The multi-billion-dollar domestic cannabis industry is relatively small with fewer than a half-million people employed. With a limited talent pool and a steep learning curve, retaining talent and your brand’s reputation among industry professionals is imperative to long-term growth and success.
Due to the fact that news in this small club travels fast, one of the most important things an employer or employee can do to retain a good reputation is to handle complicated and potentially emotional situations with grace. And there are few situations more complicated or emotionally charged than when an employee tells you they’ve decided to resign and potentially go work for one of your competitors.
Large companies have HR divisions that are generally trained and experienced in discussions of this nature, but for the smaller organizations that rely on upper management or ownership to handle these inevitable yet uncomfortable circumstances, things become more difficult.
Legal HR precautions withstanding, what is the best way to respond when an employee decides to quit their position? We discovered that more often than not, the best responses depend on the scenario.
“First, you need to understand that these are people,” said Ezra Malmuth, CEO of Atlas Edibles. “So when someone decides they want to quit, the first thing I want to understand is, why?”
Malmuth added that it’s valuable to find out if it’s something about the organization’s internal or external practices, or perhaps it’s something more personal. Oftentimes, it’s simply a bigger and better opportunity in which case it’s important to consider that your former employee may one day return with a new set of skills that someone else paid to develop.
“Of course, we don’t ask them to get into the details. But if there’s something going on and they just need a break, we try to work with our employees and say, if you need some time to take for yourself, we completely understand,” Malmuth said. “If there’s a really great relationship then we always want to acknowledge that there’s a place for them to come back when they’re ready.”
Malmuth also highlighted the importance of taking an objective look at company practices if someone is leaving because they’re unsatisfied in any way. “It’s really important that we continue to better how we engage with our employees and learn from our employees to improve the work environment,” Malmuth said. “If you start there, you tend to retain your people a lot more.”
According to Gallup, American businesses are losing a trillion dollars each year as a result of voluntary turnover. Even with conservative estimates, the cost of replacing a productive employee is anywhere from one-half to two times that employee’s annual salary. If an employee making $50,000 a year quits, you may end up spending $25,000 to $100,000 replacing them.
The cost associated with turnover makes it easy to understand why employers must examine the situations when employees have left and reflect on what might have been done as an alternative. “It’s important to look in the mirror and ask if there are things you could have done differently,” said Malmuth. “If so, be mindful of that, and think the next time how you can make these changes, and inform your managers and your team [to also] let them learn from the lessons.”
Fiscal responsibility and empathy toward employees aside, there are other instances when it simply isn’t working. “Sometimes, it’s not the right fit, and at that point, it’s better to cut ties for both parties than to try to keep making something work that’s just not working,” said Malmuth.
Another executive who agrees with Malmuth about the importance of learning why someone on your team has decided to quit is Bryan Buckley, CEO of Helmand Valley Growers Company. “You want to get a debrief of why they are leaving,” he said. Buckley added that sometimes it’s just obvious, like in the instance where he had a very talented social media manager who was still in college and got her dream job when she graduated. “You want to encourage [in that scenario], I would leave too.” You’ve helped someone achieve their dreams, and that’s a rewarding way to think about it.
In the case of a disgruntled staff member, Buckley feels that looking at the organization itself may be a useful exercise. “[In this instance] it’s always great to find out what it is. Is it something that we’re doing wrong?” Buckley said. “And if it’s something on their side that maybe you just can’t solve, or you can’t promote as fast, or whatever it may be, it is what it is.”
Although Buckley is definitely a supporter of an open dialogue with existing employees, he feels that the organization should also ensure they have a steady “pipeline” to a robust talent pool.
“Even if you just go out to a restaurant, maybe you get an exceptional waiter or waitress and they have a great personality, you just [ask them], what do you want to do with your life?” Buckley recommends giving impressive individuals your card or trading contact information so you can reach out to touch base for 15 minutes every few months.
“You never know if they’re looking for something. Even with your competitors, just have a conversation with some of them and maybe you can bring that talent over.” Buckley finds it “mind-boggling” when companies don’t have a backup plan when an important employee decides to quit.
The Bureau of Labor Statistics recently reported that between September 2021 and January 2022, an average of 4.3 million Americans quit their jobs each month. These job numbers and the costs associated with them serve as a stark reminder that employee retention and employment contingency plans should be almost as important as output and the bottom line. After all, the two are directly related.