to negate the perceived barriers to adoption seen by some clients – in
Iain Carmichael, Chief Commercial Officer, Tusker What makes us different? At Tusker, we’re the UK’s market-leading and awardwinning salary sacrifice car scheme provider with more than 160 successful schemes in operation at organisations of all sizes in both the private and public sectors. As such, we are ideally placed to deliver holistic innovative fleet solutions encompassing conventional company cars, grey fleet management and salary sacrifice car schemes, either as an employee benefit or an attractive option for cash takers. Our core belief is in the power of simplicity; we aim to simplify the lives of our customers and design bespoke solutions tailored to their needs.
n To find out how Tusker can revolutionise your fleet management simply call us on 0333 400 1010, email: hello@tuskerdirect.com or visit: tuskerdirect.com
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HR: S A L A R Y S ACRIF ICE
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£ particular the risk of being saddled with an unused leased car should the employee leave the business. Whereas Zenith has begun to take that risk on itself, imposing a small surcharge on each driver to insure against leaving, SG Fleet has removed it entirely by contracting directly with the employee, as is typical in Australia. This novated leasing method means that should an employee leave the company they take the car with them. According to Roberts: “This also has the benefit that the employer will not be utilising corporate credit lines.” For drivers, too, there is no cheaper way of obtaining a new car on the road than through salary sacrifice, and it is no wonder that 94% of the current salary sacrifice users responding to a recent OC&C survey were happy with their choice. On average, salary sacrifice drivers save 20% on their monthly cost of ownership compared with buying a new car directly once the inclusive insurance and servicing has been taken into account. Obtaining a new car through salary sacrifice can even be cheaper than owning a used car. “When you add the corporate discounts on financing, vehicle and running costs to the tax benefit you get to a pretty unbeatable price,” says Kirby. “But the convenience benefit is just as important – we remove the hassle so the driver just has to add fuel.” Indeed, not having to pull together a deposit or worry about large one-off charges for repairs or maintenance was the second most common reason our survey respondents gave for choosing to use salary sacrifice, followed by the overall convenience of the process. It is not surprising, therefore, that contrary to myth there is no ‘typical’ salary sacrifice driver – there is truly something for everyone. Today’s salary sacrifice users span all age and income brackets evenly, with vehicles fulfilling every purpose from family mainstays to teenage runabouts. What is also now clear is that salary sacrifice is a source of incremental new car sales – according to our driver survey roughly 65% of current drivers would have either bought a used vehicle or not bought one at all were the scheme not in place. This is music to the ears of manufacturers, some of whom are now actively trying to grow salary sacrifice as a channel to market, with Carmichael claiming “it is a genuine route to incremental sales in a way that no other channel can offer – 70% of our drivers had never driven a new car before they came to us”. It is perhaps for this reason also that the Treasury shows few signs of wanting to intervene in the market. The increase in new, carbon efficient cars on the roads not only helps achieve green targets, but also helps to grow the
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“Salary sacrifice is a route to incremental sales in a way that no other channel can offer”
94%
Ian Carmichael, Tusker
of salary sacrifice users are happy with their decision
20%
typical cost of ownership saving a driver makes by obtaining a car through salary sacrifice
car manufacturing industry (and its associated tax revenues) that is vital for the UK’s economic prosperity. So what is the experts’ advice for launching a successful scheme? According to Kirby it all comes down to a genuine partnership between employer and supplier. “Companies need to be in it for the long term, and want to actively promote the scheme to their employees for a prolonged period,” he says. Carmichael agrees. He adds: “Companies should understand that salary sacrifice is different from standard fleet and needs to be procured differently – a supplier’s ability to engage and support drivers is just as important as simple price”. Kirby says: “We are seeing a learning curve in our clients. Most employees we survey want us to market to them so we catch them at the right time in their buying cycle.” However, even now more innovation is needed to fully unlock the potential prize from salary sacrifice. The sheer variety of potential drivers, as well as the complexity of the pricing model, means that improving the consumer-facing proposition still demands attention from employers and scheme providers. This will require tailoring the product for different driver groups – both the ‘softer’ aspects of schemes, such marketing messages, as well as ‘harder’ ones, such as service quality and pricing. Aligning employers, scheme providers and manufacturers to create a compelling consumer proposition will be critical to realising the full value of this potentially game-changing product.
