The Interconnectivity of Human Resource Management Activities

Regardless of the size of an organization and whether or not the organization has a human resource department, the responsibility for the day-to-day management of human resources most often rests with individual managers throughout the organization. As a result, all leaders and managers must be familiar with the fundamentals of human resources.

Human resource management as a specialist function evolved from very humble beginnings. Inseparable from key organizational goals, productmarket plans, technology and innovation, and an organization’s strategy, the field of human resource management comprises numerous activities—many of them discussed in depth throughout this textbook.

Although each topic within human resources is addressed individually, it is important to recognize that the activities within human resource management are all interconnected. Figure 1-1 highlights some of this interconnectedness. When a change is made to one activity or system, it often has an impact on another activity. For example, if an organization acts to engage long-term employees in order to prevent them from leaving, it may spend fewer dollars recruiting and hiring new employees.8 In order for human resource management systems, practices, and activities to be effective, leaders must consider how changes may affect the system overall.

LO2 Making Human Resource Management Strategic

Human resource management must operate within the framework of an organization. Like other activities, human resource management activities must contribute to the organization’s goals and performance.9 In response to a growing call for accountability, recent decades have witnessed increased attention to strategic human resource management. Strategic human resource management seeks to recognize that the choice and integration of human resource tools will depend on what the organization is trying to achieve. As a strategic business tool, the human resource management activities must anticipate, align with, and contribute to the organization’s strategies. Similar to any other investment made by an organization, financial, technological, and infrastructure investments made in human resource systems, processes, and tools need to create a return on that investment that exceeds the investment itself.

An organization’s strategy is similar to a game plan: It involves large-scale, future-oriented, integrated ideas and initiatives to achieve organizational goals and respond to uncertain and competitive environments facing the organization. In part, a strategy identifies how the organization will change and create longterm sustainable value given the environment the organization is in.10 Strategies can vary significantly, even within the same market.

Walmart uses the slogan “Save money. Live better.”11 As a result, Walmart tends to follow a lowcost strategy. Target’s slogan, on the other hand, is “Expect more. Pay less.”12 As a result, Target tends to follow a value-based strategy.

In some cases, strategies may even differ within a company.

For instance, Toyota uses the slogan “Let’s go places,” which is focused on innovation. Lexus, Toyota’s luxury vehicle division, focuses on quality, as indicated by its slogan, “The relentless pursuit of perfection.”13 the right people are in the right place at the right time to initiate the corporate strategy.

Marriot Hotels & Resorts uses gamification to recruit potential Millennial employees. Alternatively, Zappos offers successful job candidates $3,000 to leave the recruitment process. The aim is to invite candidates who are not going to stay long term to exit the company early. Those who do not take the exit offer (which is 97 percent of candidates) have a better understanding of the corporate culture.14 strategic human resource management

Strategic human resource management is the process of vertically integrating the strategic direction of an organization into the organization’s choice of human resource management systems and practices to support the organization’s overall mission, vision, strategies, and performance. Simultaneously, strategic human resource management is a value-driven, proactive focus on how best to deploy and horizontally integrate the various sub-fields of human resource management to enable an organization of any size to achieve its strategic goals. We start with a discussion of strategic human resource management because it lays a foundation from which the topics discussed throughout this textbook can be integrated into a human resource (HR) system.

Integrating the strategic needs of an organization into the organization’s choice of human resource management systems and practices to support the organization’s overall mission, strategies, and performance.

At the core, HR strategies and tactics must be mutually consistent and must reflect the larger organizational mission and strategy. Even the best-conceived strategies may fail if they are not accompanied by sound human resource programs and procedures.

Costco Wholesalers has a strategy based partly on high volume and value-based sales. To support this strategy, it has few people on the retail floor to help shoppers and instead employs a large number of cashiers to process orders more quickly. This could be compared to Holt Renfrew, which has a strategy based partly on high quality and highvalue products. As such, Holt Renfrew employs proportionately more sales associates, to assist shoppers in product choice, and fewer cashiers.

By integrating corporate strategies with the choice of HR practices, HR managers can remain proactive and anticipate challenges or problems both inside and outside the organization, and make adjustments before they impact the organization or its people.

The challenge facing HR leaders is that often the human resource strategy needs to be put in place before the corporate strategy can be successful. That is, the HR strategy needs to be implemented so that

Gamification

The use of rules, competition, and teamwork to encourage engagement by mimicking games.

The strategy of attracting talent through gamification is an example of how proactive strategies can meet the needs of organizations. Recent trends demonstrate the increased use of artificial (or augmented) intelligence and machine learning (AI/ ML) in areas such as recruitment to ensure that job postings and resumé reviews are devoid of unconscious bias.15 Understanding the forces that may impact organizations and their strategies is critical in strategic human resource management and will be discussed later in this chapter.

