The ROI of investing in commute
“Transportation as a benefit” pilots have made it easier for employees to get to work in South Bend, enabling 83% to work more hours and reducing absences and tardiness by 8%. Learn about the ROI of investing in commute.
Investing in commute is a growing trend
For years now, there has been a growing trend to invest in solving commute. According to Sequoia Consulting Group, a leading service partner that provides people-first companies strategic benefits, HR, retirement, and insurance services, 36% of companies offer a commuter stipend, up from 33% in 2017.
In surveying more than 750 U.S.-based companies, Sequoia found that:
- 7% offered a corporate shuttle in 2017 with an additional 4% planning to offer one in the next 12 months (57% growth rate)
- 11% offered internal rideshare or carpool options with an additional 4% planning to offer one in the next 12 months (36% growth rate)
- 26% offered a biking program with an additional 4% planning to offer one in the next 12 months (15% growth rate)
Genesis of commute benefits
This trend originated in legislation introducing employer-provided voluntary benefits that allow employees to reduce their commuting expenses for transit, vanpooling, bicycling, and work-related parking costs by setting aside pre-tax dollars.
Meanwhile, progressive companies have taken their support much further. With the increase in congestion and air pollution, competition for talent, and long commutes impacting employees’ health and productivity, companies are investing into commuting: financially and logistically supporting their employees’ travel to and from work.
The ROI of commute benefits has historically been difficult to measure
Measuring the efficacy of these programs has always been a challenge. After all, how is one supposed to assess if offering a last mile shuttle is just a large monthly expense or a true necessity that allows you to attract and retain employees? How can you determine if the positive feedback you are getting from your ridehail program is just a, “well, duh, of course people would want free/subsidized rides to and from work,” or a differentiated benefit that enables your people to actually get to the office and work longer?
For many employers, the argument had been simple — it’s just the right thing to do and a low cost way to keep employees happy. However, other companies have asked for more data in order to warrant investment — data that hasn’t been readily accessible until recently.
Commute is no longer a company-specific problem, but a community problem
Luckily, the team at Voy recently met Santiago Garces, the Chief Innovation Officer for the City of South Bend, Indiana. He has been pioneering “Transportation as a Benefit” with local employers. With a grant from Bloomberg Philanthropies, South Bend’s Innovation and Technology office set out to tackle the barriers to stable employment for low income individuals and shift workers in the region.
In the past, efforts were aimed at providing skills and training to tackle stable employment. This time around, they sourced ideas from the community. The responses were consistent — transportation and childcare were what people needed. Armed with a new perspective, they got to work, rapidly prototyping what transportation as a benefit could look like.
Piloting ridehailing as a benefit with employers in South Bend
After interviewing and holding focus groups with more than 60 shift workers, 300 residents, and 50 applicants at job fairs, South Bend partnered with four large employers to offer transportation assistance via ridehailing to over 500 shift workers in food service, hotel service, housekeeping, maintenance, and elderly home care.
South Bend was able to approach exploring this new service in a manner that no employer would ever have the opportunity to do — as randomized controlled trials and iterative pilots. Can you imagine introducing a benefit at your company that is only given to a portion of your employees, with the expectation that it will iteratively change over time?
As a city tackling a gnarly challenge, South Bend had other priorities. In order to create a sustainable solution, an employer-funded “Transportation as a Benefit”, the team knew they would need to prove the business case of this benefit as a win-win for both employers and employees.
Garces explains, “our first pilots offered rideshare transportation to eight hospital employees using Uber gift cards. We later enrolled 188 participants in the Uber for Business platform, allowing us to view real-time data for 800+ rides[…]. We offered unlimited rides in our initial pilots to understand baseline behavior while experimenting with different monthly ride caps in other pilots. We tested a ‘skin-in-the-game’ model requiring employees to cover part of the ride cost and a vanpool model for vocational students going to and from the same training location.”
The pilots proved commuting benefits have impact
After 12 weeks of testing, 9 pilots, working with 500+ employees who took over 800 rides, the results were staggering:
- 100% of participants reported the program made it easier to get to work and were 8% less likely to be absent or late
- 83% were able to work more hours, with an average of one additional hour per shift
- All were interested in participating again, and 92% would participate even if they paid $2 per ride
- Employers reported increased scheduling flexibility, decreased overtime costs and increased client satisfaction
- All four employer partners committed to providing support moving forward
Going beyond numbers that point to improved business performance and employee satisfaction, the pilots also led to success stories of true human impact. According to Garces, “one participant at risk of termination kept her job due to improved attendance and was promoted.”
Furthermore, to one of their partners, a senior in-home care provider, the benefits of this mobility offering resonated throughout the organization. Before the pilot, supervisors had found themselves stressed as caregivers regularly called in reporting they couldn’t fill a shift or be in a particular location. In these situations, supervisors would scramble to give rides to these caregivers or elect to fill the shift themselves. Armed with their new transportation benefits, employees were able to reliably take on additional shifts and the company was able to take on new, otherwise inaccessible clients.
South Bend’s pilots going forward
Commuter benefits are a quickly evolving space and South Bend already has plans for more extensive pilots. Garces shared, “our initial idea focused on a single solution of ridesharing to address the problem of unreliable transportation. As we spoke with our target population, we discovered a range of transportation needs and preferences that require a more nuanced solution. We pivoted away from the idea of ridesharing as a one-size-fits-all solution to a model that integrates services from additional transportation providers to optimize cost and ridership.”
Naturally, as technology and new modes of transportation merge with a growing involvement from employers to solve commute, commute benefits are going to evolve, standardize, and empower a more productive and happier workforce. It’s exciting to see how South Bend plans to continue to evolve their offering.
Food for thought as you reflect on your commute program
Key takeaways from South Bend’s transportation as a benefit pilots:
- Commute benefits in South Bend have proven to reduce absenteeism, which can reduce overtime costs and the stress of trying to fill shifts.
- Geographic context and employee demographics affect transportation needs. A solution that optimizes for cost and utilization needs to entail more than ridehail services.
- The cost of commuting doesn’t have to belong strictly to employers or employees. Co-investment is viewed favorably by a majority of employees.
- Innovation within the commuting space is happening rapidly and best practices are still being worked out.
In the coming weeks, we’ll continue to dive into innovation in the commute space and how to holistically design commute benefits to best support your talent and business strategy. Stay tuned and join our mailing list to be the first to learn about what you can do to solve commuting.
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This article first appeared on www.getvoy.com on Nov 15, 2018.