£
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HR: INF LUENCING CHOICE
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Find the right balance on car choice lists Fleets need to reconcile an attractive car benefit scheme with best practice as the economic recovery puts perk cars further up the agenda. John Maslen reports
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erk cars are rising up the agenda again as the economic situation eases and companies seek to attract and retain staff. Employers are being warned that staff are prepared to vote with their feet if they are not happy with their current package. A report from the Chartered Institute of Personnel and Development (CIPD) reveals that 24% of employees in the private and voluntary sectors, and 23% in the public sector are looking for a new job. The intention to look for a new role increases with job dissatisfaction, with 62% of dissatisfied employees currently looking for a job, compared to 10% who are satisfied. Job satisfaction levels in the private sector have declined steadily over the last few quarters as the economic recovery
Claire McCartney, CIPD
TYPICAL FLEET CHOICE RESTRICTIONS Cabriolet/convertible vehicles
60%
Sports utility vehicles (SUVs)
48%
Off-road vehicles
46%
Two door vehicles
33%
Non-conventional colours
30%
Vehicles with CO2 emissions above 160g/km
23%
Vehicles with CO2 emissions above 120g/km
9%
Other
2%
No restrictions
17%
Source: Sewells Fleet Operator Attitude Survey 2013. Sample 943 fleets
“This should signal a warning to employers to up their game when it comes to retaining key talent”
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has not been reflected in improved conditions and pay. Claire McCartney, research advisor at the CIPD, says many employees are on the move again, signalling a decline in fear around job security as the recovery strengthens. “However, this should also signal a warning to employers to up their game when it comes to retaining key talent,” she said. For fleet and HR managers, the question is how a company can reconcile an attractive car benefit scheme, which is essential for recruitment and retention, with best practice fleet principles, focused on low wholelife costs, minimising brand choice to enhance buying power and strong driver management policies. It can be done, with the right level of expertise. Aviva fleet manager Paul Murdoch used a carefully-constructed offering to combine cost efficiency with an attractive fleet proposition. The majority of the insurance company’s 1,000-vehicle fleet is perk vehicles and Murdoch recognises that minimising vehicle choice to a more economical range might be an easy way to generate savings, but would also be a quick way to make drivers disgruntled. To combat this, he worked to offer drivers the same vehicle range and yet encouraged them to opt for a more fuelefficient, environmentally-friendly vehicle by passing the cost of less tax/fuel-efficient vehicles on to the driver. As a result, drivers are now choosing more tax and fuelefficient vehicles of their own volition. GE Capital used employee and driver feedback to completely redesign its fleet policy and communications strategy, which achieved its aim of encouraging drivers to shift from cash allowances to company cars, where risks could be more effectively controlled. The policy delivered benefits on both sides, with cost savings for the fleet and an attractive choice list for drivers, based on offering
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HR: INF LUENCING CHOICE the most fuel and tax efficient vehicles. Damion Bennett, company car compliance advisor to GE’s 219-car fleet, says: “We have been able to create a choice list centred on low CO2 models that has proved highly attractive to the legacy cash-taker population. “Very importantly, and central to the success of cash-taker penetration, has been the comprehensive programme of driver feedback where we listened to and acted upon the specific needs of all our drivers.” Company-wide driver surveys combined with smaller focus groups enabled GE to establish the needs of the workforce and create a policy that was attractive to staff while being extremely cost effective. For most fleets, the key is to ensure that drivers feel as involved as possible in their choice of fleet vehicle, even if their final decision is being guided in the background by company policies. At Fleet News Award-winning Red Bull, a new sales force provided the opportunity to combine an attractive company car offering with a fleet designed around low CO2 priorities (see profile on page 66). A CO2 limit was set at 99g/km, leading to a Volkswagen Golf 1.6 TDI SE being selected based on its low running costs, class-leading safety features and low CO2 emissions. Although some sales staff said this reduced the storage capacity they had access to compared to the Nissan Qashqai cars they had previously driven, the fleet team worked with employees by agreeing to change the way they carried product, therein overcoming the final barrier to adoption of this change. To reinforce the company’s focus on reducing CO2, new starters that are eligible for a company vehicle are advised as part of their induction on the relationship with CO2 and their tax, as well as the way fuel economy of the car affects their cost for private mileage.
