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Combat Cannabis Industry Turnover Rate

Why do employees leave their job? It’s a question that plagues businesses both within the cannabis industry and across the greater workforce. They report frustration with compensation, feeling undervalued, and a LACK of opportunity for advancement as top reasons for leaving.

Losing people is never easy, but it’s even harder when the departing person is an executive or leader. Not only does it create extra work for you and the other members of the team who have to step in to fill the void, but it can also be damaging to the morale and “optics” of the company, as a whole.

“After all,” the rest of your team is thinking, “if someone that important was willing to quit, maybe we should start looking around, too…” And yet, DESPITE all your best efforts, great people will leave your company. Whether they leave to start their own venture or they get poached by a better-funded, better-positioned competitor, they will leave.

It’s just a fact of business. So what do you do? How do you handle things when a key person quits? Although these are some of the most common motivations for quitting, the decision likely results from a combination of many factors. With over a third of United States workers considering quitting their job at any given time, it’s a problem that needs serious addressing to improve.

Headset, a cannabis industry data platform, reported a 62% turnover rate for retail cannabis employees in Colorado. With the annual rate of turnover across the workforce reported at 44%, the cannabis industry has a notably bigger PROBLEM to address.

Every business’s main goal is profitability. So, when you hear professional development program benefits like “team morale” and “employee loyalty,” you might write them off as “nice-to-haves” that aren’t really essential to your company’s bottom line. But, you’d be wrong.

The right professional development program returns much more than an intangible ideal since it reaps real monetary advantages for your organization. Remember that the next time you find yourself asking, “Is professional development really worth the cost?”

According to Talent Management & HR, they break down the answer for you and show you how to gauge the impact of management training on your company. The payoff for professional development is RETENTION and you can see that replacing an employee is a costly enterprise:

  • The average expense of replacing an entry-level worker is 30 – 50% of their annual salary.
  • For mid-level employees or managers, it’s about 150% of their annual salary.
  • And for high-level individuals, you’re talking 400% in replacement costs.

These numbers stem from a few issues:

  • New employees are often brought on board at a higher salary.
  • Every new employee requires training.
  • Your leaders lose work time searching for, interviewing, and training candidates.
  • Your company loses productivity as a new employee learns the ropes.
  • Companies often lose business opportunities in the interim of a key leader being replaced.

As a business, when you FAIL to retain employees, it hurts your profitability. An investment in professional development, however, helps you protect that bottom line. If employees feel more engaged in their work as a result of professional development and training that’s provided, they’re less likely to get bored with the position and leave.

An investment in training also shows your people that you’re invested in them as individuals – which makes them more inclined to stay.


What Causes Turnover In The Cannabis Industry?

While the cannabis industry faces many of the same universal reasons for turnover, there are circumstances specific to cannabis that perpetuate the revolving door pattern. Unrealistic expectations of the industry contribute to the DISCONNECT, specifically in hourly retail positions. Some cannabis enthusiasts assume that certain positions are more relaxed than those outside the industry.

Cannabis is filled with incredible people who love what they do – and they take their jobs seriously. The “lazy” cannabis stereotype (which is largely incorrect for most consumers) doesn’t apply to cannabis professionals.

Any jobseeker that looks to the cannabis industry for an “easy” position is going to be in for a surprise. In addition, some hold unrealistic expectations about the growth and culture of the industry. We see employees in our space doing a lot of “dispensary hopping,” working a few months here and there for various cannabis companies BEFORE moving on.

There is some very consistent feedback on why this happens and continues to happen through entrance and exit surveys. There are still expectations related to extreme growth both in compensation and position within an unrealistic time frame, even expectations that it is acceptable to consume cannabis while on the job.

As so many folks join our industry for the first time, we have a duty to educate and create clear expectations that we are a legitimate business and hold them to a higher standard (pun intended)! The media has at times portrayed an unreal expectation of day to day cannabis industry work.

If employers aren’t clear about the details of the role during the interview process, it can potentially lead to a disappointing experience for the employee, causing the turnover. Giving candidates a REALISTIC preview of the role – the good and challenging aspects – is key. The cannabis industry has a lot of incredible positions available in it that are meaningful and fulfilling.

Guiding prospective hires by first understanding what it is they’re looking for is essential to fit the right candidate to the right position. While unrealistic expectations do contribute to turnover within cannabis, businesses have the biggest opportunity to combat the issue.

