Employee Retention…Your Key to Success!

Franchising World Magazine - Feb. 2007
by John Boyens

Retaining and motivating employees are two of the most difficult tasks for any franchise owner no matter how long they’ve been at it!  So what are the secrets to retaining and motivating employees? To answer that question we need to understand what makes an employee want to leave or want to stay at a particular company. Let’s first focus on the reasons that they leave.

• Involuntary Turnover (either through termination or lay offs)
• Voluntary Turnover (employees choose to leave on their own)
• Promotion

The first two types of turnover are the most devastating for franchisees.  Let me give you an example.  When a franchisee loses a salesperson who is performing it negatively affects their business in three ways.  You lose their sales performance, you lose their knowledge/expertise/relationships and you lose valuable “bench strength.”  You also lose the time and resources that you invested in training this employee. Franchisees can’t build a successful business when they lose good people and constantly find themselves in the rehire process.  Worse yet, what happens if they go to work for a competitor?

The Three “Rs” of Turnover

So why does turnover occur?  Our research shows that as opposed to a single, isolated reason for leaving, employees (especially salespeople) will balance three organizational themes (rewards, respect and requirements) in their decision to remain with a particular company. The three “Rs” include:

• Rewards (i.e., base salary, commission, benefits, incentives, continuing education opportunities, vacation time, retirement plans, etc.)
• Respect (i.e., how they’re treated, work environment, personal and professional growth opportunities, recognition, implementation of some of their ideas, etc.)
• Requirements (i.e., clearly defined job duties, realistic goals and expectations, dress code, etc.).

Franchisees that have successfully reduced turnover align goals/expectations across their franchise, invest in the personal and professional development of their people, ask for input from their employees on a regular basis, implement some of their suggestions and consistently review any potential sources of dissatisfaction.

You can’t fix something you don’t understand. Therefore, a franchise that is having significant challenges with turnover must find out which of the three “Rs” is currently in the greatest need of attention and put a plan in place to proactively address the dissatisfaction.

Regularly addressing the three “Rs” of turnover helps create a culture where employees can thrive.  Culture affects how people feel when they go to work.  Is excellence required or is “good enough” tolerated?  Are customers and employees treated in a valuable way or just a number or a dollar sign?  Culture also plays a huge role in your customers’ decision whether or not to return to your store or business.

Changing Your Culture

If you are looking for ways to improve the culture of your franchise it would be wise to follow these guidelines:

• Create a positive work environment. Clean facilities, comfortable furniture, modern fixtures, ample workspace, proper equipment, current technology, break rooms/kitchens that are good size, and ample parking are examples of creating a positive work environment.
• Ensure a high level of employee involvement. Give employee’s responsibility for helping to direct a change in culture.  This empowerment diminishes resistance by creating a partnership of the eventual outcome with the people who are most affected by the change.
• Ensure continuous communication. By communicating on a regular basis and in various forms (i.e., face-to-face, phone, voice mail, email, etc.) you build motivation and buy-in for all employees. People should be brought into the loop to ask questions, provide input so that they understand what needs to be done.  When you start messing with existing systems and change too many things at once, people get scared. When they get scared, they resist. The key is to continually communicate what the problems are, what the desired future is and how the employees will benefit from the changes.
• Identifying potential sources of resistance in advance and develop strategies for overcoming them. People react to change in different ways. Some embrace it while others need to be brought along kicking and screaming. Resistance is sure to be intense if employees aren’t heard from and if conflict and challenges are swept aside.  Remember, most people fear the unknown.  Fear and loss must be dealt with and worked through. Fear can only be reduced with information and management’s willingness to listen to input, frustrations and concerns and respond accordingly.
• Celebrate success!  Make sure that you recognize and celebrate successes (no matter how small) along the way.  Remember, success is a journey, not a final destination.

Practice Proactive Communication

Nine tenths of all problems with managing people stem from poor communication. Do you ever feel like “nobody gets it?”  Do you get tired of always trying to clarify the meaning of what you say and apologizing for not saying what you mean?  If this keeps happening perhaps its worth looking at the way the message is being delivered.  Research shows that people retain only 10% of what they hear 72-hours after the fact.  Written communication has a 20% retention rate.  That is why it is critical for owners and managers to provide proactive, consistent and clear communication.  Remember, the biggest stumbling block to good communication is poor listening!  Here are five ways to be a better listener:

• Eliminate distractions
• Get rid of excess paper to reduce distractions at your desk
• Know your blind spots – assumptions and prejudices
• Be an active listener – paraphrase, ask questions
• Be an empathic listener – listen to the way the message is being said

Motivating Your Employees

Do you know what motivates each of your employees?  Is it recognition?  Is it public praise? Perhaps they’re motivated by certificates, trophies or awards.  Maybe they’re motivated by money or gifts.  If you’re not sure, find out.  The best way to find out is to ask them!  Get to know your employees as people before getting to know them as employees.   That knowledge will help you know how to get the absolute best out of each of them while at the same time recognizing and rewarding their individuality.

Hire the Right People

One reason franchisees suffer turnover problems is because they haven’t done a good job hiring employees in the first place, especially salespeople.  Often during the interview process the owner subliminally switches from interviewing the person to trying to hire the person!  Let me be more specific.  Let’s say that you’ve had an “open” position for quite some time.  Let’s say that you, or other employees, have to cover for that open position and it’s putting quite a bit of strain on the business.  Finally a candidate appears at your door that at least “looks the part.”  He or she sits down for the interview and as they answer the first question you observe that they are reasonably articulate and that they answer the subsequent questions the way you want them to answer.  All of a sudden you move full speed ahead into the hiring mode.  You tell them about the job.  You sell them on the franchise.  You sell them on the benefits and so forth. You do everything except interview them! One way to keep from falling into that trap is to use a process called behavioral interviewing.

Behavioral Interviewing is a technique that enables the interviewer to extract relevant information to help distinguish a good hire from a bad hire.  It is based on the fact that a candidate’s past and present behavior is the best predictor of how he or she will behave in the future. Behavioral traits don’t appear on a resume… they can only come from an interview. Furthermore, interviewers need to obtain repeated examples of a specific behavior to ensure that the behavior they are observing is “real” and not just “turned on” for the interview itself.

Interviews not based on exploring past behavior with previous employers inevitably focus exclusively on education, experience, and knowledge… exactly what’s on the resume (if they even have one).  While education and experience are clearly important, they only reveal what a candidate “says” they did. Behavioral interviewing helps you drill down to the core of a candidate’s past performance and what he or she is likely to do in the future.

During the interview it is important to ask questions that require the candidate to describe how they would handle certain “real world” situations.  In other words, how would they behave if that situation were to present itself today.  Here are some examples of behavioral or situational interview questions:

• “Tell me about a difficult customer situation that you were able to satisfactorily resolve.”
• “Describe your job hunting process and desired outcome.”
• “Tell me about a time you had to complete a “rush” project with no resources and little direction.”
• “Describe the best boss that you’ve ever worked for and what made them so good.”

In closing, let’s review the secrets to minimizing turnover:

• Proactively manage the three “Rs” of Turnover
• Create a culture where all employees can thrive
• Practice proactive, consistent and clear communication
• Know what motivates each of your employees and act accordingly
• Do a better job on the front-end when hiring employees by using behavioral interviewing