Vehicle-Related Benefits Programs research A report by WorldatWork July 2011
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1 Introduction & Methodology This report summarizes the results of a March 2011 survey of WorldatWork members to gather information about current trends in vehicle-related benefits programs. Specifically, the research is designed to better understand the prevalence and perceptions of vehicle-related benefits programs within organizations. On March 16, 2011, survey invitations were sent electronically to 5,527 WorldatWork members. Members selected for participation were all members who specified total rewards as their specific function area along with randomly selected members who had designated a responsibility level of executive, top or senior level responsibility area. The survey was open to all members meeting specific criteria domestic, Canadian and foreign. The survey closed on April 1, 2011, with 511 responses, a 9% response rate. The closing dataset was cleaned, resulting in a final dataset of 466 responses. In order to provide the most accurate data possible, data was cleaned and analyzed using statistical software. Any duplicate records were removed. The demographics of the survey sample and the respondents are similar to the WorldatWork membership as a whole. The typical WorldatWork member works at the managerial level or higher in the headquarters of a large company in North America. The frequencies or response distributions listed in the report show the number of times or percentage of times a value appears in a data set. Due to rounding, frequencies of data responses provided in this survey may not total exactly 100 percent.
2 Table of Figures Figure 1: Prevalence of Vehicle-Related Benefits Programs... 5 Figure 2: Region and Vehicle-Related Benefits Programs... 5 Figure 3: Elimination of Vehicle-Related Benefits Programs... 6 Figure 4: Reason for the Elimination of Vehicle-Related Benefits Programs... 6 Figure 5: Types of Vehicle-Related Benefits Programs Offered... 7 Figure 6: Numbers of Vehicle-Related Benefits Programs Offered... 7 Figure 7: Vehicle-Related Benefits Options... 8 Figure 8: Groups Eligible for Vehicle-Related Benefits... 9 Figure 9: Vehicle-Related Benefit Difference Compensation... 9 Figure 10: Vehicle-Related Benefit Monthly Allowance Amount... 10 Figure 11: Impact of Fuel Costs and Vehicle-Related Benefits... 10 Figure 12: Considered Changes to the Vehicle-Related Benefits Making the Program Less Generous... 11 Figure 13: Implemented Changes to the Vehicle-Related Benefits Making the Program Less Generous... 11 Figure 14: Considered Changes to the Vehicle-Related Benefits Making the Program More Generous... 12 Figure 15: Implemented Changes to the Vehicle-Related Benefits Making the Program More Generous... 12 Figure 16: Perceived Effects of Vehicle-Related Benefits Programs on the Workforce... 13 Figure 17: Vehicle-Related Benefits Programs and the Use in Attraction... 13 Figure 18: Vehicle-Related Benefit Type and Attraction... 14 Figure 19: Vehicle-Related Benefit Type and Employee Satisfaction... 14 Figure 20: Vehicle-Related Benefit Type and Employee Motivation... 15 Figure 21: Vehicle-Related Benefit Type and Employee Engagement... 15 Figure 22: Vehicle-Related Benefit Type and Voluntary Turnover... 16 Figure 23: Vehicle-Related Benefit Type and Organization Type... 16 Figure D1: Number of Employees... 17 Figure D2: Organization Type... 17 Figure D3: Voluntary Turnover... 18 Figure D4: Industry... 18
3 Executive Summary The majority of organizations (89%) continue offer some type of vehicle benefit to employees. Of these organizations, 49% offer a minimum of three vehicle benefit programs to their workforce. Fuel or mileage reimbursement, automobile/vehicle allowance and company-owned automobile provided are the most common programs offered. The impact of fuel costs on an organization s vehicle-related benefits program is considerably less in 2011 compared to 2008. In 2008, 68% of organizations reported implementing changes that made the vehicle-related benefits program less generous to employees in response to fuel costs, compared to only 6% in 2011. Furthermore, 79% of organizations in 2011 reported they were not considering changes to the vehicle-related benefits program in response to fuel cost; only 3% of organizations reported the same in 2008. The highlights below show key findings on a variety of vehicle-related benefits as well as the impact on employee motivation, engagement, satisfaction and turnover. Almost nine out of 10 (89%) of respondent organizations offer a car allowance, company car or other vehicle benefit to at least some employees. (Figure 1) Vehicle-related benefits programs were most prevalent in the United States (75%), followed by Canada (19%), United Kingdom (16%), Western Europe (16%) and Asia Pacific (10%). (Figure 2) For those organizations with no current vehicle benefit programs, 18% said they had eliminated their program in the past three years up from 11% that had eliminated programs in the 2008 survey. (Figure 3) Of those that eliminated their vehicle benefit