Marijuana Business Magazine October 2019

Marijuana Business Magazine | October 2019 88 A cannabis company’s perk package could mean the difference between attracting the employees and executives needed to grow the business—or losing that talent to industry competitors. Compensation planning forces cannabis companies to take a strategic look at their hiring needs, develop a comprehensive approach around payroll and create incentives to reduce employee turnover. Large, mainstream companies such as Target and Anheuser-Busch dedicate entire positions or teams to figuring out what to pay workers and what benefits to offer. Smaller companies typically tack those responsibilities on to their human resources or financial operations staff. Others work with third-party recruiting firms such as Viridian Staffing, a cannabis recruitment firm in Seattle. Compensation and payroll are fre- quently companies’ most significant ex- pense, Viridian CEO Kara Bradford said. “We’ve seen companies rise and fall based on whether they’re able to pay employees or not,” Bradford added. “Designing a compensation model is really a combination of workforce planning and deciding what you’re going to pay those people who you need to run your business. That should be at the foundation of your planning process as a company.” KEY FIRST STEPS Bradford said a first step for companies wanting to develop a pay strategy is to map out every position needed to run their businesses. For retail companies, that might involve figuring how many budtenders are needed to properly cover a company’s square footage. Also, man- agers will be necessary to oversee staff, and buyers will be needed to acquire inventory, and so on. From there, companies can classify the various positions in terms of whether the workers will be needed on a full- or part-time basis and be exempt or nonexempt from overtime and other rules outlined by the federal Fair Labor Standards Act. Those decisions help company executives decide: • Which employees can be paid an hourly wage. • Who should receive salaries. • Which employees should receive other benefits, such as bonuses and health care. “You have quite a bit of setup before you start doing the research and pulling the pay data,” Bradford said. After outlining your workforce needs and determining how to classify the positions, employers can determine whether they want to have the same broad compensation model for all their employees or different ones tailored according to the employee’s role. “For example, you may have one model that is designed specifically for your office workers—people that are not plant-touching. And then for the technical positions in this industry—your extraction and cultivation positions—maybe you have a different compensation guide. If you are a vertically integrated company, you might have different categories for your retail workers versus your producer- processor staff,” she said. A pay structure that includes a commission could make sense for retail or sales workers but might not be the right incentive for those who handle administration functions in an office. Profit and equity sharing would likely be essential for high-level executives, while lower-level staffers might appreciate flexible shifts, a small raise after a probationary period or paid time off. CALCULATING PAY Salaries and hourly pay are typically the largest part of an employee’s compensation package. But calculating Compensation plans guide cannabis companies in developing a comprehensive look at their payroll needs and strategies. Businesses throughout the industry can create perk packages designed to lure the top talent needed to grow their companies. Compensation plans can also help reduce turnover of existing workers. Below are some considerations when developing compensation plans: • Companies need to identify all the job positions required to run their businesses and how best to utilize those staffers before determining what each worker should get paid. • Calculating a position’s base salary will require looking at available payroll data, considering a candidate’s experience and being ready to offer above-average pay to top talent because of the current candidate-driven job market. • Poaching talent from other industries requires developing compensation plans similar to what other industries offer, including bonuses tied to qualitative key performance indicators, or KPIs. • Offering long-term incentives such as profit-sharing and a 401(k) match on a vesting schedule could be components of a compensation plan that keeps existing employees from taking their knowledge to competitors. Kara Bradford Courtesy Photo Perfecting Your Pay Plan