Who Should Pay for an Employee's Cell Phone?
Thursday, October 4, 2012 • 5:00pm
Who should pay for an employees' wireless phone, the organization or the employee?
Unless you live in the deep wilderness, you know that the wireless world is upon us in every facet of our lives. Wireless devices have become the standard mode of communication for personal and business purposes. They are invaluable business tools, both a business and personal necessities – and our thumbs are suffering accordingly!
The predictions for future development of applications and functionality continue to be astounding. All of us will be using these devices for more and more purposes in the coming months and years.
The issue then for organizations is who should pay for these devices? Should the firm control and pay for the device (company liability) or should the firm provide a stipend for each individual to use their own device (individual liability.)
At first, it seems that expenses can be reduced and controlled by simply paying a fixed amount to each user. This relieves the organization of the excess costs for personal use, costs of overuse, and other costs such as hardware upgrades. However, there are downsides. The result of a proper review of both strategies creates an long list of cons (below) for the personal liability strategy. There may or may not be any actual savings in the short term. But there can also be a loss of data, a loss of control & security, loss of opportunities, and a loss of the ability to upgrade effectively. There can be increased exposure to liability and the risk of fiduciary loss.
Most companies would not dream of allowing all their employees to just simply attach any old personal computer to their network at work. Computers are company assets and are not a party to individual liability analysis, and yet they are actually less expensive than the wireless device. You can purchase a laptop today for $500, and it will very likely last for 3 years or more. That’s less than $15 per month. We pay many times that cost monthly for each wireless device.
A well developed, implemented, and enforced corporate wireless policy is also important . This includes policies regarding device use while driving, upgrade scheduling, Apps control, limiting liability, roaming procedures, and limiting other exposures.
Our conclusion, based on our analysis and experience, is that significant cost reductions and greater control are the benefits achieved through the corporate liability strategy.
Below I share some issues to consider when comparing individual liability (employee pays) versus corporate liability (company pays):
1) Employee Termination If an employee is terminated, then the phone number goes with them under individual liability. Just one sales lead loss that goes to the new employer could be a huge loss compared to a few dollars saved each month on wireless costs. The same holds true for any contact of value that is made following termination. Just one call, one text, one email, or one web reference is all it takes.
2) Corporate Discounts While the initial perception may be that the company may reduce costs with individual liability, that may not be true at all. The ability to pool or group phones under a corporate umbrella may actually allow for less cost to the company than the fixed amount strategy.
3) Invoice Payments If the employee doesn’t pay their bill on time there may be a loss of service. The result could be a loss of a significant sale, contact, or transaction. Or it could be unsatisfactory customer service resulting in the loss of a valuable existing customer.
4) Security The security issues can be significant as well. Under a corporate scenario, standardization of handsets can be mandated. Policies can be implemented on a corporate basis and restrictions can be implemented automatically through proper unit programming and they can be managed centrally. The risk can be significant as the accessibility to company data becomes more fluid with Wi-Fi, Smart Phones, and the genre. With an individual liability strategy the likelihood of a confidentiality breach is increased as controls are difficult to implement.
5) Viruses Wireless device Apps can contain viruses and worms just like computer applications and emails. With easy access to the network these disasters can be spread. Properly implemented virus protection is very difficult to implement and almost impossible to maintain on an ongoing basis with personally managed devices. With corporate devices the protection can be installed before issuance and ungraded through centralized initiatives.
7) Optimization Plan changes to optimize new pricing advantages can be implemented easily with a corporate liability strategy but is a very difficult task with individual liability as each individual would have to put the change into effect for their own device.
8) Support The user will still need support. Where the company may feel that they will save costs by eliminating support time for IT staff, in reality they have downloaded the support requirement to the executives, staff, and other users. That is ultimately much more costly.
9) Policy The support function is actually much more efficient when there is a corporate standard documented and managed for hardware, Apps, upgrades, and plans. .
10) Upgrade Frequency and Cost Equipment can generally be refreshed more frequently under a corporate scenario. With functionality and options increasing so rapidly this can, and will be, a significant productivity hindrance under an individual liability strategy. Equipment can generally be refreshed less expensively with corporate liability situations, if not freely, due to volume of transactions.
11) Congruent Goals If the individual user ‘caps’ usage in order to maximize his or her own ‘profit’ based on the difference between their monthly stipend from the company and the actual monthly invoice from the wireless vendor, a counter-productive situation is created.
12) Management Under a corporate liability strategy, the company has access to all usage and costing data and can therefore make proper decisions. Detailed reporting can be obtained from the wireless vendors and all usage can be assessed, including personal usage if that is a concern. This type of data can also be useful in any kind of dispute concerning employee performance, etc.
13) More Cost The ‘capped’ cost may exceed the actual costs for certain users and yet they will feel entitled to claim the standard monthly payment. They may feel justified in doing so because they ‘worked an extra hour three weeks ago.’
14) International – Management of international calling becomes more difficult when not managed corporately. For corporate travelers, the standard monthly wireless payment from the company will be adjusted for additional international calling under an individual liability strategy. Additional international costs can be managed with standard corporate roaming plan adjustments but becomes an issue when reliance is placed on the individual to adjust plans according to each country visited.”
15) Functionality – The employee may arrange for a cheap alternative to maximize their personal return. Things like prepaid phones, limited network availability, limited texting, less than full functionality, coverage issues, and other detrimental effects can be the result.
16) Perception – There may be a perception of employees that the organization is attempting to ‘nickel and dime’ them and that trust is an issue by setting a fixed monthly amount.
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