|
Trendy but affordable:
McDonald's keeps employees happy with quality fleet vehicles
Kara Kuryllowicz
McDonald's Restaurants of Canada Ltd. faces a common challenge in fleet management—minimizing costs while giving employees the best possible experience in their company vehicle.
"It's an ongoing challenge to find vehicles that offer a good balance between containing costs and offering something that's attractive and appreciated by drivers," says Rodger Klarer, fleet manager with McDonald's in Toronto.
"It's just not enough to give them a boring old Taurus and pay everything from insurance to operating costs on it. This perk is very much a part of their compensation and we've been good to them in the past, so it's hard to revert to a plain-Jane vehicle."
Klarer handles 575 vehicles, driven by senior executives, restaurant managers and support staff from operations, construction and real estate.
As in most fleets, McDonald's turns its vehicles over every three years or 100,000 km., whichever comes first.
But each year, Klarer assesses consumer trends, and drops and replaces several models to get the best possible resale price for the vehicles while satisfying trend-conscious drivers.
For example, over the past couple of years, McDonald's has moved away from SUVs and vans in favour of cross-over vehicles and cars such as the Dodge Charger, Chevrolet Equinox and the Buick Rendezvous. The choices are enhanced with features such as all-wheel-drive, when it makes financial sense.
After they made their debut on McDonald's 2006 Selector, employees shared their appreciation with Klarer face-to-face as well as via phone and e-mail.
"These vehicles are more current and look better sitting in employees' driveways, which gives McDonald's multiple benefits," says Klarer. "They provide better returns at resale and employees really appreciate them which results in higher employee morale.
"Employees also take pride in these vehicles, which means they treat them as their own in terms of maintenance and care. This reduces depreciation which helps minimize fleet costs—and the employees' taxable benefits."
In view of long-term lifecycle costs (depreciation, fuel, maintenance and repair), the more expensive, dressed-up vehicle that is strong in the market (lower overall depreciation) can actually be more cost-effective than a bare bones vehicle that doesn't hold its value as well.
Saving on service
An all-wheel drive, cross-over vehicle not only depreciates less than a typical SUV, it uses less fuel, which benefits McDonald's, the environment and the employee, who gets a lower taxable benefit. Since the mid 1990s, employees have been taxed on operating costs as a "cents per personal kilometer" basis and not on the actual fuel and maintenance costs for that vehicle.
As significant a role as the vehicles themselves play in the power of the perk, the service surrounding employees' use of the vehicles is almost as important. Interestingly, enhancing that service has actually saved McDonald's money.
Three years ago, Klarer decided to use third-party company PHH Arval for several management functions, instead of buying them off-the-shelf or having them custom-designed.
Building the software from scratch would have been wildly expensive, but that's not the only advantage. As McDonald's lessor, Maryland-based PHH Arval, which has Canadian offices, already had all the driver and vehicle information on file.
McDonald's now uses the Vehicle Accident Services program, gives drivers access to a person at PHH 24/7. Karval says it's proved to be the most important benefit to the company and its drivers. PHH's expertise within this dedicated program ensures the right decision is made promptly, thereby helping to also reduce costs and driver down-time."Being in an accident is a hugely stressful emotional situation for any driver," he says. "For our drivers, it's often their first-ever accident and they're in a big black hole."
With PHH stepping in, Klarer no longer has to deal with urgent, overwrought messages from accident-traumatized drivers after a week-end or vacation.
"They don't know what to do or who to contact because it's not something that occurs regularly. They need a little coaching, a little handholding. When PHH says, `Don't worry. We'll get you back on the road', it's like giving them a little hug."
Of course, that's key to the drivers' satisfaction and comfort levels, but Vehicle Accident Services can also deliver cost savings of up to 10 to 12 per cent. The savings are realized by customizing the accident policy, preparing the first notice of loss, validating and negotiating repair prices, managing the entire repair process, including rentals, minimizing driver and vehicle downtime, managing total loss and salvage and finally, promptly and aggressively pursuing subrogation and uninsured recovery. Based on McDonald's on-file policies, PHH then decides whether to repair the vehicle or get rid of it.
"I now only need to get involved when there is serious bodily injury or the vehicle is written off," says Klarer, who jokes that he doesn't miss personally driving damaged vehicles to the body shop. "I'm free to focus more on management-oriented versus administrative-type tasks. It's a win-win for the drivers, for McDonald's and for me."
For the past three years, PHH Arval has also managed McDonald's personal use taxable benefits. Klarer, who used to handle the bulk of it in-house, remembers tax time as a nightmare for himself and the payroll department.
Capturing information from the drivers, then accurately calculating the tax benefit was daunting and time-consuming. Back then, because drivers were expected to remit their mileage (personal versus business) just once a year on a paper form, 65 per cent were delinquent.
"It was a cumbersome, dreaded task that required multiple e-mail and phone reminders and resulted in less than precise data, since employees had often lost or misplaced the paperwork if they'd bothered to do it at all," says Klarer.
PHH Arval's monthly reporting and reminder system gets drivers in the habit and makes it a part of their routine, which is now more appealing than suffering the artificially high, but motivational default mileage that is submitted if the PHH Arval lacks the true figures.
"It's still not fun, but it's as easy as possible and a way of life for most employees, which reduced our delinquency rate to about five per cent," says Klarer. "McDonald's is a very numbers-driven company, so our employees actually like seeing if they're mileage is up or down and what tax they can expect to pay."
Klarer, who was one of a group of North American fleet managers who collaborated with PHH to create a wish list of reports, graphs and presentations for PHH's dashboard product, has been using it for about 12 months. The interactive dashboard automatically gathers the data and creates the spreadsheets Klarer used to pull and manipulate manually. At the click of a button, the program also produces the graphs and presentations he needs to spot the patterns and trends, then share the information with management and suppliers.
"It now takes me 15 minutes, rather than several hours to prepare the data and reports my manufacturing counterparts need. It's a time saving of 96 per cent on some reports," he says. "It gives me a quick picture of what's going on and saves the company money because I respond to situations more quickly."
Thanks to the expertise and programs provided by its lessor, McDonald's Restaurants of Canada and its 575 drivers are enjoying terrific customer service, while containing costs and freeing Klarer for more managerial strategizing and less routine administration.
Kara Kuryllowicz is a Toronto-based freelance fleet and business writer.
|