Just as each member of an organization is expected to generate positive contributions to accomplishing an organization’s goals, so too is every HR system. That is, each and every HR system, practice, process, or tactic should generate value for the organization. The challenge for HR managers is to understand that, within a system of people, a decision to change one thing will often have an impact on other HR practices or activities. Moreover, these decisions are often influenced by the organization and its environment. To this end, HR managers need to be able to integrate and synthesize information about an organization, its environment, its culture, and its strategies to make the most effective HR decisions for the organization:

A number of organizations are installing workout facilities within their physical space. At first glance, this may appear to be simply a cost centre for an organization with respect to the installation and ongoing maintenance and operation of the facility. A closer consideration, however, may reveal increased employee morale, decreased expenses associated with sick days and health benefits, and a time savings for employees, who no longer need to leave the office early to drive to a gym.

Although HR managers must be consistently strategic in their mindset, HR issues are also dominating corporate strategic priorities. Consider first that employee salaries may account for more than 50 percent of the operating expenses in some organizations.16 Complicating matters are findings such as those in a 2013 study in the United States suggesting that actively disengaged employees cost the U.S. economy $450–550 billion a year.17 As a result, the expectations for HR groups are regularly on the rise:

KPMG’s 2020 CEO outlook was completed in two waves because of the COVID-19 health crisis. When asked about their outlook in summer 2020, CEOs ranked talent risk as the primary threat to organizational growth, citing the need to keep employees engaged, connected, and feeling safe; 73 percent of CEOs also noted that remote work has widened their talent pool.18

Understanding the Strategic Human Resource Management Process

To be effective, an organization’s human resources strategy and associated system of processes and practices should be formulated after careful consideration of an organization’s environment, mission and objectives, strategies, internal strengths and weaknesses, and culture. For purposes of discussion, the human resource strategy formulation and implementation process will be broken down into five major steps, as outlined in Figure 1-2. Alternative sources may provide different stages and descriptions. Regardless, the logic remains consistent: Know what you are aligning to, understand your external and internal environment, make decisions, and evaluate the decisions.

Step 1: Organizational Mission, Vision, and Strategy Analysis

FIGURE 1-2 mission

The way in which an organization defines its mission often significantly influences human resource strategies. A mission statement specifies what activities the organization intends to pursue

Organizational Mission, Vision, and Strategy Analysis Environmental Scan Review, Evaluation, and Audit of Human Resource Strategies Analysis of Organizational Character and Culture Choice and Implementation of Human Resource Strategies Identifying Opportunities, Risks, and Challenges Making Data-Informed Decisions Aligned to Strategy Optimizing for High Performance and what course is charted for the future. It is a concise statement of “who we are, and what we do” and gives an organization its own special identity, culture, and path of development.

Two similar pork producers may have varying missions. One may define the mission as “to be a sustainable pork producer,” whereas the other may define it as “to be a leading pork producer.” The associated strategies are likely to show significant differences. Apart from finding efficient ways to raise hogs, the first producer may also seek ways to improve the effectiveness and safety of manure recycling or seek strategies to raise antibiotic-free hogs, while the focus of the second producer may be expansion and profitability. Each will have an impact on HR practices such as talent acquisition.

As defined earlier, an organization’s goals outline what specifically an organization seeks to achieve in a specific time period. Similar to a mission, an organization’s goals will also have a dramatic impact on human resource practices.

The emergence of environmental, social, and governance (ESG) standards used by socially conscious investors20 is paired with organizations’ identifying unique goals related to environmental standards such as company waste and social standards such as ethical supply chains. Building on the example above of the sustainability focused pork producer, one might consider a social goal to be an inclusive organization. This goal would impact internal processes related to workplace equity, diversity, and inclusion, which are often led by HR specialists.

Finally, a thorough analysis of an organization’s strategies is also critical in deciding on the appropriate array of HR practices.

Energy companies who have identified strategies to enter the hydrogen market to curb emissions21 would need to work with their HR teams to identify the knowledge, skills, and abilities to carry out these strategies and determine whether internal or external talent is needed to achieve them.

Many organizations are also now including specific strategies that directly consider their employees. For example, many organizations have set as a strategy to become one of Canada’s “Best Managed Companies.”22 The setting of corporate strategies directly related to HR is a growing trend as HR professionals continue to demonstrate their strategic value.

Regardless of an organization’s strategic direction, human resources are required to formulate and fulfill the organization’s strategies. In all cases, the HR strategies should be chosen for their ability to enable the successful completion of the organization’s strategies. In some cases, a single HR strategy may be used to accomplish different corporate strategies.

Consistent with the setting of corporate mission, goals, and strategies, HR managers must consider how the external environment will influence their decisions. This is the focus of the second step.

Step 2: Environmental Scan

Through careful and continuous monitoring of economic, social, and labour market trends, and by noting changes in governmental policies, legislation, and public policy statements, effective human resource management will be able to identify environmental threats and opportunities that in turn serve as a foundation for new actions. Some of these environmental forces facing Canadian organizations today are listed in Figure 1-3. For discussion purposes, the forces facing a Canadian organization (especially those affecting human resource management) can be grouped under five headings: economic (e.g., recession), technological (e.g., automation), demographic (e.g., workforce composition), sociocultural (e.g., ethnic diversity), and legal (e.g., changing laws). The first four forces will be discussed in this chapter. The critical importance of legal compliance for the HR function warrants a more elaborate review of the subject matter. Hence, this topic is discussed in detail in Chapter 4.

