Lessons from the Franchising Model

Pankaj Jindal

Co-Founder, Sense

Pankaj Jindal co-founded Sense, a talent engagement platform specifically designed for the staffing industry. It helps staffing firms reduce attrition and dramatically improve re-deployment rates. Prior to that, Pankaj ran two staffing companies: Aditi Staffing as President (1999-2012) and Akraya as CEO (2013-2015).

Tammi Heaton

Executive VP and COO, PrideStaff

Through Tammi Heaton’s 20 years at PrideStaff, she has been instrumental in developing and implementing multiple best practices and relationships, which have collectively positioned the company among North America’s top national staffing firms. She is a dedicated, passionate role model for women throughout the staffing industry.

As Executive Vice President and COO of PrideStaff, Tammi Heaton plays a vital role developing operational best practices for the company’s broad-based franchise network. She also serves as a cultural ambassador, working with PrideStaff’s owner-operators (in their term, ‘strategic partners’) to ensure a consistent client and candidate experience.

As the co-founder of Sense (the first engagement and retention platform designed specifically for the Staffing Industry), Pankaj Jindal is also extremely interested in creating positive candidate experiences to enhance engagement and retention. He interviewed Tammi to get insight into the unique nature of PrideStaff’s business model. The lessons she shared apply not only within the franchising environment, but to any staffing company operating with a distributed and decentralized branch network.

 

Pankaj: Tammi, thanks for your time today.  PrideStaff has operated through franchises for more than 20 years. Is the franchising business model still alive and well in staffing?

Tammi: Absolutely. We’ve been in the franchising business since 1995, and it’s a business model that works very well in our industry. In fact, we’re in the process of opening about 10 offices as we speak. All our growth is organic, not from acquisitions. The reason it works so well is that it combines the strengths of local ownership with the backing of a national organization. In a traditional corporate model, people get promoted up and out, and there’s less direct contact with the relationships. At our franchised operations, our teams are heavily invested in creating a successful, community-based business.

 

Pankaj: What is the typical profile of new owner-operators? What are the market size and location targets?

Tammi: These are people who are disciplined, consistent, and interested in others. They like developing people and they have a positive attitude. Although they don’t necessarily have to have a sales background, they have to be ready to embrace the sales process. A lot of our strategic partners have been business executives in the past. We’re not dealing with absentee owners, but rather leaders who roll up their sleeves to work side by side with their team.

The reality is, what you do with a particular market is going to depend on the strategic partner running an independent operating unit. The territory itself doesn’t define success, so you’ll see some variation in territory size. What matters is what you do with it. Because everything we do is universal—people hate to hire and to fire—our services are translatable from market to market, whether that’s Los Angeles or South Dakota.

 

Pankaj: PrideStaff has had an annual growth rate of over 30 percent for three consecutive years. How do you balance fast growth with operational excellence across your network?

Tammi: We staff ahead of the growth to support our strategic partners. We’re always focused on how well they’re doing. Our goal is not to be the biggest, but to be the best. It’s a core component of our culture that can’t be duplicated. We believe we are the best and so we behave in a manner that makes that true.

Accountability and culture are not mutually exclusive. You can’t just have activity without results, you have to grow the business.

 

Pankaj: Speaking of culture, how do you maintain a consistent culture with a distributed operating model?  

Tammi: It starts before a strategic partner joins the organization, with the very first conversation. You can’t just sign up to be a strategic partner; in fact, we decline more applications than we invite to join. The culture is the number one reason people join and stay at PrideStaff. It’s the driving factor.

We use a multi-tiered approach to send consistent messaging across different channels and venues.  Complacency can hurt organizations, so we always stay focused on our culture, behaviors, and beliefs. Everyone in the organization—from corporate to our partners and team members to our field associates—understands what our mission statement is. We operate independently, but it’s important that we operate as a single brand, and that rolls up from corporate.

 

Pankaj: How, if at all, are you capitalizing on the industry trend towards total workforce solutions? Or are you primarily focused on traditional staff augmentation?

Tammi: Our model is not based on total workforce management. It’s based on building lifelong relationships with clients. Because strong relationships form the core of our culture, we’re not running a transactional, high-volume business.

 

Pankaj: What are the typical challenges to creating a profitable franchise, and what does PrideStaff provide to help strategic partners get ‘over the hump’?

Tammi: All of our systems and processes are designed to help our strategic partners break even faster so they can focus on a solid growth plan. We’re focused on strong gross margins and reinforcing best practices that have been proven successful across our network in jump starting profitability.

Other franchised staffing firms will assign 30 offices to field support representative, whereas we cap that number at 15. Our support staff ratios for marketing, training, and sales support are also much higher, so we provide everything they need to be proficient.

 

Pankaj: How much time do you personally spend working in the business vs. on the business?

Tammi: It varies, because I’m always focused on what the business needs today and what will position it for the future. If you’re thinking that you need to sell as much as you can today just so you can golf every day, you’re not focused on the future. The saying “You need to disrupt yourself before the marketplace does” is at my core. Because of PrideStaff’s size and structure, we’re able to adjust very quickly when change is merit.

 

Pankaj: To finish up, I’d like to ask you why do you love working at PrideStaff?

Tammi: It’s never boring, and it’s always powerful. Every day I’m impacted by stories about the high value that our industry provides to both client and talent. Every day, we help thousands of people get the jobs they need and want. For example, one associate wrote letting us know how excited she was because she was finally able to buy a new car because of PrideStaff.

There’s another story that really demonstrates what PrideStaff is all about. We were honored to have inspirational speaker and author John O’Leary speak at one of our events. [Editor’s note: Read about O’Leary’s inspiring story]. Although he’s spoken at more than 1,500 events, his policy is to never do so on weekends. But he made an exception for PrideStaff, and it turned out it was because we had placed his wife’s brother in multiple positions and their family personally valued what we had done for them. It just goes to show you that small actions can create loyalty or they can create negativity, so we need to own our decisions every day.