programs, the major reason was cost in both 2008 and 2011 with a few companies citing negative perception when offered only to executives and affect on culture. The most common car-related benefits in 2011 were fuel/mileage reimbursement programs and vehicle allowances (72 and 65%, respectively), while in 2008 the order for the top two was reversed. (See Figure 5) For companies that provide vehicle-related benefits, the most prevalent number of programs was two (29%) followed by three (28%) and one program (22%). As in 2008, the eligibility for a car allowance or use of a company car is concentrated among executives and sales employees, but 29% of companies also provide a vehicle to any employee with a bona-fide business need. In addition, three quarters of organizations (76%) offer mileage or fuel reimbursement to any employee with a bona-fide business reason. (Figure 3) Although the majority of the organizations (65%) still do not allow eligible employees to choose between vehicle benefit programs, the number has decreased from 72% in 2008 when fewer companies allowed choices. When an employee selects a car below the value of the allowance, most companies (56%) will not refund the employee in cash. (Figure 9)
4 Although there are a wide range of car allowances provided based on employee level, the most prevalent for all levels of employees is $500 to $999. Record-high fuel prices have had little or no effect on vehicle benefit programs in 2011, with only 13% of companies considering or implementing changes to make the programs less generous compared to 2008 when 78% of companies either considered or implemented such changes. With the exception of employee satisfaction (51% positive), vehicle-related benefit programs appear to have little positive affect on the workforce in terms of attraction, motivation or engagement.
5 Results and Analysis Figure 1: Prevalence of Vehicle-Related Benefits Programs Does your organization currently offer at least one vehicle-related benefit (e.g., car allowance, company car, fuel reimbursement, etc.) to any employee or group of employees? (n=466) Yes 89% No 11% 0% 20% 40% 60% 80% 100% In 2008, 75% of organizations reported offering a car allowance or company car benefit to employees, but the question was limited in scope and did not request information on other vehicle-related benefits programs (i.e. use of fleet vehicles, fuel reimbursement, insurance and maintenance subsidies). Figure 2: Region and Vehicle-Related Benefits Programs When considering the vehicle-related benefits program that applies to the greatest number of employees at your organization, please specify to which regions and countries this program applies. (Check all that apply.) (n=402) Only participants answering yes in Figure 1 received this question. United States Canada United Kingdom Western Europe Asia-Pacific Caribbean/Latin America Australia/New Zealand Eastern Europe China India Middle East Africa 19% 16% 16% 10% 8% 7% 7% 6% 5% 5% 4% 75% 0% 20% 40% 60% 80%
6 Figure 3: Elimination of Vehicle-Related Benefits Programs Have you eliminated the entire vehicle-related benefit program within the past three years? (n=49) Only participants answering no in Figure 1 received this question. 2008 (n=118) Yes 11% No 89% 2011 (n=49) Yes 18% No 82% 0% 20% 40% 60% 80% 100% Figure 4: Reason for the Elimination of Vehicle-Related Benefits Programs What was the primary reason the vehicle-related benefits program was eliminated? (n= 9) Only participants answering no in Figure 1 received this question. Notable reasons listed: Cost was cited as a majority. The occasional negative perception of a car allowance as an executive perk. Vehicles were not needed and average use was around 10% a year. We have a few company vehicles at each site to use for equipment pick-up or transportation to other sites if applicable. In 2008, cost was the primary reasons cited for program elimination followed by eliminatation of an entitlement culture.
7 Figure 5: Types of Vehicle-Related Benefits Programs Offered Please indicate the type of vehicle-related benefits program(s) that your organization currently offers. (Please check all that apply.) (n=394) Only participants answering yes in Figure 1 received this question. Option 2008 (n=416) 2011 (n=394) Fuel or mileage reimbursement 74% 72% Automobile/vehicle allowance 76% 65% Automobile provided (company owns) n/a 1 53% Eligible employees may use a vehicle from the company s fleet 40% 29% Reimburses, pays or provides cash for insurance, maintenance and/or fuel n/a 20% Eligible employees are reimbursed for a vehicle purchase (employee owns) 5% 6% Fuel or mileage subsidy or discounted fuel 5% 5% Other program 11% 3% Other programs listed: Parking allowance/reimbursement Awards for commuters Figure 6: Numbers of Vehicle-Related Benefits Programs Offered (n=394) 30% 29% 28% 20% 22% 15% 10% 0% 5% 1% 0% Average number of programs: 3 Median number of programs: 2 Mode number of programs: 2 1 In 2008, the survey question did not distinguish between company car (owned) and car allowance so no information was available for comparison to company-owned vehicles.
