Employers searching for top talent are realizing the importance of employee benefits. Most businesses know the importance of health insurance and wellness programs, 401k matches and paid time off. But employers can stretch beyond the typical offerings while controlling costs. How? Let’s explore what companies can offer current and future employees by investing in programs that benefit employees.
The first thing that likely comes to mind when reading “programs that benefit employees” is a health and wellness program. Plenty of companies provide employees with stipends to cover health equipment or gym memberships. However, programs often reach beyond company culture and into the way a company operates. Take, for example, a vehicle program.
A vehicle program is essential to its business. It exists to ensure customer needs are met, deliveries are made, clients receive vital services. It doesn’t matter if it’s a fleet or car allowance, a cents-per-mile reimbursement or FAVR program. Whatever the company has in place is essential to the business’s performance. This program can, and should, also benefit employees.
Plenty of companies already use vehicle programs as a hiring bonus. Businesses with company-provided vehicle programs may offer new hires a fleet vehicle. Companies may offer top talent a large car allowance as a bonus. These may seem like benefits to employees, but they aren’t without their downsides. Here we’ll explore each vehicle program and how a company might use it as an employee benefit.
The benefit of this program is in the name. Employees whose job role includes driving for work receive a company-owned fleet vehicle. And what benefit could beat a company-provided vehicle? Maybe a vehicle an employee chooses? Employees are more interested in vehicles that support their personal lives, not whatever company-branded vehicle a business may provide them with.
The average car allowance in 2021 was $575. And, depending on the amount an employee drives, that sounds pretty good, right? Only, car allowances are not compensation. In fact, they’re taxable, which means employees would only see $393 of that amount. Finally, if an employee is higher mileage, that amount may not be enough to cover their business mileage. Given that the car allowance is not tied to the costs of vehicle ownership, a car allowance program is hardly a benefit to employees.
With a mileage reimbursement program, employees receive a cents-per-mile rate for the business use of their personal vehicles. Companies often use the IRS mileage rate, as that ensures the reimbursement will remain untaxed. And, while this vehicle program is tied directly to the miles an employee drives, it might not account for geographic costs specific to each employee. For some companies, it’s the perfect program. For other companies, it can mean create winners and losers.
The fixed and variable rate reimbursement is named so because it accounts for both the fixed costs—insurance and registration—and variable costs—fuel, tires, maintenance—of vehicle ownership. What’s more, the right platform can calculate these costs specific to each employee’s location. This tax free and IRS-compliant method benefits both employers and their employees.
Further, the FAVR program allows companies flexibility. While fleets are stuck with their vehicles and mileage reimbursements sit at the same rate, FAVR programs can be scaled to the economic climate.
Employers can’t afford to miss the importance of employee benefits. Vehicle programs are only one example of the ways employees can benefit. Think about other programs vital to your company. Can they be adapted in ways that benefit employees? Consider what changes you can make to improve employee’s lives before buying a ping pong table.
Interested in learning more about the ways your company can foster programs that benefit both employer and employee? Check out our resources on recruiting and retention with the right solutions.