esterday, Sarah and Jim went live to discuss a topic that gets brought up quite often with clients: Financial Incentives for Founders & Employees.
Attracting and keeping the best talent at your business is critical to the success of your organization.
So, you need to find the right incentives that fit your business model and help the company meet its objectives.
In this video, they cover:
- Sarah’s Background
- Why talk about compensation?
- 3 Types of Financial Incentives
- Importance & Risks of Giving Away Equity
- Considerations & Why Offer Profit-Sharing
- Breaking Down Gainsharing & How It Works
- Other Ways to Attract Talent
- Questions from the Audience
- How Should You Split Up the Equity in a Business?
- How to Value a Pre-revenue Business?
- Why Picking a Niche Target Audience is Important
- Why Previous Business-building Experience is Valuable
- Thoughts on starting a cannabis business in Texas
- Thoughts on Opportunity and Risks with Type S – Shared Facility Licenses
- Thoughts on White-Labeling Through a Type S License
- Benefits of Investing Your Own Money Vs. Taking Other People’s Money (OPM)
- Can you really do $40MM revenue at a dispensary after 2 years?
If you need help with financial analysis or incentive plan structuring for your cannabis business, then please reach out to us today.
All right, everyone. Thank you again for joining us today for our webinar on understanding the considerations about compensation and employee incentives. So we’re joined now with Sarah Chang, the director of HR at GreenGrowth CPAs. Sarah, thank you for joining us today. Oh, thanks for having me. Good. Good. So tell us a little bit about yourself so we can understand some context of why you’re the right person to be talking about this topic.
Of course. so I’ve been in HR for the last 13 years. I actually started out my career mostly in large organizations. mostly global organizations with 80,000 employees. some mid tier companies was about 5,000 employees and then starting about, eight years ago or so I, uh, focused more on consulting with small businesses. So that’s really what I’ve been doing for a little over eight years now, just focusing on helping small businesses kind of get started on HR. Most of the clients that I work with are companies that don’t have HR departments. So they’re usually in their businesses. They’re usually either a startup. Who’s just kind of figuring things out pretty much at that point, the majority of the companies have figured out kind of any HR needs that they need are either pretty basic. or, they’re just kind of making, getting to know all their compliance pieces on their own.
When I come in to any organization, they usually have anywhere from five employees, uh, through 30 employees is usually when I come in the goal at that point is for businesses to recognize that they have compliance issues that they have. They know that they have people issues that they’re trying to deal with. but more than anything else, I think the biggest piece is they are recognizing that their companies are growing. They’re doing really well, and they really want to set themselves up for major growth in the future and recognizing that the people issue and the people, trying to engage employees, trying to provide, incentives, trying to provide opportunities for employees and finding the right people. I think they recognize that they need to have somebody come in and help them really launch forward and have the infrastructure and their business to do to really take those next big steps.
That makes total sense. And then thank you for sharing your background on this. So I appreciate that. So now, before we get started, I need to let you guys know that the information contained in this presentation is meant for guidance purposes only, and that is professional legal or tax advice. And for it does not provide any personalized legal tax investment or any business advice in general. So with that out of the way, Sarah let’s jump right into the material that you have.
Sure. So we really talked about, cannabis compensation for employees, as any, as you know, I mean, all these businesses are most businesses are new because of regulation. There are a lot of them are in the startup phase and they’re looking for top talent at the end of the day. what you want to have is great employees. Everybody wants to have great employees. and when you look at businesses, I mean the industry as a whole is exploding. Uh, I looked at some of the estimates for the industry as a whole, and they’re looking at $30 billion by 2025. I Forbes magazine. Some of them are a lot bigger. Some of them are projecting, you know, a hundred million by 2027 and some, I mean there, but everybody knows that this is a huge explosive industry coming up very quickly. And it’s actually really interesting in the HR arena right now, because right now, given the demographics of society in the United States, there’s a huge competition for talent.
