RSS feedsMy late mother’s advice concerning employment went like this: ‘Get a good job that has a company car and you will be safe.’ Little did she realise just how dangerous that advice was. To put it bluntly, you would be safer to work on a construction site than drive 25,000 miles per year. Just think of the safety measures taken on a building site.
According to the Royal Society for the Prevention of Accidents, the average probability of occupational fatality in the service industries is 1 to 150,000, in construction 1 to 10,000, while for those who drive 25,000 mpa it’s 1 to 8,000. When you compare this to deep-sea fishing (1 to 750) and coal mining (1 to 7100), an interesting picture emerges.
Given the current business climate with regard to safety, is it acceptable for the organisation to cut the cost of managing corporate travel through handing over the management of fleets to non-specialists?
BRANCHING OUT
Research undertaken at Nottingham Business School (CAIM/NBS) suggests organisations are still looking to outsource fleet management. Our research shows a quarter of senior executives questioned felt the fleet is best managed outside the organisation, while 23% said it would be best managed by a third-party provider. But more than a third said that either it wasn’t an issue or it made no difference.
The response: ‘better managed by a third party provider’, may be excellent advice on the surface. That’s what happens with contract hire – at least as far as the vehicle is concerned. However, it only covers part of the situation. What happens with regard to the drivers themselves and, perhaps, more importantly, what happens to cars provided by employees and used on business, or cars provided by employees and occasionally used on business? Who manages them – and how are they managed?
Using a third-party provider to manage the fleet answers only one element of the total personal business mobility issue and only scratches the surface of duty of care. The organisation has a strict duty of care responsibility to ensure employees travelling on business are properly looked after. The rules regarding duty of care are clearly spelt out.
For a business to comply with duty of care, employers must: have a comprehensive road safety policy supported by management – in writing; have road safety management procedures in place, including risk assessment, and implement safe practices to eradicate or minimise identified risk; ensure employees are given relevant information, training and supervision to be safe on the road; regularly audit the safety of journeys and amend procedures according to newly identified risks.
As can be seen, this is an all-embracing set of guidelines – and there is no avoiding them. Elsewhere, government-backed guidelines for ‘driving while at work’ indicate the employer needs to monitor a broad range of issues regarding the suitability of the vehicle for the task in hand – whether cars provided by the organisation, rented on behalf of the business – or the employee provided car.
ROAD RULES
Bringing these various sets of rules together and adding ‘risk management’ to the equation, one might claim there are three significant implications for the organisation with regard to business mobility. The organisation must follow strict guidelines regarding safety for employees travelling on business. It must provide suitable means of company transport, including checking the individuals’ own cars – or hire appropriate transport. The organisation, for its and the employees’ protection, needs to establish and retain an audit trail.
It is against those rules that the organisation should consider its position as regards to surrendering fleet management to non-specialists. However, there has been some tendency to undertake such a potentially risky action, as is illustrated by research from the Alphabet [GB], multi-marque fleet finance company.
Alphabet asked if boardroom attitudes to cash alternatives offered to company cars were likely to change over the next 2-3 years? Of the respondents, 50% said they were more likely to offer cash alternatives to employees, while 47% said things were unlikely to change.
FALSE PERCEPTION
The research would suggest organisations are looking to let employees provide their own cars rather than the company provide them. By implication this and other research suggests there is a misapprehension that the employer can pass on the responsibility for provision of an appropriate car to the employee, and so wash its corporate hands of the whole issue.
Nothing could be further from the truth. The organisation has the responsibility to ensure the employee is safe. More than that - the organisation must ensure there is a clear audit trail for the checks and management of the system. Managing even a small fleet and the provision of employee mobility represented by cars is a pretty specialist task and can be time-consuming.
Consider the issues that need to be checked with regard to employee-provided cars used on business. You will have to consider things like whether the vehicle is suitable for the task, if it has appropriate insurance for the task, whether it is taxed, properly maintained and what condition the tyres are in. This is not even close to a comprehensive list.
To be able to check all of those items is a daunting task if a number of employees are using their own cars on business. A single check will not be sufficient – the units need to be checked a couple of times a year, at least.
One might ask how many experts there are in the organisation who can read an insurance policy to ensure it covers the appropriate business use of the vehicle?
There is still a second part of the equation to be handled: the employees’ own driver information. Driving licences need to be checked regularly. I reckon every quarter. How many points have they gathered? Are they driving without a licence? Think of the implications for the business.
I have hardly touched on the question of whether the fleet should be handed over to non-specialists? All I have tried to do is highlight some of the pitfalls and risks to the organisation should it seek to use non-specialists to manage business mobility. ‘It won’t happen to us, we will not get caught’ is a dereliction of corporate responsibility and, as outlined above, driving is a dangerous activity. My case rests.
Peter Cooke is KPMG professor of Automotive Industries management at Nottingham Trent
