Building a Great Operations Team in the Cannabis Industry

The cost analysis of employee turnover and what it actually costs.

Interview with Jamie Seeker, Founder of Seeker Solutions, a cannabis operations consultancy.

Is consulting for cannabis businesses any different than consulting for mainstream businesses? Why/why not?

Of course, every industry has their own unique characteristics that you need to be mindful of so there will be differences specific to the cannabis industry. However, it’s not as different as you may think. We approach the core business philosophies the same as we would any client we work with regardless of the industry. For example, my process for creating a budget will be the same approach: using our same templates, following the same steps, whether the business is in recreational sports, a dental practice or selling cannabis. There will be a revenue source (a product or service) and expenses (cost of goods, labor, etc.) and target margins we will define in the process. Where the differences lie are factors such as industry averages for these margins, seasonal considerations, legislation, or in this industry public perception, all impacting the financials.

When it comes to employee retention in the cannabis industry can you give me 5 keys, and explain them, and how can a cannabis business implement them?

In no particular order of importance:

  1. Hire someone for their values, potential and professional goals; train them to build their technical knowledge, skillset and to fill company needs.
  2. Pay your employees enough to take the issue of compensation off the table.
  3. Give employees the resources, education and support they need to do their job successfully.
  4. Build trust by encouraging problem solvers, not by employing mindless doers.
  5. Provide a healthy work/life balance

Research industry averages for wages and evaluate where you fall into that, being mindful that investing in your human capital can pay exponential dividends when done right. Set clear expectations using SMART (Specific, Measurable, Attainable, Realistic, Timebound) goals and hold employees accountable using data not emotion. Make sure that they have the tools they need to do their job. When systems are constantly down and they are having to spend the majority of their time trouble shooting because of inefficient or outdated systems, they become frustrated and all of the wasted time lost in the inefficiencies go to your bottom line. When you experience unfavorable behavior, we call those the symptoms of the problem. They are the indicators that let us know something is up. Successful businesses get to the core of the issue, the actual problem causing the behavioral symptoms that lead to underperformance. Although it is easy to assume underperformance is the employee’s failure to meet expectations, the core issue may be systemic and you as the business leader may need to take responsibility for it. Remember, employees don’t quit jobs, they quit managers. This is a new industry, so be willing to learn.

Talk about some non-traditional strategies cannabis owners can use to keep employees?

By adopting and defining a company culture of empowerment, trust and collaboration, you can rest on those values to implement some pretty fun employee benefit strategies. For example, here are a few that we’ve implemented here at Seeker Solution, straight from our culture guide (ideas provided by AmeriSource HR).

In our company we only have 2 rules:

  1. Be respectful, considerate and kind, even when you disagree.
  2. 2. Always act in Seeker Solution’s best interest.

Because we relentlessly pursue these two rules and a company, we are able to adopt a few of these non-traditional strategies to illustrate examples of how we follow them.

We don’t have an expense policy: Imagine you are spending your own money when you spend company resources. Just like you would for yourself, you’d be price conscious and not book unreasonably lavish accommodations. You’d look for the best value in any purchasing decision and use good judgment.

We do not have a PTO policy: It is awkward having to ask a manager permission to take time off. We don’t clock you in and out each day, so why should we track days off? All we ask is that you coordinate time off with your clients and your team, so they can continue to function and needs will be met while you are away.

Taking too little time off is just as damaging to Seeker Solution as taking too much. We all need to recharge and reconnect with loved ones, so don’t let the lack of a PTO policy discourage you from taking a well-deserved break.

Flexible work schedule: The nature of this position is based on giving employees the freedom to balance the time they spend in their personal and professional life. Although company guidelines dedicate 2 hours per week per client, you are given the final say in scheduling in order to meet your client’s needs and maintain a healthy working relationship. Therefore, your time spent with clients is left to your discretion with the ability to schedule around foreseeable holidays, vacation, and personal plans.

Talk a little bit about the cost analysis etc. of having to replace employees?