That’s pretty much the basic, the most difficult piece in any organization right now that I think most companies are struggling with is finding the right people. And when you’re a small company and you’re starting out, you want to have great people, but you’re also competing against larger organizations, have bigger budgets who have stronger brand names and are able to attract people on different levels that you may not be able to compete with. So we wanted to talk about ways that smaller new businesses, especially in cannabis can really compete for these great people. when I was looking at the top three reasons why startups fail, if you look at three things, the first is that they have no market for the product. And we know that’s not the case with cannabis. So we’re going to focus on the next two, which are actually really solvable when it comes to this particular industry.
Number two, and number three is because they ran out of money and thankfully they have green growth help focus on create opportunities to make sure that doesn’t happen. And the third, when we focused on HR and it’s something that every company can do well, it’s that 23% of startups fail because of having an inadequate team. Now, you think about it as a startup. you’re looking at smaller budgets. You don’t have the kind of brand names. So people aren’t really familiar with you. So we want to think about creative ways to create opportunities that they can market themselves as startups to attract great talent. I mean, that’s at the end of the day, why you want to have, why you can help your business move forward, right? You need great people. You need to have a great product. we know that cannabis is creating amazing products right now, and we know there’s a market for it.
So how do we get, make that step forward and getting great people to kind of move these businesses forward. Now we know that money, isn’t the only reason why people choose company. but the reason why we’re talking about today, cause everybody knows it is certainly important. people won’t work for free and if they do or for free for a little bit, they might do it for a little while. but at the end of the day, they need something to come out of it and they need to be a reason. So we want to talk about some creative solutions that they can go about handling the compensation piece when you don’t necessarily have a huge budget to work with. So there are three ideas. Jim, that we’ve kind of talked about, which is three things, equity gain share, and profit share. Now, when you’re looking at your budgets as a company and you say, okay, what do I have to give?
But I don’t have like a huge, buffer as far as budget goes to bring in all the people before we’re making any money. These are some great ways that you can look at it. And the reason why we’re going to talk about equity and profit share great tools gainshare is one that I just want to explain the idea. So there isn’t any confusion when you see these, kind of these topics come across. So equity, when you talk about equity, you’re really talking about a percentage of ownership, given an account in a given company it’s usually represented in shares of a company or percentages. And we’re going to go into that a little bit more explaining how to do that. Profit share is a percentage of net profits that will be distributed to the team as bonuses and compensation. And the third is one that isn’t utilized to be honest as much in new startups, but it’s an important piece to understand because there is a key difference between gain share and profit share.
And what gain share is it’s based on the company’s historical performance, which is why you don’t see it as much and startups, when you’re really looking at is to gain the gain that would be profited above and beyond a previous year and you need historical data. So that’s why startups, you know, being so new and so much change so rapidly, it can be used. Absolutely. but it’s not as common. what you’re looking to do is improve performance of employees over and financial gain over past performance. So what you do is you basically lay out, goals for performance, uh, growth, those types of things. And you’re looking for ways to really eliminate waste, and motivate employees to work smarter and harder beyond what they’ve already done. So let’s talk a little bit more about these ideas. So we want to talk about equity.
So why give equity equity is really to attract skilled people and resources to your startup. So if your new business, you know, you need money, you know, you need great people. Those are two, you know, at the end of the day, that’s it, but it’s hard. It’s a business that you’ve started. It’s something you’ve come up with. It’s something that you’ve put your blood, sweat and tears into, and you don’t want to only want to feel comfortable giving away part of your business. And I totally get that, but here’s the risk of not doing it. Number one, Mmm. Whether it’s incentivizing venture capitalist money to get sizable ownership of stake, or it’s trying to learn great talent, with some options pools, it’s a great opportunity to benefit your startup because you can hang on. If you hang on to your equity. So tightly, you really will, restrict your ability to grow in some ways, because you won’t be able to have that pool of resources for money and support or great people.
I mean, at the end of the day, they want to come on board. They say, Hey, I’m willing to make the sacrifices. I’m willing to do what it takes. Yeah. At some point it needs to make sense for me. And that’s a great way to do it on the other extreme. you can, by not doing it. And you, you basically are basically a major shareholder in a worthless company because you now have contained all the shares. You won’t give away any part of your business, but you haven’t been able to move forward. It’s restricted your ability to overcome a lot of the obstacles, when it comes to handling a lot of things that you’re naming on the seal you get up. So when it comes to business, we understand that any owner, any person in business is not going to be great at every single aspect of the business.
