What are the benefits of using a staffing agency? There are many challenges to operating a business in the post legalization cannabis space. The most common challenge is finding good, quality employees from the executive level to the boots on the ground employees. Another common hurdle is finding the right employee at the right time for the exact project at hand. Cannabis businesses face many ebbs and flows with their labor needs, which is just one part of the cannabis industry. For example, if you are a cultivator, you typically have spikes in labor during harvest and post production, but once completed, the labor needs will ramp back down until the next harvest.
Finding a staffing agency that understands these ebbs and flows to partner with can ease many labor headaches and challenges that a company might face. GreenForce focuses on the cannabis industry and with more than 50+ years of combined cannabis experience between the executive staff, GreenForce, understands the nuances of the cannabis industry, providing the best solutions.
Unemployment was 3.6% in October of 2019. Low unemployment rates make finding the ideal candidate a much more challenging process for your company. This is due to the fact that individuals looking for work are in a position to be selective of who they want to interview with and accept job offers from. Employers are under the microscope and being interviewed by the candidates. Companies need great fringe benefits, take more time connecting with candidates on a personal level, as well as engaging through multiple channels including, texts, phone and digital. It takes more time to make a hire, which causes a loss of productivity that equates to less revenue.
One study by Faces Human Capital Management, finds that the cannabis industry has around a 60% turnover rate. This means a lot of hiring and recruiting costs in finding the ideal long term employee.
Cost of Hiring an Employee
Depending on the study, hiring an employee costs around $4000 and takes about 40 days. This does not account for the costs associated with training a new hire, which can be over $1500 per employee according to Training Magazine.
Let’s break down some of the burdens that a staffing agency can alleviate:
- Payroll Taxes – When a company hires an employee for $15/hr, that employee costs significantly more that $15/hr to the employer. Depending on which state your company is located, one can assume that on top of the hourly wage, your company will be responsible for about 20% more in payroll taxes.
- Affordable Care Act – If you have employees working on average 32/hrs a week or more, as an employer you must offer subsidized health insurance or face a $2180/employee penalty each year.
- Paid Sick Time – Most states require employers to offer paid sick time to their employees.
- Other Benefits – Paid vacation time, 401(k) match, and other fringe benefits
- Staff Costs – Hours spent scheduling employee by executive staff and hours spent hiring and recruiting for the open position.
A $15/hr employee will actually cost a company $18/hr when payroll taxes are included. This cost per employee is even higher when the time spent scheduling, onboarding, handling benefits, human resource issues and other employee related activities are taken into account and the salary costs for an employee to administer these duties.
Three Different Ways to Utilize a Staffing Agency
- Direct Hire / Headhunting / Recruiting A company calls an agency with a specific staffing need, i.e. CPA, Director of Sales, Budtender, Office Manager, etc. If you were to choose GreenForce, our Recruiting Manager will speak with a representative of your company to find your more about your specific needs, your company culture, what your ideal candidate looks like, in order to recruit and find the best fit. There is no cost associated with this search. If a candidate is hired, then a recruiting fee will be invoiced. A reputable staffing agency will offer free recruiting and replacement, if the hired candidate does work out or is fired within “X” number of days.
- Temp to Hire An employer hires a staffing agency to provide labor for a specific job to see an employee is going to be a good fit for the company. This hiring path allows a more risk free way to find a great employee. If a potential employee does not work out then the company does not need to worry about paying unemployment or deal with the hiring process, instead the staffing agency can plug another candidate into the slot immediately. If a candidate fits well, then a transition fee is usually implemented and the cost is determined by a variety of formulas depending on the client service contract between the company and the staffing agency.
- Labor when you need it The biggest advantage to using a staffing agency is that a company can have labor when it is needed. There are many fluctuations in the cannabis industry, if a company finds a great worker, but then has a labor lull for a couple of months or even weeks, it’s possible the employee found another job. Good employees in the cannabis industry are hard to find and tend to find work quickly. Even if your company has great employees to do the job, they can be overworked or encounter burnout if they have to work too much overtime, thus losing productivity from these employees along with the risk of losing them. Hiring temporary labor to alleviate this labor burden can help the morale of your permanent team.
Other Advantages to Utilizing Staffing Agencies
One of the major advantages to using a staffing agency is the savings that a company can acquire from administrative costs. This includes payroll taxes, time spent scheduling, unemployment payments, cost of offering health care due to the Affordable Care Act, etc. A company can alleviate these burdens by having the staffing agency handle these costs.
Many cannabis companies are currently hiring independent contractors for their post harvest labor needs. However, many would believe that these employees are wrongly classified as independent contractors. In Oregon for example, independent contractors are determined by these tests:
- Independent contractors determine their own working hours and schedules.
- Independent contractors are also supposed to be able to work independently and determine how the work should be accomplished.
- Independent contractors submit an invoice to the company, versus getting paid by the hour or by the piece.
- There is a written contract between the company and the independent contractor,
- Independent contractors are supposed to have their own workers comp insurance in case of workplace injury.
- The penalties a company can face for mis-classifying an independent contractor can be financially cumbersome. Businesses that do not comply with employment law could be subject to penalties from multiple state agencies. These penalties include additional tax assessments, financial penalties and interest, suspension of licenses, civil penalties, and incarceration.
Finding a staffing agency to partner with can ease many labor headaches and challenges that a company might face. GreenForce focuses on the cannabis industry and with more than 50+ years of combined cannabis experience between the executive staff understands the nuances of the cannabis industry, thus providing the best labor solutions.