Economic Forces

Economic Force: Economic Cycles The first of four critical economic forces is economic cycles.

Economies go through boom and bust business cycles.

Economic Forces

Economic factors facing Canadian business today, including global trade forces and the force to increase one’s own competitiveness and productivity levels.

The Canadian economy is no exception. In today’s globally connected world, strengths and misfortunes originating in one economy are soon passed on to others. HR professionals must consider economic cycles when designing practices, policies, and the broader HR system. For instance, HR managers face special challenges during a recessionary period, as they often have to carry out the unpleasant task of planning, communicating, and implementing employee layoffs or terminations. Often, wage concessions have to be sought from labour for the sheer survival of the firm. Workforce morale, by and large, is low during a recessionary period; supplementary employee counselling may become necessary. At times, the entire organization may assume a crisis management posture, which creates new challenges for the HR manager with respect to policy formulation, communication, and implementation.

The challenges are equally daunting coming out of a recession, as HR managers consider how best to grow the organization’s talent base. During growth cycles, organizations may be faced with the opportunity to recruit employees with a different skill set than those who may have been let go during the recessionary cycle.

By the middle of 2020, Canada’s economy was shrinking at an unprecedented pace. According to the Ministry of Finance, the economy was contracting at over 5.8 percent per annum, a far cry from the 3.5 percent growth in 2017 and the 1.6 percent growth in 2019.23

Note that boom and bust cycles may not be the same across the country. For instance, the manufacturing sector in Southern Ontario often cycles based on the value of the Canadian dollar against the American dollar. The energy sector in Alberta, on the other hand, tends to vary based on the price of crude oil on the world market. This results in localized challenges for finding or shedding talent. Thus, HR managers need to consider economic forces at the local, national, and international level—which are discussed next.

The COVID-19 pandemic further complicated the numerous challenges associated with adapting to traditional economic cycles. For much of 2020 and 2021, HR leaders needed to also adapt to the rapid closing and reopening cycles of businesses to account for national, provincial, and civic states of emergency, health orders, and community expectations.

By April 2020, 3 million Canadians had lost their jobs and an additional 2.5 million had experienced COVID-19 related absences from work. Within nine months, the overall number had fallen to 1.1 million Canadians being out of work due to economic shutdowns.24

Despite a more positive outlook into 2022, the speed of the economic recovery in Canada as a result of the COVID-19 pandemic remains quite fluid. The Department of Finance projects that the estimated growth of 4.8 percent in 2021 may be tempered to 2.9 percent if health restrictions escalate. Far less volatility is expected in 2022.25

Economic Force: Global Trade International trade has always been critical to Canada’s prosperity and growth. Canada ranks high among exporting nations: on a per capita basis, we export much more than either the United States or China.26 The combination of a relatively small population, a large natural resource base, and a positive currency gives Canada an international trade advantage.

Although our ability to compete in the international marketplace has been generally strong, Canada’s competitiveness has fallen. In 2011, Canada was the twelfth most competitive nation in the world; in 2019, we were ranked fourteenth (Figure 1-4).27

The ever-growing shift toward the global marketplace forces organizations to consider how they manage their employees. The emergence of open borders has presented newer opportunities to Canadian firms and professionals—resulting in both an increase in Canadians working abroad and an increase in economic immigration to Canada. Canada currently accepts over 341,000 immigrants per year; of these, approximately 58 percent are economic immigrants.28 Progressive HR practices and new government policies may be critical to meeting these growing realities. Indeed, the Canadian government is looking to increase immigration to Canada in an attempt to boost the economy as our population ages, with a focus on economic immigration as compared to family- or refugee-based immigration.29 As of 2020, permanent and non-permanent immigration accounted for over 80 percent of Canada’s population growth.30

Economic Forces: Productivity and Innovation

Improvement Productivity refers to the ratio of an organization’s outputs (e.g., goods and services) to its inputs (e.g., people, capital, materials, and energy). Productivity increases as an organization finds new ways to use fewer resources to produce its output. For example:

FIGURE 1-4 How Competitive Is Canada Compared to Other Nations? productivity

The ratio of a firm’s outputs (goods and ser vices) divided by its inputs (people, capital, materials, energy).

A restaurant may seek to improve productivity by using fewer ingredients in recipes (reduction in raw materials) or by asking a server to also clear, clean, and reset tables (increase in responsibility and associated reduction in the need for additional staff). Alternatively, the restaurant may seek to increase the number of outputs by having more people come to the restaurant. The latter, however, may require increased marketing efforts, which would result in an increase in inputs.