That’s just, that’s just a natural part of, you know, working in any industry. You’re not someone who is amazing at, at growing or processing or retail with customers or marketing. It may not necessarily be the absolute best person to handle your finances, to handle your marketing, to handle, your investment decisions, or, or do your management decisions. So you need a pool and a team of great people who can do all of the best things that they’re good at and come together and work together. And, you know, at the end of the day, equity is a great, great way to say, Hey, let’s work together. We’ll sacrifice together. And in the end, we’ll all benefit and share part of this company. Now there is a risk of giving away too much. So there’s always a balance at the end of the day.
You want to make sure that, because if you’re careful, if you give away too much of the company, anytime you bring anybody in, it gives people control a little bit control over your business. So when you bring in investors, when you bring in partners, when you bring in, board members at the end of the day, if they have equity in this company, then they want to have a say. And if that is the case, then if you have too many people, suddenly you basically have no control of this company and where it’s going at all. So it’s really about striking that right balance. Now I want to talk a little bit about how to go about doing that because someone says, okay, well, if I’m willing to give away equity, what does that look like? What does that mean for me? So usually when you set up your corporation, usually they’ll actually set it up in your articles.
for your corporation is the number of shares you can give away. that number is fairly arbitrary, cause it can change. But when you start out, let’s say a hundred percent of your company is a hundred shares. And let’s say, if you had an angel investor who said, Hey, you know, I’m ready to invest money in your business. And I want to take, I wanted to bring in enough cash flow to equal 20% of the value of the company you’d need to issue shares to reflect that ownership in the stake. So it isn’t necessarily giving that a hundred shares, and giving him 20 of them. And now you have 80. What it actually means is that you had a hundred shares. You gave away 25 shares and now your total shares in the company is 125 and they still own 20% of it.
So you don’t necessarily have to divide up equally. The number of shares you have, you can add in shares, but if it fluctuates the percentages of how much people actually own the company down the road. So let’s say you jumped further ahead and their next funding round, you’ve got a little bit of money you’re doing well and you’re ready to take that second huge step forward. And you’ve got another venture capitalist who’s ready to invest an equal amount of money to half your company. So you now had 125 shares. you started out with that hundred now in order to get 40%, you have 250 shares. So you had 25 shares. Now that that angel investor had invested because they had, you know, 25, then you had a hundred, you have to basically multiply that 125 shares that you had to 250 to give away half of your business.
So at the end of the day, when you’re looking at giving away equity in your business, you have to find that right balance. You know, you have to make a decision if the investment deal is really worth Mmm. The value of the shares in the longterm, than it is when you’re reducing it to in the short term. So you got to think overall in your business, is it worth it? You know, and don’t think today, don’t think just tomorrow, think two years from now, think five years from now, think 10 years from now, because at the end of the day, whatever decisions you’re making early on will impact your business. And those decisions will become magnified as your company grows. So when it talks about how you’re gonna manage your investments, how you’re going to handle your people, what direction you’re going to take, what your branding image looks like.
I think these are all important decisions, but if you have more people, as part of that discussion, you have to understand that it will affect the longterm perspective of our company. And it may make sense at the end of the day, when you look at large businesses that anybody who started these huge companies, they don’t usually own the entire business. They are the owner, but they don’t necessarily aren’t necessarily always a majority stake holder in the fact that they might own just 10% of this company of a billion dollar startup, but 10% of a billion dollar startup is still better than a hundred percent of a worthless company. So, you know, keep that in mind as you’re, as you’re making these decisions.
Yeah. And one thing to note about also with shares, as you can issue different types of shares that have different abilities, like there’s different voting shares is class a class B types of shares. So when you think about the types of shares that you give away, it doesn’t have to be all the same types of shares. But essentially what Sarah’s saying is that you will have to increase the pool as you add more people in. But when you bring too many people in, it’s like too many cooks in the kitchen, things will not move forward. There’s too many voices, there’s too much noise. So be thoughtful again about the types of shares you give away and how many people you break that off with.
