Franchising Has a Gen Z Problem

With employee recruitment and retention currently the number one challenge, solving the Gen Z workforce dilemma should be a top priority for franchises

No matter who you talk to in franchising, the labor shortage continues to be one of the greatest challenges facing the growth of the franchise sector. Not only did the pandemic force many people out of the workforce, it also caused many to reconsider their careers and reevaluate what they wanted out of their jobs. 

Compounding that with Baby Boomers retiring in record numbers makes it more critical than ever for franchise organizations to attract and retain younger employees. According to the U.S. Bureau of Labor Statistics, the oldest members of Generation Z—those currently between the ages of 20 and 25—will make up 8.3 percent of the workforce by 2030.

The problem? Gen Z has by far the lowest employee satisfaction and engagement scores on Franchise Business Review’s Franchising@WORK survey, scoring a 76 on the Satisfaction Benchmark Index—10% to 33% below the overall benchmark. 

It hasn’t changed much either over the last few years, despite a growing emphasis and conversation around culture in most franchise organizations. Franchise employee data from the 2019 Franchising@WORK study showed that 67 percent of Gen Z employees planned to leave their jobs within two years. Post-pandemic, the number stayed roughly static, with 66 percent of Gen Z employees that responded in both 2021 and 2022 indicating they plan to leave within two years. Compare that to a general study by Deloitte that reported 40 percent of Gen Z plan to leave their employers within two years.

There is one bright spot for Gen Z’s. In 2019, just 56% of Franchising@WORK survey respondents said they felt they were compensated fairly for their position, compared to 71% in 2022, possibly a reflection of franchise organizations increasing salaries to retain employees amidst the Great Resignation.

What Matters to Gen Z Employees?

Everyone has different priorities, values and life experiences, but broadly speaking, Gen Z’s are purpose driven, multi-taskers, impatient with the status quo, and crave cross-functional opportunities with a clear path to advancement.  

While employment mobility is not a new trend among younger workers, job-hopping and freelance/“gig work” have become much more pervasive in the past few years. Given the increased budget dollars going into employee recruitment in the current war of talent, franchise organizations will be hard-pressed to design effective retention programs, and clearly communicate the long-term career path opportunities within their organization—especially for younger workers. 

Hiring software firm CareerPlug recommends tips for recruiting and retaining Gen Z employees, from making your job postings mobile friendly to texting and using social media, but even more notably, they point out that offering the RIGHT benefits and perks, and focusing on diversity and inclusion, are two important ways to appeal to Gen Z.

How to Attract and Retain Gen Z Employees

Mission and purpose
Look at your company’s mission statement and core values. Do they speak to the employees you want in your organization? If you can connect the dots between your brand’s mission, core values and meaningful work—and make it an integral part of your employer brand—you can create a significant recruitment and retention advantage.

Flexibility
Flexibility is no longer a perk, it’s expected. A 40-hour work-week in an office is no longer the status quo, especially post-pandemic. Gen Z is more digitally connected and tends to have less defined lines between work and life. Retaining Gen Z employees will require organizations to figure out how to accommodate the flexibility these employees crave. 

Managers
Not surprisingly, an employee’s direct manager has the strongest impact on their overall satisfaction and engagement. Provide training for managers on how to coach younger employees and foster an environment that emphasizes teamwork, particularly if some or all employees are remote. As this article from Forbes points out, managers play a key role in helping Gen Z workers adapt to an office environment, but there’s also a lot of value that younger workers bring to the team in terms of innovation, technology and challenging the status quo. 

Mentorships
Many corporate franchise teams are small, with a relatively flat organizational structure, which can make it difficult for younger employees to see a clear career path. Mentorships can help keep Gen Z employees engaged and fulfill their desire for growth opportunities and skill development. 

Mental health benefits
Gen Z reports being more stressed and emotionally distressed than any other generation. Employers need to take note and offer access to benefits and resources like Employee Assistance Programs (EAPs) that support mental health and well-being.

DEI Initiatives
Gen Z is the most ethnically and racially diverse generation in the workforce, and they want to see diversity and social awareness reflected in the workplace. If your organization is not yet benchmarking your DEI progress, now’s the time to start.

Franchise Business Reviews helps hundreds of franchise organizations measure and improve employee engagement and DEI. Find out how your organization stacks up! Request a free 10-minute demo to see how you can get a confidential assessment of your culture and employee engagement.

Related Resource: The Ultimate Guide to Employee Engagement for Franchises

Employee engagement is critical to the success (or survival) of franchise organizations, but it’s becoming increasingly difficult to foster engagement.

Download your free eBook to learn how to:

• Recognize barriers holding employees back from fully engaging
• Create a supportive and engaging workplace culture
• Make engagement a key part of your hiring and retention strategy
• Measure and benchmark your team’s engagement against other franchise employers

DOWNLOAD NOW