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David Oliver, purchasing manager for Red Bull, says: “This change was introduced by procurement to ensure that sales and marketing managers were not overlooking this and concentrating on the badge aspect only. “In the case of the new 99g/km Golf, we highlighted that for a 20% taxpayer the tax bill was equivalent to buying a large latte three times a week, not bad for a £20,000 car they could use privately.” In most cases, companies guide drivers towards the right vehicle through simple initiatives, such as restricting choice lists to vehicles that meet company standards. For example, the majority of companies impose some form of restriction on the types of vehicles that can be included on the fleet. According to Sewells Research & Insight, nearly two-thirds of fleets ban convertibles, with off-roaders blocked by around half. Coupés are off-limits for one-third of fleets, with an almost equal proportion demanding that cars are chosen in ‘conventional’ colours. Only 17% of nearly 1,000 fleets questioned said they didn’t impose any restrictions. Although many companies need to ensure their fleet choice lists help to attract and retain the right employees, they should not be afraid to guide that choice using company policies. Sewells’ research among company car drivers shows that although the company often takes away choice through policies and restricting choice lists, drivers don’t detect the employer’s influence during the car-choosing process. Most accept the choice list for what it is, rather than thinking about how and why it was created in that way. Sewells believes this is successful because the restrictions that help companies to reduce their costs often also benefit the driver by encouraging more tax efficient vehicles, with lower emissions and better fuel economy.
DON’T OVERLOOK A LEASING COMPANY’S ROLE IN DRIVER SATISFACTION Hundreds of company car drivers have criticised their employers’ leasing companies for failing to meet their expectations when it comes to key aspects of vehicle delivery and servicing. Exclusive research among more than 1,600 company car drivers carried out by Sewells Research & Insight as part of its User-Chooser Barometer service has highlighted serious concerns about service levels.
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Problems can begin at an early stage in the ordering process, with nearly one-in-five (18%) employees saying that booking a test drive or demonstrator through their leasing company did not meet their expectations. The experience of ordering a car raised similar concerns, with 13% saying the process did not meet their expectations, while 15% said they felt let down by communication related to the delivery of the car. By far the greatest proportion rated ‘lead time for delivery of a car’ the lowest, with nearly one quarter (22%) saying it did not meet their expectations. When it comes to servicing and repair, 13% are unhappy with the leasing company’s performance in this area. A spokesman for Sewells Research & Insight says: “Leasing companies are playing a growing role in the management of modern fleets, particularly among perk fleets. Our research suggests that, while the majority of drivers receive the service levels that are expected, a large minority are unhappy. “Fleet managers and their leasing partners need to look closely at how problems can be avoided through strong service level agreements and close monitoring of key performance indicators. “If leasing companies are to play a closer role in fleet departments in future years, they have to ensure that every driver is a priority and that service levels meet their expectations.” n For more results, see panel right
FLEET DRIVER SATISFACTION WITH LEASING COMPANY Satisfaction with booking a test drive/demo
20% Met my expectations 62% Didn’t meet my expectations 18% Exceeded my expectations
Satisfaction with ordering a car
17% Met my expectations 70% Didn’t meet my expectations 13% Exceeded my expectations
Satisfaction with communication related to delivery of car
19% Met my expectations 66% Didn’t meet my expectations 15% Exceeded my expectations
Satisfaction with lead time to delivery of car
18% Met my expectations 60% Didn’t meet my expectations 22% Exceeded my expectations
Satisfaction related to communication related to servicing and repair
18% Met my expectations 69% Didn’t meet my expectations 13% Exceeded my expectations
Source: Sewells Research & Insight UCB fleet driver research. Sample 1,626 company car drivers
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Fleet reviews are critical to cost management Regular assessments will help companies identify potential savings
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ost management is the single biggest issue facing employers today and, after employee expenditure, fleet is typically the second biggest corporate expense. That means, in many cases, HR professionals are responsible for managing the two largest components of an organisation’s budget, but almost inevitably the vast majority of their know-how and experience will be linked to managing people and not vehicles. Historically, the involvement in fleet of HR managers was ensuring that the “right” car was available to the “right employee” with fleet managers responsible for the acquisition, disposal and management of all vehicles and related services. However, today many HR managers have complete responsibility for their company’s fleet – and that includes managing employees who drive their own cars on business trips, the “grey fleet”. Company cars continue to offer tremendous value for money, both to employers and employees, which is why in recent times demand for salary sacrifice car schemes has increased. For example, if a basic rate taxpayer chooses a £20,000 car with CO2 emissions of 105g/km, the benefit-in-kind tax due in 2014/15 is £560 or 2.8% of the value of the car (5.6% for a higher rate taxpayer). However, the cost for a basic rate taxpayer of choosing salary is 32% – tax (20%) and National Insurance (12%) and for higher rate taxpayers their tax and NIC liability increases to 42%.