I totally agree. And you want to look at, you know, think very carefully about who you’re bringing in. It’s tempting to bring in investors who bring in a lot of cash and can really take a step forward in your business. But if they have a totally different idea of the market, you want to market to, the brand image that you have, it will sincerely impact your business. So keep that in mind and make sure that you’re making decisions that’s right for you and right for your company overall.
Yeah. And one more thing I want to add in about bringing in investors is there is a thing called smart money versus dumb money, right? There’s some people that just have money. They want to deploy into certain assets or into certain industries because it looks cool. It’s sexy. It’s the thing that’s going up into the right right now. But they may not have access to other strategic ways to help your business. They may not have access to talent or access to any other new distribution channels and thought and things like that. So be thoughtful about when you do bring on investors, aside from money, what else are they bringing to the table? Because, you know, I know it’s hard to raise capital, but relatively, it’s not that difficult. If you have traction in a good idea and a good product market fit. So again, be thoughtful about the types of people you’re bringing into your company. What else can they provide other than cash?
Absolutely. so let’s go ahead and move on to the next piece that we’re talking about, which is profit sharing. let’s go back to a little bit about what profit sharing is. And we talked about it being a percentage of net profits. That’s distributed to the team as bonuses and compensation. Now let’s talk a little bit about how to go about doing this. So basically what you do is you decide, we talked a little bit about shares in equity, and that really impacts how you’re going to handle profit sharing. And it can work all the way down from your both senior leaders to your most junior staff. And that’s, that’s great. basically you decide how many shares of, let’s say that a hundred shares will go to each individual and that’s how you’re gonna decide to how much to divvy out among the team.
So let’s say, you know, you had your senior leaders with 50 shares and 25 is like two partners. So they each get 25 down to some of the staff that just get one. that’s how you’re going to divide up. Let’s say a hundred thousand dollars among your team can kind of differentiate percentage wise. Now people think, why do you want to go about doing profit sharing? Profit sharing is actually helpful because it kind of eases off a lot of the pressure when it comes to your growth. at the end of the day, if your company does really well, then you’re able to pay everybody a lot of money and if you’re not doing well, then you’re not boxed in to these high salaries. and basically a lot of their compensation is affected by, Hey, if the company does well, I make a lot of money.
If we don’t do well, you as a business owner, don’t have to actually pay out as much if part of their compensation is considered bonus or cupboard or profit share. So at the end of the day, it’s just a little bit more forgiving. There are some advantages and disadvantages to doing that. the advantage is, like I said, everybody’s working toward that same goal. Everybody wants the company to do well. Everybody wants the top rallying revenue, too two be with high because everybody’s going to be impacted by it. it really helps employees focus on the overall profitability of the business and the comp the cost of it really rises and falls with revenue. So it’s not like you suddenly have these really high compensation pieces and then your box in, if suddenly you have a low year and you know, what’s great is that enhances to organizational goals.
Everybody knows that, Hey, we’re working towards that same goal, whether it’s to be more efficient, whether it’s to be more profitable, whether it’s to have amazing customer service, everybody knows that the goal is for this company to do well. And what’s great about it is they’ll actually look for ways that aside from your new normal goals, that you’ll set for your staff, the look for ways and interesting ways in whatever they’re doing to help your company move forward, because they are impacted by it. At the same time, there are some disadvantages by it. Basically the pay for your employees will move up and down depending on how well the company does. it’s not based on performance. So even the person who really has no impact on how profitable you are, how great the marketing is, they’re still gonna make a lot of money if your company does well.
On the flip side, there’s also major swings. So, you know, if you’re, if you suddenly have an off year, your employees will be impacted quite big at the end of the day, if your company doesn’t do well. So for a lot of people, those big swings and compensation kind of makes it hard to plan their lives, and their own personal finances. There are also some things you do want to keep in wine when it comes to the fair labor standards act. when you’re calculating pay for everybody, you do always have to Nate, at least your minimum rate of pay. and so you kind of have to calculate and make sure that everybody’s still being paid fairly. So when you’re trying to base all of people’s compensation based on just performance, and if suddenly the company made absolutely no money, they’ve all worked and you haven’t paid them. So you do run into some compliance issues there. So it’s definitely a great piece to use there. Just some things to keep in mind down the road.
