10 Steps for implementing the Mobility Budget
As securing employee mobility becomes ever more important in the light of employee retention and understanding the complete cost equation of the mobility spend, there is much talk of mobility budgets. To listen to some, you might think this is just a matter of ditching the company car policy and replacing it with something more ‘modern’. But there’s more to it than that.
Company cars have been a part of business life in the Western world for many decades. They were generally 100% paid by the company (including private use). On top of this, if a company car user decided to take the train (or plane) for a particular journey, no questions were asked and this trip was paid for too. But from there to a fully fledged ‘mobility budget’ is, at the beginning of the 21st century, a much more complicated affair. We look at some of the most important steps that companies should consider for successful implementation.
Firstly, and even before analysing whether it will work for you, it is important to understand what a mobility budget is. In general terms, it is a system that gives an individual employee the freedom and the flexibility to choose the mobility solutions they need. This will probably include, alongside a company car, a set amount per month to be used on trains, buses, taxis, car-sharing, urban bike-sharing…
The next logical step is to work out whether it will work for your company. This up-stream reflection can be summed up as understanding your business needs and understanding your mobility needs. There are at least two facets to this question, one practical and the other culture-related. On the practical side, where are your premises and what are your employees expected to do? If you are lucky enough to be in a pleasant out-of-town location, then some of the above options clearly will not work. And if your employees are required to make frequent visits to clients of one sort or another who may be anywhere in the country, they won’t work either.
On the ‘culture’ side, is the company car an integral part of your remuneration package, and do you even use it to attract and retain staff? Consider whether it is a good idea to ask someone who has just proudly reached the level of an executive car, to take the bus from time to time… on the other hand, you may employ a large number of the ‘Y’ generation who, it is generally believed, proactively want to use softer, more environmentally-friendly modes of transport.
Given that no companies fit entirely into one of the above examples, you will probably decide that it is a good idea to look further into this. So the next stage is to analyse the mobility requirements of your various different types of employee. What do they do now, and could the use of shared or pooled company cars, bus or metro, taxi or bike – and it is of course understood that we are talking about a combination of these, not just one or the other – be a useful solution?
So far, it has been tacitly understood that we are talking about a new system for company car drivers. But this change in approach can benefit a wide range of the company’s workforce, not just those eligible for a company car. This may make your company a more attractive proposition at many levels of seniority.
This may all sound a bit frightening: moving from supplying a single mode of transport to a pre-defined set of employees, to providing many modes of transport to a greater number of people, all of whom will have different needs and different usage patters. So next, ensure that a multimodal mobility budget is an easy administrative instrument. Many of your current suppliers (leasing companies and others) have already branched out into the ‘mobility’ domain. They may be able to handle all aspects of the system, and may also have a mobility card that employees can use for various modes of transport (depending, of course, on location and individual agreements that the supplier has in place with transport operators). It should then be possible for you to receive a single, detailed invoice at the end of the month, making your job no more complicated than before.
Now that we’ve got this far, and a potential partner is involved, the inevitable financial question arises, and there are (at least) four questions to consider. Firstly, you will no doubt know how much you currently spend on cars and travel. Compare this to what the supplier is proposing, and look out for all the hidden extras. Secondly, consider whether the move to a flexible budget should be accompanied by a ‘flexible’ lease car. A smaller (and cheaper) car for everyday use, with the option of changing this for a larger car for holidays, a convertible for weekends, for a set number of times per year.
And thirdly, find out what will be the tax issues in each country, for the company and the employer. Normally, if employees have a company car, they can drive their families around. If the company replaces the car by a mobility budget and pays for train tickets for employees and their families instead, how will this be considered in terms of tax, of benefit in kind?
Lastly, alongside the tangible costs and potential savings, look at whether there are intangible benefits. Employees are happier and potentially more productive if they are not sitting in traffic jams every morning and evening. And the fact that you, the employer, are solving this problem may make your company more attractive.
To conclude, there are at least ten points set out above which you need to consider to make a smooth transition to a mobility budget. As for everything else, change management is vital, especially when the emotive question of a change of mentality regarding company cars is involved. But times are, indeed, changing, and so are mindsets.
10 Steps in brief
- Make sure you know what a mobility budget is and how it can complement a traditional company car policy.
- Analyse the real mobility needs of your employees and what your company expects them to achieve.
- Consider which types of mobility modes could satisfy both the mobility needs of your employees and your company’s business needs, and match them.
- Talk to key colleagues and stakeholders such as HR and Legal, to understand how the company car policy fits into the overall remuneration/staff recruitment and retention programme, and what effect a change might have.
- Look at how the introduction of a mobility budget could impact on the car policy: small car for the week, larger car for holidays, but also less mileage per year, different lease holding periods…
- Consider to what degree a mobility programme could be extended to other employees who are not entitled to a company car.
- Involve both the personnel and, if appropriate, social partners in your discussions; with colleagues, analyse the intangible benefits – happier, more productive staff…
- Look at the overall cost of what you are proposing, and compare it with current travel costs: car ownership, bikes and scooters, trains, taxis, homeworking, parking…
- Ensure that local managers analyse the impact of other forms of mobility provision on the tax position of the employee and the company.
- Get the professional help of a partner to make the set-up and implementation as simple as possible, and include gamification to generate awareness and motivation and make the mobility budget approach sustainable.