There is no doubt that the recession and continuing economic climate have made companies look at their training budgets as an easy cost to cut.
Training budgets are always the first to go in any crack down on costs because there is no immediate visible or quantifiable impact on company or individual’s performance.
Driver training usually comes top of the list particularly if the smell of redundancies is in the air. Who is going to invest in training someone who you might possibly be laying off?
The immediate effect of a reduction or complete withdrawal of driver training in a company’s claims rate is usually minimal. But as the economy turns, and companies start to recruit again claim rates begin to rise. We have seen this time and time again with a number of our clients. One particular fleet of over 4000 drivers ran a comprehensive programme for 10 years which cost about £90,000 per year to implement and saved a regular £250,000 per year on insurance premiums. You can also add into that the hidden savings such as fewer third party claims, less vehicle downtime, fewer car hire costs and so on. The estimate is that for every £1 of visible claims cost there is between £16 and £32 worth of invisible costs which the company has to absorb.
When this client stopped training for a two year period due to restructuring and takeovers, by the end of the second year the claims rate which has fallen to below 30% was back in the mid 60% area with an inevitable rise in the insurance premium. It was at the insistence of the insurance company that driver training resumed and the claims rate is now back to previous levels.
The financial argument for driver training was the only one that carried any clout in the 1990’s. But now, taking a conscious decision to not train could land a company in court. The Corporate Manslaughter Act and numerous other initiatives by the Health And Safety Executive (HSE) have completely changed the rationale behind training drivers. True it will certainly save money on premiums, claims and even fuel costs – usually about 11%. But companies who are not completing basic risk assessments on their fleet and taking necessary steps to limit risk are treading a precarious path.
As business improves and companies start to recruit again, they should be asking themselves what experience and abilities their new driver has. Handing over the keys of a £30,000 car to a 22 year old just out of university salesman, without doing the basic safety checks could be fatal.
While budgets are tight, many of our clients have cut back on general training but have continued to train new recruits or any drivers making repetitive claims. It’s money well spent and benefits both the bottom line and the individual drivers. And it may just keep Financial Director or MD out of the dock.