Now, would this be something that you would do like a base salary and then some profit sharing on top of that to kind of mitigate that compliance issue? Or what do you generally see startups do? Do they have a base salary plus some type of profit sharing, or is it purely profit sharing? You know, what are your thoughts on that?
Generally, I would recommend having a base salary, at the end of the day, most staff, most people need some sense of security. The only people that are really going to invest in say in their time and the resources in their lives, to the point where they have no base salary, are either sales, sales teams will do that. They’re used to straight commission structures, and they know that they do have full control over how well that company does. Uh, it’s, it’s built into the nature of their work, but most staff, let’s say in house accounting or HR, let’s say your operational team, your administration team, they usually need some sort of base salary and it’s, it makes more sense to have a base salary for those teams.
That makes sense. And then another thing is, would you pay something like this out quarterly, monthly, annually, biannually? What are your thoughts around that?
You know, at the end of the day, it really is up to you and that’s, what’s great about profit with your business and what makes sense. depending if it’s seasonal and you want to allow that for that, you can do it on a quarterly or a seasonal basis and say, Hey, you know, every, at the end of August, we, you know, we know summers are always good for us, then we can pay it out. Some people wait until it’s annual. So they get that sense of how well the company is really doing. And it accounts for some, it kind of distributes any downtime, overall, but it really depends on your particular vertical, and your business and what makes sense for your business at the end of the day, I’ve seen it really done across the board.
Cool. Thank you for that. That’s that makes good insight. And he brought up seasonality. There are some times when it’s very, very good and there’s lots to go around, but you know, when you get those very thin times and you run a loss during maybe the fourth quarter, for whatever reason, they use those other revenues throughout the year to smooth out the curve. So it makes sense to, you know, it base it on a type of business that you’re in and the industry and the seasonality of your business.
Yeah, absolutely. Absolutely. I wanted to keep in on one, there is one more piece when it comes to profit sharing that people struggle with a little bit, which is, there are a lot of roles in your businesses, depending on how big it is that are kind of disconnected with how well the company does. So while it is incentivizing to say, Hey, we’re all working towards the end goal. We’re all trying to make this happen when the company doesn’t do well. it can impact morale because there, there are staff that say, I have no control over how well the company does. If they’re doing your in house accounting, you know, how well, you know, your processing or your cultivation or, or your growth went, or, or your sales really wasn’t involved in how well they did and they’re still being impacted by it.
So you do want to be sensitive to that and think about at the end of the day, what makes sense for your business and your team. let’s go ahead and move on to gain share. And the reason why we talk about gain shares, because I hear a lot of people use the terms profit share and gain share, together or as similar terms. And they really are two completely different ideas. we talked about profit share as basically how well your company does for the year and sharing those profits kind of evenly distributed gain share is actually different. And it talks about more about productivity, efficiency and performance. Whereas whereas profit share don’t chair is really different because the focus is really about saving more than growth, which is kind of the opposite idea. So when you talk about gainshare, most of the time people think about making their businesses more efficient and maybe how much they saved from the last year.
It does talk about growth and profitability, but you’re really looking at about how efficiently you did your job. And, and they really have very clear parameters in every person’s role to produce that game. So usually someone will have very laid out specific, actionable goals and say, if you meet these things, this would help us save, let’s say, you know, a hundred thousand, you know, $10,000 in your particular service line in the business. Mmm. And that would be, you know, we talk about how you gain and you basically have strict parameters of how much gain that actually what their bonus would look like for each game. So it doesn’t like, just because they say this is $10,000, doesn’t mean they get $10,000. You also want to say, you know, if you saved $10,000, because you were way more efficient at the end of the year, you’ll have a bonus of $2,000 at the end of the year.
