Hidden Dangers of Vehicle Reimbursement: Recruiting & Retention
As mentioned in our previous blog The True Cost of a Bad Hire, industry experts warn that the cost of recruiting, hiring, and onboarding a new employee can be as much as $240,000. So, with that much at stake, it’s no wonder why companies are placing an increased focus on recruiting and retaining top talent.
So how does a vehicle reimbursement program compare to a company-provided vehicle program in the eyes of prospective employees?
According to Mike Antich of Automotive Fleet, “Repeated industry surveys show that prospective employees view a company vehicle as an equivalent benefit to health care coverage and pension benefits.” Employees on company-provided vehicle programs appreciate the regularity in which they’re placed in a new model vehicle, as well as having vehicle-related burdens managed for them. They enjoy being able to do their job without worrying about the ancillary headaches that accompany vehicle reimbursement.
Moreover, a study conducted by GE Capital revealed “70 percent of employees reimbursed for using personal vehicles, preferred using company-provided vehicles.” According to Adam Pringle of Fleet Financials, “Survey respondents cited wear-and-tear, personal cost, maintenance, insurance, and fuel costs as the reasons why they preferred using company-provided vehicles.”
Based on those results, it’s easy to see why companies who offer company-provided vehicles have a key advantage over their competitors when it comes to competing for talent.
Along with being used as a recruitment tool, a company-provided vehicle also has a distinct advantage over reimbursement when it comes to helping companies retain employees. A company with a vehicle reimbursement program who is attempting to recruit someone that currently has a company-provided vehicle is going to be at a significant disadvantage right from the start. The potential recruit is not going to look favorably upon the prospects of relinquishing their current company vehicle, investing money in acquiring their own vehicle and insurance, and then watching that vehicle depreciate at an accelerated rate due to heavier than normal use. In contrast, by providing employees with a company-provided vehicle, it becomes even harder for an employee to jump to one of your competitors.
For companies looking to arm their HR Department with a valuable recruiting and retention tool, the choice is clear. A company provided vehicle is one of the most sought-after benefits by current and prospective employees.
Be sure to check back next week for our final installment on the Hidden Dangers of Vehicle Reimbursement: Brand Image.