‘The position comes with a vehicle’. This common phrase (or some variation) that usually appears in HR documentation may be short, however it can introduce a variety of questions for fleet managers. In each case the core requirement is to determine what that vehicle should be.
For ‘tool of trade’ vehicles (where the vehicle is required as part of the resources an employee needs to do their job) it’s a more simple process. Usually the vehicle will be selected according to a combination of what’s fit for purpose and preferred supplier arrangements.
The process becomes more complex when a private use vehicle is involved (the employee has an allocated vehicle with an agreement that allows for some degree of private use). The extent of private use and any limitations (cost of fuel used, geographic boundaries, etc) opens up another set of questions and is outside the scope of this article which will focus on vehicle selection.
Usually for private use vehicles there is some flexibility and choice which is sometimes referred to as ‘user-chooser’ arrangements.
While there is no one correct approach there is a range of factors that fleet managers will (or should) consider and these are considered below. Whatever position is developed, it should be clearly documented in a policy.
Costs, Contributions and Budget
Fleet operation involves developing and managing budgets. Usually private use vehicles involve a contribution by the employee towards the costs. Again, the type of contribution model is another topic.
The key point here is that the fleet manager will need to understand the net impact of a private use vehicle on the overall budget (Whole of Life Costs less the offset from employee contributions).
A specific consideration is how the associated FBT liability is to be handled which will usually require liaison the Finance department.
Efficiency through Standardisation
The benefits of standardisation are well understood and life for fleet managers would be greatly simplified if all private use vehicles were the same make and model (in white of course!).
While that position may not be realistic, since it reduces the value to employees as described below, it is still important for other organisational stakeholders to recognise the impacts on operational efficiency that result from variation.
The effects of the pandemic and semi-conductor shortage on vehicle lead times have been a clear demonstration that industry conditions can change significantly. Vehicle choice should include consideration of current and expected conditions for availability.
After-sales support including servicing, parts and warranty work may be less exciting than the initial stages of selecting a vehicle however they are important and should not be overlooked.
HR will usually have a range of initiatives to attract and retain the right employees and vehicles are often used as a lever. Offering a choice of private use vehicles can be an effective way of increasing the attractiveness of the position to an employee without increasing salary.
It is essential that Fleet and HR have a clear understanding of each other’s objectives, constraints and any other relevant factors when developing an organisational position. HR may be more oriented towards making the vehicle offer more attractive to employees without recognising the implications for the fleet team.
As a broader view of the above topic, fleet managers must always be aware of how their actions align with and support organisational strategies and objectives. A common example currently is sustainability with many organisations including targets for reduced carbon emissions. This may influence the types of private use vehicles that are promoted or restricted, eg hybrids and large utes respectively.
The importance of this area should not be underestimated. It can be of increased importance for some organisations such as government entities, not-for-profits, and similar where any indications of excess are likely to be flagged. An example is an expensive, premium brand vehicle driven by a local government employee, even if the employee is paying an increased personal contribution.
Stakeholders include customers, the community and also other employees. The perceptions of all these groups should be considered and appropriate communications may be advisable to avoid any misinterpretations.
The areas listed above are all on the basis that the private vehicle is owned by the organisation. Grey fleets introduce another set of questions which are outside that scope although many of the concepts are still applicable.
The key point is that grey fleet vehicles also need to have a policy that clearly identifies what vehicles are suitable and the associated reasons.
As an example, having minimum safety standards for organisational fleet vehicles as a way of supporting safety and then not having suitable safety requirements for grey fleet vehicles is a clear disconnect. There is also a risk that this could be seen as the organisation not meeting its duty of care to its employees.
The need for consistency is a priority in managing private use vehicles.
Private use vehicles tend to attract a high level of emotional involvement and are also very visible. It is critical that the selection and allocation processes are consistent, transparent and fair.
Fleet managers may be stakeholders and influencers rather than final decision makers however they also have specialised knowledge and can provide an organisation-wide moderator perspective not available to others. Fleet managers can highlight any variations between authorising managers including where policy could potentially be compromised to achieve other objectives, eg reward good performance.
The organisation’s policy for private vehicles should reinforce this consistency. While there may be conflicting objectives and priorities for different parties the policy should provide the agreed position that has been reached through appropriate consultation.
In some areas it may not be possible for the policy to be completely prescriptive. The guiding principles must then provide clear direction to support consistent decision making.