Employee engagement among franchise professionals remains high, but recruitment and retention remain a top concern for franchisors
Franchise Business Review’s 2022 Franchise Industry Outlook Report revealed that franchisors were highly optimistic about growth opportunities for their businesses, but noted that one of the biggest challenges continues to be employee recruitment and retention.
Over the past year there has been a lot of attention on The Great Resignation, and more recently the trend of “quiet quitting”—workers who stop going above and beyond in their jobs in response to burnout, often brought on by the pandemic and understaffing. Couple that with a continuing labor shortage, predictions of a recession (and subsequent layoffs), escalating inflation and housing costs, and we have what some are calling the “labor market paradox”.
There are some bright spots for the franchise sector however. FBR’s most recent Franchising@WORK Study of 5,500 franchise professionals showed that overall employee engagement among corporate franchise employees remains extremely high. Eighty-two percent of survey participants find their work rewarding and satisfying, and four out of five employees would recommend a job at their company to a friend, far exceeding employee engagement studies from Gallup and other organizations that report general employee engagement at under 40 percent across many industries.
What the Data Revealed: Employment Trends in Franchising
The full findings of the Franchising@WORK research were released in June 2022. These are the key trends that emerged.
1. Managers are critical to employee engagement.
Not surprisingly, an employee’s direct manager has the strongest impact on their overall satisfaction and engagement. In the Franchising@WORK survey, 84 percent of respondents rated their managers positively on three key criteria:
- My manager cares about my success.
- My manager is professional, positive, and effective.
- My manager values my ideas and feedback.
Lora Kellogg, president and CEO of Curious Jane, a franchise marketing agency that reports a 97% employee retention rate, says they coach managers on soft skills and emphasize transparency. “We encourage managers to handle job-related communications with their direct reports, even when those conversations are difficult,” said Kellogg. “We believe in transparency and feel it’s important for employees to always know where they stand.”
2. Clear measures of performance, better communication, and employee recognition are areas of opportunity.
Like many business organizations, 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@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.
Wetzel’s Pretzels has a number of programs in place to leverage these opportunities. Jon Fischer, Chief Development Officer for Wetzel’s Pretzels explains, “Individual growth plans are created annually for every corporate employee, outlining two areas of personal development. Once those areas are identified, we share our plans amongst the team to find ways we can support one another’s growth.” Wetzel’s also creates opportunities to recognize employees with monthly spotlight awards that include a cash bonus, as well as monthly wellness benefits that are used to strengthen the team’s mental and physical health. Through these efforts, Wetzel’s fosters a welcoming culture that celebrates wins as a team.
At Jason’s Deli, Michele Kemplay, Director of Human Resources, says, “We are a “listening company” and want to make sure people feel heard and appreciated. Not only do we conduct surveys, we also have an online “idea garden” in which our folks can add any type of idea which is voted on by their peers. If there’s enough interest in the idea, it is vetted out and sometimes implemented.”
3. “Brain Drain” is a potential issue.
Employee retention of the most experienced people may have an impact on many franchise organizations in the years ahead. Between layoffs of many senior staff early in the pandemic, and The Great Resignation that followed, franchise organizations have seen a 40 percent decrease in senior staff on their teams (defined as employees with 7+ years of experience with the company).
On the other hand, there has been a significant increase in younger, less experienced employees joining franchise organizations that could help drive new innovations. Time will tell if this employee churn will have a positive or negative impact on franchise brands. Clearly, those organizations with the strongest employee recruitment and retention programs will have the greatest competitive advantage over the next decade.
UMI Inc., a franchise marketing solutions company, has seen outstanding growth despite the challenges of the labor market. “While many companies are currently struggling with hiring and employee retention, our company has more than tripled in size,” said Stephanie Hijazi, UMI’s digital marketing manager. “For us, social media is an essential tool for showing and telling potential applicants about your company’s authentic culture. We make sure to create content every month that showcases our authentic culture and features our employees’ unique personalities and passions. Testimonials from our team and our clients are maybe the best way to demonstrate why newcomers would love to work for UMI.”
4. Gen-Z seeks experience from multiple organizations.
Employee recruitment and retention is currently the number one challenge for many franchise organizations. One in four employees that responded to the Franchising@WORK survey indicated they did not see a long-term career opportunity at their current company, with 66 percent of Gen-Z employees indicating they plan to leave their company within the next two years.
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 for 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.
5. Finding a balance with hybrid office environments.
Throughout the pandemic, franchise organizations did an excellent job of continuing operations, with staff working in a mix of remote and hybrid (part-time remote) environments. In our previous 2021 Franchising@WORK survey, 57 percent of employees said they were more productive while working remotely, and another 30 percent reported that they were equally productive at home vs the office. And managers agreed, with 84 percent of managers reporting that their direct reports were equally or more productive while working remotely.
The challenge now is how do franchise organizations navigate the new normal of a hybrid workforce? While two out of three employees would like to stay remote full-time, many franchise leaders want their teams back in the office more frequently. Currently, 21 percent of corporate franchise staff are working remotely full-time, with another 32% working remotely part-time.
This new hybrid work environment certainly has its pros and cons. Employees argue for the benefits of greater flexibility, improved productivity, and better work-life balance – not to mention the environmental and cost/time savings from reduced commutes. Many employers on the other hand aren’t sold on productivity gains, and they worry about the cultural impacts, communication challenges, and reduced learning/collaboration of dispersed employees.
The Wetzel’s Pretzels team has remained mostly remote, with plans to have HQ employees maintain a hybrid work schedule going forward. Fischer explains, “We’re providing the flexibility to allow our employees to work wherever they’re most productive, while providing in-person opportunities for collaboration.”
Curious Jane also offers flexible hybrid work arrangements, with most employees in the office two days a week and working from home the rest of the week. Employees with commutes over 50 miles can work fully remotely. “This flexibility has allowed us to grow our staff with top talent who may live too far away to commute,” says Kellogg.
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.
Company Culture Continues to Define Success
One thing that hasn’t changed is the role culture plays in achieving and maintaining high employee satisfaction, engagement and retention. Creating a flexible, transparent, meaningful culture may be your greatest asset for attracting and keeping your best people.
Among the companies we spoke to, all Franchising@WORK award winners, culture is top priority. Curious Jane CEO Lora Kellogg describes her philosophy as, “I believe culture is very much a top-down aspect of work life. Our agency’s culture is important to me, and one way I protect it is to make our agency a place where people truly love to work. We hire very smart people and don’t micromanage, giving our employees freedom, unlimited vacation days, remote work, lots of perks. Bottom line: We treat them like adults, and we expect big things in return.”
The costs associated with creating a positive culture are nominal, but it does require dedication, time and consistency to move the needle. Jon Fischer put it simply: “Culture is everything. No amount of money can fix a rotten culture.”
Franchise Business Reviews helps hundreds of franchise organizations measure and improve employee engagement. 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.
Franchising@WORK Report: Employee Engagement & Compensation Study
Read the full report to learn the detailed findings of the study, including:
- The biggest factor in employee engagement and retention
- The impact of The Great Resignation on franchising
- Pay hikes in a tight labor market
- Navigating a hybrid work environment