The Problem With Cannabis’ Gig Economy
Many freelance gigs came to an end in December or are in the process of being renewed. Now’s a good time to look at this talent strategy with fresh eyes.
Freelancers are temporary, contracted and independent workers. Many hold full-time jobs but also freelance in a “side hustle.” The gig economy is huge. According to McKinsey 36% of all employed Americans are freelancers, up from 27% in 2016. I don’t have figures for the cannabis industry, but the level is likely similar if not higher given the sector’s financial travails.
Independent workers cut across all functional groups, skill level and locations (office or remote). In cannabis they could range from your greenhouse trimmer and shipper to your lawyer and sales rep.
Freelancers are an attractive staffing solution. Management can keep the lid on a hot-button metric, headcount. In many jurisdictions, companies can minimize wage costs since they don’t have to pay source deductions, severance, or benefits. Firms can also quickly hire and fire freelancers increasing organizational nimbleness.
Yet, I have seen firsthand the problems in cannabis when firms gorge on gig workers:
> Strategic risk
It's difficult to build capability and retain institutional knowledge when your talent isn’t locked in. Find me a market-leading weed company that puts key positions like a master grower, product innovator and key account sales in the hands of hired-guns.
> Real labour costs can be higher
Freelancers come with a much higher hourly pay rate versus full time workers. Because of their value and easy hiring, companies can become addicted to gig workers leading to higher labour costs over the long run. Independents also require (on average) more management and administrative time.
> Flat lined productivity
Gig workers don’t always align with your long-term human capital needs They rarely get the same training & coaching as full-time staff. After all, who bothers to wash a rental car. The increasing complexity of many jobs is also tilting the ROI in favour of using full-time staff.
> Negative impact on culture
It is a challenge building esprit de corps or executing change management initiatives with independents. And, replacing permanent staff with freelancers usually send a bad message to your workforce.
Going on a freelancer diet is not easy but it’s possible - and essential for long term competitiveness.
1. Swap shop
For key positions, replace independents with more committed, personal growth-focused employees;
2. Optimize your organization
Reduce the need for freelancers by eliminating redundant and obsolete workflows & practices. Establish controls that prevent rogue freelance hiring practices;
3. Outsource non-core, freelancer-intensive functions like HR and IT;
4. Demand more value and commitment from freelancers, in line with your expectations of full-time staff.
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