Employee Benefits Future Strategy 2006 – Sponsor’s comment: The price versus suitability battle

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The business car environment moves faster and becomes more complex every year, continually presenting fleet decision makers and their suppliers with new challenges. Two distinct sides to the company car market have emerged in recent years and this trend will continue in 2006.

On one side are basic deals to provide cars and finance; usually on the basis of ‘the lowest price wins’. On the other are contracts – characteristically partnerships – to deliver more complex car benefit solutions tailored to align with the customer’s wider business goals. However, there is a growing trend where customers press suppliers to deliver the benefits of the latter at the price of the former: a financially unsustainable situation that invariably leads to unsatisfactory results.

Financially and legally, fleets and drivers have become high-risk responsibilities, putting growing pressure on employers and their suppliers to ensure they deliver appropriate solutions. Car benefits strategies can significantly affect safety by building positive values and attitudes as well as shaping vehicle choices – meaning that selecting the right products and suppliers are more important than ever.

The situation is further complicated by the fact that while the fleet industry has changed dramatically in the last few years, only a few fleet companies genuinely have the ability to build a bespoke solution from a portfolio of proven products.

Identifying these companies will help you separate the suppliers who will be able to deliver you a tailored solution from those trying to fit your needs to their capabilities. The best providers will also be keen to help you with your funding review using independent financial software to ensure absolute best fit for your needs.

So, where to begin? As a starting point, you need to review the fundamental aspects of car provision – mobility, motivation and reward. In practice, this means completing a detailed analysis of the fleet’s role and requirements within your company, taking into account current guidance on duty of care compliance.

Once this is complete and you have a clear view on what your fleet needs to deliver for your company, you can turn your attention to selecting the right supplier to help you achieve your wider business goals.

Many companies follow approved purchasing processes, often including tenders, but these should not be used in isolation. There is no substitute for getting to know potential suppliers before making the final decision.

By combining both quantitative and qualitative methods, you can approach the final decision highly confident that you have shortlisted the best available solutions and suppliers. You can then compare all the offers objectively and select a winner on the basis of how they perform against a combination of essential criteria, including service quality and cultural and strategic fit as well as value for money.

Following this process has helped many major UK organisations to redefine their fleet policies in order to better meet the needs of both employer and employees. It also suits today’s business climate in which flatter organisational structures and the pursuit of more egalitarian employment policies call for a more holistic approach to providing car benefits.

Fast food firm McDonald’s has used this approach to increase the range and scope of their car benefits while containing overall costs. There is no doubt that employees see choice as a key factor in a car scheme and that offering more choice can attract staff back into a car benefit, with the attendant advantages in terms of motivation, cost management and, of course, safety.

By applying a single status benefits philosophy to cars, Oracle UK has given all its employees equal access to an attractive motoring package through a points-based flexible benefits system. The scheme is run as a seamless operation in partnership with a single supplier and delivers clear benefits to Oracle in terms of efficiency and reduced administrative overheads.

Adopt a best practice approach to planning your fleet strategy and ensure that in 2006, you are benefiting from working with the right supplier to deliver the right car scheme at the right cost for your company.