Rocco Petrilli

Acquiring and retaining talent have long been the keys to business success, but finding and keeping that talent isn’t always easy, especially as the workforce continues to change. Fortunately, there are steps cannabis business operators can take, and questions they can ask, to learn how to find and use these critical keys.

What actions must I take?

Possible solutions to this problem are multiple and interactive in nature. Mounds of information exists that advise actions such as such as trust, empowerment, communication, honesty, giving credit, taking blame, team development, flexible work hours, work from home, etc. All of these can be important in a given situation. Their complex integrations, however, are mainly dependent on specific situations and cultures. Given this, the ongoing discussion of steps to be included in the solutions is presented more in the form of a checklist or roadmap than a specific prescription of a cure.

NCRPS, with its focus on occupational and organizational health, clearly details the beginning steps in this roadmap following:

Leader Self Awareness

Research has revealed the number one core competency that separates good leaders from the rest of the pack as self-awareness.

Leaders need to know their weaknesses to improve their own self-awareness before they can accurately address the issues involving their employees. Such weaknesses are difficult to identify individually because as the boss, one doesn’t regularly solicit or accept candid feedback from others. Such inaction causes weakness to perpetuate as our nature is to pursue issues in the areas where we are most comfortable.

Create an execution culture

As simple as it sounds, good people like performance and success. As Bossidy details in his classic “Execution: The Discipline of Getting Things Done”, several key characteristics of an execution mentality include:

• Having the right people in the right places
• Creating single point accountability
• Promoting robust dialogue and emotional fortitude without fear of retribution

Driving the three execution mainstays into the action line of a company creates an atmosphere of expectation, evaluation and contribution. True talent is attracted to such work place environments as it allows them to immediately be themselves, to contribute to progress and to respectfully speak their minds and/ or participate in real work at an active level. Such a culture must permeate from the top and throughout the complete organization. When it does, employees become truly satisfied and are then less likely to seek alternatives independent of pay rate and other forms of monetary compensation.

Emphasize the behavioral side

The resume: the scripture of cognitive skills that defines the candidate. The one page of information that primarily —and sometimes solely —determines some candidates’ right-of-passage into the interview process.

Unfortunately, resumes typically only describe one’s cognitive skills. The true determinants of TAR, however, lie in a large part on the behavioral side. We are born with a specific behavioral pattern that drives our needs and determines what motivates us. Understanding these patterns and working these needs and motivators into a person’s area of job responsibility attack the true reasons why employees are attracted to or leave companies. This information is “the other side of the resume” and often contains the keys to a true and effective TAR process. A key step in the use of the behavioral side in recruitment and retention is the construction of a behavioral job description for the position being filled. Doing so assures a succinct marriage of the cognitive and non-cognitive expectations as determined by the adjoining members within an organization. Results of this exercise deliver the attainment of the “right people in the right places” execution driver. Accurate behavioral assessment also creates self-awareness defined earlier as a primary TAR component.

Difficulties will continue for businesses who don’t represent talent acquisition and retention as a top priority in their strategic plans.are in for a difficult decade to come. The available candidates/available jobs ratio has decreased by a factor of 15-20 times over the past 20 years. Additionally, the millennial generation now fills over 70%percent of the available jobs. Only companies whose TAR strategy aggressively addresses these factors will truly succeed

TAKE ACTION NOW: NCRMA

Ethephon contamination in Nevada, HLV in Massachusetts and California, CBD unregulated and out of control.

The phrase, “You can pay me now or pay me later” is one many of us remember and use. It’s from the FRAM oil filter commercials in the 70s and 80s. The implied meaning of the phrase in the commercial is basically you can pay some money now for a good oil filter or, if you don’t, you’ll pay much more later when your car breaks down.

The commercial no longer airs but the concept holds true in many areas of life and commerce. Cannabis is no exception. Operators in the cannabis industry have balked and resisted the value of risk management and prevention. Arguments include “we can’t spend money on things that don’t impact our sales” and “we are in cannabis…risk is nothing new to us.”

The latter is absolutely true. WE ARE in the cannabis risk business and WE ARE risk takers. Being a risk taker, however, does not remove our responsibility to reduce or eliminate risk whenever possible. This is EFFECTIVE risk management. And contrary to the above, EFFECTIVE risk management does impact your sales…and your profitability.

This edition of the NCRPS newsletter, Chronic Risk, launches a series of articles that deal with cannabis product risk and more importantly cannabis product safety. We at the NCRPS have continually maintained that product risk is the threat that could take the legs out from under the cannabis industry. No, we are not part of the naysayers that live on LinkedIn or the doomsday cannabis crowd. We are a team of cannabis experienced risk managers whose passion is to work with the industry to use EFFECTIVE risk management to ensure its profitability and sustainability.

