Market Trends

How to Manage a 'Reverse Expansion'

April 4, 2003

by Mike Antich

In the past 12 months, there have been a growing number of corporate downsizings and layoffs; but in today’s politically correct business environment, such terms are viewed as too harsh. The new term that is emerging is ‘reverse expansion,’ especially in the context of fleet management, which is enlistedto retrieve company-provided vehicles from terminated employees. One company that has been involved in the recent spate of reverse expansions, some involving as many as 300 units, is AmeriFleet Transportation, which, among other things, provides driveaway and truck carrier transportation services tothe commercial fleet market. Since a reverse expansion is not a day-to-day occurrence, a fleet manager who is thrust into such asituation will find it is very easy to make mistakes. AmeriFleet recently shared with me some of the pitfalls that fleet managerscan encounter in attempting to retrieve dispersed company vehicles and how to avoid them.What to Do With the Retrieved Vehicles?
Essentially, there are three options: remarket the vehicle, sell it to the employee, or reassign it to another employee. In today’s soft used-vehicle market, many fleets are hesitant to automatically send vehicles to auction, especially if mileage and months in service are below the fleet replacement criteria. As to selling the vehicle to the driver, some fleets have policies against selling corporate assets to a terminated employee. Plus, the harsh reality is that most terminated employees are not in the financial position to purchase their company vehicles.The third option is reassigning the vehicles retrieved from terminated employees to other drivers. If this course of action is taken, then it is crucial to recondition the vehicles before reassignment. By not properly reconditioning a vehicle, you risk demoralizing long-term employees, who are used to getting newvehicles, not used ones. In addition, the condition of the reassigned used vehicle will have a direct bearing on the future care provided by the second driver. For instance, most companies have a no-smoking policy in fleet vehicles, but the reality is that drivers will surreptitiously smoke in their vehicleswhen they are alone. If such a vehicle isn’t reconditioned and is assigned to another employee who is sensitive to tobacco odor, itis not uncommon for him or her to refuse the vehicle. Another common complaint about some reassigned vehicles is pet odor and pet hairs tangled in the upholstery and carpeting.A vehicle condition report will help to identify these potential problems, along with others such as cigarette burns in the upholstery, cracked windshields, mysterious dents, and, more importantly, safety-related problems. For nationally dispersed fleets, itmay be advantageous to enlist the services of a third-party to inspect the vehicles and write the condition reports. When a vehicle is reassigned, the new driver should be given a copy of a second condition report, which is prepared after the vehicle is reconditioned.Also, the new driver should be given the opportunity to perform a walk-around of the vehicle and report any missed problems.Timely Pickup of Vehicle is Crucial
One thing a fleet manager wants to avoid is having the driveaway company call the driver before he or she knows they are beingterminated. The HR department must provide fleet operations with a confirmation that a termination notification has been issued prior to the driveaway company getting the go-ahead to contact the employee to set up a time for vehicle pick-up.One area of vigilance is the retrieval of other company assets such as fax machines, laptop computers, photocopies, or company samples.This task is sometimes delegated to the fleet department and the equipment is often loaded into the trunk of the vehicle that is beingretrieved. Sometimes an unscrupulous employee will not return the company-provided laptop and instead return a less expensive model in the hope that the switch will not be detected.Dealing With Driver-Paid Options
A recurring point of contention with terminated drivers is over driver-paid options. Typically, a driver buys additional options for his or her company vehicle with the thought of acquiring it at the end of its service life. But once terminated, the employee may not be in theposition to acquire the vehicle or company policy may prohibit the sale of the vehicle to a terminated employee. Sometimes an employeewill refuse to relinquish the vehicle until the company reimburses him or her for the cost of the paid options. At this point, the standoffbecomes an HR issue. In the worst-case situation, the company files a stolen vehicle report with the police. The best way to deal with this potential problem is beforehand by including in fleet policy the restriction stating that the money paid for an option is not refundable if the employee leaves the company, either voluntarily or involuntarily.If you have other suggestions on how best to retrieve vehicles in a reverse expansion, let me know in an e-mail.

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Mike Antich

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Mike Antich has covered fleet management and remarketing for more than 20 years and was inducted in the Fleet Hall of Fame in 2010.

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