In a business environment, productivity optimization is essential for long-run success. Through gains in productivity, managers can reduce costs, save scarce resources, and enhance returns. In turn, improved returns enable an organization to provide better pay, benefits, and working conditions. The result can be a higher quality of work life for employees, who may then be more likely to be motivated

Singapore

United States

Hong Kong

Netherlands

Switzerland

Japan

Germany

Sweden

United Kingdom

Denmark

Finland

Taiwan, China

Korea

Canada

France

Australia

Norway

Luxembourg

New Zealand

Israel toward further improvements in productivity. HR professionals contribute to improved productivity directly by finding better, more efficient ways to meet their objectives and, indirectly, by improving the quality of work life for employees.

Unfortunately, optimizing productivity is not simply a matter of increasing outputs or decreasing inputs. In either case, the employees must adapt how work is done. As a result, a major challenge facing Canadian leaders is optimizing productivity while maintaining a high quality of engaged work life for the employees. Moreover, strategic human resource management seeks to address more than just financial productivity.31 Some of the strategies to address productivity will be discussed in Chapter 3.

What is worrisome today is the gap between the productivity levels of Canada and its biggest trade partner, the United States.32 For over a decade, U.S. productivity has been consistently outpacing ours. Canada is steadily losing its ability to innovate and create wealth compared with other countries. According to the Conference Board of Canada, Canada is ranked ninth of 16 peer countries of the Organisation for Economic Co-operation and Development.33 Even more troubling is that, without enhanced management skills, something enabled through HR, the future is not likely to shift.

If Canada is to improve—even maintain—its competitiveness, innovation on two fronts, namely people management and technology, is a must.

FIGURE 1-5 Employment by Industry in Canada

Public administration

Other services (except public administration)

Accommodation and food services

Information, culture and recreation

Health care and social assistance

Educational services

Business, building and other support services

Professional, scientific and technical services

Real estate and rental and leasing

Finance and insurance

Finance, insurance, real estate, rental and leasing

Transportation and warehousing

Retail trade

Wholesale trade

Wholesale and retail trade

Services-producing sector

Non-durables

Manufacturing Durables

Construction

Utilities

Mining, quarrying, and oil and gas extraction

Fishing, hunting and trapping

Forestry and logging and support activities for forestry

Forestry, fishing, mining, quarrying, oil and gas

Agriculture

Goods-producing sector

Source: Adapted from Statistics Canada, “Labour Force Characteristics by Industry, Annual, (x1000)” 2020, Table 14-10-0023-01. https://www150.statcan. gc.ca/t1/tbl1/en/tv.action?pid=1410002301

Among peer nations, Canada receives a poor rating for the number of patents filed per capita. Indeed, we are 15 of 16. Japan and Switzerland are ranked number 1 and 2.34

Without innovation, productivity differences tend to increase. As such, without innovation, Canadian employers and their HR professionals will be faced with the challenge of creating additional productivity improvements. As a progressive HR strategy, numerous organizations are starting to recruit or develop innovative staff to create a culture of innovation within the organization.

Economic Force: Knowledge Workers Over the last 20 years, employment in primary and extractive industries (such as mining and fishing) has remained relatively constant or even dropped, whereas service, technical, and professional jobs have increased. The relative contribution to Canada’s employment in various industries is shown in Figure 1-5. Service industries such as education, health care, tourism, trade, and public administration make significant contributions to our national wealth today. knowledge workers

The move away from extractive industries increases the need for innovation. In part, it creates an environment that requires not only knowledge workers, but individuals who bring innovative thinking to their organization.

Members of occupations generating, processing, analyzing, or synthesizing ideas and information (such as scientists and management consultants).

Knowledge workers form the basis of a knowledgebased economy grounded in the production, distribution, and use of knowledge and information. Indeed, modern economies are becoming dependent on knowledge, information, and highly skilled individuals.35 A 2018 study by the Business Development Bank of Canada noted that 39 percent of small and medium-sized business were having difficulty finding new workers, and that these pressures would be present for at least a decade. Interestingly, the same study found that companies with strong HR policies had less difficulty.36

The ability of organizations to find, keep, and continually retrain these workers might spell success in the coming years. This is not only a trend in North America. China has taken great strides toward moving from a production-based to a knowledge-based economy.37 Moreover, some have even signalled that the term knowledge workers needs to be changed to learning workers.38 With an increased reliance on knowledge workers, organizations also start to face challenges associated with employees hiding and withholding knowledge.39 A further challenge facing HR professionals in a growing knowledge-based economy is that educational attainment is not keeping pace. For instance, UNESCO found that governments are having difficulty keeping up with the pace of growth in higher education.40

Technological

Forces

Technological Force: Connectivity and Work Design Connectivity influences organizations and the way people work. Canada has witnessed the rapid growth of connectivity and access to high-speed information transmission systems affecting almost all walks of life. In December 2016, the Canadian Radiotelevision and Telecommunications Commission declared that access to high-speed Internet should be a base service for all Canadians.41 An unprecedented degree of connectivity has changed the way we work, play, study, and even entertain ourselves. Access to information has affected the way several organizations conduct their business. Nevertheless, Canada lags behind a number of developed nations in technology development and use.

