PracticeAccounting FirmsFleet special: external drive

Fleet special: external drive

Thinking of handing over your fleet to non-specialists? It's important to consider all aspects before such a move

fleet special

My 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

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