8 Figure 7: Vehicle-Related Benefits Options Does your organization allow eligible employees to choose between vehicle allowance and/or a company car and/or other options? Only participants answering yes in Figure 1 received this question. Option 2008 (n=414) 2011 (n=397) No, employees eligible for this type of benefit have only one option 72% 65% Yes, all eligible employees have choices 16% 9% Executives have choices n/a 9% Sales and other eligible employees have choices n/a 3% Some employees have choices, others do not 10% 6% Other 2% 8% Submitted answers under Some employees have choices, others do not: Executives only get the allowance, all other eligibles get a choice. Some are given vehicle allowance and others mileage reimbursement for employees who drive for meetings outside of their office. Director and above have choices. Benefit is negotiated.
9 Figure 8: Groups Eligible for Vehicle-Related Benefits Please specify which groups are eligible for each vehicle-related benefit. (Select all that apply.) Only participants answering yes in Figure 1 received this question. Executives Outside sales employees Any employee with a bonafide business need Expatriates depending on the country of operations Managers Directors Field technicians/ employees Automobile provided (company owns) (n=180) 66% 40% 29% 16% 17% 24% 28% 8% Eligible employees are reimbursed for a vehicle purchase (employee 74% 32% 21% 21% 26% 5% 5% 0% owns) (n=19) Automobile/vehicle allowance (n=247) 76% 43% 21% 16% 19% 29% 16% 7% Fuel or mileage reimbursement (n=272) 47% 42% 76% 14% 37% 37% 38% 15% Fuel or mileage subsidy or discounted fuel (n=15) 53% 73% 60% 27% 53% 53% 40% 20% Eligible employees may use a vehicle from the 34% 25% 67% 9% 27% 27% 37% 9% company s fleet (n=110) Reimburses, pays or provides cash for insurance, maintenance 70% 43% 28% 15% 12% 24% 16% 7% and/or fuel (n=74) Other program (n=24) 71% 38% 21% 17% 38% 42% 29% 25% Other Figure 9: Vehicle-Related Benefit Difference Compensation If an employee chooses a vehicle that is below the allowance limit, is the employee eligible to receive the difference as cash compensation? (n=185) Only participants answering automobile provided (company owns) in Figure 5 received this question. Yes 8% No 56% Not applicable 36% 0% 20% 40% 60% 80% 100%
10 Figure 10: Vehicle-Related Benefit Monthly Allowance Amount Please tell us the monthly allowance by position for your vehicle allowance program. Only participants answering automobile/vehicle allowance in Figure 5 received this question. $1-$499 $500 - $999 $1,000 - $1,499 $1,500 - $1,999 $2,000 and up Executives: Level I (highest level) (n=175) 8% 36% 35% 11% 10% Executives: Level II (mid level) (n=143) 9% 52% 22% 10% 6% Executives: Level III (n=113) 14% 50% 25% 6% 4% Managers (n=69) 20% 58% 16% 4% 1% Directors (n=78) 19% 53% 18% 9% 1% Outside sales employees (n=102) 37% 55% 5% 3% 0% Any employee with a bona-fide business need (n=59) Expatriates depending on the country of operations (n=31) 37% 51% 5% 7% 0% 19% 52% 16% 6% 6% Other (n=17) 47% 41% 6% 0% 6% Figure 11: Impact of Fuel Costs and Vehicle-Related Benefits Have fuel costs caused your organization to either consider or actually make changes to your vehicle-related benefit program? Only participants answering yes in Figure 1 received this question. Option 2008 (n=412) 2011 (n=387) We are not considering any changes at this time 3% 79% We are considering changes to make the program less generous to employees 10% 7% We are considering changes to make the program more generous to employees 8% 4% We have implemented changes that make the program less generous to employees 68% 6% We have implemented changes that make the program more generous to employees 10% 4%
