How to control labor costs, overtime in marijuana business

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, How to control labor costs, overtime in marijuana business

Labor is one of the biggest expenses in any cannabis business.

Cannabis companies are hunting for ways to tighten their belts during the economic downturn, and executives are looking at personnel as one area where savings can be found.

Businesses wanting to save money on labor costs might consider:

  • Running as lean of a team as possible by relying on versatile, productive workers.
  • Retaining the good talent they’ve worked hard to find and develop.
  • Keeping a lid on overtime and other excess payroll expenses.
  • Keeping employees healthy to avoid lost production.

“These little bits of labor add up over time,” said Keegan Peterson, founder and CEO of Denver-based Würk, a company that provides payroll software and a human resource information platform.

Lean and Mean

Peterson advises cannabis retailers that want to save on labor to schedule the most productive employees to work shifts where they will have the biggest impact.

For example, a salesperson who can upsell a client should work during the company’s busiest hours.

Retail data shows that in some markets, cannabis consumers are shopping less often but purchasing more each time they visit a store.

A savvy business manager would put that high-performing sales associate on the floor when the most customers are visiting while encouraging that salesperson to steer consumers toward higher-value products.

During tough economic times, Peterson said, “each person has to make a bigger impact across the organization.” The same thinking can be applied across the industry, including in cultivation and extraction operations.


Employee Retention

Losing good employees who require time and money to replace can be a significant drain on a company’s resources.

At Portland, Oregon-based Chalice Farms, a vertically integrated cannabis company, John Ford, vice president of customer experience, is highly focused on retaining the business’ strong employees.

“In the middle of this epidemic, you can’t afford to lose good talent,” Ford said. “We’ve worked very hard to make sure our teams are happy.”

The company has made investments in its employees, including buying lunches, offering more cannabis samples and increasing how much paid time off they’re eligible to earn.

Losing those employees with institutional knowledge and training “takes so much time to replace,” Ford added.


Trim the Fat

Another way for cannabis companies to save cash is to get rid of “labor waste.”

That means limiting the amount of overtime that’s paid. Paying an employee time-and-a-half can add up.

“If someone doesn’t need to be in the office, then let them be at home,” Peterson said.

Make sure employees aren’t clocking in or out of work late or early. Companies can set up software systems that allow employees to check in or out only according to a predetermined schedule.

For example, if the worker is scheduled to come in at 8 a.m. and leave at 5 p.m., the system won’t allow that person to clock in a half-hour early or out a half-hour late.


Shift Control

Another way to prevent lost production time is to make sure everyone stays healthy and feels comfortable coming to work.

A company that experiences a COVID-19 outbreak at work will have a major disruption to its operation in the form of lost revenue and workers who don’t feel safe.

In response to safety concerns, managers at Full Spec, a Seattle-based cannabis brand, are spacing out shifts for employees in the grow rooms by extending hours into the evenings and on weekends, said Marcus Naramore, director of business development.

“We’ve created an environment where risk is minimized,” Naramore noted.

Würk’s Peterson recommends grouping employees into pods that work together in staggered shifts, so if someone does get sick, the illness won’t spread to the entire workforce.

“We’ve got to rethink how we’re deploying (our workers,)” he said. “You’ve got to keep your doors open for your business.”


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