"Why Am I Paying A Car Allowance if My Employees Are Not Driving for Sales Calls?" - 01/20/21 Edition
Stephen Says Column
Dear Stephen,
It was our pre-pandemic corporate policy to reimburse our sales people $500 a month for auto expenses. Almost all of them, except for a few who live and work in large cities, call on our geographically spread-out customer base of dealers, A&D firms and end-users. Now, during the pandemic, in some states like Florida, Georgia and Texas it’s business as usual yet in other states like NY, N.J. PA or California and Washington, there are almost no sales calls in person, the clients come to our showroom or it’s a Zoom presentation. Customers just do not want to see us face-to-face; at their offices there’s still a lot of fear as we see from the statistics in the news every day. This will change as the vaccine is more widely distributed but come Spring 2021, we will have been paying this car allowance for a year for nothing! Can I stop paying the monthly allowance until salespeople resume traveling in their cars again?I am a bit concerned about how my salespeople will take the news, right now it is cash in their pocket, but it seems unfair to the company. We’re reimbursing for an expense that is not occurring. What do you think?Signed,
No Miles No Money!
Most companies say they feel it will affect morale if they take it away or even reduce the reimbursement.
Dear No MiMo,
You argument seems logical and even fair but it’s too late to be even considering this and if you take the 500 bucks away now, as we finally can envision the end of the COVID crisis, the ”optics” for you and your company are horrible. I have asked around at manufacturers and dealers, and this question or something similar to it, has been on their minds for sure. Companies are reimbursing for a business expense that has not been utilized for almost a year. Yet like you said, in some states sales people have not missed a beat, so this is not a policy where “one size fits all”. The answer depends a lot of what else your company has done. Have you reduced salaries? Were they restored? Are you a big company or small? Dealer, independent rep group or major manufacturer? Overall, management believes that employees think of this car allowance amount as part of their income, even though to be clear, and especially for tax reasons, that is not the intention. Most companies say they feel it will affect morale if they take it away or even reduce the reimbursement. And consider this; the sales person still has the expense of owning a car and maintaining it even though they do not use it day-to-day and they do not have gasoline, oil change, tire wear and other expenses, and they are doing this at the behest of the employer so they are prepared to make sales calls once the pandemic subsides.Let’s look at this from another angle. I have talked to smaller companies that are right on the edge financially, and what if these monies that are being wasted could instead be used to save someone’s job. Just think, if a small company has 20 sales peo- ple x $500 a month x 12 months that equals $120,000. One or two employees that do not have to be laid-off! Each company needs to make its own decision but you are right almost a year has gone by since March 2020, when most sales people stopped making face-to-face sales calls. With the advance of the vaccine this health disaster may soon be over, and sales calls may soon resume, so I wish you had written last April so we could have discussed it then!
Stephen
You can send your workplace questions to Stephen at: StephenSays@bellow.press
Questions selected to be answered, will appear in this column. Please use the subject: Stephen Says for all emails. Stephen Viscusi is a bestselling author, television personality, and CEO of The Viscusi Group, global executive recruiters located in New York. Follow Stephen on Twitter @stephenviscusi; Like Stephen on Facebook and follow him on LinkedIn.
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