Company cars: Car policies in a changing economy

John Webb, principal consultant at Lex Autolease, looks at the place of the company car policy.

 During the recession, belts were tightened across the board. For company car schemes, this often meant extending contract durations and reducing vehicle choice. Now the UK economy is in the early stages of an upturn, many companies are actively recruiting.

As the Chartered Institute of Personnel and Development recently confirmed, companies are competing for valuable skills and employees are looking for the best reward packages when deciding between roles.

Company car policies have a significant impact on staff retention and loyalty, particularly in organisations where a company vehicle may be one of the only reward options open. Ensuring reward packages are competitive therefore ought to be a top priority. Packages should be developed to include clear progression within grades so employees have access to levels of reward appropriate for their individual career advancement.

In an increasingly competitive jobs market, reconsidering car policies may make the difference between retaining star performers and losing them to the competition.

The rapid pace of economic change is such that in-depth car policy reviews should be carried out at least annually.

Benchmarking policies against others in the industry, sector and wider marketplace will also ensure competitiveness, and ought to include cash alternatives. While cash was considered by many companies as a ‘quick fix’ during the recession, in our experience many customers are now unsure about its true value.

Employers are recognising the need to do more to educate employees about the full cost of ownership of cars and the different options available when looking to procure a vehicle.

When the time comes to rethink policies, it is essential to keep the future expectations of both employer and employee front of mind, along with any objectives set out by HR.

By redesigning existing policies on, for example, a wholelife cost basis, schemes can be enhanced without increasing costs. This helps companies keep their policies up to date, competitive and attractive to staff, without greater costs and risk.