Approximately 91 percent of Canada’s population has access to the Internet.42 A key challenge, however, is that only 37 percent of rural households and 24 percent of Indigenous community households have access to Internet that is considered “high speed” compared to 97 percent of urban homes.43

Connectivity brings considerable flexibility into when and where work is carried out in that it enables remote work arrangements. In 2016, more than 19 percent of Canada’s working population worked from a nontraditional workplace, such as their home.44 That percentage jumped to nearly 40 percent of employees in April 2020 because of pandemic restrictions.45

Pre-pandemic, TELUS had arranged for half of its 30,000 employees to be able to work from home if they chose. In its teleworking pilot test, TELUS found that having 170 employees working from home saved 114 tonnes of greenhouse gases and 14,000 hours of traffic time. In the same pilot, TELUS found that morale as well as productivity increased as a result of telecommuting.46

Remote work is not without its HR challenges, however. For instance, a challenge related to remote work is how an organization can best ensure that the employee’s home workstation is safe. Inequality among job types and sectors also becomes a significant challenge in that not all jobs can be accomplished remotely, thereby creating further inequalities between individuals.47

Not all jobs lend themselves to less traditional workspaces; but with the advances in technology, virtually any job—or any part of a job—that involves work that is independent of other people and special equipment could be performed away from the workplace. Careful planning, training, and piloting may be required before remote work arrangements are rolled out in an organization, as managing from a distance is simply different from managing in person.48 As a platform for communication and interaction, the Internet has had a profound impact on human resource management activities. Social networking sites, video-sharing sites, wikis, blogs, and other interactive opportunities allow users to own and control data as well as add value to the applications they use. This has resulted in rapid adoption of social media for HR purposes and simultaneously created the need for policies about the limitations of social networking within organizations. See the Spotlight on Ethics for an example. Connectivity has also created a greater focus on cybersecurity.49 With employees working distally, the probability of data breaches is climbing. From a strategic human resource perspective, many organizations have taken to hiring cybersecurity experts to not only protect their sensitive data but also make attempts to breach their security systems in an effort to better protect their data.

Technological Force: Automation Automation continues to be a technological force and opportunity that has affected Canadian organizations and their human resource management practices.

Automation

The shift toward converting work that was traditionally done by hand to being completed by mechanical or electronic devices.

Organizations tend to mechanize or automate for speed, reliability, or flexibility. Competition from other countries has made it imperative that we improve the speed of our manufacturing practices if we want to stay competitive.

By moving to a mechanized process, better service may be provided to the customer through increased predictability and reliability in operations and higher standards of quality in production. Machines, software, and algorithms do not go on strike, nor do they ask for raises.

Mechanization allows for flexibility in operations. In several automated production facilities, even small production batches become economically viable since the time, cost, and effort involved in changing setups are minimal. The ability to produce small batches, in turn, enables a firm to focus on the needs of different customers and market segments and speed up delivery schedules.

Shapeways is an organization that specializes in rapid prototyping and small-batch production through three-dimensional printing in materials such as plastic and metal.

Mechanization and automation are not without HR challenges. Negative union attitudes toward mechanization are a barrier to the introduction of technology in the workplace. Automation may result in a smaller workforce together with fewer opportunities for socialization on the job. To use expensive technology effectively (during automation), more and more manufacturing facilities may find it necessary to schedule two or three shifts a day. In addition, the technologies used in industries such as additive manufacturing may require highly skilled designers, operators, and technicians.

Improvements in technology and automation have helped the British Columbia lumber industry. Interestingly, while automation has led to job losses in some roles, British Columbia’s forest industry is facing a talent shortage due to retirements and technology advances. Thus, automation has created an environment in which there are too many employees and too few employees simultaneously, just for different segments of the industry.50

In some cases, however, mechanization is seen as a solution to labour shortages. The farming industry in the United States, as an example, is experiencing a labour shortage. As a result, companies are turning to mechanization as a solution.51

The technology employed by different firms shows considerable variation. In organizations such as a large steel factory or lumber mill, the production processes are fairly routine. In these organizations, improving the predictability of operations assumes great importance. This often requires HR managers to focus more on the predictability of employee performance (e.g., by providing explicit job descriptions and job-specific training, and by focusing on performance monitoring). In contrast, in firms with nonroutine production processes (such as advertising firms and software developers), flexible HR practices that foster creativity, innovation, and entrepreneurship may add more value.

Technological

Force:

Data and

Analytics Related to both connectivity and automation is the growing impact of data and analytics in the workplace. Due to AI/ML and rapidly increasing computing power, companies are facing a significant shift in the role that data and analytics play in the workplace. HR professionals, in turn, must be able to support the organization’s data and analytics talent needs and also embrace the role of analytics to support the HR function. A 2017 report suggested that 71 percent of companies consider people analytics to be a high priority.52

Ultimate Software is producing an artificial intelligence based technology to assess employee engagement in real time.