So you do need much more clear parameters when you’re using gain share as part of your business model. Like I said, it’s based on historical performance. So usually what you’ll look at is performance for the person, the department, the service line over the previous year. you want to have clear goals and they’re measured by quality. So help me, you know, how much spent the department spent customer service. it’s a lot more controllable by employees as opposed to organizational wide measures of profits. usually these are paid out more monthly and quarterly because especially employees feel like they’re much more in control of their ability to gain these gain share. Again, there’s like, like profit share. There are some pros or some cons to it. A lot of the pros are you’re increasing employee engagement and improving their overall quality of work. That’s the goal of gainshare.
it keeps people motivated and it really gives them an opportunity to take a sense of pride in their work, because they’re focused on what they have control over what they can do and what they can bring to the table workers who are engaged and committed to higher quality work and stay with your business longer. and this goes back to something interesting. It really talks about engagement. So, when you look at the market as a whole, you see millennials, especially at this point, we’ve talked about, there’s been a lot more job changes with this demographic more than ever before. And it’s interesting, and especially with cannabis, because cannabis actually caters a lot more to that demographic. So you will see a lot more movement and retention is kind of an issue with a lot more cannabis companies because people are moving in and out of businesses a lot more often.
And engagement is such a key part of keeping people and retention because people who are engaged and happy in their work want to stay. And if you feel like you have an opportunity to grow an opportunity, some clear ways that you are focused on your work and everything that you’re doing, whether it’s being more efficient, more productive, better quality of service, and you can actually provide that kind of, clear, measurable growth. It does keep them more engaged and you’re providing an incentive for them to do that. And by linking overall rewards to overall company performance, then gain share plans can really, really kind of manage your payroll and keep it in line with your capacity to pay it too. So that does help to some degree, some cons are, it’s not necessarily clear for individuals how their personal contributions work towards overall outcomes being rewarded.
Mmm. And I think that goes back to really about clarity of metrics, more than anything else. And that’s why this particular piece it’s really useful, but you really have to be thoughtful and strategic about how you implement it. Right? So I think the reason why some companies struggle with it is because they struggle being able to set out measurable, actionable goals, being able to have check ins with employees and see how they’re actually doing, maybe metrics aren’t necessarily the right, the correct ones when they started out to be. And now people are kind of boxed into these goals that they, I don’t really feel like it makes sense. It can also be demoralizing for work for employees when they don’t meet these extra goals. And, you know, I think usually these goals are stretch goals. Uh, they should be, it kind of pushes people harder, but you don’t really know how well people were performed and how well they can really meet these goals until you do it.
Mmm. So that sometimes can be problematic, which is why you have historical data with this particular model. and even then, you know, metrics are kind of hard to necessarily say, this is where you should be. And this is where our company should be meeting standards, gain share plans, may reward workers for productivity. When there isn’t a great or immediate need for items being produced. So sometimes people are working really, really hard and you don’t need that product. So let’s say, you said, Hey, you know, you are a brick maker and you needed to make, they’re saying, you’re going to get paid more money if you have higher productivity. Well, now there’s suddenly producing so much product that you don’t really need, or isn’t there quite a market to meet that quite yet. So you’re spending money on all these things that you’re not quite needing at this point. I think it’s great. It focuses on individuals, but sometimes it doesn’t focus necessarily on the big picture. When you talk about people’s individual metrics, it may or may not. If you’re not careful, if they don’t tie in well with the overall metrics of the company, then sometimes it, it doesn’t really make sense to have these metrics and people working super hard on these goals that may not help you as a business overall.
That makes sense. You have to look at these second and third order consequences of your higher productivity. If you grow too much cannabis and there’s just not a market for it, it’s going to be wasteful and ended up net net will lose money for the company. Absolutely. And then one thing I wanted to ask about those goals are those goals, particularly binary, whereas like you meet it or you don’t, or is it sometimes a percentage? Like if you do the goal is $10,000 in savings, they say $7,000. Do they get 70% of that goal? Or is it typically binary that yes you did or did not hit that goal?
You know, that really is up to the company, but you have to be clear before you set those expectations of what that looks like. So, I’ve seen it done both ways. Some people will say, Hey, any savings you make us, then you can get a percentage of that. other people will say, well, it doesn’t make sense for me to give a bonus. If you don’t meet this threshold for my business, it doesn’t really make enough impact. So depending on the goal, depending on the actual employee and your business, it’s really up to you, but you to be sure to make very clear what those expectations are from day one, when you said those metrics, it is really undermining in your entire performance strategy. If you change it halfway through
that never goes well, a hundred percent. Yeah. When you get started, the boat starts going all in different directions. People kind of get like, I don’t know what my job is or why I’m doing this and things of that nature. Does that make sense that you have to have those very clear goals? One thing about gainsharing is this something for like a four year old company for a 10 year old company, you know, a more antiquated, like our older company, 20 years, they don’t, what are your thoughts on, when should you start implementing this? Like how much data do you need historical data, do you need?