According to Talent Management & HR, the cost of turnover adds up fast, so let’s play a game called “fun with math”… is a business loses 12 employees in one year, averaging one per month:

  • Six (6) of these employees were entry-level, with an average salary of $40,000. It costs, on average, $16,000 to replace each employee at 40 percent of their annual salary… for $96,000 total.
  • Four (4) of these employees were mid-level, with an average salary of $80,000. It costs, on average, $120,000 to replace each employee at 150 percent of their annual salary… for $480,000 total.
  • Two (2) of these employees were senior, with an average salary of $120,000. At four-hundred percent (400%) of their annual salary to replace them… you’re looking at almost $1 million, specifically $960,000.

Add everything up and you’re looking at costs of over $1.5 million to replace just 12 employees. Numbers seem high? Fair enough, some organizations that estimate replacement costs to be lower.

The conservative estimate is pretty bad, too. So let’s cut the cost of replacing all of those employees to the lower end of what it costs to replace an entry-level employee – 30 percent – across the board. Here’s how it breaks down:

  • It’s going to cost your company $72,000 to replace the six (6) entry-level employees.
  • It’s going to cost your company $96,000 to replace your four (4) mid-level employees.
  • It’s going to cost your company $72,000 to replace the two (2) senior employees.

That means that at the absolute lowest estimated end of the spectrum – your best case scenario – you are looking at almost $250,000 as the total-cost of the turnover for just 12 employees. If your company has a quarter of a million dollars that it can just light on fire at the next office BBQ social activity, then maybe you don’t really need to invest in these areas.

But our guess is that the vast majority of companies are simply not in that position and need to realize it costs LESS to retain than it does to replace employees.


How Can A Business Combat Turnover In Cannabis?

Addressing turnover starts with the employer. By properly setting expectations, vetting candidates, and following up after onboarding, cannabis businesses can increase their chances of employees staying past the 90-day mark.

Proper placement retention starts before you even meet the candidate. To ensure you ATTRACT the right talent, start by crafting a job description that clearly outlines the requirements, expectations, and company culture.

By being as clear as possible of your expectations, you’ll attract more of the right job seekers from the start. During the interview process, uncover all questions and expectations for both parties. Interviews should cover more than just the basics, screen each candidate for a culture-fit, and invite applicable team members to interview for additional perspectives.

It’s important for applicants to research the company and know that it’s okay to ask detailed questions about what the position entails and why it is vacant in the interview process. Ask about retention, culture, and what the company VALUES. Here are three (3) tips to follow during the interview to make sure you stay on track:

  • Ask what their future career goals are to make sure they align with the company and department goals. If the candidate is hoping to advance quickly but there are no open roles within their career path or their expectations are unrealistic, be honest about the projected growth the positions will see.
  • Make sure the candidate is comfortable with the salary range and compensation package. As lack of adequate compensation is a major reason for turnover, address the situation during the interview process so there aren’t any misconceptions in the future. In addition, don’t over-promise tips, commission or promotions. Empty promises cause resentment – don’t commit to anything you’re not 100% confident about.
  • Make sure the candidate is comfortable with the hours expected. Include any overtime, holidays or additional hours the employee may be expected to work. Frustration from lack of flexibility or schedule changes not addressed well in advance contribute to employee turnover.

After you’ve made an offer that both parties agree on, plan their first day and let them know what to expect so they feel COMFORTABLE within the company from the start. Clearly outline any information your new hire needs to know upon arriving the first day, like where to park, who to report to, an on-site contact in case they have any issues arriving, and what they need to bring for onboarding paperwork.

Prepare your team for the new hire’s arrival. You want your new hire to feel welcomed. A team lunch or simple gifts like a company lanyard or shirt can go a long way for making your new hire feel special on the nerve-wracking first day.


Set Them Up For Success

Create an onboarding process that not only gets your new hire up to speed on their specific role but also INFORMS them of the company’s history, the company’s organization chart/who they report to, how the other departments operate, and any applicable information they need to know.

By clearly outlining all processes, you avoid future frustration from both the employee and employer. Ask for feedback and questions during the process to make sure they aren’t left with any confusion about the role and company as a whole. Consider incorporating a mentor or buddy the new hire can come to with any questions and incorporate time for the new hire to shadow someone with their role or within their department.


