When we talk about finding efficiencies, we too often approach it from a budget perspective. However, real efficiency isn’t just about spending less; it’s about using available resources as effectively as possible.
By using rental cars in a variety of ways – by the hour, by the day, or for longer periods of a month or more – fleet operators provide flexibility and convenience for employees while increasing compliance and cost efficiencies for organizations. This approach is helping to change costly programs, such as mileage reimbursement, by offering a viable and easy-to-use alternative. With a few simple changes to employee travel, governments in Canada can save money while offering safer, better travel options to employees.
For more than a decade, the British government has been rethinking employee travel. A key direction was to reduce work travel in private vehicles, or “grey fleet” travel (it is called “grey” because it can be an unclear area of responsibility). The Office of Government Commerce brought stakeholders together to perform a comprehensive review of employee travel and develop the Grey Fleet Best Practice policy (2008). That review found the key to reducing grey fleet travel is to establish a policy where employees must use the least expensive travel option available, whether their own car, a pool vehicle, public transit or a rental – or not to travel at all. While the arithmetic may vary, at the current government of Canada kilometre reimbursement rate of $0.57, the break-even point for car rental is around 90 kilometres.
One province, New Brunswick, has been an early adopter and has had a grey fleet policy in place for several years. In the U.K. we also work in partnership with Government Procurement Services to address entrenched attitudes to grey fleet use. Our analysis shows a significant increase in the use of car rental, including daily rental services as well as hourly rental through car sharing programs. This growth in the number of rental days indicates public sector employees are responding positively to the call for a switch from mileage reimbursement to the use of a rental car.
An online platform for booking rental vehicles can prompt employees to determine whether alternative transport or car sharing may be more suitable, or whether the trip is even necessary in the first place. This is helping to re-educate employees on their transport choices.
Here are four steps we recommend for effectively reducing grey fleet travel:
1. Monitor and report on the use and cost of the grey fleet and set goals to reduce it over time.
2. Provide a clear policy that requires employees to use the least expensive travel option, and monitor compliance.
3. Give managers the authority to make exceptions to the policy based on the work
requirements of specific individuals.
4. Provide benchmarks, easy-to-use calculators and distance charts so employees can
identify the break-even point where kilometre reimbursement is more expensive than
Customer feedback from public sector partners indicates that car rental programs achieve several aims. They also reduce liability for government by ensuring that employees are fully insured for work travel. The fact is that, for many employees, driving on the highway is the most dangerous thing that they do at work. Most organizations’ travel policies state that employees are responsible for any insurance claims or accidents but, based on our experience, employees rarely notify their insurer that they use their car for work – which can lead to a nasty surprise when trying to make a claim.
By rethinking employee travel, governments have a significant opportunity to do the right thing for their budgets and for their employees.