Don’t get caught by the thought that you can’t afford EFFECTIVE risk management. Don’t cut corners to save dollars in critical areas of your cannabis business. Remember the FRAM guy or better yet, Quint the boat captain from Jaws. He was a risk taker too…

Merriam Webster defines:

RISK- possibility of loss or injury : PERIL

INSURANCE- An arrangement by which a company provides a guarantee of compensation for specified loss in return for payment of a premium.

COMPLIANCE-the act or process of complying (to conform, submit, or adapt (as to a regulation or to another's wishes) as required or requested) to a desire, demand, proposal, or regimen or to coercion

RISK MANAGEMENT - The discipline of forecasting and evaluation of financial risks together with the identification of procedures to avoid or minimize their impact.

Unfortunate for grass roots cannabis businesses, varying “professionals” travel the industry using these terms interchangeably. If you are confused…don’t feel badly…you have every right…

As detailed by the definitions above, however, each are distinctly different with all having their place in a cannabis company’s strategy and business plan.

Let’s try to untangle this web...

Risk management or mitigation is fundamentally defined as taking an action to reduce the possibility of an event taking place. Insurance is designed to supplement these actions by financially transferring the portion of certain risks whose probability can’t be lowered to an acceptable level.

To further understand the differences between risk management and risk transfer, let’s look at the comparison below

Risk Management vs Risk Sharing

Risk Management

• Lowers the odds of a happening
• Keeps you whole
• Makes you better

Insurance

• Partial compensation for damage if it happens
• Never, ever makes you whole
• Always creates a setback

Additionally, many risks cannot be insured affordably, and certain risks can not be insured at all. Take talent optimization for example. One of the largest risks facing not only the US cannabis market but American businesses in general is finding the right people, putting them in the right paces and retaining them. There is no insurance market that transfers an ounce of this risk. Risk management is the only route of control (SEE PRESS RELEASE LINK).

Similarly, typical cannabis insurance and other financial services products are “pricey” as a result of the much overplayed “external risk of cannabis.” This is in a time where loss claims are low because of the presence of substantial coverage exclusions in a market where demand significantly outweighs supply. The likelihood of losses and their associated costs increases without effective risk management and further increases coverage prices.

Based on the above, one can only conclude that…

Risk management without insurance is imperfect …but insurance without risk management is illogical”

Now let’s look at compliance. The definitions cited above clearly point to compliance as something that YOU do to satisfy SOMEONE ELSE. I am in no way stating that compliance is not important as it provides many of the tools required for successful operation. Compliance is also key in maintaining licensing status and conformance with any multitude of regulatory requirements.

Where compliance falls short is that it does not necessarily teach one as to what tools to use and how to use these tools in certain situations. This is where risk management comes in. Where compliance is the tool box, risk management is the real application of the right tools to solve a cannabis company’s problems efficiently, reduce their fixed and variable costs and enhance their profitability.

Hopefully this clears some of the confusion. Now take action to put your compliance investment to work by clicking on the link below and completing the NCRPS 5-minute risk assessment.

In this month's column, Rocco responds to a recent Politico article pointed to high taxes, siloed state markets and access to capital as the three main reasons as to why cannabis companies cant make money.

My response:

While all are contributors to the absence of financial success today's cannabis markets, the article overlooks the interaction of capital access and the vital importance of a major discipline in achieving positive financial results.

Cannabis business leaders have become versed at blaming "external" risk factors, or those that are, for the most part, out of their control for their poor financial performance. While the negative impact of these contributors can not be discounted, true business success comes from maximizing the benefits from issues in a leader's circle of influence and not the less accessible issues in their areas of concern. The time is now to replace blame with accountability <footnote>

Cannabis needs to show profitability to create sustainable growth. Profitability, in turn, is generated at the COST line, not the REVENUE line. EFFECTIVE RISK MANAGEMENT is not only a process but a culture that fuels the discipline, accountability and execution required to drive cost out of a business or operation. Discipline, accountability and execution are cornerstones of successful companies that gel to create successful markets. Thriving markets are then led by best in class who raise the bar and drive improvement in others.

Additionally, capital availability traditionally trails profitability. Now the irrational exuberance of early cannabis valuation has been replaced by concern and expectation, the limited capital will flow to the companies who are profitable. This will establish sustainability and growth within this group of companies, while the others will stumble and some will die.

Market leaders in cannabis will follow the proven market leadership route of "operational excellence" by securing the best total product costs. EFFECTIVE RISK MANAGEMENT provides the roadmap through its combination of process and discipline.