Small Businesses Offer Incentives for Hybrids

While major corporations like Bank of America (BAC) and Google (GOOG) have garnered headlines recently for offering cash incentives to employees who buy hybrid vehicles, a number of small businesses have already found success through similar eco-friendly programs.

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Business owners say their efforts to reward fuel conservation have already resulted in better employee recruitment and retention.

"Private businesses are doing what the government should do," said Greg James, founder and CEO of Topics Entertainment, a Seattle-based publisher of educational software, which established its "Eco Car Incentive Program" in 2002. "This makes for less clogged air and happier employees because they are saving money every month."

The company offers $1,000 to any of its 50 employees who downgrade engine sizes — and if an employee goes hybrid, the company offers $2,000.

James cited his own downgrade from a 6-cylinder SUV to his current Subaru Forrester, which helped reduce his gas consumption from 1,250 gallons a year to 750.

My Organic Market, or MOM's, based in Rockville, Md., started an incentive program about a year and a half ago, which rewards employees up to $3,000 for purchasing and driving a hybrid vehicle.

MOM's employees who have been with the company for more than two years and work a minimum of 1,000 hours per year are also entitled to a $1,000 bonus for their down payment on any car that gets an average of 45 miles per gallon or more.

After that, they are entitled to receive an additional bonus of $1,000 at the end of each of the two years following the first bonus, if still employed at MOM's and driving the fuel-efficient or hybrid car.

"We're now starting to see the effects, and a recent survey showed that employee retention and recruiting improved substantially," said Scott Nash, CEO of MOM's. "Morale is higher too because employees want to work harder for a company that cares."

Such breaks come on top of tax credits already offered by the government. Under the Energy Policy Act of 2005, individuals and businesses that buy or lease a new hybrid gas-electric car or truck, or an alternative-fuel or fuel-cell vehicle, are eligible for an income-tax credit of up to $3,400, depending on the vehicle's fuel economy and weight.

Larger companies like Hyperion, a software company based in Santa Clara, Calif., and Integrated Archive Systems in Palo Alto, Calif., are simply offering their employees flat incentives of $5,000 and $10,000 for the purchase of a hybrid, respectively.

However, incentive programs like this are hard for many small businesses to afford, according to Jennifer Woofter, president of Strategic Sustainability Consulting, who consults with small businesses to make them more environmentally friendly.

"For small companies, who have challenges of giving their workers health benefits, it isn’t reasonable," Woofter said. "While we may see some small businesses offering bonuses for hybrid cars, we’re more likely to see alternative techniques."

These techniques, such as allowing employees to telecommute a couple of days a week, covering their public transit costs, or even buying employees a bicycle, are more cost-effective for businesses with smaller budgets.

Woofter does, however, say that programs defraying the cost of a hybrid are still among the best options if companies can afford them, since many people are resistant to the idea of giving up their car.

"We as Americans love our cars, so in that sense, it’s a win for the employer, the employee and the environment," she said.

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