Irrespective of whether an employee drives a company car or their own vehicle on business trips, compliance with occupational road risk managementrelated legislation rests with employers. Effectively managing the driver, vehicle and journey is critical and occupational road risk management best practice starts with an audit trail of documents including validating employees’ driving licences with the DVLA and following that up with rechecks at intervals ranging from three to 12 months depending on points collected. A further reason for the resurgence in company car demand is the complexities involved in compiling an audit trail of vehicle-related documents of grey fleet vehicles – Vehicle Excise Duty, service stamps, MoT and insurance certificates. Meanwhile, businesses are concerned at the cost of mileage claims from own car users. Unless vehicle use controls are in place and tightly monitored, it is all too
easy for mileages being travelled to rise and consequently reimbursement charges. As a result, an increasing number of firms are turning to flexible vehicle rental for periods of time ranging from just a single day to three months or more for a variety of requirements including new staff, seasonal demands and non-company car drivers when they have an off-site as well as a pool car alternative. Days Contract Hire director Aled Williams said: “Many organisations retained the status quo with regards to their fleet operation during the recession years. But economic recovery gives businesses a reason to give their entire fleet operation a root and branch review. “While this could appear a daunting prospect, particularly to HR managers who may not consider fleet as their primary function, undertaking a regular review of fleet and grey fleet operations is critical to long-term cost management.”
Contact Days Contract Hire today for your complimentary fleet review on 0845 217 2608 or visit www.daysfleet.com
HR: GRE Y F L EE T
Unlock grey fleet savings Employee-owned vehicles used for business are sometimes neglected by fleets, but forming a policy to manage them well can help reduce costs
T
he grey fleet is an important, but often neglected, aspect of fleet management. It consists of employee-owned vehicles, bought with their own money or via company cash allowances and reimbursed for business mileage on a pence per mile basis. There are an estimated four million grey fleet cars in the UK – more than three times the number of company cars. Therefore, it is crucial to identify opportunities to reduce emissions and costs. For many organisations, eliminating grey fleet will not be practical and for some employees and journeys it will be the best option. However, it must be managed properly, and that requires a clearly communicated, well developed policy.
4m
estimated number of grey fleet cars in the UK
3
times more grey fleet cars in the UK than there are company cars
THE BUSINESS CASE Many organisations spend a significant amount of money on reimbursing employees for mileage. Managing the grey fleet carefully can reduce those payments. Diligent management of the grey fleet, including accurate recording of mileage and expense claims, can also prove invaluable in the event of an HMRC audit. However, the benefits are not all financial. The law is clear – an organisation has a legal duty of care to an employee, regardless of vehicle ownership. Grey fleet vehicles tend to be older and less well maintained, thus increasing the risk to your staff. Newer cars have more advanced safety features such as airbags and ABS, and higher NCAP safety ratings.
The following departments may be required to establish and implement it: human resources, finance, health and safety, and environment/sustainability. Benchmark the existing grey fleet: Benchmarking the grey fleet is a crucial first step toward creating a policy. A number of questions should be asked about the drivers and their vehicles, what journeys they are making, how much the journeys cost and what management controls are in place. If obtaining this information proves too difficult, the recordkeeping surrounding the grey fleet may be inadequate. At this stage, data collection procedures should be reviewed and new systems established, so that a more accurate picture of the grey fleet can be developed. During the benchmarking process, you may find that the wrong people are in the wrong cars. For example, there may be grey fleet drivers doing more than 10,000 business miles a year and company car drivers doing fewer than 5,000. It may be necessary to conduct a review of the grey fleet as part of a wider fleet and travel policy review, and consider providing a salary sacrifice or company car for high-mileage drivers.
POLICY MEASURES
POLICY DEVELOPMENT Assign responsibilities: Lack of responsibility is one of the key reasons the grey fleet is so often overlooked. In organisations that have one, a fleet manager is likely to be the best person to assume responsibility for the grey fleet. Otherwise, finance and HR departments should work together to appoint an individual who can take responsibility. Whoever is responsible, establishing a working group to assist with the development and implementation of a grey fleet policy is recommended.
