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You are here: Home Features Featured July 2016 A grey area
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A grey area

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A grey areaImagine a company director being held liable for an accident that happens with a vehicle belonging to a staff member. The scenario is not as farfetched as it sounds. We explore the concept of “grey” fleet management

A “grey” fleet is simply the term used to describe any vehicles that do not belong to the company, but which are used for business travel. This might include a vehicle purchased via an employee ownership scheme, a privately rented vehicle, or a vehicle privately owned by an employee.

When these vehicles are driven on company business, often in return for a cash allowance or fuel expense, they are then considered to be part of the grey fleet – and, as such, fall under the responsibility of the employer.

David Molapo, head of fleet management at Standard Bank, states that the concept is not well known in South Africa. He adds, however, that the approach is fast becoming a norm in the developed world.

In the United Kingdom, legislation has been introduced that requires each business to ensure that the vehicles belonging to the company are inspected for their safety and road-worthiness, as well as any vehicle belonging to a staff member that happens to be used for business purposes.

“Not surprisingly, the idea of a business having a grey fleet is not well known in South Africa, where the art and science of managing a company’s formal fleet is not yet all that well developed. This is more so in smaller companies that do not have a dedicated fleet manager,” says Molapo.

The suggestion of having any management obligation over the vehicles belonging to staff members, apart from compensating them for when they use them for work, is, at best, likely to draw a blank stare from most local fleet managers, and, at worst, protest over the thought of the added responsibility.

A grey areaThe results of a recent research project commissioned by Standard Bank Fleet Management seem to bear this out.

The Fleet Management Excellence 2015 survey, conducted among a mix of 60 South African fleets of passenger and light commercial vehicles, found that only seven percent of them had ever inspected the vehicles belonging to their grey fleets for safety. An annual inspection of such vehicles is considered best practice.

The research was drawn from a model of fleet management excellence, and measured the key indicators of a well-run fleet. Apart from annual vehicle safety inspections, the model puts forward a further three requirements for managing a company’s grey fleet:

• Keeping a register of all the vehicles owned by staff members and used for business purposes. Only 15 percent of the fleet managers in the survey said they kept such a register.

• Keeping a register of the drivers’ licences of staff members who use their own cars for business purposes. Again, only 15 percent of the research participants recorded this information.

• Insuring grey fleet vehicles for business travel. Only 13 percent of the surveyed fleets conformed to this requirement.

Given the lack of legal obligation on South African companies to manage their grey fleets, the issue of insuring staff-owned vehicles for business travel is likely to be the main driver of the grey fleet concept, and the idea that at least some company responsibility is required beyond compensating staff members for kilometres travelled. Some insurance policies will not pay out in the case of an accident in which a private vehicle was used for business purposes.

The research suggests, however, that South African fleets have some way to go. Only about a third of South African fleet managers are proactive enough to keep systematic track of the risks to which the company-owned vehicles are exposed, let alone their grey fleet. It seems, therefore, that, for now, most local companies will only become aware of the insurance issue – and their grey fleet obligations – after an accident.

“The value of the Fleet Management Excellence research is that it provides a comprehensive model of a well-run fleet, including grey fleet management. This research provides a benchmark to fleets of how they compare with their South African peers,” says Molapo.

Here are some tips for developing an effective grey fleet management policy:

1. Assign responsibilities

One of the key reasons why the grey fleet is often overlooked is that no one individual is deemed responsible for its management. In organisations where a fleet manager is responsible for running the company’s fleet, this is likely to be the best person to assume this responsibility. Otherwise, finance and human resources (HR) departments should work together to appoint an individual to take responsibility.

A grey areaEstablishing a working group to assist with the development and implementation of a grey fleet policy is recommended. The following departments may be involved in determining and implementing a policy:

• human resources;

• finance;

• health and safety; and

• environment/sustainability.

It is important to gain buy-in from key stakeholders in the organisation. Actions to consider include:

• establishing a small working group of stakeholders to help develop the overall strategy and individual measures;

• engaging senior managers in the process so that they understand and support any changes;

• allowing employee input to influence the recommendations; and

• supporting HR in communicating the changes and new policies to employees.

2. Benchmark the existing grey fleet

Benchmarking is a crucial step when developing a grey fleet policy. Drivers should be asked a number of questions concerning their journeys, the costs associated with their travelling and management of their vehicles.

3. Improve accuracy of grey fleet data

If the abovementioned information isn’t available, then grey fleet records are inadequate and data collection procedures should be reviewed so that an accurate picture of the grey fleet can be developed.

Once the policy has been formulated and has been effectively communicated to all employees, an action plan can be drawn up to reduce the mileage driven in grey fleet vehicles.

 
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