The Importance of Hiring Right in The Cannabis Industry

At our parent company, GIE Media, we joke about how we put prospective employees through the wringer by having them interview with up to seven or eight people. What is not a joke, however, is why we do this. Obviously, hiring the right person has many benefits, including positively impacting a company’s productivity and bottom line.

Hiring the wrong person can lead to a mountain of problems. It can be difficult to fire someone once he or she is hired, and wrongful termination lawsuits are not uncommon—even in the cannabis industry.

“For 2014, U.S. companies had at least an 11.7-percent chance of having an employment charge filed against them,” according to a 2015 report by business-insurance firm Hiscox Inc. The report also showed how costly and time-consuming these suits can be: “Companies with fewer than 500 employees showed that 19 percent of employment charges resulted in defense and settlement costs averaging a total of $125,000. On average, those matters took 275 days to resolve.”

Overall, “monetary settlements and court awards in wrongful termination cases typically range from $5,000 to $80,000,” according to Lawyers.com—with larger employers (more than 100 employees) paying nearly twice as much, on average, as smaller employers.

Hiring the wrong person can be costly in other ways as well, such as the time and money required to backfill the role. “The average cost-per-hire is $4,129, while the average time it takes to fill a given position is 42 days,” according to the Society for Human Resource Management’s “Human Capital Benchmarking Report.” Factor in productivity losses while a new employee is being trained, and that number is significantly higher.

“The typical (median) cost of turnover was 21 percent of an employee’s annual salary,” according to research conducted by the Center for American Progress.

When it comes to cannabis, another major component in hiring the “right” people is trust and security. “High employee turnover is a negative … for any business, but certainly affects security in cannabis,” says Humboldt Seed Company’s Nathaniel Pennington in this issue’s “Security Tell-All.”

Once employees see the inner-workings of your business, not to mention your intellectual property (IP), “there’s a risk of what they’ll do with that knowledge—particularly if they aren’t happy about leaving,” writes the feature’s author, Jolene Hansen.

Hiring the right employees, and the reduced turnover rate that often comes with it, can improve security, as well as boost morale and overall employee performance, especially as talented and knowledgeable employees remain with the company.

In this issue’s cover story, Elite Botanicals’ owner David Bonvillain stresses the importance of hiring the right people and fostering long-term employment through extensive training and internal promotion. “It’s important with any sustainable business that you have a team that you can trust and rely on,” he says.

If your turnover rate is high, you may want to explore ways to reduce it and evaluate your hiring processes while you’re at it.

I can speak from experience. Taking the time to hire the right team, besides having significant financial and security advantages, can make all the difference in your ability to produce high-quality products, make deadlines, grow your business and enjoy work.