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To comply with health and safety legislation and the HSE’s Driving at Work guidance, any grey fleet policy should include statements relating to the vehicle, the driver and the journey. The employee is required to meet their responsibilities regarding the suitability of themselves and their vehicle when driving for business purposes. Crucially, however, the employer has to ensure an employee has done so. The following measures should be considered as part of a policy for managing the grey fleet: The driver: The organisation must satisfy itself that all grey fleet drivers have a valid licence and are not disqualified. The employee is responsible for holding a current driving licence, with up-to-date information on endorsements, and for producing this for regular checks by management. Licence checks, which should be carried out annually, help to identify drivers with endorsements on their licence. Drivers’ insurance details should be checked to ensure that every grey fleet driver is insured to use their vehicle for
EXAMPLE: INFORMATION TO RECORD FOR GREY FLEET VEHICLES Staff ID
Reg no
Date of first reg
Make
Model
cc
Fuel
CO2 (g/km)*
NCAP**
EN1234
ES08EST
03/04/08
Ford
Focus
1,796
Petrol
167
5 star
* For vehicles registered from 2001 onwards, their CO2 (g/km) can be found at carfueldata.direct.gov.uk or on the vehicle registration document (the V5). Cars registered prior to 2001 were not required to declare their CO2 emissions performance, and so this information cannot be recorded. ** Euro NCAP provides consumers with a realistic and independent assessment of the safety performance of most cars sold in Europe. The NCAP safety rating of a particular car can be found on their website at www.euroncap.com
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GREY FLEET CHECKLIST The drivers
The vehicles
The journeys
The costs
Management
Who are they?
What are they and what are they used for?
Where are they going?
What mileage rates are paid?
Who authorises travel?
Are they fit and qualified to drive?
What are their CO2 emissions?
Why are they travelling?
Is the rate an incentive for them to cover more miles?
Who authorises mileage claims?
Are they suitable for business use? Do they fit with the business image?
How often?
What is the total mileage cost?
Who has overall responsibility?
Are they well maintained, MOTcertified and insured for business use?
How far are they travelling?
How do these costs compare with fleet vehicles and daily rental agreements?
Source: Energy Saving Trust
business journeys. Drivers should hold breakdown assistance cover. Ideally, the above checks will form part of an annual risk assessment for each grey fleet driver. Driver assessments and training should be considered to help address any risk concerns. The vehicle: Record information about grey fleet vehicles, such as make, model, registration number, date of first registration, fuel type, CO2 emissions and NCAP rating. The employee is responsible for ensuring their vehicle complies with road traffic law, is in a safe and roadworthy condition and is fit for purpose. The employer should carry out annual checks including ensuring that MOT certificates are current. The employer should set minimum vehicle standards for the grey fleet, including NCAP ratings, emissions levels, required safety features and essential breakdown cover. Consider imposing standards such as maximum age and CO2 limits. Ensure there is a suitable reporting system in place to record any accidents that occur while an employee is driving their own vehicle for business. Pay the same mileage reimbursement rates for all vehicles and engine sizes. Paying higher rates for larger vehicles indirectly encourages higher emissions and costs more money.
“During the grey fleet benchmarking process, you may find that the wrong people are in the wrong cars” This article is an excerpt from the Energy Saving Trust’s ‘A Guide to Managing the Grey Fleet’. For a full copy of the guide, visit www. energysavingtrust.org.uk
The journey: A grey fleet policy should seek to eliminate all unnecessary business journeys. Staff should follow a travel hierarchy, ensuring that the journey is necessary, and selecting the most appropriate form of transport. Line managers should be responsible for ensuring that each journey is necessary and that the most suitable mode of transport has been selected.
COMMUNICATING THE POLICY It is recommended that a grey fleet policy declaration is produced, which must be signed by the driver to indicate that they have read and understood the policy. This will help to communicate the policy and to gather evidence that drivers have been made aware of their responsibilities.
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HR: DRI V ER BEH AV IOUR
Communication is key to improving driver performance Handling difficult drivers can be a major headache for HR, particularly if driving isn’t the employee’s core task. Louise Cole examines the various options for improving performance.
