By Dan Walter, FutureSense LLC
Compensation surveys don’t sound like much fun. In fact, they seem like a pain in the neck for everyone involved. Why then should you participate? Heck, why should the NCIA and FutureSense even make an effort to spearhead such an effort? Our driving force is a goal to see this industry reach its potential as quickly as possible. The National Cannabis Industry Association (NCIA) and FutureSense have joined forces to create CannaCompensation, our industry’s first comprehensive compensation survey.
One of the most common questions we hear is: “How is compensation survey data used?”
Companies in many other industries (if not most other industries) generally use the resulting data to determine how much the market pays each position and level in an industry. Data is reported in quartiles or deciles and allows companies to determine their own “compensation philosophy” for paying staff members. Companies use this information to set annual pay ranges, determine incentive compensation levels and track pay trends. Nearly every industry, from golf course management to construction, technology, and healthcare use surveys to create defensible compensation data.
A formal survey, such as CannaCompensation, must adhere to specific guidelines to ensure anonymity, carefully balance responses so data from big companies doesn’t overwhelm the data from smaller companies, and also avoid antitrust issues (these are DOJ regulations).
The following Top 10 List provides a bit more information about why you should sign up today for the 2019 CannaCompensation survey.
- Pay is the largest expense at most companies. This is especially true for high-growth businesses. HR uses between $0.65 and $0.80 of each dollar your company’s revenue. This leaves an only tiny bit for real estate, marketing, security, product improvement and everything else your company needs. You better make sure you are getting your money’s worth. Paying even slightly more effectively can provide material benefits to budgets throughout your organization.
- Our industry pays people well, and politicians need to understand that. Finances drive policymakers. Data that shows how well the cannabis industry pays employees relative to other comparative business will go much farther than scientific proof of the efficacy of our product, or the public’s desire to have easier access. The NCIA will use the results of this survey to further the cause of every company in and supporting, the cannabis industry.
- Every company should comply with legal expectations and regulations. Compensation survey data is the de facto standard method for setting pay in nearly every industry. Most importantly, it is a sound defense against industry collusion and price-fixing. Antitrust laws are no joke. A well-run compensation survey provides competitive market data in an entirely confidential structure. Data resulting from the CannaCompensation survey will comply with the Safe Harbor guidelines established by the Federal Trade Commission (FTC) and the US Department of Justice.
- Replacing a good employee is ridiculously expensive. The total cost of replacing an employee can be 150-200% of their annual salary! Every employee you keep saves you money, builds your knowledge base, and creates a more employee-friendly environment. Pay is seldom the only reason people leave, but your competitors will be perfectly happy to try and “buy” your best people.
- More confidence in your pay data means more confidence in your hiring process. Other high-growth industries, like the technology sector, depend on reliable data to shorten the hiring lifecycle. Cannabis companies are growing incredibly fast. There’s no time to recover from mistakes, and every extra day you spend negotiating with someone is one more day they can’t help you grow.
- Current pay data is either very limited, likely to be biased or too generic to apply to many cannabis positions. There are a few data sources, for a limited number of positions. These include data that mainly comes directly from employees. This data has been measured in other industries to be 125-135% higher than company-reported data. Data aggregators like Payscale, Salary.com, and Payfactors can be very useful as a component of your pay data but tend to lack the specificity needed in our industry. We can all probably agree that the head of a blueberry farm is not on par with the head of a legal grow operation.
- Unique industries use unique data. Most high-quality compensation surveys are focused on narrow industry definitions. This allows similar companies to know that the pay data they are using is relevant and likely to be used by their peers. Healthcare companies don’t care what financial firms pay their accountants. Construction firms don’t care what software companies pay their project managers. The world of cannabis business is incredibly broad and very deep. Our pay data must be equal to that challenge.
- Your investors will increasingly demand that you pay people correctly. Investments in cannabis companies continue to increase. When a Private Equity or Venture Capital firm invests many millions of dollars in a company, they need to know that you’ve handled the nuts and bolts like FLSA rules, gender equity, and general competitive pay. They expect to see defensible pay ranges for every position. They want to know that you aren’t wasting money on employees and that you aren’t at risk of losing people over compensation issues.
- When hiring people away from other industries, it is critical that you can show your value proposition. Biologists, distribution chain professionals, security experts, finance pros, and countless other potential hires can choose to work in any number of other industries. Some may be passionate about our industries, but many may be curious but trepidatious. Jumping into an industry that is not fully proven can be difficult for someone with experience in and job offers from a more traditional industry. Great pay data will provide you with ammunition to compete. This has been incredibly effective for other emerging industries in the past.
- Most importantly, participating helps you win the war for talent. Great people are hard to find in any business. They are even harder to hire. This is a major issue for any industry that is inventing itself on the fly. Your competitive advantage may come from your business model or product, but you cannot succeed without the right people to execute your vision. This survey will not only provide pay data, but it will also provide basic job descriptions and leveling information that will allow you to understand both entry-level and senior positions. If you don’t use this information to win, your competitors certainly will.
Regularly using a reputable and comprehensive compensation survey is a best practice of every company that is successful over the long-term. The cost of participation in 2019 is simply a bit of your time. The benefits pay for themselves and carry into every aspect of your business. It is a simple way to get the most out of your largest monetary investment.
Sign-up by June 14 to participate. Data collection takes only 30-60 mins on average.