When you’re looking at the potential risks involved in running a fleet of vehicles for your business, most people think of the financial and operational risks because they are tangible and easy to identify. However there are a number of other risks that should be considered and included in a Fleet Policy which are outlined in a comprehensive new guide from Interleasing – Managing Fleet Risk.
One area of fleet risk that many executives don’t understand is ‘grey fleet’. It’s a significant risk that hovers across several operational areas within a business which makes it hard to quantify, and even harder to manage.
“Fundamentally, grey fleet refers to a personal vehicle that’s used for business purposes by employees, volunteers or contractors,” explains Anthony Perri, General Manager – Sales and Customer Relations at Interleasing.
“It’s part of every business regardless of their size or industry and being grey by name also creates grey areas with accountability.”
After many discussions with customers about the different types of risk organisations face with their fleet, Perri has identified three types of grey fleet:
- Conscious
- Semi-conscious
- Unconscious
Many businesses have developed formal agreements with employees that allows them to use their own cars when travelling for work and then claim a reimbursement. This is a conscious acknowledgement of grey fleet by the organisation.
A semi-conscious grey fleet is where employees are claiming reimbursements for travel under an informal arrangement. It’s accepted as a form of employee mobility within the organisation, though most employees travelling for work purposes will have a company car.
The greatest risk for organisations is the unconscious grey fleet. This is when employees, volunteers or contractors are travelling in their personal vehicles to provide services for the business and senior management have no idea about the trip, the condition of the vehicle, the status of the driver’s licence, registration or insurance.
Part of the issue is a lack of clear understanding of ownership and accountability. While Fleet Managers generally look after the company assets, employee mobility is a broader concept which needs to be addressed by the leadership team.
A good place to start is by asking, how does the business provide products/services to its customers? In the process of answering this question, the Fleet Manager can work with the senior management team to discuss the costs, risks and benefits of each mobility option, for example owned fleet, pool cars, novated leasing, car allowances, kilometre reimbursements, taxis/Uber, public transports, walking, and grey fleet.
“We’ve worked with lots of clients to understand their grey fleet and sometimes the solution is to add more company cars,” says Perri. “When they looked at the total amount reimbursed to employees, and the cents per kilometre rate, they realised that providing a tool-of-trade vehicle, or running pool cars, was cheaper and reduced their grey fleet risk.”
Starting a discussion about the age and condition of an employee’s vehicle can be difficult because everyone has different personal circumstances. It does present an opportunity for Fleet Managers to expand their involvement beyond the transactional and operational areas of asset management by working with different departments. However, Perri advises that Human Resources should become the owner of the grey fleet policy.
“Ultimately the HR team should be the organisational owner of a grey fleet policy because if there’s an incident, they will be involved in the process of getting employees back to work,” explains Perri.
The task of managing a grey fleet can seem overwhelming to many organisations so here are some simple steps to follow when starting out:
- Look at staff that are claiming reimbursements for business travel. If it’s high, consider giving them a company car. If it’s low, talk to them about taxis/Uber or public transport.
- Start a pool car fleet. Technology has made the booking process easier and streamlined the end-to-end management. Pool cars are also a good way to introduce electric vehicles to staff.
- Implement a grey fleet policy and use a platform like Interleasing’s Driver Manager to make it easy to monitor and enforce.
To take a deep dive into all the considerations required to manage and reduce overall risk, as well as the day-to-day decisions and activities that need to be included in a fleet policy, download Interleasing’s Managing Fleet Risk guide.
