Effectively Managing an Executive Fleet
Executive fleet management can present challenges for even the most experienced fleet managers. Several tips for dealing with fleet vehicles and the executives driving them are discussed.
To manage a fleet requires quite a bit of skill, expertise, and patience. From juggling the requests of higher-ups to putting together the right vehicle selector, managing an executive fleet requires additional diplomatic and management skills. Several veteran fleet professionals share their experiences and best practices for taking on the executive fleet.
Communication is crucial to successfully managing executive vehicles, according to Dean Yerem, purchasing manager, corporate services for Nestlé Business Services - North America, based in Glendale, Calif. Nestlé operates a total of 120 vehicles in its executive fleet.
"Communicate as much as possible. It is overstated all the time, but you must communicate any changes to the program or differences to policy. [You must] give [executives] periodic updates and plug them into the process," Yerem said.
Communicating with fleet users requires specific knowledge, according to Yerem. In communicating important information such as policy changes, he said it's advisable to involve the right people, such as Human Resources representatives, if necessary. The fleet management company can also help assemble a distribution list of drivers.
In addition, providing as much information as possible to stakeholders is usually beneficial, including the total cost of ownership (TCO). "At least they have it, and if someone asks them a question, or they have to convey that recommendation out to others," they have the infomation, Yerem said.
Lee Miller, manager, fleet services, Boehringer Ingelheim Pharmaceuticals, Inc., emphasized the importance of having a clear, written policy for executive fleet management. "Management, senior management, and leadership need to commit to sitting down with fleet and HR and putting in writing everything, either before they launch an executive car program, or in fine-tuning it, making sure everything is in writing and clear," she said.
Boehringer Ingelheim, headquartered in Ridgefield, Conn., operates an executive fleet of about 175 vehicles. The company has had an executive car policy for about 15 years, which Miller and HR review every three to five years to make adjustments, revisions, and benchmark against competitors.
The policy is detailed to prevent executives from making too many demands, clarifying the vehicle types the company feels are appropriate. This includes provisions as minute as no custom vans, no two-door vehicles, no convertibles, and no manual transmissions.
"We want to be able to take an executive vehicle and pass it along to either a new executive or another executive if the need arises," Miller said. "We are stringent, but I think we still keep it flexible and appealing to the executive."
The policy, posted on the company intranet site for easy access, also lists user requirements, such as tax reporting and business and personal use.
Miller added that an important policy for fleet includes documenting everything and making sure everybody is in the loop, especially important since audits are performed every five to 10 years. "I am happy to say that we document thoroughly and as a result, have had few issues during an audit," she said.
Stand Your Ground
Vehicles assigned to senior management are often part of employee compensation packages, which can make it a somewhat sensitive issue.
"You don't want to rock the boat too much because obviously these people are policymakers within the company. But you do have to have some control," said Frank Memolo, fleet manager, Panasonic Corporation of North America in Secaucus, N.J.
"To know how to be able to say no to an executive is a necessity in managing an executive fleet," said Christy Coyte, corporate global fleet manager for Johnson Controls, Inc. (JCI), a global provider of automotive systems, building efficiency, and power solutions, based in Plymouth, Mich. For example, "You have to know how to handle yourself with an executive who gets a little excited because she or he can't get the level of options or vehicle choice they desire," Coyte said.
JCI has worked to limit vehicle assignments based on position within the company, going "higher and higher in the organization for eligibility." Fleet collaborates with HR and the compensation and benefits team to determine vehicle eligibility and provides direction on the level of vehicle the eligible employee should receive.
Mark Walters, director of administrative services for Los Angeles-based Farmers Insurance, manages the company's 143 executive vehicles. He advocates for a vehicle selector over a monthly car allowance.
"From a best practice perspective, it is a better economic value for the executive to have that selector list available to them," he said.
Walters admitted that "trying to meet the needs of the entire executive population can be challenging from time to time." However, the company does offer an alternative when executives ask for other vehicles. "We do have an exception process, but most of the time, when somebody wants something not on the selector, we advise them to select the monthly car allowance," he said.
For years, Panasonic's executive fleet drivers had a dollar amount they could purchase vehicles with, according to Memolo. One of the challenges he faced with this model was convincing impatient executives to order through the factory instead of through a dealership, even if it meant a slower delivery.
"You have to put a salesman hat on and pitch it a couple of different ways. Explain that they get more car for their dollar by factory ordering, and by taking advantage of the incentives, it adds some more options to the car," Memolo said.
A couple of years ago, Memolo assembled a selector list, giving executives the option of choosing from the list or an allowance. Since the allowance hadn't been increased in more than 10 years to match the increase in auto prices, and Panasonic already had an Audi program for its sales team, he ended up piggybacking an Audi program for the executive fleet. This way, executives acquire a higher-end vehicle than possible with the allowance, and Memolo said nine out of 10 executives have opted for the Audi program.
One of the benefits of piggybacking is volume purchasing. Panasonic has about 100 vehicles in its executive fleet. "I am able to take advantage of that volume, and it adds additional incentives onto the executive cars," Memolo said. "If I was just going for those executive cars on my own, I don't think I'd have enough volume to get the same kind of discounts."
Mike Sims, fleet operations manager for the Salt Lake City-based Church of Jesus Christ of Latter-Day Saints (LDS) is also an advocate of maximizing buying power. "Don't make your selector so big that you dilute your buying power with the manufacturers. If your volume is really small, you might want to limit it to one brand," Sims advised.
LKQ Corp., a national provider of aftermarket collision replacement, recycled OEM parts, and refurbished OEM collision replacement products headquartered in Chicago, is slowly doing away with executive vehicles as a cost-cutting and control measure, according to Mike Lahr, director of logistics. About 100 of its approximately 3,000-unit fleet are assigned to plant managers, vice presidents, and business development representatives.
"It's part of their salary and they are allowed to use them on the weekend and charge fuel to the company," said Lahr. "We are trying to get away from that. We're leaning more towards them purchasing their own vehicle and then just paying mileage for it."