There are a lot of studies out there that can give you actual statistics on the cost analysis of employee turnover and what it actually costs. I can talk about the process and how to find it and the number of factors that play into it such as lost productivity, replacement costs, training days, salary/benefits saved, etc. But what it comes down to no matter how you slice it is it costs your company on average between 50-70% more per year to replace employees. For some companies, that number is in the thousands, others in the hundreds of thousands or even millions. At the end of the day what you need to know is employee retention will have a direct impact on your bottom line. You must dedicate company resources to keep your current staff, or you will be spending those resources anyway in replacing them.

Are you in favor of annual raises or profit sharing etc.?

Yes. The cost of living increases every year and it’s a good show of faith to account for that as a minimum for employees. Profit sharing can cultivate a sense of buy-in for the team, where the company is profitable so we are all profitable. It’s a great alternative to company bonuses that has the potential to foster entitlement vs. black and white defined profit sharing metrics.

When you begin losing employees what would your advice be to a cannabis business owner?

Take a look in the mirror and start talking to your current employees to get a pulse on what’s going on. Reflect on events leading up to these departures and see what part you played in it. In the end, you can only control yourself and there are always external factors that can impact your employees’ decisions. Take responsibility for your actions, improve where you can and move on.

What are your thoughts on employee training programs?

Employee training programs aren’t just about retention as we have been discussing. It’s also about improving their skills and abilities, and ultimately your bottom line. When employees are more efficient, they are more productive, delivering products/services faster. Accelerating this process will generate revenue at a faster rate, allowing you to earn more in a given time. In addition, it will also save you in expenses. By learning and growing in your craft, you save the company in labor (one employee takes 2 hours to complete a project and another 30 minutes, it increases project profitability). When employees experience growth and see continuous improvement in their performance as well as the company’s, they have an increased job satisfaction as well. My thoughts on employee training programs: an investment worth pursuing with the potential for huge ROI’s.

Any last advice for retaining employees, growing your business etc…and WHY IS IT VITAL FOR BUSINESS OWNERS TO TREAT, RETAIN, AND TRAIN THEIR EMPLOYEES…..

Growing your business is hard. Business owners must be experts not only in their profession but also in all areas of their business operation. The best advice I can give is don’t go at it alone. Surround yourself with accountability partners. They can be as informal as a spouse, respected colleague, mentor or friend. It can be as structured as an operations manager or consultant like Seeker Solution. Whatever you do, make sure you have a support system so you don’t face your obstacles alone.

Next, focus on your bottom line. If you aren’t making money, your company will eventually close its doors. So, you must build a sales funnel. This is the most effective way to help you scale your business and grow successfully, so make this a top priority.

Then rely on your team and learn to delegate. All of our clients at one time or another have expressed that they just don’t have enough time. We don’t subscribe to that way of thinking. Everyone has the same amount of time in the day and we are in control of how we chose to spend every minute of our day. Chances are you need help with time management, prioritization and delegation (or letting go). Focusing on this will build trust with employees and make you more productive – 2 heads are better than 1!

Also important, focus on your customers. They are your whole reason for being. You provide a solution to meet their needs so make sure that you do whatever it takes to continue doing that. Customer loyalty is the easiest way to build that pipeline we talked about earlier and just as it takes less resources to retain current employees, the same goes for customer retention. Implement effective strategies to engage and move your customers from casual to committed to connected and watch your company grow exponentially. (Hint: your employees are a big piece of the success of this customer puzzle!).

Tell us a little bit about your professional background?

Add: Working at a non-profit during the recession was the ultimate boot camp for operations management. We were faced with having to do a lot with a little. Dwindling resources, added responsibilities. It forced us to focus on efficiency and doing what it takes to get the job done. It was a make or break situation and everything we went through during that time helped prepare me for what I do today. It was hard work but it showed me what I am capable of.

How/when/why did you enter the cannabis field?

Our vision is to provide expert assistance in Strategic Planning, Training & Development, Finance, Marketing, Human Resources, Operations and Process Management to partner with business leaders from the burden of managing these organizational operations alone. One of our business partners asked if we would ever work in this industry, which turned our focus on to it. We decided to get into this field this year because it is so new to the US and these business leaders fit our ideal client: those looking to legitimize their business and put healthy practices into place to lay the foundation for a successful operation.