A
s with any performance issue, the most important element of improving driver behaviour is clear, consistent communication. It is important that the employee understands the various implications of their failure to comply with policy, whether those are commercially or safetyrelated, because this depersonalises the issue and removes the idea of arbitrary rules. Judith Popay, fleet manager at AstraZeneca, says: “I think that you have to be consistent and fair to all. “Anticipate all the tactics that they might use to try to get what they want and have reasoned arguments ready to counter their arguments. “Keep calm when having the difficult conversation. If challenged and you don’t know the answer, don’t try to fudge the answer – take the question, find the answer and go back to them.” Ted Sakyi, fleet manager at Tube Lines, says that all performance discussions must be a dialogue, not one-way. “It depends on the issue. Some things are simply not negotiable, such as legal requirements/legislation changes and obvious safety concerns,” he says. “[However] drivers are the people that operate within the vehicle policy, it is important to listen to their views and suggestions.” It is also essential to ensure that a full support network is in place, with appropriate briefings, guidance and training. Rick Wood, head of driver training and fleet solutions at the Royal Society for the Prevention of Accidents, makes the point that expectation or incentive alone are not enough. “There is no point in incentivising someone to be crashfree if they don’t have the skills to achieve it,” he says. Once the ground rules are understood, most companies adopt a mixture of carrot and stick to inhibit unwanted driving tendencies. Tracey Scarr, fleet and road safety manager at Arval, says while it embraces communication,
“A company car is a valuable asset and drivers must take a level of accountability for their actions” Tracey Scarr, Arval
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training and engagement in many ways, there is also value in allowing drivers to take some measure of the cost of poor driving. “Where a driver is involved in repeat at-fault incidents, we do request a small driver contribution in relation to the repair of damage to the vehicle,” she says. “A company car is a valuable asset and drivers must take a level of accountability for their actions. Not passing any cost on would potentially send out the wrong message and promote a flippant attitude to driving.” Avoiding personal penalty can be a strong motivator, but it can also mean that minor damage and near misses are not admitted to, compromising the company’s safety data. Telematics can fill in the gaps with obvious benefits in terms of targeted training, and this data can also be used for competitive rankings, penalties or incentive schemes. There are benefits to all of them but there are also possible downsides. Some drivers respond well to a sense of competition. John Catling, CEO at FMG, says: “In one instance, a driver from one of our clients was ranked 58th out of 58 in his company with a performance score of 57%. FMG discussed this driver’s data with the client and recommended the range of actions he needed to take to improve his score and how this could be achieved. “The driver acted on the feedback and one month later achieved a score of 92%. In some instances, incentive schemes can act as a further impetus to produce the required performance improvement. ” Not all will be motivated by a public airing of their failings, however. Rhys Harrhy, telematics consultant at ALD, says: “Drivers can often look at training and think: What’s in it for me? Financial incentives can garner a more positive response.” However, incentives can be troublesome as they can also distract from good practice in favour of simply winning. Like personal penalties, the idea of competing for a prize can encourage drivers to hide mistakes, or pay for damage or fuel from their own pocket. Incentives schemes often work best when aimed at groups with a clear focus on skills and process and not outcomes. Will Murray, research director at Interactive Driving Systems, says: “League tables, for instance, should be based on the process of driving well and not just outcomes,” he says. “Otherwise incentives can twist behaviour.” Rewards should be competed for and granted to teams and not individuals. This way there is a shared cultural approach and a peer pressure to stay within the rules. Individuals skipping paperwork or cutting corners will be policed, but also encouraged, by their team mates.
57-92%
rise in one driver’s score rating after acting on telematics data feedback
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Reduce risk to drive a better business
BEST DRIVER AWARD 2014
If you run a fleet, you know that employers are legally required ‘to carry out an assessment of the risks to the health and safety of their employees’ and that ‘includes any driving activity on the road’. But do you want to invest in your drivers just because you have to... or because you’ll improve your overall business performance too? In the area of fleet risk management, you can achieve both; safer drivers means fewer collisions, which means less costs and more profit. How do you achieve this? Well, firstly, get sponsorship from your leadership team that they will support the programme; saving money is a powerful incentive. Then, find a partner who can offer you a fully comprehensive and integrated approach that can help you through
management compliance, driver assessment and training. Next, take time to understand your whole fleet, including your grey fleet. A fleet risk survey covering the company, vehicles and drivers can help you identify risks and set priorities. Then set some realistic timelines and goals, define what success means and give management and staff deadlines to work towards. After that, show your driver how it benefits them and build these messages into your communications strategy. Once that’s in place, you can start. Validate your employees’ entitlement to drive, typically their driving licence, against the DVLA database. Then assess their risk exposure while driving, remembering that any driver training should be relevant to their risks. Most of us drive everyday so it’s actually a life skill. Consider ‘Driver of the Year’ competitions or event days to bring your strategy to life!
