Managing the Financial Side of Commercial Fleets

Senior Management's Demands for a Corporate Safety Program

July 2015, by Bob Cavalli

Photo courtesy of iStockPhoto.com.
Photo courtesy of iStockPhoto.com.

The development, approval, and implementation of a fleet safety program make up of the highest priorities — if not the highest priority — for any fleet manager. And, that priority extends throughout the company, from every stakeholder on up to senior management.

Senior management’s responsibility in this process is to review the program and provide the fleet manager with the authority to implement and carry out the program. In order to do this, however, executives need to know what the program should include, and make it clear to the fleet manager what is demanded of them. Here are some key points and elements senior managers should demand in the program:

Sharing Responsibilities

You hear it often: complaints about how much money senior managers are paid, particularly in comparison to workers lower in the organizational chart. But, what is seldom mentioned in such commentary is the enormous responsibilities senior managers have to the company, its employees, and its shareholders. And, with those responsibilities come an enormous potential for both personal and professional liability. Although most companies will purchase liability insurance for senior executives and board members, it is still a serious risk.

That risk extends to most areas of company operations including fleet. Providing vehicles for employees’ use in conducting company business carries with it enormous risks, and that puts fleet safety near the top of the list of senior management’s responsibilities.

For these reasons, one of the first demands that senior management should have is that there be a formal fleet safety program, and a policy to guide it as well. In addition, a senior manager should require that the program (and the policy) be applicable to every employee, from the driver on up the company hierarchy, with no exceptions. This includes penalties for violations, the area where more exceptions are requested than any other, since the penalties can ultimately result in suspension of personal-use privileges (or of car privileges, if the vehicle is compensatory).

A program lacking that kind of authority will inevitably result in resentment (if executives make themselves exempt), increasing requests for special treatment or exemptions, and, ultimately, failure.

At a Glance

There are a number of key elements senior managers should demand of a company's fleet safety program, including:

  • A formal fleet safety program, and a policy to guide it as well
  • Motor vehicle report (MVR) reviews not only for employees
  • Consequences for violations of fleet safety policy
  • Driver training
  • Regular review of accident reports, and classification of incidents as either preventable or non-preventable

Reviewing All Drivers' MVRs

Before assigning a company vehicle to an employee, an important element of the screening process is the review of the employee’s motor vehicle report (MVR). Although there are other screening techniques that should be used, MVR screening is a necessary starting point and a foundation of a fleet safety program. Senior management should demand that the program include MVR reviews not only for employees, but also for any and all drivers. This would include drivers of pool vehicles, and especially family members who might be permitted to drive under the company’s personal-use policy.

Furthermore, those family members must also be subject to the consequences should they violate policy — suspension or even revocation of personal-use privileges included. It is also important that compensatory vehicles (executive fleet) and their drivers also be covered by the program. In nearly every aspect of a fleet safety policy and program, it is from the executive suite that many, if not most, of the demands for special treatment or immunity come.

Because MVRs from different states come in different formats, the MVR process should include some type of scoring mechanism, e.g., a point system to track the severity of any violations. For example, a simple administrative violation such as an expired registration or inspection sticker might be one point while a serious transgression such as speeding or failure to obey a traffic signal could be three points. Whatever way it is done, senior management should insist that the program contain this MVR element.

Implementing Penalties

When a fleet policy is implemented, and the program to carry it out developed, there must be — and management should demand — consequences for violations of that policy.

The penalty program begins with the MVR assessment, where any violations should be scored, and the hiring process should contain different levels of consequences for them. As an example, for a new hire the appearance of a three-point violation on the screening review might require that, initially, the driver will go on reimbursement for a probationary period before being cleared to drive a company-provided vehicle.

MVRs should be drawn and assessed at least every year for each driver (and, again, for family members if permitted), and more often if possible. And, for those drivers (including personal use drivers) whose MVRs indicate violations, or who are involved in chargeable accidents, the report should be reviewed at least quarterly for the ensuing year.

Senior managers must, and usually do, understand that third parties often look for “deep pockets” against whom to take legal action to recover damages and pay for liability for real (or imagined) injury — and those lawsuits as often as not can include individuals they deem responsible for the drivers’ actions. The first step in preventing bad drivers from getting behind the wheel, and avoiding such liability, is a strict review of driving records, both before hire and during employment.

Training Drivers

Another important element of a thorough safety program is driver training. To be realistic, it is clear that drivers with any common sense at all know that they shouldn’t be speeding, or following too closely, or drinking while driving. That, however, isn’t what driver training is about.

A major part of fleet driver training should involve teaching defensive driving techniques, to drive home the point that the company expects drivers to do everything possible to avoid accidents.

Senior management should insist that safety be part of every company gathering. Annual sales meetings, company presentations, new product/service introductions, regularly scheduled conference calls — these are all opportunities to, at the very least, mention that it is every employee’s responsibility to operate company vehicles safely and responsibly. Management should emphasize that the company, whether or not the driver is at fault, can be held liable for injury, physical damage, or both when company vehicles are involved in accidents.

