Why Company Cars are No Longer Necessary for Employee Recruitment
All across North America, employers are implementing new, innovative benefits as part of their competitive compensation packages to recruit top-flight employees. Some of these benefits designed for employee recruitment may include brand new types of perks, such as on-site child care, catered lunches, or flexible work hours. However, company cars are no longer at the top of the list for many employee recruits, and the reasons may be surprising.
More recent generations of workers who are now entering the workforce do not often list a company car at the top of their list of preferred benefits. Generation X and Generation Y employees, who currently comprise over 55% of the workforce, look at benefits differently than the previous generation of Baby Boomers, or the older Traditionalists generation. Though baby boomers grew up during the era of the company car, younger employees prefer to drive their own vehicle.
Additionally, views of employee recruitment are considerably different for younger generations of salespeople who are changing the face of the workforce. Many salespeople now prefer to a home office. Generation X and Y employees also value continuing education, company cars are not topping the list anymore. It seems to be all about choice – and this translates into choosing to use their own vehicle too.
Recruitment for the new generation of young professionals is significantly different from other generations. And since most prefer to be focused on personal growth benefits like tuition reimbursement or mentoring, their focus on self includes being reimbursed for their own car because it is their and their family’s car of choice.
Company Cars and Taxes
For some younger employees who might consider a company car a great benefit, the tax headache will be discouraging. The IRS considers personal use in a company car as a taxable benefit. Therefore, the employee has to pay tax on the mileage used to drive to and from work, on weekends, and the like. If they don’t keep precise mileage records, then all of the mileage could be considered taxable. Tax-requirement confusion is one more reason why company cars will fall flat as an employee recruitment option.
Reimbursement, wherein employees are reimbursed for the use of their vehicle for work, is a more attractive option for potential employees. Employees have the ease of using their own automobile, and be reimbursed appropriately for their business gas and other driving expenses.
The days of the company car benefit for potential employees are ending. As the younger generations make up a higher percentage of the workforce, their choice to drive their own car for work purposes will lead to more compensation packages with vehicle reimbursement options rather than company cars.
If you are interested in further information on vehicle reimbursement plans, please contact CarData by phone at 1-866-550-5188, or send an email to email@example.com. Or, visit our Learning Centre for additional resources on VRPs.