Contact Francesca Hill on: 0845 070 6042 or email: tellmemore@AAdrivetech.com or visit: AAdrivetech.com
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HR: DRI V ER BEH AV IOUR
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“Teams should include work allocators and line managers,” says Murray. “This engages the workforce better and ensures that line managers will be monitoring and motivating good performance.” There is evidence that positive reinforcement in the form of reward and recognition schemes can reduce accident rates and costs but, as a safety report (Work-related road safety: a systematic review of the literature on the effectiveness of interventions 2011) from the Transport Research Laboratory suggests, there has been little proper research into the effects of incentive or penalty schemes. While many companies which employ incentives see benefits, they are often also hosting an array of other interventions as well. Murray says: “Rewards and incentives should not be used as a substitute for any other good practice but, if implemented well, can help enhance a programme. “If implemented badly and without thought, or as a pilot study to test, they can cause more problems than they are worth.” Recognition schemes can be as informal as verbal praise, or as defined as money in the pay packet. HR professionals need to stop and consider carefully not only which type of recognition has most impact, but which may be problematic if withdrawn. It is very hard to take away financial benefits once granted. However, a culture of encouragement with a monthly meeting to honour not only those with best performance, but also the greatest improvement in performance, is unlikely to ever become too costly or problematic to maintain. One of the difficulties of handling difficult drivers is that driving may not be their core task. They may be exceptionally good at sales, engineering or whatever core task they were hired for.
WORST DRIVER AWARD 2014
“Rewards and incentives should not be used as a substitute for any other good practice, but can help enhance a programme” Will Murray, Interactive Driving Systems However, this expertise cannot be allowed to shield them from the implications of unsafe driving. A company may be prepared to overlook the high cost of fuel from a heavyfooted sales whizz, but very often smart, safe driving is synonymous with fuel-efficient driving. And firms cannot afford to overlook unsafe road practice. This kind of scenario is easiest expressed as a costbenefit equation. An unsafe driver risks substantial cost in vehicular damage, but potentially enormous cost in terms of thirdparty liability or injury, legal implications for the company including, potentially, corporate manslaughter charges or a wrongful death suit, uninsured losses and the hard-toquantify knock-on effects on company morale. It would be hard for a company to defend itself against claims of negligence if it has noted, but taken no action against, a driver who repeatedly flouts the rules and subsequently has a serious collision. How much revenue does a great salesman have to generate to offset that kind of potential loss? Not dealing with problematic drivers simply isn’t an option. For more on fleet management, visit fleetnews.co.uk/fleet-management/
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HR: DRI V ER S A F E T Y P OL ICY
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What does a good driver safety policy look like? Christopher Smith looks at the areas a comprehensive policy should cover
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aving a clear driver safety policy is an essential part of running a fleet. Every organisation has a duty to look after its employees – including drivers. But the driver also has a duty to look after their vehicle and their own personal safety. The Health and Safety at Work Act 1974 states: “You must ensure, so far as reasonably practi-
cable, the health and safety of all employees while at work. “You must also ensure that others are not put at risk by your work-related driving activities.” Creating a driver handbook with key information, policy and limits is important, together with ensuring that drivers have read, acknowledged and signed the document.
Drivers need to have properly read and understood the policy for it to work effectively. If a policy is created but never properly shared with staff, then it is worthless. Fleet operators should ensure all staff, including senior managers, understand that the organisation expects everyone who drives for work to drive safely for their own and others’ benefit.
THE LAW Although restrictions such as speed limits and seatbelts are set by law, a policy should still include information such as this. The policy should also state that those driving on business require a full driving licence, and how long they should have held it for. Licence checking and frequency should be included. Drivers should also be reminded of the minimum eyesight levels and details of the company eye testing policy, if available, should be given.
