Operations

A Look at the Bottom Line

Posted on May 1, 1983 by John Kilroy, LCT Editor

Ah, the Academy Awards, it is the night of the stars and, of course, their limousines. If you were to stop someone on the street and ask them, “Quick, what do you think of when I say Academy Awards?” the answer would probably be something like, “Actresses, jewelry, limousines.”

Every year, television sets across the country flicker with the sight of the limousines rolling up to the entrance to the Academy Awards to drop off the night’s celebrated participants. The image of glamour and even fun is reinforced once more and much of America thinks for a few moments about what it would be like to spend an evening utilizing a chauffeur-driven limousine.

Now, that’s wonderful for business except for one important point. It also tends to portray chauffeured limousines as a frivolous extravagance…an image that cost-cutting corporations are very much aware of in this economy.

There’s another image of chauffeured limousines that needs to be publicized as well: a very cost-effective mode of travel for the nation’s corporate chiefs.

Let’s consider the case of a corporate executive who costs the company $200,000 in wages, benefits and other forms of compensation. If we allow him four weeks’ vacation; weekends off; 10 holidays and two sick days, that executive works 228 days per year. If we say he puts in an average of 10 hours per work day, then the company is spending $200,000 per year for this person to work 2280 hours.

This comes out to roughly $88 per hour. If we put the price of a chauffeured limousine at a cost per hour of, let’s say $40, then for every hour that executive spends comfortably in a limousine, rather than driving himself or being jostled in a taxi, the company is saving $48. A limousine ride to luncheon meetings or appointments across town for such an executive would allow him to work during his traveling time. If the executive only averaged 10 hours per month in a company paid limousine, devoting that time to the company rather than spending valuable company time on just getting from point A to point B, the company would save $5760 in the course of the year. That might just be the cost of retaining another part-time file clerk or going ahead with the purchase of that copier the accounting department has wanted for so long.

Yes, limousines are the elegance and glamour of the Academy Awards, but it needs to be made clear to the corporate consumer that limousines are also the logic and profitability of a healthy financial statement.

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