I would say when you’re really low, when your business is starting to stabilize, so it doesn’t necessarily mean length of time. It just means of if, if you’re in a sincere growth phase and every year looks different, it’s probably not the right time to implement gain share, but let’s say you’ve, maybe you’ve been a company it’s only been three years, but you’re starting to level off. And you’re seeing what your company should look like in the next two or three years going forward. Then it’s probably, it makes more sense to do gain share at that point, because you’re over a year, the changes that employees make will make a big impact in your business. And it’s not necessarily, external forces of the market or customers or, or growth that just comes naturally with changes in your, opportunities as a business.
at the end of the day, I think all three programs are interesting and different and really what all of them can be utilized in any business. as long as they’re carefully implemented with a thoughtful approach, but like I said, at the end of the day, when it comes to attracting top talent, these are important pieces that you can utilize through tools that you can use. But there’s also a lot of other things that you can do in order to attract great employees that are non-monetary. So there are a few things like building a really strong brand. Some people work for companies just because they think this is an amazing company I’ve heard of them before my friends have heard of them before. And that actually goes a long way. I think a lot farther than most people realize also considering consider hiring remotely.
What’s so interesting about this particular time during this whole pandemic, I think it’s really changed. People’s thought process about working remotely. Can it be done effectively? And what we’re seeing is that lots of companies are realizing, you know, you can do this job in a remote setting and it’s going just as well. And it really changes people’s minds about, I think the efficiency of employees about their productivity. I think people are recognizing more that people who are working remotely are just as effective and productive, if not more so, Mmm. It brings up kind of some interesting challenges too. Then you have people who have a hard time shutting off, you know, but as the company that you’re saying, Hey, you know, at least they’re working and they’re doing great things. but it really is a really low cost way to have a perk for a lot of people. And it gives people that work life balance that they’re looking for without detracting from a lot of your productivity as a business.
Yeah. I think one of the things, when you start to go a transition from an in, in office, everybody in office to out of offices, you kind of had to stop focusing on the inputs, like the number of hours and more on the outputs of the business. Like how many deals have you closed? How many, you know, things of that nature. Cause you get these remote sales teams as to travel everywhere, to try to get your products into distributors or dispensary’s, that becomes more the kind of the way to measure success is the output. So I know that we’re trying to go through some of these things here at green growth, being a remote company, I know a lot of cannabis businesses, you know, you run a dispensary, you can’t always be remote, but there are certain functions that you can export out of a home office. you know, our out of our headquarters to a home office or to something on the road. So just being thoughtful about what you’re measuring when you make that transition.
Absolutely, absolutely, totally agree. and that kind of ties in well to the next piece, which is really just being a great place to work. at the end of the day, whether you’re all in an office together, whether in your warehouse that you work together or whether you are totally remote, you want to just be a great place to work. And as a business leader, it starts with you. So when people want to talk about the company’s vision and their values and their mission statements, I think those are all wonderful things. But as a business leader, you are really setting the tone for your entire organization. If you say, Hey, I want people to have work life balance, but you yourself don’t believe in it. and you want it to be work for people, but you don’t implement that in your own life. And it doesn’t necessarily mean that you don’t want people to work hard. You can, but it’s setting that tone of what’s valuable. What’s valuable for your business, what’s valuable for your life. What do you care about, in a lot of, tangible ways it comes through in the way that you manage your people that you may not recognize. so be thoughtful about what do you value and what’s important to you and how do you set that example for your team?
100% I can echo that is that, you know, people will mimic the leader they want to do with the leader does because they want to move up in the company and say, all right, well, if you know, Michelle does this and she’s a CEO, I should do that if I want to be her right hand gal, right hand guys. So, you know, yeah, very much so echo that you have to put a good example forward and then, you know, allow that to push into everybody throughout the company. Cause if you, yeah, you’re a workaholic. People will take on that. Cause I think that’s what you appreciate.
