MAINTAINING A PROFITABLE WORKFORCE

Franchising is a privilege, filled with responsibilities. It is a series of successful habits predicated upon a few great thoughts implemented by good employees.

Nobody ever said that franchising was easy or that it didn't take hard work to be successful. The secret that makes the business of franchising thrive so soundly lies with the people who make it run.

Essential knowledge for any employer is that there are three ways to get a job accomplished. Do it yourself; employ someone; or forbid your children to do it. For our purposes, let's look closely at the employee side of this equation.

Without a quality workforce, an unwavering management team, the franchising system of business could not provide the excellent price points, branded quality, consistent training, and elevated efficiency of service for which it is so celebrated worldwide. Success in franchising implies optimism, mutual confidence, and fair play. Franchisors must hold a high opinion for the worth of what they sell and must feel that the product or service they provide is the best their employees can produce for their franchisees.

Franchising makes the world a much better place in which to live and work by acknowledging everyone's success throughout a branded system. Franchisors have faith in their organizations and their staffs. They hold a profound desire to help others succeed. Clear, definite vision and consciousness allow them to generate the fusion of people working step by step, shoulder to shoulder, pulling together with franchisees. Without a stable management team and employee base, the brand would fade.

Today, franchisees pay less attention to what franchisors say and more attention to what they do. This brings ever more focus on the franchise system workforce. A dynamic franchisor hires quality people whom he encourages and enables to become the finest employees they can be. Those destined for success never underestimate the ability of their workforce to exceed their expectations as they labor toward a better tomorrow. A system cannot thrive without admirable management and well-trained, reliable employees. They help create the business plan, implement, manage, and revise for market conditions, while interacting with franchisees daily to improve the bottom line.

Some of the best franchise companies today have turned themselves upside down to get more out of their workforce. The old top-down pyramid style management chart does not work well in franchising. Progressive franchisors encourage and stimulate their employees to think and grow with the system. All are given more input in what goes on; from field operations to visionary management, from customer care to franchisee relations, from new products and services to compensation plans.

The following is some strategy to consider:

• Talk with your employees and invite them to offer improved ways to perform their jobs. By challenging your employees, you will learn how your system is working, where it can be improved, and enable budget reducing suggestions.
• Communicate with everyone and not just people who are responsible for the particular job. Superior ideas come from many resources.
• Be sincere with your workforce and revere their ideas. If their opinions are not going to be endorsed by your franchise system, clarify the rationale for your conclusion or course of action.
• Make everyone accountable for authority. If the pyramid is inverted, and the majority of people are at the top, this group should have the ability and influence to help direct the brand.

By giving employees more control over their work environment and more involvement at running their jobs, you tap into a valuable source of ideas and productivity. This direct participation pays off for the franchisees and the brand by building stronger relationships and an elevated royalty stream.

Employees have responsibilities also. They must excel at their work while learning from experience. I recall a story once told to me by an International Franchise Association Board member, a gray beard if you will, and a founder of a franchise system that has become an international brand.

Two employees started the same day at XYZ Corporation. Both were trained in operations and sales, and both were considered hard working employees. Within a year, one was promoted to a higher position at headquarters, and the other passed over.

The employee left in field operations felt unappreciated by the company and became resentful of the other's success. Soon, he presented a letter of resignation to the boss who was disappointed by the action.

When queried by his boss, the regional operations director said he was surprised at the recent promotion of his fellow employee and could not understand why he had been passed over for advancement.

The boss became thoughtful and said, "Before I accept your letter, do me a favor and go across the street to the farmer's market. Find out if anyone is selling apples."

He said all right and started off on this unusual errand. A few minutes later, he returned and reported to the boss. Yes, apples were for sale at the market that day.

Then, the boss called in the other employee, the one who had been promoted, and asked her to do the same favor. She returned to the office and reported that yes, there was a fellow selling apples. His name was Jonathan, and he was selling Washington State apples at $2 a pound, three pounds for $5. She knew that they were tree-ripened, very sweet, and delicious, for she had tried one. Furthermore, she reported that the vendor would give a volume discount for any order over 50 pounds, would pay the shipping charges on an order of 100 pounds, and would guarantee delivery today. She concluded by asking if there was anything else the boss needed.

The boss said no and thanked her as she walked away. He then turned to the field operations employee and asked if he still wanted to offer his resignation.

"No," was the answer as he blushed with embarrassment. "I now understand your decision," he said, "and I want to be more like her. Do you think she'd teach me how?"

The boss replied, "Don't think of this as a disappointment. Think of it as a time-released success."

To put the price of good employees into perspective consider a unit manager level proxy. The Commerce Department estimates that it costs approximately $26,000 to replace a manager of a basic small retail business or restaurant. This number is the primary price tag to locate, hire, train, and employ the individual. Now, consider the cost of turn over and multiply that at the franchise headquarters level. Good people are not cheap or expendable. The direct cost for replacement is only the beginning of the dour news. Lost time for objectives, goals, corporate energy, and attention expended on replacement searches is not only wasteful, but also inexcusably poor management planning. A workforce that is profitable is also cost effective.

Healthcare is front and center today. If you are not offering some form of packaged health insurance to your employees, you will likely lose them over time. Feeling the colossal weight of escalating healthcare costs is General Motors, a major franchisor that recently provided these staggering statistics. GM spent $5.2 billion on health care in 2004 with $1.5 billion on prescriptions alone for 1.1 million employees, including retirees. Healthcare accounts for $1,500 of the cost of each vehicle GM produces. As the business of franchising matures, healthcare costs are a primary aspect in hiring and maintaining a profitable workforce. We all need to work more closely with politicians and lean hard on Washington for attention to healthcare issues or we risk losing our place within the world market. Our elected representatives at the Capitol have insurance. They just don't think we need it as much as they do. Business and employees must speak as one voice to do something about rising costs and inefficient health services across the country.

Another problem for U.S. business, particularly franchising, is the cost of litigation. No other country has litigation costs that approach those of the U.S. with more than $245 billion a year or $845 per person. Know what your employees are saying, doing, and promising. Business must be conducted not only within the realm of what is legal but also within the realm of what is fair and just to the franchisee partner. Such actions are grounds for long-term royalty capitalization and prosperous franchisee relations.

In franchising, our actions create a legacy that inspires others to dream, to learn more, do more, and be more. All employees must have the ability to reach for the top, although truly there is no top in business, only a fleeting moment of market revolution. One must remember along the course of opportunity that the highest individual achievements are never solo events. We reach our best mark in life with the help of others and their belief in us.

Leadership In the workforce is never demonstrated by pointing in the direction you want to go and telling people to follow. Leaders go to that place, show the way, and make their case. Instill passion in your workforce, and let them know it is a mistake to believe they are merely working for a company. Always strive for employees to work with you and not for you. Inspire them to trust that they have more ability than can ever be developed in a lifetime. Help them crystallize their imagination and let the possibilities begin.

A maxim to consider is that there is no such thing as "best" in a world of individuals. Everyone comes with his/her own coat of colors, peculiarities, hits and misses. Talent is never enough. The best players on a team are the hardest workers. Try rating enthusiasm above professional skill. A great deal of what we ascribe to luck is not luck at all. Luck is simply being ready for the chance. It's seizing the day and accepting responsibility for our future. For franchising, it's seeing what other people don't see and pursuing that vision.