11 Figure 12: Considered Changes to the Vehicle-Related Benefits Making the Program Less Generous What changes are you considering? (Select all that apply.) (n=28) Only participants answering We are considering changes to make the program less generous to employees in Figure 10 received this question. Limiting/reducing the number of employees eligible 57% Reducing the cash amount of allowances, leases and reimbursements 43% Reducing the number of companyowned vehicles 29% Restrictions on car options or models 25% Other 36% 0% 20% 40% 60% Figure 13: Implemented Changes to the Vehicle-Related Benefits Making the Program Less Generous What changes have you implemented? (Select all that apply.) (n=23) Only participants answering We have implemented changes that make the program less generous to employees in Figure 10 received this question. Limiting/reducing the number of employees eligible 61% Restrictions on car options or models 43% Reducing the number of companyowned vehicles 39% Reducing the cash amount of allowances and reimbursements 26% Other 22% 0% 20% 40% 60% 80%
12 Figure 14: Considered Changes to the Vehicle-Related Benefits Making the Program More Generous What changes are you considering? (Select all that apply.) (n=17) Only participants answering We are considering changes to make the program more generous to employees in Figure 10 received this question. Increasing car allowances and reimbursements 41% Increasing the mileage rate 35% Adjusting rates according to IRS guideline 18% Increasing the number of eligible employees 6% Other 12% 0% 20% 40% 60% Figure 15: Implemented Changes to the Vehicle-Related Benefits Making the Program More Generous What changes have you implemented? (Select all that apply.) (n=15) Only participants answering We have implemented changes that make the program more generous to employees in Figure 10 received this question. Increased car allowances and reimbursements 53% Increased the mileage rate 47% Adjusted rates according to IRS guidelines 13% Increased the number of eligible employees 0% Other 7% 0% 20% 40% 60%
13 Figure 16: Perceived Effects of Vehicle-Related Benefits Programs on the Workforce What would your workforce say is the effect of your organization s vehicle-related benefit program on: Only participants answering yes in Figure 1 received this question. Extremely negative/ negative effect No effect/neutral Extremely positive/positive effect Employee engagement (n=374) 2% 65% 33% Employee motivation (n=373) 2% 67% 31% Employee satisfaction (n=377) 5% 44% 51% Figure 17: Vehicle-Related Benefits Programs and the Use in Attraction Does your organization feature or market the vehicle-related benefit program as a key employee benefit when attempting to attract new employees? (n=380) Only participants answering yes in Figure 1 received this question. Yes 20% Sometimes, but not always 34% No 46% 0% 20% 40% 60% 80% 100%
14 Figure 18: Vehicle-Related Benefit Type and Attraction Yes Sometimes No Overall (n=380) 20% 34% 46% Fuel or mileage reimbursement (n=275) 16% 35% 49% Automobile/vehicle allowance (n=246) 21% 38% 41% Automobile provided (company owns) (n=200) 22% 39% 40% Eligible employees may use a vehicle from the company s fleet (n=110) 15% 37% 47% Reimburses, pays or provides cash for insurance, maintenance and/or fuel (n=77) 29% 38% 34% Eligible employees are reimbursed for a vehicle purchase (employee owns) (n=23) 2 26% 48% 26% Fuel or mileage subsidy or discounted fuel (n=17) 2 18% 41% 41% Other program (n=12) 2 25% 25% 50% Figure 19: Vehicle-Related Benefit Type and Employee Satisfaction Extremely negative/ negative effect No effect/neutral Extremely positive/ positive effect Overall (n=377) 5% 44% 51% Fuel or mileage reimbursement (n=274) 6% 44% 50% Automobile/vehicle allowance (n=244) 6% 41% 52% Automobile provided (company owns) (n=198) 6% 37% 57% Eligible employees may use a vehicle from the company s fleet (n=111) 5% 41% 55% Reimburses, pays or provides cash for insurance, maintenance and/or fuel (n=76) 3% 38% 59% Eligible employees are reimbursed for a vehicle purchase (employee owns) (n=22) 2 18% 32% 50% Fuel or mileage subsidy or discounted fuel (n=17) 2 18% 41% 41% Other program (n=11) 2 6% 31% 63% 2 Count for group is less than 30; data corresponding to larger sample sizes will have stronger statistical power and validity.
