Media scandal after media scandal after media scandal after media scandal has revealed an undeniable truth about franchise businesses in Australia: they are really, really bad at looking after their employees.
In most cases it’s about underpayment of wages or the mysterious absence of other financial benefits. But that’s just what makes the news. There’s no doubt a lot more that might not be as newsworthy but can be just as detrimental to the welfare of employees.
These include issues associated with motivation, job satisfaction, training, performance, teamwork, supervision and career progression. Or lack thereof.
The question that arises is this: what is it about franchise businesses in particular that makes them especially vulnerable to poor employee management practices?
Skillset is one factor that plagues many owners irrespective of whether they’ve bought a franchise. The skills they possess in making their business successful – commercial acumen, salesmanship and equity raising to name a few – are often not the managerial skills required to engage their team. Hence why disengagement (or worse) so frequently ensues.
The other consideration is the size of the establishment. Not the size of the franchisor which can be massive and multinational but the size of the franchisee which can be tiny and local with limited funds to invest in the resources that cultivate happy and loyal employees and not the opposite.
Insight on what leads to the opposite can be gleaned by an American study published earlier this year in the Personnel Review journal. The researchers conducted 74 interviews with stakeholders across the sector and spent almost 90 hours observing 42 of them in practice. Even though most of the stakeholders were franchisors and franchisees, more than a dozen were lawyers, consultants, financial advisers, journalists and industry leaders – a wide-ranging analysis.
Two themes emerged from the findings, the first of which was environmental. There are aspects unique to franchising that expose it to workforce-related vulnerabilities.
For the reasons noted above, as well as the apparently smaller pool of talented people willing to operate such businesses, franchising becomes an avenue for “inadvertent or deliberate abuse”. They’re the words of a consultant who asserts “there needs to be skilled people with integrity” not only at the top but throughout all levels of a franchise.
Echoing those sentiments is a franchisor whose comments about the widespread difficulty attracting quality franchisees have him derogatorily describing them as “a bunch of morons who don’t even know how to waste their money”.
The second theme pertains to internal challenges within franchise locations where “psychological and financial distress” is common. One successful franchisee reflects on his unsuccessful peers by declaring “franchisee business is not meant for everyone. People whose personalities and goals are inconsistent … should not become franchisees.”
And yet they do. It’s not long before they’re deriding their employees as “the weakest link in the chain”, with some of the franchisees referring to “the bottom of the pyramid”, the “ongoing, day-in-day-out issue” of managing staff, and that recruitment is “easier said than done”.
None of which is that different to the challenges facing managers everywhere, irrespective of the sector. The difference, write the researchers, is “many franchisees have had little or no experience managing and motivating their human resources, and end up instigating and escalating problems … and invest little incentive (due to high turnover rates) and time to train their employees”.
The key revelation is what’s in parentheses. High turnover rates. If franchise owners really do “consider workers easily replaceable, they are less likely to adopt” the type of strategies best placed to retain them. So what comes first? The staff turnover or the neglect?
That conundrum is why it’s no surprise the outcome for many employees working in franchises happens to be disenfranchisement.
Source: Thanks smh.com