The True Cost of Hiring a New Employee

In the cannabis industry, hiring is typically about values like reliability, personality, and fit within the company culture. While these traits are important, a business must also see hiring a new employee as an investment. Finding, hiring, and training the correct employee can cost a lot of money. However, if done with care, the employee’s contributions to the company will quickly exceed the cost to hire. It’s very useful to develop an understanding of the true cost of hiring before embarking on the recruiting process.

Recruiting and Advertising

You’ll never hire a new employee if no one knows you have a job available, which is why money spent on recruiting is one of the most important expenses in the hiring process. Fortunately, the cannabis industry has a bit of an advantage because it’s a fast-growing field that a lot of people are interested in. However, just because a candidate wants to work for you doesn’t mean you want the candidate on your team. So it’s still important to reach a large pool of potential employees to ensure that you are finding ones that have the skills, experience, and personal characteristics to make them outstanding members of your team.

Many of the people who apply for positions in the cannabis industry are younger and tech savvy. Their first move when looking for a new job is to hunt through online job boards on sites like Monster, Indeed, or LinkedIn. But the competition on these sites is stiff. An investment in a well-written ad or job posting that stands out and represents the professionalism of your company is critical. If you’re hiring regularly, it’s not unusual to spend $1,000-$5,000/month to ensure you have qualified candidates flowing into your screening process.

Training

According to Training magazine, the average business spends about $1,200 on training per employee per year. Until an employee is fully trained, you can expect them to be far less productive than their equally paid peers. And once they are competent, it’s important to continue to invest in training so they remain challenged, engaged, up to date, and ready to take on levels of increasing responsibility.

Streamline your onboarding process and training with the Cannabis Industry Institute’s high quality and affordable, online, onsite and custom courses. Protect your business with our definitive Metrc training course, It Doesn’t Have to Be Difficult. Become MED-certified in the state of Colorado with our MED-approved Responsible Vendor Training. Or take your pick from our full course offerings…

Benefits

When determining the financial impact of a new employee, it’s easy to focus on their wage or salary and overlook employee benefits. Depending on what your business offers, you should consider the following:

• Health insurance
• Retirement contribution
• Paid-time-off
• New equipment

And a variety of unforeseen benefits that come with regular business practices. All-in-all, there’s a lot of extra money to be spent bringing on new employees. Benefits often run as high as 25% of an employee’s wage or salary.

Adding Up the Costs

When you factor in recruiting, interviewing, training, benefits, extra pay for employees covering for an open position, management time to hire and train, hiring a new employee can cost as much as their first year’s compensation. And since many of the expenses aren’t readily apparent, it’s easy to underestimate the cost of hiring.