15 Figure 20: Vehicle-Related Benefit Type and Employee Motivation Extremely negative/ negative effect No effect/neutral Extremely positive/ positive effect Overall (n=373) 2% 67% 31% Fuel or mileage reimbursement (n=270) 2% 69% 29% Automobile/vehicle allowance (n=240) 2% 68% 30% Automobile provided (company owns) (n=195) 2% 63% 36% Eligible employees may use a vehicle from the company s fleet (n=110) 2% 66% 33% Reimburses, pays or provides cash for insurance, maintenance and/or fuel (n=75) 1% 61% 37% Eligible employees are reimbursed for a vehicle purchase (employee owns) (n=22) 3 0% 59% 41% Fuel or mileage subsidy or discounted fuel (n=17) 3 12% 53% 35% Other program (n=11) 3 9% 64% 27% Figure 21: Vehicle-Related Benefit Type and Employee Engagement Extremely negative/ negative effect No effect/neutral Extremely positive/ positive effect Overall (n=374) 2% 65% 33% Fuel or mileage reimbursement (n=271) 2% 68% 31% Automobile/vehicle allowance (n=241) 3% 64% 34% Automobile provided (company owns) (n=196) 2% 60% 38% Eligible employees may use a vehicle from the company s fleet (n=110) 1% 66% 34% Reimburses, pays or provides cash for insurance, maintenance and/or fuel (n=75) 1% 59% 40% Eligible employees are reimbursed for a vehicle purchase (employee owns) (n=22) 3 0% 59% 41% Fuel or mileage subsidy or discounted fuel (n=17) 3 12% 59% 29% Other program (n=11) 3 10% 64% 27% 3 Count for group is less than 30; data corresponding to larger sample sizes will have stronger statistical power and validity.
16 Figure 22: Vehicle-Related Benefit Type and Voluntary Turnover All Participants (n=360) 0% to 5% (Low) (n=113) 6% to 10% (Medium) (n=145) 11% to 15% (High) (n=109) Fuel or mileage reimbursement 72% 62% 74% 81% Automobile/vehicle allowance 65% 50% 71% 72% Automobile provided (company owns) 53% 56% 52% 49% Eligible employees may use a vehicle from the company s fleet Reimburses, pays or provides cash for insurance, maintenance and/or fuel Eligible employees are reimbursed for a vehicle purchase (employee owns) 29% 34% 28% 27% 20% 17% 23% 19% 6% 6% 6% 6% Fuel or mileage subsidy or discounted fuel 5% 4% 6% 6% Other program 3% 3% 3% 3% Figure 23: Vehicle-Related Benefit Type and Organization Type All Participants (n=360) Public sector (n=49) Private sector - publicly traded (n=171) Private sector - privately held (n=117) Nonprofit/Notfor-profit (n=45) Fuel or mileage reimbursement 72% 71% 71% 75% 69% Automobile/vehicle allowance 65% 67% 71% 61% 51% Automobile provided (company owns) Eligible employees may use a vehicle from the company s fleet Reimburses, pays or provides cash for insurance, maintenance and/or fuel Eligible employees are reimbursed for a vehicle purchase (employee owns) Fuel or mileage subsidy or discounted fuel 53% 53% 61% 46% 38% 29% 61% 29% 15% 29% 20% 16% 24% 20% 13% 6% 4% 6% 8% 4% 5% 6% 6% 3% 4% Other program 3% 4% 1% 5% 4%
17 Demographics Figure D1: Number of Employees Please choose the total number of employees your organization employs worldwide: (n=426) Option Percent Less than 100 employees 6% 100 to 499 13% 500 to 999 10% 1,000 to 2,499 17% 2,500 to 4,999 14% 5,000 to 9,999 13% 10,000 to 19,999 9% 20,000 to 39,999 6% 40,000 to 99,999 6% 100,000 or more 5% Figure D2: Organization Type Your organization is: (n=429) Non-profit/Not-for-profit (educational organizations, charitable organizations, etc.) 14% Private sector - privately held 31% Private sector - publicly traded 43% Public sector (local, state, federal government) 13% 0% 10% 20% 30% 40% 50%
18 Figure D3: Voluntary Turnover What is the approximate annual voluntary turnover for employees? (n=414) Option Percent 0-5% 31% 6-10% 40% 11-15% 15% 16-20% 9% 21-26% 3% 27-40% 2% 41% or more 1% Figure D4: Industry Please choose one category that best describes the industry in which your organization operates: (n=425) Option Percent All Other Manufacturing 15% Finance & Insurance 11% Utilities, Oil & Gas 10% Healthcare & Social Assistance 9% Consulting, Professional, Scientific & Technical Services 6% Public Administration 4% Computer and Electronic Manufacturing 4% Retail Trade 3% Information (includes Publishing, IT Technologies, etc.) 3% Transportation 3% Pharmaceuticals 3% Educational Services 2% Other Services (except Public Administration) 2% Construction 2% Real Estate & Rental & Leasing 2% Mining 1% Arts, Entertainment & Recreation 1% Accommodations & Food Services 1% Other 16%