More effective knowledge management—the process of capturing organizational knowledge and making it available for sharing and building new knowledge— has been another outcome of digital information systems. It has given rise to potentially boundless information.53 Intranets and integrated information systems help store and access information quickly and accurately. Information management systems capture an incredible amount of digital information about an employee, giving rise to human resource data analytics.54 For instance, such systems can store what the employee learns during various training programs (or over a time period) and give evidence of performance improvement. When the annual

FIGURE 1-6 Distribution of Biological Gender in the Workforce by Industry

Public administration

Other services (except public administration)

Accommodation and food services

Information, culture and recreation

Health care and social assistance

Educational services

Business, building and other support services

Professional, scientific and technical services

Real estate and rental and leasing

Finance and insurance

Finance, insurance, real estate, rental and leasing

Transportation and warehousing

Retail trade

Wholesale trade

Wholesale and retail trade

Producing-sector services

Non-durables

Durables

Manufacturing

Construction

Utilities

Mining, quarrying, and oil and gas extraction

Fishing, hunting and trapping

Forestry and logging and support activities for forestry

Forestry, fishing, mining, quarrying, oil and gas

Agriculture

Goods-producing sector performance interview is conducted, managers can identify the on-the-job competencies of an employee. Even the field of HR is being shaped by big data trends. For instance, metaBUS is a technologybased research hub that is seeking to bring together and synthesize every correlation within the field of human resources over a 25-year period to enable HR practitioners to make better data-informed decisions about their practices and systems.55

Demographic Forces

additive effect. As a result, HR managers must consider demographic shifts both in isolation and as an integrated system.

Demographic Force: Gender Balance While the figures that follow refer to gender, one must recognize from an inclusiveness lens the importance of differentiating biological gender (or sex at birth) from gender identity and gender expression. An understanding of demographic forces in sex at birth, gender identity, and gender expression will serve human resource professionals in their pursuit to create inclusive workplaces. For example, a recent job fair in Toronto focused on the transgender community.56

Demographic Changes

Changes in the demographics of the labour force (e.g., education levels, age levels, participation rates) that occur slowly and are usually known in advance.

The demographics of the labour force describe the composition of the workforce: the education levels, the age levels, the percentage of the population participating in the workforce, and other population characteristics. While demographic changes occur slowly and can be predicted in most instances, they still exert considerable influence on organizational decisions. Each demographic change will have a different impact on the choice of human resource practices and activities, but may also have an

As of 2020, Canada’s labour force consisted of almost 19.9 million people aged 15 years or older, up from 15.8 million in 2000.57 In 2020, 47 percent of the workforce had been assigned female at birth.58 Moreover, the participation rate of biologically female in health care and professional, scientific, and technical services also continues to grow (see Figure 1-6). More women than men tend to work part-time (see Figure 1-7).

FIGURE 1-7

Labour Force Employed Full-Time and Part-Time by Biological Gender

Educational Attainment

The highest educational level

Demographic Force: Educational Attainment A look at the educational attainment of Canadian workers presents an intriguing picture. The educational attainment of Canadians has increased dramatically over the past several years and is expected to maintain its upward trend (see Figure 1-8).

According to one study, 65 percent of jobs will require higher education.59 More specifically, 35 percent will require a degree, whereas 30 percent will require a diploma. In 2016, 54 percent of Canadians aged 25–44 years were post-secondary graduates.60 Over 28 percent of Canadians aged 25 or above hold a university degree or better (the corresponding figure in 2002 was less than 10 percent).61

Educational attainment is not equal across demographics, however. For instance, 23 percent of Indigenous peoples living off reserve aged 25–64 have a diploma and 10.9 percent have a degree. Degree attainment among Indigenous peoples living on reserve is 5.4 percent.62 While degree attainment for women who are married or living in a common-law relationship is 39 percent, the percentage is only 20.4 percent for single mothers with a degree.63

Because someone has achieved some level of higher education also does not imply that they will par ticipate in the labour force. Approximately 80 percent of individuals with a degree and 76 percent of individuals with a certificate actively participate in the labour market.64 Consequently, HR professionals actively seeking to create diverse, equitable, and inclusive work environments may face growing challenges in the sourcing of future talent if educational attainment is used as a primary recruitment hurdle.

Primary and secondary education systems play a key role in generating the new supply of skills needed by our post-industrial society. By and large, Canadian schools appear to be ready for this task.

In one study, approximately 30,000 students from more than 1,000 Canadian schools were compared on their mathematical and scientific literacy with students in 31 other countries. Canadian students performed well compared to others, ranking second in reading, seventh in science, and eighth in mathematics. In a majority of provinces, students’ performance in reading, science, and mathematics placed these provinces among the top-ranked countries.65

The disturbing news, however, is that 48 percent of Canadians aged 16 or over fall below adequate levels of literacy.66 Not only do such low literacy rates reduce the overall productivity levels in our industries, but they may also be a major contributor to safety violations and accidents. Moreover, as the nature of work shifts to that of knowledge-based industries, the demand for individuals with post-secondary education will outpace the rate at which people attain a postsecondary education.

