Livable Pay vs. Minimum Wage: A Guide to Entry-Level Compensation
While mega-companies like Amazon can dangle fat salaries and bonuses to entice new employees, small- and medium-sized business must find other ways to attract new talent on the hiring front.
The U.S. unemployment rate continues to fall, and experts say we’re on track for a full recovery from pandemic-related job losses by the end of 2022. And yet, small- and medium-sized businesses (SMBs) everywhere are caught on a tightrope between too many available jobs and too few workers to fill them.
Licensed cannabis SMBs (generally with 500 or fewer employees) are feeling the pinch in particular — from retail, to cultivation, to manufacturing, to distribution.
Adding to the difficulties are major cannabis multi-state operators and large national employers like Amazon, which have a big enough operating margin to offer sky-high entry wages (up to $30 an hour at Amazon, for example), robust benefits or signing bonuses to entice potential employees.
With increased competition and labor shortages, many SMB owners find themselves at a loss. How are they to compete with the Amazons of the world for workers? Well, I’m here to let you in on a secret: they’re not supposed to.
SMBs can play to their strengths to attract and retain employees, even in a hypercompetitive environment. Here’s how.
The Question Every Manager Asks: Why Do Employees Leave?
Believe it or not, humans aren’t known for their rational behavior or for their predictability in decision-making, but in my decades working in the field of employee recruitment and staffing, I’ve observed common issues in workplaces that cause employees to flee. It’s not surprising that a top-cited reason is sub-par pay — and with inflation rising across the globe, that may become an even more immediate reason for employees to update their resumes and look elsewhere.
But there are several other reasons for leaving jobs totally outside of compensation, including: roles that are unchallenging or a bad fit, employees having a poor relationship with their managers, and workplaces with overly rigid scheduling that leads to difficult work-life balance — these work aspects all have an impact on employee satisfaction and churn rates.
During the pandemic these issues of fulfillment and flexibility have been amplified, and some people with enough financial cushion have made the leap from jobs that were no longer a good fit for their needs. Additionally, more people have stayed out of the workforce for extended periods and are being much more selective about the jobs they do apply for.
So, employee resignation isn’t only about pay. For many people, the pandemic has illuminated the sacrifices they’re no longer willing to make for a paycheck, and a lot of it comes down to company culture and on-the-job satisfaction.
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Here’s How Small and Medium-Sized Businesses Can Compete
As an SMB owner, don’t be intimidated by sky-high entry pay or unreachable employee benefits offered at places like Amazon. Depending on the nature of your business, simply increasing wages or dangling a signing bonus won’t cut it (and that’s not a sustainable fix for the long term, either).
Here are my top three recommendations for not just measuring up to these large-scale employers but standing out in comparison:
- Ask your employees what they want. Don’t waste your time and resources on big, expensive experiments that fail — and don’t risk unknowingly alienating workers by creating band-aid-style fixes for hemorrhaging issues with morale. In other words, stay away from the monthly “employee appreciation pizza party.” Instead, consider benefits that truly impact employees’ lives, such stipends for health insurance or childcare.
- You’ve got something the Amazons and major multistate operators of the world don’t have, which is a shorter distance between management and employees. In a smaller company, each and every hire matters, and every resignation is impactful. Because a smaller work environment is naturally better suited to more individualized interactions at all levels, issues with management or within teams can more quickly be addressed and remedied.
- Try some new approaches and incorporate new fundamentals to show people you care. This could be as straightforward as adopting self-scheduling software to give people a sense of ownership and increase levels of flexibility. Don’t wait for burnout to peak to offer necessary downtime. Create opportunities for professional growth, like career tracking, mentorships, and continuing education. Make sure your onboarding procedures are comprehensive and welcoming.
High-entry wages and unreachable benefits won’t retain employees (just ask Amazon, whose churn rate was 150 percent a year, even before the pandemic).
In a year marked by higher operating costs, wage inflation, and worker shortages, many SMBs in the cannabis space simply can’t stick with their status quo. If you’re struggling to attract and retain employees, the answer isn’t to mimic these churn-and-burn models that have different financial pictures or workplace philosophies than yours. Celebrate what makes your business unique and pay attention to employee needs, and you’ll be in a very competitive position in the long run.