Employee Rewards That Lead to Franchise Success

Is It the Money?

A franchise employee reward system must include the components of compensation, benefits, recognition, and appreciation. Unfortunately, the current focus is often not on the latter two. Recognition and appreciation are more likely to facilitate the generation of intrinsic rewards, which will lead to greater employee engagement.

Intrinsic rewards are internal in nature and are focused on things that bring feelings of personal satisfaction, esteem, autonomy, self-actualization, personal growth, a sense of accomplishment, or a feeling of confidence. They’re not like paychecks or bonuses, they can’t be simply “given” to employees to increase engagement. They’re at the heart of the job performed.  It’s the nature of the work and how the employee perceives their role within the organization and its value to the organization’s success.

Franchise leaders must structure jobs to provide an outlet for intrinsic needs to promote job satisfaction and increased productivity.  Keeping employees involved and focused is the goal.

Engagement Party

One poll shows only 33 percent of employees are ‘engaged” in their job, at a great cost to the economy in lost productivity. Leadership must make employee engagement a high priority.  And more money isn’t necessarily the solution. Leaders must help team members understand their own value and how it impacts the organization. They should reduce obstacles to their team members' productive success. Management should create a work environment with greater flexibility as a key to generating intrinsic rewards. The sense that an employee has some control of their own activities and their work environment can generate substantial intrinsic rewards. Show them the value of their contribution and what “success” looks like.

Despite the nearly universal acceptance of employee recognition as a highly motivating factor, only 25% of leaders have a recognition strategy. Regular demonstrations of appreciation for valuable work and related group recognition are other ways to generate intrinsic rewards.

If employers can structure jobs and the treatment of employees to facilitate the generation of intrinsic rewards, all parties benefit.  The employee has greater job satisfaction and may be less insistent on higher pay.  The employer may see greater productivity from the employee, and benefit from the increased involvement of the team members in generating ideas and problem solving.

What Do Franchisee Employees Want?

One factor common in franchising is the preponderance of hourly workers; many completing tasks that would appear to offer little opportunity for intrinsic rewards.  Nonetheless, a franchise organization that facilitates the creation of an environment where the employees share the franchise vision and buy into the value of what is being accomplished, will have the most dedicated team members, and the resulting productivity.

Naturally, money is always an important consideration. But there are many factors that can enhance employee satisfaction and engagement. Flexible time off is always a key benefit. Many franchise jobs are filled by employees who are students or have other tasks to perform. The ability to generate income while they can continue other life goals can be very important. Another is offering training to improve their work or life skills.  The team must believe the employer is concerned about their well-being and success by encouraging feedback and taking time to listen. 

Another very common problem in franchising is the difficulty of finding and keeping quality people and the related cost of replacement. A cooperative and rewarding work environment can significantly reduce turnover and extrinsic rewards can be given for less than the extraordinary cost of employee replacement. Identify and provide rewards that have unique value to the receiver. A customized reward system can save money and have a much greater satisfaction impact then “standard” rewards.

Help the System Work

Almost by definition, the franchisor is more sophisticated than the franchisee. As such, the franchisor must take the lead in developing systems to effectively motivate and reward the system employees. Points the franchisor can train to help the franchisee motivate their employees through an effective reward system are:

  • Employee engagement is a leadership responsibility.
  • Help their franchisees develop an effective and flexible extrinsic reward system for their employees, while providing valued intrinsic rewards.
  • In concert with an extrinsic reward program, help the franchisees understand and develop intrinsic reward programs geared toward the needs of each employee role.
  • Provide continual guidance and expertise on the best methods of rewarding and motivating team members.
  • Help the franchisee understand the value and importance of receiving team member input and feedback, and to show appreciation of team member ideas.
  • Help the franchisee provide each of their employees a clear career path looking beyond the tasks of today.
  • Help them understand that employee engagement is a 24/7 activity, not just end-of-year.
  • Openly recognize the value of employees and their contribution to the franchisee’s goals.
  • Show employees how their activities lead to franchisee success.

There is a clear and compelling relationship between employee reward systems and the level of employee engagement. And the greater motivation is derived when these rewards can be provided in a way that generates intrinsic rewards within the employee.  Motivated and engaged employees lead to dedicated customers as well as franchisee and franchisor success.

Roger McCoy is a Certified Franchise Executive (CFE) and a Senior Franchise Business Consultant for Direct Energy.  He has been involved in franchising since 2004 and is a US Army Veteran.  He is pursuing his PhD in Franchise Management.  He has had articles published recently in franchising and trade publications and spoken on related PhD topics at a variety of conferences.  This article is an abridged version of a PhD paper.  For further information please see rogermccoy.academia.edu