FIGURE 1-8 Number of People in the Canadian Workforce by Their Highest Level of Educational Attainment

0 to 8 years

High school graduate

Bachelor’s degree

Some high school

Some post-secondary

Post-secondary certificate or diploma University degree

Above bachelor’s degree 200020012002200320042005200620072008200920102011201220132014201520162017

Source: Adapted from Statistics Canada, “Unemployment Rate, Participation Rate and Employment Rate by Educational Attainment, Annual,” Table 14-100020-01. Population on y-axis in thousands.

About 17 percent of women and 19 percent of men drop out of school before they graduate high school.67

It is estimated that currently more than 5.2 million Canadians lack a basic school certificate or diploma.68

Some of the more progressive employers have recognized workplace literacy as a serious issue and have taken proactive action to minimize its adverse consequences. For instance, HR professionals are encouraged to use accessible and plain language in communications.69

Faced with this disheartening prospect, the Corporate Council on Education identified a set of “employability skills” consisting of basic academic skills (e.g., communication, thinking, learning), personal management skills (e.g., positive attitudes and behaviours, ability to accept responsibility, adaptability to new challenges), and teamwork skills (e.g., ability to work with others, ability to lead a team). These skills were considered to be the foundation skills for employability in the future.70

Demographic Force: Aging Population One of the issues for human resource managers is what Maclean’s termed our old age crisis.71 In 1996, about 28 percent of the population (or almost 7.6 million Canadians) were more than 50 years old. The proportion of the population in the age group 65 and over is now expanding rapidly, reinforced by a low birth rate and longer life expectancy. In 2020, people aged 65 and over (those likely leaving the workforce) formed

18 percent of the population. By 2060, this proportion will increase to 25.7 percent. Conversely, the age category between 15 and 30 years old (those entering the workforce) will decrease from 18.9 percent in 2020 to 17.36 percent of the population over the same time frame.72 In short, human resource professionals will face an ever-increasing trend of more people leaving the workforce than entering it. This is because the average age of the Canadian population has been steadily increasing (see Figure 1-9). Like economic cycles, the impact of population aging is different depending on your location.

In 2020, the provinces with the highest proportion of the labour force aged 65 and over were Quebec, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador, all between 19.7 and 22.3 percent compared to 18 percent for Canada as a whole.73 At the other end of the scale, Nunavut had only 4 percent of its population over the age of 65 in 2020.

The exact consequences of this trend for the human resource management function are hard to predict. An increasingly hectic scramble for jobs (especially in the traditional sectors) may be one consequence. This is because the fear of post-retirement poverty (fuelled by uncertainty about government-sponsored pension plans and the recent volatility in the stock market) may motivate employees to hold on to their current jobs. This may create unprecedented bottlenecks in

FIGURE 1-9 Projected Population of Canada by Age Category

15–19 years

20–29 years

30–39 years

40–49 years

50–59 years

60–69 years

70–79 years

80–89 years

90–99 years

100 years and over professional and unionized industries. That said, older workers may face ageism in technology jobs.74

According to Statistics Canada, the age of retirement has been on the rise since the 2000s. The average age for retirement in 2000 was 61.6, whereas the same number in 2020 was 64.5.75

Pressures for expanded retirement benefits, variable work schedules, coordination of government benefits (e.g., Canada/Quebec Pension Plan benefits) with company benefits, and retraining programs are just a few of the challenges that await HR specialists in the future. This effect is compounded by recent changes to the Old Age Security (OAS) pension program. Phased in by 2029, workers will have to wait until they are 67 to claim OAS benefits.

One major challenge facing Canadian organizations is retaining older, more experienced, and skilled employees whose expertise is in demand in the labour market. The past view of people as expendable cogs who are responsible for managing their own careers has encouraged employees to leave their employers as soon as a better opportunity emerges elsewhere. To retain older workers, employers have to show respect and appreciation, facilitate career growth within the organization, offer flexible work and opportunities to telecommute, and recognize their skills and experience.76

It is important to keep in mind that, while Canadians often look to retire, there is no mandatory retirement age. An aging population affects many HR functions, especially recruitment and selection, job design, training, appraisal, and compensation and benefits administration.

The availability of retirees provides an opportunity to employers who are looking for experienced parttime employees. The reduction in the supply of young workers (a staple source of recruits by many fast-food restaurants and grocery chains) may be compensated by the availability of older workers willing to work part-time. Experienced and highly motivated retirees may be a welcome source of recruits for employers and nonprofit/voluntary agencies searching for persons who can accept supervisory responsibilities.

The age crisis is not limited to older generations. A declining youth population—those under age 25— entering the workforce has implications for Canada on a global scale. While Canada’s youth population is falling in relation to the population overall, developing economies, such as India, are experiencing an increase in the youth population relative to the population overall.

