How Engaged Are Your Employees? Highlights from FBR's annual Franchising@WORK study

As the U.S. labor market continues its upheaval this summer, new employee data from Franchise Business Review suggests bright spots for some franchise sectors and brands. We recently completed the annual Franchising@WORK employee engagement study, collecting feedback from more than 4,000 employees.

The full report will not be released until later summer. However, initial findings revealed that employee engagement and satisfaction remain very high across corporate franchise roles, as well as for many front-line staff. Here are some of the study’s key findings.

• Overall, the 2021 study’s Employee Engagement Index score of 79 was down just 1% from pre-pandemic levels (compared with the 2019 benchmark of 80).
• 81% of employees said their job is rewarding and satisfying, and 79% would recommend their company to a friend.
• Compensation remains strong with 60% of respondents reporting they received a raise this past year, while just 12% reported that their pay had declined.
• Highest employee engagement rates by industry vs. benchmark: Cleaning & Maintenance (+6%); Business Services (+5%); Fitness (+5%).
• Lowest employee engagement rates by industry vs. benchmark: Hotels & Lodging (–18%); Personal Services (haircare/massage/etc., –15%).
• Covid-related impacts on corporate employees: 1) 82% of employees reported staying “well connected” with their manager while working remotely; 2) 57% of employees said they were <more> productive while working remotely, 30% said they had <no change> in productivity, and only 13% felt they were less productive while working remotely; 3) 49% of managers said their direct reports were <more> productive while working remotely, 35% said there was no change in productivity, and only 16% noticed a drop in productivity from their teams; and 4) two of three employees (67%) said they would prefer to stay working fully remotely post-pandemic.

Winning the talent race

Recruiting and retaining employees was challenging pre-pandemic. Now, it’s nearly impossible for some organizations, as work/life balance, job flexibility (i.e., remote work), and higher wages have become top priorities. Nowhere is this more evident than in the hospitality industry. Restaurant and hotel workers led the way in spring resignations. For April alone, the U.S. Department of Labor reported that millions of people quit their jobs, with more than 740,000 of those jobs in the hospitality and leisure industries.

People in lower-paying jobs are leaving for better pay. Work/life balance played a role, as did other factors including safety, stressful working conditions, long hours, long commutes, and lack of childcare.

The pandemic has given everyone—especially those fed up with unfulfilling jobs—time to reflect on their careers, and people are flocking to new jobs they are more passionate about. Take Wild Birds Unlimited (WBU). One silver lining of the past year-and-a-half is that people have rediscovered the outdoors. As a result, the nature retailer, whose mission is “to spread joy,” has experienced solid growth across its network of more than 350 franchise locations. To support this growth, WBU has been recruiting and hiring new staff with a strong focus on culture.

“We hired 12 new corporate staff members over the past 16 months to keep pace with the growth of our system,” says EVP and COO Pat Perkinson. “Fortunately, we have not struggled to find great people, but we have had to focus with intensity on the onboarding process, making the culture come alive for them and making them feel part of the team.”

When asked if wage increases have been part of the recruitment process for retail store staff, Christa Anderson, WBU’s director of coaching support, said, “Absolutely, to be competitive and to retain existing talent, but it’s only part of the package. Small businesses cannot compete with larger company wage offerings alone. We encourage franchise owners to promote the intangible benefits such as the work environment, the opportunity to bring joy to customers, and their direct contributions to the betterment of nature.”

The struggle to find talent

The national labor shortage has touched every company at some level. That said, brands that focused on building a strong culture before the pandemic have fared far better over the past year than those that haven’t.

“Jason’s Deli has been in business since 1976. Our founder, Joe Tortorice, was always such a positive example for us, which set the tone for our strong culture,” says Michelle Kemplay, director of human resources for the brand. “He believed in a set of core values and taught us the concept of servant leadership. We believe if we serve others and help people get what they want they will thrive and, in turn, the company will thrive. We set that tone on the company level, and then it’s up to each managing partner to set that tone in their deli.”

While Jason’s and WBU have had their share of staffing challenges, the companies have maintained extremely high levels of employee engagement right through the pandemic. In fact, both were named a 2021 Franchising@WORK award finalist for the second year in a row for their outstanding employee engagement.

The battle over top talent will continue for the foreseeable future, but many franchise companies are well positioned to win. To learn more about the 2021 Franchising@WORK project and benchmark your company’s employee engagement system-wide, visit our website.

Eric Stites is the CEO and Managing Director of Franchise Business Review, a market research firm founded in 2005 that specializes in franchisee satisfaction and performance.