The answer may surprise you! Look at some highlights from Mercer’s Canada Transportation Policies and Costs report.

Company cars or car allowance benefits have long been popular, especially among company executives. They first emerged in the 1960s and quickly became a desirable part of the rewards and benefits package. Some workers view these benefits as a reward for working their way into a higher level position.

While some transportation benefits are a necessity, like for workers who need specialized vehicles to do their job or who are continually traveling from one customer to the next (e.g., sales people), there are other car allowances or transportation benefits that can be adjusted to better fit the times we live in.

As the working world has shifted post pandemic, many companies have moved toward more sustainable policies, in addition to having many employees work remotely from home. With these changes, we can expect to see a change in transportation benefits.

For some companies, this might mean offering a parking subsidy in place of a car allowance. Another option could be partnering with your local public transportation agencies and offering your employees a free or reduced rate on monthly passes.

To get an up-to-date look at what companies are offering for transportation benefits today, take a look at some of the highlights from the latest Mercer Transportation Policies and Costs report, published in May 2023. In fact, the real-world changes in car allowances and other transportation benefits might surprise you.

Transportation benefits are commonly offered

Companies have commonly offered at least 4 types of transportation benefits:

• Company-owned vehicles
• Company-leased vehicles
• Car allowances
• Alternative transportation benefits

Would you believe that we’re not seeing a dip in the number of companies offering car allowances? Despite the shift to more remote and work-from-home positions, Mercer’s May 2023 Transportation Policies and Costs report shows that 78% of respondents continue to offer a car allowance. By comparison, the same report in 2019 showed that 82% of companies offered a car allowance.

This continued benefit may seem counterintuitive. However, many businesses want their workers to return to the workplace and offering a car allowance could be one way to help encourage this.

Many businesses are also offering more commuter benefits to encourage workers to return to the office. This kind of support can ease the transition from working at home to working onsite.

Commuter benefits have numerous advantages for employees. They can:

• Reduce frustration: Commuter benefits can help offset the frustration employees might feel about driving to and from work every day.
• Reduce negative environmental effects: If you want to emphasize sustainability and reduce the carbon footprint of your business, you can offer benefits for certain types of programs, such as using public transit, buying and using a bicycle for commuting, or carpooling.
• Reduce costs: Whether your employees are commuting by car, public transportation, or some other method, it does cost them money. Offering some kind of commuter benefit can help offset those costs.

No matter what kind of commuter benefits you offer, employees want to feel recognized for the work they do. Offering these benefits is an easy way to do that. Commuter benefits can also fulfill employees’ need to get “more” from their employers and have an impact on their day-to-day experience.

Companies are still working toward a green future

Even with the increase in car allowances, companies are still focused on creating a better, greener future with an emphasis on sustainability and green transportation policies. In the May 2023 Mercer Transportation Policies report, we found some exciting green transportation updates:

• 31% of companies have taken action to limit or reduce the number of company cars they own.
• 47% have added or plan to add hybrid and/or electric vehicles to their fleet of company cars.
• 29% are actively promoting public transportation, up from 19% in 2019
• 32% are promoting other types of transportation, like bicycles and carpools.
• 38% are offering charging stations for electric vehicles at some or all of their office locations.
• A small percentage are providing monetary incentives to encourage the use of hybrid and electric vehicles.

Companies aren’t making these decisions in a vacuum. Employees and employers alike recognize the pressing need to create a greener future. According to the 2022–2023 Global Talent Trends report, 97% of employees expect their employers to pursue a sustainability agenda.

Employee needs versus benefits

It’s important to recognize the difference between an employee whose transportation needs are critical to their job, such as some sales and service positions, and most employees who simply need to travel to and from the office.

For employees in the first category, transportation isn’t a benefit but a necessary tool to do their job. For other types of employees, offering commuter benefits is a nice perk but not a necessity. If some employees feel slighted because they don’t get this “benefit,” make sure they understand why some employees need company-provided transportation to properly do their jobs while others don’t.

What do your employees want?

Ultimately, deciding whether your company offers any type of transportation benefit will depend on what your employees want. While the job market is continually changing, you always want to put yourself in a competitive position. If having some kind of transportation benefit is the difference between a potential employee choosing your company versus another company, then offering that benefit could be worth it.

On the other side, employees want to work for companies that support sustainability and take care of their resources. Many employees may see offering transportation benefits as wasteful and extravagant, especially if those benefits fall outside of basic work transportation requirements.

The best and simplest way to determine how your employees feel about transportation and many other important issues is to ask them. By creating an employee research strategy that includes employee listening tools, you can learn the value your employees place on benefits and rewards, uncover their unmet needs, and even create digital focus groups for specific issues.

These tools can help you better develop your strategic total rewards package and become an appealing and rewarding place to work.

Consider the state of your current transportation benefits. Do you need to cut back on vehicle allowances? Should you consider shifting from providing vehicles to paying for fuel?

Mercer is here to help you stay up-to-date with the current trends in vehicles and other transportation benefits.

Contact us at surveys@mercer.com or 855-286-5302 today!