The Costs of a Bad Hire in the Cannabis Industry

costs of a bad hire in the cannabis industry

In the fast-paced cannabis industry, every second counts. Therefore, hiring the right cannabis talent the first time around is crucial. In the growing industry, the costs of a bad hire will exacerbate your current challenges. There are many verticals within the cannabis industry, so taking quality time to ensure you make the best talent selections can be challenging. However, the time spent executing a sound hiring process is well worth it.  

With over 420,000 cannabis jobs and growing, many individuals are entering the industry. Yet not all candidates are matched up with the right companies or roles–as with all other industries. The war for talent in the cannabis industry may influence quick or uninformed decisions, but often times that leads to the revolving door issue. The cost of hiring an employee is expensive, but the cost of a bad hire is far greater. And because the candidate will be a better fit at another company, it’s a waste of time and resources for both parties. Let’s take a look at the costs of a bad hire and then get into how to avoid a bad hire in the cannabis industry.   

bad cannabis hire losing time and money

Losing Money & Time 

How much money are you spending to search for and hire a new employee? Advertising, resume reviews, screening applicants, performing background checks, and holding interviews for a cannabis job costs, on average, $4,000. The average cost of a bad hire is 30% of that individual’s salary. Additionally, it costs a company an average of $14,900 for a single bad hire. However, that number can shoot up to as much as $240,000, depending on the role. If your company continues to make the wrong decisions in filling an open position, the financial burden of the process will pile up.   

The costs of a bad hire in the cannabis industry doesn’t stop at money. Time lost will also factor in when you find the wrong person for a cannabis job. It takes an average of 10 weeks to terminate the bad hire and another 6 weeks to replace them. In total, cannabis companies have lost an average of 4 months per bad hire. As the cannabis industry moves at a brisk pace and every second is crucial, nobody has 4 months to spare. The time it takes to recognize a bad hire and move forward with the decision to find a replacement will also rack up the quality time lost. The time and money you lose are significant, but they aren’t the only things to consider for the hiring cost of an underperforming employee.  

costs of bad hire in cannabis low morale

Low Morale & Decreased Productivity 

A bad hire in the cannabis industry can be detrimental to your staff’s morale. With a bad hire on your team, every other employee must pick up the slack. This may lead to working extra hours to stay on target or devoting more time to trying to coach a bad hire to a place of solid productivity. There is a learning curve with new cannabis jobs, but with the proper training, one-on-ones, shadowing, and progressive managerial efforts, the average employee typically starts showing progress and comfort within the role around 30 to 90 days. Additionally, with low cannabis staff morale due to a bad hire, your team may lose confidence in your decision-making abilities. Looking at the costs of a bad hire, low morale may be the one with the most significant impact.  

It’s no surprise that with a bad hire on your cannabis staff, productivity will take a hit. One study shows that managers spend 17% of their time supervising employees that are underperforming. Not to mention, the process of replacing a bad hire takes up more time your staff doesn’t have. The goal of replacing the underperforming cannabis employee diverts your team from fully focusing on your main company goals and deadlines. Furthermore, your work culture may suffer—and you may even lose clients–with more time lost and increased stress.   

costs of a bad hire in cannabis

More Potential Damage to Consider for the Cost of a Bad Hire 

The cost of hiring employees is already expensive, but the cost of a bad hire is far greater and goes beyond what you may expect. According to a Robert Half survey, 64% of senior managers believe the negative impact of a bad hire is much worse now than a year ago. Let’s take a look at some of the other costs of a bad hire that you may not have been considering:  

  • 20% of senior managers believe it increases stress on supervisors  
  • A manager spends 10 hours on average coaching underperforming employees  
  • A bad hire may foster negativity in the work environment leading to motivation loss  
  • Your employer reputation and/or company reputation will likely take a hit  

Every 3 in 4 senior managers from the Robert Half survey admitted to making the wrong decision when hiring a candidate. Our cannabis staffing team came up with a list of essential tips on how to avoid picking up a bad hire for your company.  

avoid a bad hire in cannabis

How to Avoid a Bad Hire in the Cannabis Industry 

Define the Prerequisite Skills Needed for the Cannabis Job 

For the cannabis job description and during the interview, define the prerequisite skills needed for the role. Clarify what skills will be gained through training and which skills they’ll need from day one. Also, include any necessary certifications or degrees required for the role. Additionally, you may want to verify the candidate’s certificates and degrees on their resume. Make the cannabis job prerequisite skills clear and mention them often.  

Be Specific About Soft Skills & Company Culture 

Soft skills—interpersonal abilities/people skills—may be interpreted differently from company to company. Therefore, it is best to break down the soft skills required for open cannabis jobs. You can even give examples of the soft skills in action for a particular role. For example, “effective communication skills” can be defined as someone who can compose comprehensive and easy-to-read team emails and convert technical jargon into simple copy. Soft skills go hand-in-hand with your company culture, so take time to define it well. Looking at your company’s values, ethics, and environment will help you define your company culture. 

Do Not Rush the Hiring Process 

The chances of hiring the right candidate are higher if you do not cut corners in the hiring process. Even though your team may be spread thin, the cost of a bad hire is not worth it. If you are in a tight spot, you may want to consider hiring temporary employees to alleviate stress and the workload. A quick full-time hire might seem like the necessary choice, but it may ultimately lead you back to square one if you hire someone not fit for the open cannabis job.   

Ask More Behavioral Interview Questions 

Behavioral interview questions will help your team get a better picture of how the candidate will perform in the cannabis job. By asking them about how they performed in past situations, you can get a sense of their experience, knowledge, and competencies. Common interview questions are fine, but behavioral interview questions will allow you to dive deeper into the mindset of the candidate, as well as their tendencies. Check out the top behavioral interview questions for the cannabis industry.  

Test Their Skills for the Cannabis Job 

A candidate’s report of their proficiency doesn’t have an objective scale. With a skills assessment, you can see if the candidate has the skills needed for the cannabis job. Also, you can gauge the level of the skills they have. You can create an online skills assessment for your open role—some of these platforms also have the option for video questions. Additionally, you can create a short assignment that can help you gauge their proficiency in certain areas. For example, you can create a sales scenario where the candidate must form a strategy and a sales pitch. However, be mindful of their time and do not make it too long.  

cannabis staffing agency support

Consider Using a Cannabis Staffing Agency 

A cannabis staffing agency can focus on the task at hand so you can continue running your business. The right staffing team will take the time to learn about your company goals, culture, and what you’re looking for in the role in terms of skills and experience. Therefore, cannabis recruiters can develop a shortlist of cannabis candidates who are able to fill the open position well. Exemplary cannabis recruiters will also vet each candidate presented and ensure that their goals align with where the organization is and where it’s going. Not to mention, a cannabis staffing agency will have a deep network of talent to choose from, as well as the inside scoop of what’s happening at various companies. If you want more information on cannabis staffing solutions, contact us today 

More Cannabis Industry Insight

2022 Tri-State Cannabis Salary Guide

Salary guide download for the Tri-State cannabis market
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2022 Cannabis Industry Salary Guide

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