How Employee Development Programs Improve Hiring and Retention Rates

Employees are a franchise's greatest asset, but 87% of franchisors report that their franchisees have difficulty filling open positions, according to the International Franchise Association. Still, many franchises manage to overcome today's labor and inflationary pressures to thrive, contributing significantly to their owners, the local economy, and their communities.

Because the performance of individual franchisees within a chain can vary, there are disparities to overcome in terms of resources available for employee benefits. This underscores the importance of finding innovative ways to support and develop franchise employees, even in the face of financial constraints. Benefits like employee development programs, tuition assistance, and employee recognition are great ways to attract and retain talent.

In the current job market, where the Manpower Group reports that 75% of employers struggle to fill positions, the value of employee development opportunities becomes particularly pronounced. Compared with other retail businesses, franchise businesses often find themselves at a talent-attraction disadvantage. This underscores the necessity of prioritizing and enhancing employee development initiatives, ensuring that they remain competitive and appealing to potential talent.

Franchise talent challenges

Franchise owners generally have some autonomy in running their businesses but must adhere to guidelines set by the corporate parent. These guidelines may include certain employee policies, but often do not mandate comprehensive benefits packages. The variability in policies and practices across franchises can lead to a lack of extensive benefits for employees, as each franchisee may make different decisions based on their unique financial situation. For example, fast-food franchises in particular aren't typically known for best-in-class employee development programs.

However, ignoring employee development can increase staff turnover rates for franchise operations. As many as 86% of employees say they would switch jobs for the sake of growth opportunities. When employees feel like they aren't moving forward in their careers, their engagement and commitment to the company begins to wane. If those employees leave, replacing them can cost anywhere from 1.5 to 2 times an employee's annual salary.

On the other hand, companies that invest in employee development see as high as a 58% increase in employee retention and greater productivity from their workers.

Making employee development more effective

Fortunately, franchises have plenty of options when it comes to employee development programs. But when it comes to implementing those programs, many franchise owners don't know where to start.

Some franchise systems, however, have made a decent start. For example, McDonald's has been advertising tuition assistance programs for some time. Of course, not everyone is aware of those programs, and it may be rare to find employees who choose to work at a fast-food franchise primarily for the educational opportunities.

Three main features for a successful program

When it comes to creating a competitive employee development program, three main features stand out.

First, programs should be financially accessible for team members. Many companies offer tuition reimbursement programs. The problem here is that employees must have enough cash on hand to pay for the initial tuition costs and wait for later reimbursement. Most franchise employees won't be able to access programs structured in this way. A better solution may be to offer a program with a lower barrier for entry, such as up-front tuition assistance paid directly to colleges. Providing online education options can also reduce costs for the franchisee and enable busy, full-time team members to have access to educational opportunities.

Second, programs should prioritize flexibility in terms of accessibility and length. Franchise employees are more likely to participate in programs that can align with their work schedules, which regularly change based on business needs. That's why employee development increasingly involves remote, asynchronous, on-demand learning. Workers can participate on their own terms and at their own speed without having to adhere to a strict course schedule.

Third, the program shouldn't be one-size-fits-all. Not every employee needs the same academic offering or has the same capacity for a long, in-depth course. Thus, it is more effective to craft different career paths to provide options for employees that match their individual needs and career aspirations, while also aligning with the business needs. Particularly valuable is encouraging in-store managers to be deeply engaged with their teams and providing a way for employees to offer feedback and ask for accommodations as necessary.

Strategically investing in franchise growth

Investing in employee development programs offers an opportunity for franchises to distinguish themselves in a competitive market. By prioritizing such initiatives, franchises can improve retention and pave the way for a more engaged and skilled workforce. The commitment to fostering employee growth can significantly enhance a franchise's attractiveness and overall success. This proactive approach assures that franchises are well-equipped to support their employees' aspirations, benefitting the entire organization in the long run.

Gurpreet Singh, Group Vice President at InStride, leads the development of corporate partnerships, helping employers in the franchise, retail, technology, travel, and hospitality sectors provide life-changing education to employees through partnerships with high-quality global academic institutions. Before joining InStride, he spent 15 years in the enterprise technology space at Cvent, where he built high-performing, customer-focused enterprise sales teams that worked with Fortune 500 customers.