A flood of new state laws coupled with changing consumer sentiment have made cannabis among the fastest growing industry sectors in the U.S.
Consider for example these metrics from FitSmallBusiness:
As the number of cannabis businesses and their operations multiply and competition among them increases, owners and middle managers face a set of increasingly more complex challenges. Many of those challenges fall on the shoulders of human resources.
Depending on their size and operating structure, different cannabis businesses face different challenges. In general, however, the lion’s share must manage at minimum the following 7:
Faced with this complex web of challenges, an increasing number of businesses—including those in the cannabis industry—are outsourcing some key functions to professional agencies with deep expertise and knowledge in human resources management. Specifically, they are using the services of professional employer organizations (PEOs).
This is how the Society for Human Resource Management (SHRM) defines the nature and role of professional employer organizations:
“A professional employer organization (PEO) is an organization that enters into a joint-employment relationship with an employer by leasing employees to the employer, thereby allowing the PEO to share and manage many employee-related responsibilities and liabilities. This allows employers to outsource their human resource functions, such as employee benefits, compensation and payroll administration, workers’ compensation, and employment taxes.”
An experienced professional employer organization can help your business streamline human resources operations, boost employee engagement, attract and hire a more diverse and more talented workforce, increase security and more effectively ensure compliance with state laws. In addition to those qualitative advantages of outsourcing HR functions to a PEO, there are several quantitative benefits.
According to the National Association of Professional Employer Organizations (NAPEO), for example, businesses that partner with professional employer organizations realize the following 4 benefits:
Your cannabis business has many objectives, everything from polishing your brand to increasing awareness and outstripping the competition. But the principal goals are still to become more profitable and grow more quickly.
When you work with a PEO, you’ll be freed up from the host of human resources concerns and problems that inevitably confront every business. That additional time will allow you to focus on activities closer to the core of your business, things like product development. Said differently, working with a PEO will allow you to focus more on what your business is all about. Specifically, businesses that outsource to a PEO grow from 7% to 9% faster than those that don’t.
Studies show that it costs as much as 25 times more to acquire a new customer than to retain an existing one. It’s one of the reasons businesses invest so heavily in strategies and programs designed to increase employee satisfaction and engagement.
An experienced PEO will improve your hiring process and employee retention strategies, ensuring that the employees who join your cannabis business are the right fit for your company—and that they’ll stay with you rather than move on to one of your competitors. That ensures increased profitability, productivity and continuity. According to NAPEO, companies that work with a PEO decrease employee turnover by almost 15%.
Because of their deep experience in human resource management, PEOs are able to do the same things in house HR teams do, but more efficiently and at a substantially lower cost. Those are savings you can invest back into your cannabis business to fund other critical needs. On average, to be specific, a PEO will reduce human resources administrative costs by more than 35%.
According to Medium, approximately 90% of new business startups fail. They fail for a variety of reasons, from ineffectual leadership to hiring the wrong people, weak cashflow and poor management. A reliable PEO can help your business meet all these challenges. For that reason, the odds of companies which work with a PEO going out of business are as much as 50% lower compared to those which don’t.
Every cannabis business is different, of course, and only you can decide whether partnering with an experienced PEO is the right decision for yours. That said, the lion’s share of businesses which outsource HR functions to a PEO reduce costs, increase profitability, improve employee engagement and retention, grow more rapidly and succeed.
To learn more about the ways our human resources and payroll services can help your cannabis company achieve its principal business objectives and grow, contact us today.