Exactly, exactly. And what people don’t realize is that it trickles all the way down. So how you work with your senior staff, your leadership team and your partners, that message comes down through their team. They know that, what’s important to you needs to be reflected among their own teams. And, and, and it goes back to how you manage your, your staff at the end of the day. So even though you say, Hey, I want people to be flexible. I want people to be able to work from home, but then you’re constantly texting and asking them what’s going when they’re supposed to be on vacation and you knew they were then, you know, what message are you really sending? So just keep that in mind. The next day is you really want to hold onto your existing talent at the end of the day.
Great people in your business want to make your company great. They’re excited, especially early on in a new organization. especially as you’re starting up your teams, your teams are generally small when you start. So they have that excitement in your business. They have that feeling of working as a team, being part of a family, because you’re starting with teams of four or seven or eight employees, and they have seen that growth go with you. And when that talent carries with you, when that staff has that passion and you grow to 40 employees, 60 employees, they’ll remember what that feeling was like when you guys were a small team and they’ll do everything they can to, to maintain that and create that sense of, Hey, we’re a team of 60, but we still believe that we’re all a family. We all work together towards one goal.
And you know, at the end of the day, it does affect your bottom line. when we look at retention across industries and across business as a whole in the United States last year, it was costing businesses, $32 billion of just retention issues of the cost of marketing positions and posting them on ads, the cost of spending time and resources, and actually recruiting new employees. It’s the cost of training, new staff and the time that it takes that you’re not getting productivity out of your staff, cause they’re still learning. They’re still training. keeping on your existing talent really affects your culture, but it really does affect your bottom line.
Yeah, that makes sense. Yeah. I mean, you see that a fair amount, uh, in businesses where like, it’s just like, Oh, just go hire somebody. But that just go hire somebody sentence is like a $7,000 transaction or a $5,000 transaction where potentially a little bit of intervention earlier in someone’s life cycle at your company could have kept them on the right path to feeling more engaged and feeling more valued at your business. You wouldn’t have to spend all that money just a little bit of time, an hour or two out of the CEO’s time. You know me say CEO, we think of like, you know, the bigger, bigger, bigger people, but in a small organization of six, seven people, you’re pretty much a flat organization. At that point, you can spend the time to, you know, kind of listen to what your people are saying because, and sometimes you get a warehouse employee that feels disengaged or someone who is a bud tender, who feels disengaged. They have great ideas, but there’s someone in the middle management that doesn’t allow that idea to get up to whatever it’s the CEO. So being able to kind of talk with your staff at all levels and relate to your staff and communicate with them. I think it’s very important for retention, at least from what I’ve seen in the businesses that I’ve worked in, but also the businesses that we coach and help through certain things with green CPAs.
Yeah, absolutely. I think when you talk about retention and keeping your existing team, it goes for that. But back to that one word, which is engagement are people engaged in your company and in their jobs. So it goes back to a few things. Are they excited about their work? Are they given challenging opportunities? Are they given opportunities to grow? Are you providing feedback and how well they’re doing and is all of that tied into their growth and their performance and at the end of the day, their pay too, and what they take home, all those things are really important aspects of feeling engaged in their business and their jobs. And if they are engaged, they’ll stay, which is kind of the last big piece we talked about building that strong employee engagement will really progress your team and kind of unify the vision of everybody working together. It keeps people excited to come to work every day and you know, the better engagement have, it will save you money at the end of the day, too. Thanks so much, Jim. I really appreciate you having me on, it was a really great opportunity to be able to talk about all these things I can geek out on HR all day long. So hopefully we can do this again. Thanks so much.
Yeah. Thank you very much for joining us, Sarah. And if you have any questions, you can drop them into the chat or into the comments below. We’ll get those questions here we have for the live session. And anything else that we cannot answer, you can reach out to us via our website GreenGrowthcpas.com and then click that, get started button on the top, right corner, fill out the form and we’ll get back to you as soon as possible. Again, in the comments section, you can leave some questions as well as if you need help. You can call us at (800) 674-9050. So again, Sara, thank you for your time.