Budget Talks: Why Fleet Needs a Seat at the Table – And How You Can Earn It
When it comes to fleet, senior leadership may not fully appreciate all that the job entails.
“What I would often hear from folks either in finance or in the senior leadership groups was something along the lines of, ‘Every year, fleet costs go up. But I have a 2004 Honda with 300,000 miles on it. It costs me 421 bucks a year to operate. How come you can’t do the same thing?’” said Chris Lindquist, a 30-year fleet veteran from Colorado Springs Utilities and Xcel Energy, who retired in 2018.
Sound familiar?
“People think they understand fleet, but they really don’t,” Lindquist said. “The reality is that most folks in the higher echelons of utility companies tend to view fleet strictly as an expense that’s large and assume that their fleet must be underperforming because, well, the costs keep going up.”
If leadership doesn’t understand the value that your department brings to the overall business, your budget becomes a prime target for cuts.
“At the beginning of the year, that budget you fought for the previous year would be set in stone,” Lindquist said. “But in the spring, all of sudden there would be an edict that came from the budget officer or the finance department that basically said, ‘Budgets are X. We’re going to have to start cutting from Y.’ Fleet was always one of those departments on the cut side of the budget.”
That’s why it’s crucial for fleet to be involved in the company budget discussions – to help shape the narrative about the value fleet brings to the overall business. Otherwise, you’ll be handed an ill-advised budget with constraints that could set you up to fail.
“You have to educate management by developing your models and business cases so that they understand that what the fleet department does actually dovetails with the company’s strategic objectives – that your fleet really does have an impact on the overall company dynamics, especially on the operational side where these budget dollars are being fought over,” Lindquist said.
But how can you increase your influence and earn your seat at the table? Lindquist offers four tips.
1. Connect the dots between fleet operations and business performance.
Why is the fleet department under pressure for budget cuts?
Think about it: As homes and office buildings become more and more energy efficient, utility customers are using less power. And that’s putting the squeeze on utility profit margins – which, ultimately, trickles down to impacting fleet.
“You’re looking at improved operational technology and increased consumer-based efficiency that has really driven a nail right into the middle of the operating business for utility companies,” Lindquist said. “It still costs them approximately the same amount to run the operations side of the company, but people are using less electricity; or, if it’s a gas utility, people are buying better products that use less gas. I think it goes across all spectrums of utility services. The costs associated with operating the company don’t go down. Labor stays up. Cost of goods stays up. But the revenue is going down. And growth rates aren’t keeping up with costs.”
The idea here is that when you understand the industry dynamics that senior leadership is contending with, you’re better equipped to talk about how the fleet department, with sufficient investment, can offer solutions to help the operations of the overall business.
“As a fleet manager, you really need to understand the company’s business,” Lindquist said. “A utility company is not a transportation company. They don’t understand cost per mile or whatever fleet ideology you’re dealing with. They understand kilowatts and megawatts and BTUs. Utilities do transportation because they have to do it. But it’s not their prime ideology. So, it’s incumbent upon the fleet professionals to understand what the company’s business is. You have to educate yourself on what pain points senior leadership is dealing with so you can figure out a model for how fleet can help address those concerns.”
2. Expand your perspective.
To learn more about what’s going on with the business, get the perspectives of other groups in the company.
“I’ve often found that just visiting with your peers in operations groups across the street or up the stairs or across the parking lot is a good start,” Lindquist said. “Find out their three biggest issues that they deal with on a day-to-day basis. And listen to their story for a while. You’ll start getting good ideas on how to build your narrative.”
What’s an example?
“Suppose you learn that your company’s numbers are not good when it comes to response time to utility outages,” Lindquist said. “You could then build a fleet case that supports better performance in that area by talking about how improved vehicle availability and off-shift maintenance would support their ability to respond to outages more quickly.”
3. Make your case with data.
Once you understand the business issues, you also need to have clear visibility into your fleet’s performance, Lindquist said. “You need to do the data analysis to understand what your fleet organization has been good at, what opportunities that you have to get better and how they overlap.”
Suppose you’re evaluating the performance of a specific vehicle group – digger derricks, for example.
“What’s the average age of your digger derricks?” Lindquist said. “OK, let’s say it’s about 11 years. Now, how are these units performing? What’s the cost per mile? What’s the average number of breakdowns per year? Or however you want to mine the data. Then you’ve got to look at, how is my comprehensive vehicle availability in that vehicle group? If I could be X amount more available to my customers, what would that mean in terms of dollars?”
Then look at the true cost of downtime.
“What is the average crew cost for a digger derrick? Is there one driver? Are there a lineman and an apprentice? What is the cost per hour there?” Lindquist said. “Put downtime and availability in a money context. If you let everybody know that, for this vehicle code class, the true cost of downtime is X – because you’ve factored in the linemen costs, administrative costs and all the other related expenses – you’re in a much stronger position to propose, ‘If I could improve our fleet’s age in this area by 20 percent, here are the cost improvements I can make for the folks on the other side of the parking lot, which is going to improve your outage or response times.’”
4. Keep stakeholders informed about fleet performance.
One of the keys to earning a seat at the table for budget talks is to raise your department’s profile – and credibility – with senior leadership throughout the year with consistent communication. How do you accomplish that?
Lindquist recommended sending out a quarterly newsletter with a fleet scorecard for key leadership groups and stakeholders.
What metrics would he include in the scorecard?
“It could be any number of things,” Lindquist said. “It might be vehicle availability by class, like aerial bucket trucks or digger derricks. We would have our published targets for that area. Here’s where we are today. Here’s the delta and what we’re doing to help close that gap. Or, it could be shop productivity by location. How productive are our technicians?”
The important thing is to ensure the information is relevant and useful to your audience. “The scorecard is always a work in progress because you’re balancing training, safety programs and numerous other things,” Lindquist said. “There are hundreds of data points that you could look at. But you have to figure out what matters most to the leadership groups.”
The Bottom Line
If you’re not telling your story about how fleet helps the overall business, those who don’t understand fleet will tell a far different story – one in which fleet is exclusively a cost center that’s underperforming and needs to be cut. And you’ll be marginalized, with little influence over the budget discussions that directly impact your ability to do your job.
According to Lindquist, “To get the seat at the table, you have to earn it. And to earn it, you have to do the work. You have to develop your business case. You have to own your fleet numbers. You have to educate yourself on the business.”