The bottom line is that driver training isn’t necessarily to inform drivers of what they don’t know — it is to repeat the safety message often, to prevent it from wandering too far from drivers during their hectic day.

Reviewing and Classifying Accidents

No safety program is entirely successful without a regular review of accident reports, and classification of the incidents as either preventable or non-preventable. Senior management should require the program include such a review, as well as the establishment of a committee of stakeholders and experts to make the determination.

Accident review committees usually consist of at least representatives from fleet management, risk management, and the driver’s function (sales, service, etc.). In addition, because the classification may result in serious consequences (discussed below), it isn’t a bad idea to also include representatives from human resources and legal.

In order for the review to fit in with the training, focus on defensive driving; specifically, preventability — not fault — should be the focus of the committee. The question to be answered is a simple one: did the company driver do everything reasonably possible to avoid the accident? The key, of course, is “reasonably” — the purpose of the review isn’t to play “gotcha” with drivers; it is to apply the tenets of defensive driving.

Indeed, the classification of the large majority of accidents will be a relatively simple matter. The ubiquitous “hit while parked” will no doubt be used by many drivers to describe what may, or may not, have happened. But, the few accidents involving third parties in which more damage than a simple dent in a bumper takes place, will require a clear definition of preventability. Senior management must recognize the importance of accident review, and insist upon its inclusion in the program.

Applying Consequences and Rewards

Tied, to some extent, into the program requirement for MVR review and accident classification is the need for clear consequences for violations and/or preventable accidents that appear on a driver’s record. Any company policy or program is relatively ineffective if there aren't consequences when it is violated.

We’ve already established that management should require accidents be reviewed and classified as preventable or non-preventable. The same holds true for MVR checks. Violations have differing levels of severity; for example, a ticket for an expired registration is not nearly as serious as one for speeding or reckless driving. For this reason, tiers of severity should be established, usually via a point system.

Equipment or administrative violations (such as a burned out turn signal bulb or a registration expiration) might be one point, moving violations (such as failure to signal) two points, and the most serious violations such as speeding or DUI worth three points. In this manner, fleet managers can score driving performance, and set consequences based on measurable results.

What kinds of consequences are reasonable and effective? Based, again, on the scoring system, they can be set at different levels of severity. Upon the first chargeable accident, or some low number of MVR points driver will be on short-term suspension of personal use privileges. Mid-level point totals, or a second chargeable accident in an established time limit will result in suspension of company vehicle privileges for a defined period of time. And for high point totals, DUI/DWI, reckless driving, or more than two chargeable accidents punishment can range from revocation of company car assignment to termination.

The above consequences are the primary reason that human resources and legal must be involved in the review of driver performance as well as notification of consequences. And, as previously noted, senior management must insist that these consequences be consistently applied at all levels of the company, from sales drivers up to “C-level” executive vehicles.

What about rewards for exemplary safe driving records? In the professional driving industry, such rewards are not at all rare. There is no reason why a company where drivers’ primary mission isn’t driving, but sales or service, shouldn’t do the same. Keep in mind that “exemplary” means exactly that; a clean MVR and no chargeable accidents for a long period — five years at a minimum — is truly exemplary, and some reward can be a great motivator.

As with consequences, rewards can take a number of forms: recognition, by senior management on the company website or in a company news publication, financial rewards, gift certificates and upgraded vehicle models and/or equipment.

Individually, or in combination, these rewards are an excellent counterpoint to the consequences for poor driving records and performance.

Providing Authority

Just as senior management must demand that the program be established in the first place, that it contains certain key elements, and that it is applied consistently at all levels, so, too, should it be required that the fleet manager be given, in a very public way, full authority to execute and apply the program exactly as written and developed.

Some regular reporting “up the ladder” should be part of that authority; the focus should be on trends, cost savings, and a roster of drivers who have been subject to both consequences and rewards. Although a fleet manager will keep detailed records, reports to senior management should be short, concise, and easy to understand.

Further, it isn’t a bad idea for senior management to produce its own communication, annually or semi-annually, regarding the progress and effectiveness of the program in reducing accident rates (and subsequent costs) and other metrics. This will reinforce to drivers and their supervisors that senior management is actively involved in the program, and tracking fleet safety performance.

Communicating Regularly

Just implementing a program won’t be fully effective unless there is regular communication with the drivers, their managers, and senior management — and doing so should be required. With today’s electronic communications technology, there are a number of ways this can be accomplished. E-mail, the company’s intranet site, and even social media outlets such as Twitter and Facebook can all play a role in communicating the program, performance, and driver rewards.

In addition, the policy should be published online, word for word, which will make it simple to both apply and notify of changes, updates, or additions. This should also include an FAQ for drivers and supervisors, to help cut down on individual communications to fleet managers.

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