The Biggest Employment Trends Impacting Franchising in 2023

Employee engagement levels in franchising are the highest since 2018,  but burnout and retention remain top concerns for franchisors

Employers across all industries and regions are facing unprecedented challenges with hiring: A tight labor market, changing job requirements, and a shift in job seeker priorities are the leading factors, according to LinkedIn. Work/life balance, job flexibility (i.e. remote or hybrid work), higher wages, and meaningful work have become top priorities for employees. Data from the U.S. Chamber of Commerce shows the number of job openings exceeds the number of job seekers by roughly 4 million jobs. 

It’s not surprising that franchise executives surveyed by Franchise Business Review cited hybrid work, talent shortages, and employee stress/burnout as the three most significant Human Resources challenges impacting franchising. There are some bright spots for franchising, though. Fifty-nine percent of franchise leaders report that recruitment at the corporate level has gotten better compared to a year ago, but, they say, talent shortages continue to be a top challenge, particularly at the unit level.

Additionally, overall employee engagement in the franchise sector remains extremely high. Data from FBR’s most recent Franchising at Work Study of over 6,000 franchise employees, representing 40% corporate staff and 60% unit-level employees across nearly 180 franchise organizations, shows 86 percent of corporate franchise survey participants find their work rewarding and satisfying, and four out of five employees would recommend a job at their company to a friend. This is a four percent jump from last year’s already high engagement levels, and far exceeds engagement studies from Gallup and other organizations that report general employee engagement at under 40 percent in many industries.

86 percent of franchise employees say their job and the work they do is rewarding and satisfying.

Workplace Trends in Franchising: What the Data Revealed

The full findings of the Franchising at Work research were released in June 2023 and revealed key trends that franchise employers should be aware of in today’s war for talent. 

1. Training, supporting, and measuring manager effectiveness makes a real difference. 

In our 2023 Franchising at Work survey, 84 percent of respondents rated their managers positively on four key criteria: 

• • My manager cares about my success. 
  • My manager is professional, positive, and effective.
  • My manager and I can communicate openly. 
  • My manager values my ideas and feedback. 

The importance of great managers can not be understated. On the single question of “My manager cares about my success,” positive responders were three times more likely to refer a job candidate to their company, and four times more likely to stay long-term.

2. Supporting employees’ emotional well-being is critical to recruitment and retention.

Stress and anxiety have been on the rise in recent years and the mindset of your employees has a direct impact on their performance. According to the National Institute of Mental Health, one in five adults experienced some level of anxiety disorder in the past year. These numbers are even higher among women and the younger generations. 

Historically, U.S. companies haven’t paid much attention to the mental health and well-being of their employees, but that is changing as organizations everywhere are struggling to recruit and retain the best talent. Hybrid work/flexible schedules, mental health days, counseling services, yoga and gym memberships, and wellness stipends are just a few of wellness benefits that more and more franchisors are offering employees to help relieve stress and provide a better work-life balance. 

The good news is that 88 percent of employees who participated in the Franchising at Work survey rated their overall well-being as good or great. That said, every organization has employees that are currently struggling with an anxiety disorder and companies need to do more to monitor and support their team members in order to be successful. 

40 percent of franchise employees reported feeling somewhat/much better compared to a few months ago.

3. Diversity, equity, and inclusion is becoming a focus for an increasing number of companies.  

Diversity, equity, and inclusion (DEI) has become a major focus for many organizations in recent years. There is overwhelming evidence that diverse teams and companies that promote inclusive cultures perform at a higher level. 

This year, we also added seven new questions to our Franchising at Work survey to help measure DEI efforts across the franchise sector. Overall, 84 percent of employees surveyed say their company values diversity. Additionally, 86 percent of employees feel their co-workers demonstrate a commitment to creating an inclusive work environment, and 83 percent feel senior management understands that diversity is important to the company’s success. 

89 percent of employees believe their company would take appropriate action in response to harassment or discrimination.

While overall feedback related to DEI initiatives was very positive, nearly one third of employees thought that company training programs could do more to promote inclusivity.

WATCH NOW: How to Unlock Your Franchise’s Potential and Cultivate an Inclusive Environment. A conversation with Charlie Chase, president & CEO of FirstService Brands, Marcus Sawyerr, founder & CEO of EQ Community, Wendy Bauman, Director of Corporate Initiatives, FirstService Brands, and Tasha Clarke, Director of Brand Experience, California Closets.

4. Clear measures of performance, better communication, and employee recognition are areas of opportunity.

As in past years, employees at franchise companies would like to see better measures of individual performance, clearer communication from leadership, and more individual recognition for a job well done. 

While these areas scored higher compared to many industries, they were among the five lowest-rated areas of the Franchising at Work survey. The good news for franchise companies is that managers and leadership can easily influence these areas without a significant investment of time or resources. 

Rounding out the lowest-rated areas, a third of employees surveyed felt that they are under-compensated for their position, and one in four employees indicated that they did not see a long-term career opportunity at their current company.

5. Hybrid work is here to stay. 

Sixty-four percent of franchise businesses we surveyed are operating under a hybrid model. Remote and hybrid work environments certainly have pros and cons. Employees argue for the benefits of greater flexibility, improved productivity, and better work-life balance. Many franchise leaders, however, aren’t sold. Thirty-six percent said that hybrid work is the top challenge they are facing. Finding the right balance with remote work flexibility—and its potential impacts on organizational culture, employee recruitment, and retention—will continue to be a challenge for franchise organizations for the foreseeable future.

The Impact of Culture on Employee Recruitment and Retention 

With more employees than ever before looking for meaning, purpose, and a broader social connection from their careers, franchise companies that find creative ways to demonstrate a positive culture and be more transparent, open, and genuine about their mission and values will have greater success recruiting and retaining top talent.

The easiest and most impactful way to demonstrate your organization’s culture is to survey employees annually, at minimum. Not only does a survey itself show employees that company leaders care what they have to say, the resulting employee satisfaction data is a powerful message to share with job candidates. On the other hand, not so positive data provides clear, actionable areas that you can address to improve or enhance your recruitment and retention strategies. 

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

Related Content:

Franchising at Work Report: Employee Engagement Study

Read the full report to learn the detailed findings of the study, including:

• The state of employee well-being
• The top workforce trends impacting employee recruitment
• Which benefits employees crave most
• How employees rate diversity, equity, and inclusion initiatives
• Navigating the hybrid work environment

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