VEHICLE CHECKS Drivers should visually check their vehicles weekly. Tyre tread should meet the legal minimum 1.6mm level, with details of the tyre replacement process and the tread depth at which you recommend tyres should be changed. Bulbs, oil and screenwash should be checked and details provided of replenishment. A reporting procedure for bodywork damage should also be provided.
MOBILE PHONE USE
Hand-held mobile phone use is illegal, and a fleet policy should state this. It is also an offence to ‘cause or permit’ a driver to use a hand-held mobile phone while driving. Therefore, employers can be held liable as well as the individual driver if they allow employees to use a handheld phone while driving. However, the use of a hands-free mobile phone is at the employer’s discretion. Many have completely banned mobile phones at the wheel, including hands-free use (see roundtable on pages 30-31). The policy should also state that drivers must not use their phone to text, check email or any other associated tasks while in control of a vehicle.
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DRIVER HOURS
Road safety charity Brake recommends drivers stop for a break at least every two hours for a minimum of 15 minutes.
15
the minimum recommended break (minutes) after every two hours of driving
ALCOHOL AND DRUGS
Staff must not drive for work if their ability to do so safely is impaired by alcohol, drugs or medicines. The legal drink-drive limit is 35mg of alcohol per 100ml of breath. The Government is in the process of introducing specific drug-drive limits; however, the recommended policy for both alcohol and drugs is zero tolerance. It is also worth mentioning ‘morning-after’ drinkdriving in your policy, so that drivers are aware of the possible effects of this while on company business. Testing kits for drug use are now also available, and if you plan to use these in suspected cases of drink or drug driving, you should mention this in your policy (for more on this issue, see pages 59-61).
The Health and Safety Executive has recently updated its Driving at Work factsheet, which can act as a useful basis for a driver safety policy. The factsheet can be downloaded at fleetnews. co.uk/drivingatwork, where links are also available to resources from Brake and Rospa.
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A win-win situation for employers and employees Salary sacrifice schemes offer a tax-efficient way to improve a fleet
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alary sacrifice is widely used as a tax efficient way to provide employee benefits including pensions, childcare vouchers and bike to work schemes. Since 2008 it has become a popular way for employers to provide a car-based benefit to employees. The schemes are increasingly becoming part of benefits packages due to their ability to assist with employee engagement and recruitment, at no cost to the employer. How does it work? A salary sacrifice car scheme enables employees to use a company car as part of their benefits package. They exchange a fixed reduction to their gross salary each month and get to drive a brand new car with an all-inclusive package. As the reduction is from the employee’s gross salary, they save on income tax and National Insurance. The cars are subject to benefit-in-kind tax (BIK), however for low emission cars the savings that are made will more than offset the tax payable. Benefits to employers n Helps recruit, attract, retain and motivate employees n Cost neutral or even cash generative for the company n Encourages uptake of low emission cars n Assists with duty of care compliance Benefits to employees n No deposit to pay and fixed monthly payments
Some of Zenith’s awards
Most popular cars ordered so far in 2014 through Zenith’s Salary Sacrifice Car Schemes 1 Audi A3 2 Ford Fiesta 3 Nissan Qashqai 4 MINI Hatch 5 Mercedes A-Class
n Income tax and National Insurance savings n Corporate discounts n All-inclusive package including maintenance, insurance, breakdown recovery, accident management, road tax, windscreen, glass and tyre replacements n Potential for fuel savings if the new car is more fuel efficient than the vehicle it replaces How do I implement a scheme? An experienced salary sacrifice provider will be able to work with you to implement a scheme and make the process as simple as possible, providing a dedicated project manager. A scheme typically takes around 8-12 weeks to implement. Key contacts will need to be available within your business to assist with the process including representatives from the HR, payroll, legal and communications departments.
For more information call Zenith on 0844 848 9311, email enquiries@zenith.co.uk or go to www.zenith.co.uk
Maximising the impact and value It is very important that the scheme and its benefits are communicated as fully as possible, to ensure success and full realisation of its value. Communication channels will vary according to the nature of your business but will typically include emails, intranet, posters, flyers and on-site events including roadshows and benefits fairs. Work with your provider to create a tailored marketing and communications plan to ensure your employees have access to all the information they need. Employee surveys and demographic information can help provide useful information to help market the scheme launch. Following go live, data can be analysed on quoting and ordering patterns to provide a full and accurate picture of vehicle trends and price points which will assist with ongoing communications.