Employing the cannabis industry

Around the country, businesses are struggling to retain labor and hire new employees. While most see the cannabis industry exploding, internally some companies are facing the same issues as their mainstream counterparts.

Greenway recently spoke to Katie Magoon, SPHR, SHRM-SCP, Founder and President of St. Louis-based human resources consulting firm, People Solutions Center, about the challenges facing the cannabis industry in employment and employee retention.

“The labor market for the cannabis industry is starting to experience the labor market challenges that other industries have been seeing for the past 18 months,” Magoon explained, “When the industry began hiring in Missouri in late 2020, there was a significant candidate pool of individuals interested in joining a new and exciting industry. We now have significant competition in the market and many individuals hoping to make an entrance into the industry have found positions. In the past 3 months, we are seeing a much smaller pool of candidates for entry-level roles.”

Greenway spoke to operators who say that last year they were receiving hundreds of applications for entry-level positions, now some operators are at times struggling to find a handful of applicants for similar positions, in some locations.

“Employee retention is key under these circumstances and seems to be focused on the ability to create a clear career path. Employees have been willing to take wages below other industries if they can see opportunities to expand their knowledge and impact in the cannabis space,” Magoon said. “Finding ways to create a rewarding, inclusive environment that promotes employee growth and development is the key to attracting and retaining talent in the industry.”

While some companies struggle with finding applicants, other licensees are seeing higher-than-expected turnover. The cost of employee turnover is expensive. Background checks, training, onboarding, materials, etc. all have an actual dollar figure associated with them – additionally, there is a cost of human capital and time that factors into every lost employee. You’ve doubled the time spent in the interview and verification processes, you’ve doubled the time for training, and you’ve stressed the existing staff and leadership teams as they’re now shorthanded. You may have additional expenses for overtime or an increase in waste as a result of material mismanagement. More often than not, these added expenses don’t fit into the budget.

“Companies that lack a strong interview and selection process are struggling to retain people. Every company culture is different and it’s important that companies understand how to brand and market their employee value proposition. Candidates have choices of employers in this market and companies that don’t realize this are struggling to attract and retain talent,” Magoon explained.

“It is key to take time to train your interviewers and to ensure they have the right tools,” Magoon stressed, “So many interviewers make decisions ‘from the gut’ and don’t have a clear idea of the specific competencies they are evaluating. Others may ask the right questions, but don’t understand what to listen for in the answer.  These interviewers are easily swayed by vague statements like ‘I’m a real people person,” Magoon continued. “It is important to provide interview guides that allow an interviewer to focus their discussion on the most important competencies.  Then we need to train interviewers on what to listen for, how to ask follow-up questions, and how to ‘check’ our unconscious biases.” 

One of the most common concerns of any employer when faced with a depleted talent pool and high turnover is avoiding mistakes, what should companies look for as red flags or warning signs before hiring?

“Interviewing is less about finding ‘red flags’ and is more about evaluating how someone’s past performance predicts their future behaviors,” Magoon explained, “In fact, ‘red flags’ are often a result of our unconscious biases. Instead, our selection process should be collecting a series of stories about situations candidates have had to deal with in the past. Often referred to as behavioral-based interviewing, this approach provides you with examples that allow you to evaluate the true competencies and motivations of the candidates.”

Keys to success

“Our clients have had exceptional hiring and retention results and are outpacing the industry. There are several keys to this success,” Magoon explained.

• A selection process focused on hiring candidates that match the competencies, culture fit, and motivational fit for the role. “This includes creating a selection process that is inclusive and welcomes individuals of diverse backgrounds.”
• Candidate experience that ensures candidates feel valued and respected. “Employee retention starts with an excellent candidate experience.”
• Positive onboarding experience that reinforces the culture and employee experience we are trying to create.
• Professional development training that supports the culture of the organization and ensures stronger communication across team members.
• Competitive compensation and benefits programs that align with the employee needs.

Finding the right person

“It is critical that companies have a clear strategy for hiring the right person for each role,” Magoon said.  According to Magoon, this process includes:

• Developing clear job descriptions
• Conducting compensation analysis across the industry
• Defining the competencies needed for success in each role
• Talking to employees about what they like and dislike about the role.  “We have to be clear on what will motivate and stress people out about each position.  Matching these motivators for each employee will reduce turnover.”
• Conduct behavioral-based interviews to truly assess candidate experiences
• Conduct interviewer training, including a strong understanding of how unconscious bias can derail the quality of your hiring
• Create an outstanding candidate experience to ensure you don’t drive away the top candidate”

Retaining your investment

The cost associated with turnover can impact businesses in multiple ways. Each employee is an investment of time, resources, and capital, as such it’s important to maximize your return and retain your investment.  Magoon says the keys to employee retention are to:

• Create an inclusive culture
• Create a positive candidate and employee experience
• Define the employee brand and ensure all HR policies, procedures and processes align with this brand
• Invest in leadership development to ensure individuals have the skills necessary to be successful leaders and coaches

“In general, the cannabis space is highly attractive to candidates. That being said, it’s competitive right now and employers must have a strong employee value proposition. Their employment brand and their reputation for living up to that brand is extremely critical to hiring success in the industry. Candidates are definitely talking in the social media space and employers who are not cognizant of the employee experience will be at a significant disadvantage.”