Ask 100 franchise operators to name their biggest business challenge, and it’s a safe bet that at least 95 of them will say “people”. As the economy gains steam and unemployment shrinks, it’s tough to find new employees, and even tougher to retain good employees. This doesn’t apply to only line and entry-level employees. Current or potential store managers are just as likely to move on these days. Plus, many franchises (notably restaurants) have a negative image in the eyes of prospective employees. So what’s an operator to do?

A simple answer is to increase the wages you pay. Before you throw your hands up in protest, consider that economists suggest that higher wages may translate to more-talented and more-efficient employees with lower rates of absenteeism, so you may need fewer employees overall.

But money isn’t the only motivator that keeps great employees. If you want to retain them, you need to develop a purposeful, strategic approach. A sound retention effort begins before employees are on your payroll. How you recruit and hire will determine the quality of your employees. Some operators are always on the lookout for great managers and employees they can recruit from other businesses, and stay attuned for competitors that are laying off good people who they can approach, rather than waiting for potential employees to come to them. Good people like being wanted.

Once they’re hired, a formal onboarding process that makes employees feel like welcome members of the team is a great place to start. Having clear expectations and sharing those expectations in writing, recognizing employees for performance, offering clear opportunities for career advancement, and providing competitive benefits are all important. Investing in training builds skills and satisfaction, too.

Finally, keeping employees happy does more than keep them on the payroll. As productivity expert John Boyens noted, “Employee satisfaction drives customer satisfaction. Customer satisfaction drives customer retention. Happy employees equals happy customers. Never in the history of business has a disgruntled employee delivered delightful service.” (“The Secrets Behind a Satisfied Franchise Staff,” Entrepreneur Magazine, February 2013).

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