Stay On Track

Work For UsDuring the onboarding process, establish 30/60/90 day goals so expectations are defined and documented. Review these with your NEW HIRE, ask for feedback, and check in regularly (weekly) to track progress and uncover any goals that may fall behind before it’s too late.

Make sure the new hire clearly understands the goals and is comfortable with what is asked of him or her. Review the goals frequently to make sure your new hire is on track. Continually provide feedback, both constructive and positive input so both parties are satisfied.

Positive feedback is important, you want to make sure they feel appreciated in their role. Constructive feedback is important as well, as you don’t want to become FRUSTRATED with something they are doing that is fixable.

Continually ask for feedback regarding their position, your managerial style, department, and company as a whole so issues don’t become bigger problems and your new hire feels heard. Continue providing performance reviews outside of the 90-day mark so your employees can improve and provide suggestions.


Keep The Momentum Going

Supporting your employees requires offering ways for them to grow both within the company and within their role. Most employees are EXCITED about their new role during the first couple of months, but that excitement can dwindle if you’re not providing outlets for engagement.

As an employer, plan ways to keep that excitement rolling throughout their career at your company. Ongoing retention strategies are some of the most important practices you can incorporate to combat turnover. Here are some of the most effective ways to continually engage your workforce:

Offer Ongoing Training & Personal Development Courses

Those passionate about their job are eager to learn more about the industry and their position. There are various ways to offer PATHS for continued education. Bringing in an expert from the industry for a couple of hours to speak on new developments within cannabis can help educate a larger team.

Also, various cannabis training courses are available depending on the position. By offering a budget or outlet for employees to pursue these opportunities, you are improving your overall workforce expertise.

The cannabis industry business needs to be focused largely on building out our Learning and Development (or L&D) program as well as emphasizing the Talent Management process with managers. You can tie these together by training dispensary managers on succession planning and creating career paths for our team members.

The L&D Department builds out the career pathing to ensure folks understand the path between their goals and the reality of that promotion. Our emphasis is truly on building our team members to GROW and stay with us versus just having a warm body in each position.

Provide Networking Opportunities Within The Industry

Networking opportunities help foster a sense of connection within the industry. Networking events are not only great for meeting others within cannabis, but also for learning about what’s new in the industry. Networking events like Budtender Appreciation Night foster a sense of community and provide a fun outlet for your employees to engage with others in cannabis. Try sending a monthly email to employees about upcoming networking events so they can participate.

Encourage Team Building

Holiday parties and employee appreciation events go a long way in showing staff you value their work. Fostering friendships outside of the normal working hours helps build a sense of BELONGING within the organization as well. Show your appreciation by incorporating a quarterly team-building event.

Improve Your Benefit Offerings

More and more cannabis companies are offering 401(k) plans, health, dental, and vision insurance, as well as paid time off and stock options. It’s crucial your company offers competitive benefits and continues to add benefits as budgeting permits. 22% of employees leave because of the lack of benefits, it’s a valuable addition that can drastically improve employee retention.

Recognize Opportunities For Advancement

The biggest factor employees cite for leaving a position is the LACK of opportunities for advancement or promotion. Recognizing your employee’s hard work by offering bonuses and promotions will help combat turnover in the industry.


Offer Support That Goes Beyond The Role

Taking the time to continually offer assistance to your employees is crucial to the ongoing success within your business. Providing comprehensive assistance requires going beyond the role. Many of the employees in our industry are first time employees in a professional organization and are not aware of some of the ins and outs of employment.

Have the opportunity to help employees grow and offer the extra step in internal customer service. For example, so many employees do not know what a deductible is, or that you may even have an Employee Assistance Program.

Creating opportunities such as a benefits fair roadshow and explaining in full what these things are and mean, can really go a long way with our team members. We are all so busy within our space but all this truly takes is time, and isn’t our time worth higher retention and more meaningful employee experience?

Although turnover is still an issue for many within cannabis, it’s showing signs of progress. As the industry has grown in its maturity, we’ve found that turnover is becoming less of a problem. Now more than ever before, talent is entering the space with a better understanding of what to expect from a career in cannabis.

In addition, we as an industry have become better at setting these expectations during the hiring process. Employee retention comes down to taking the time to show your employees you truly care about their success.

While there’s no one-size-fits-all to combating turnover, a combination of attracting the right talent from the start, setting them up for success, and retaining talent through opportunities of engagement and advancement, you can start to combat the costly and time-consuming issue of turnover within the cannabis industry.

Let us know what you think.