Demographic Force: Generational Shift  In today’s workplace, leaders may interact with up to five generations—Generation Z, Generation Y (Millennials), Generation X, baby boomers, and traditionalists. 77 With birth years starting in 2010, Generation Alpha is not far away from the workplace. 78 This generational diversity creates an interpersonal dynamic for all leaders regardless of age in that they must be aware of the different motivators for each of the generations and be able to tailor activities to different age demographics.

Generation X employees, for example, who are born between 1966 and 1980, are not averse to hard work, place a premium on work–life balance, and like to be active participants in decision making.79 They are likely to show disdain for a “command and control” culture and are likely to have more loyalty to their profession and competency building than to their employers.

Some writers claim that Gen Xers think of work as a job while boomers view it as a career. Xers are unfazed by power and authority; boomers are impressed and attracted by it. Xers mistrust most business practices; boomers instituted many of them. Xers are self-reliant; boomers are team-oriented.80

Quickly becoming the dominant generations in the labour market are Generation Y and Generation Next (or Gen Z), and they are qualitatively different from Gen X:

Generation Y may not respond well to traditional management practices. While it is risky to overgeneralize about any group, significant numbers of Gen Ys seek continuous learning, ongoing feedback, teamwork, up-to-date technology, security, respect, and work–life balance. Their biggest fear is boredom. Gen Z, on the other hand, will have characteristics of fiscal conservatism and greater transparency expectations.81

Generational shifts in North America are also having complex implications for HR managers that are somewhat outside their control. For example, certain industries will be facing an impending skilled trades shortage in part because of the increasing average age of the skilled trade worker and in part because of challenges attracting young people to the skilled trades in post-secondary education.

Sociocultural Forces

Sociocultural Force: Diversity and Social Justice As cultural values change, HR departments discover new challenges. Several sociocultural forces face Canadian managers. In the section that follows, we will briefly highlight the role of diversity, equity, and inclusion in Canadian workplaces as an important consideration in the formulation of HR strategy.

We recognize, however, that we cannot provide a full account of the domain in this context.

Sociocultural Forces

Challenges facing a firm’s decision makers because of cultural differences among employees or changes in core cultural or social values occurring at the larger societal level.

Cultural Mosaic

The Canadian ideal of encouraging each ethnic, racial, and social group to maintain its own cultural heritage, forming a national mosaic of different cultures.

Ethnicity is a significant dimension of diversity in the workplace. In 1971, Canada became the first country to declare multiculturalism as a state policy.82 By 2016, the Canadian population was made up of over 250 ethnic origins.83 The coexistence of numerous national, racial, and ethnic groups, each with its unique cultural and social background, makes Canadian society a cultural mosaic. 84 Economic immigrants have often acted as engines of economic growth in Canada, while shifts in the country of origin of immigrants have added to this country’s cultural diversity and richness.

Unlike the American notion of the “melting pot,” Canada has encouraged each ethnic minority to maintain its unique cultural heritage to form part of the Canadian cultural mosaic. Canada is no longer a two-language nation; millions of Canadians have neither English nor French as their mother tongue. ©

Canada’s workplaces become more and more diverse as visible minor ities are encouraged to maintain their unique cultural her itage. What potential conflicts can develop because of this “encouragement”?

Today, over 3.6 million Canadians are referred to as allophones, which literally means “other speaking.”

For example, today, more Canadians speak Mandarin than Italian, and it is the most common nonofficial language.85

For the practising manager, this cultural diversity simultaneously brings additional opportunities and challenges. Often, it is HR’s responsibility to maximize the beneficial outcomes and minimize the challenges posed by an ethnically diverse workforce. A large focus of current HR practices is to create inclusive work environments in which differences are embraced and leveraged for the betterment of the organization.

As Canadian society turned the corner into the 2020s, several social justice movements drew increased attention to the role of systemic racism in the workplace. The continued inequalities articulated by social justice advocates for Indigenous, Black, and other racialized people of colour attributed to systemic bias (both unconscious and conscious) have become central to numerous equity, diversity, and inclusion initiatives in the workplace.86

Adding complexity to the importance of diverse, equitable, and inclusive workplaces human resource professionals need to consider numerous potential impacted groups including, but not limited to, sex at birth, gender and gender identity, sexual orientation, age, physical ability, language, mental wellness, language, religion, and socioeconomic status. A number of these will be discussed in Chapter 4.

Sociocultural Force: Ethics There is a great demand today for more ethical conduct of business. The unethical practices of several large companies— including Bre-X, Enron, and WorldCom—underscored the social costs of unethical and fraudulent business practices. Businesses, especially big corporations, have been accused of acting totally out of self-interest and furthering the interest of a few members of top management. In recent years, a variety of unethical practices have been reported, including creative accounting, insider trading, secur ities fraud, excessive payments made to top management not reflective of their contributions, bribery, and kickbacks. Indeed, greed and short-term orientation accompanied by creative accounting played no small role in the stock market meltdown and the acceleration of personal bankruptcies in 2008.

A global survey indicated that nearly 75 percent of respondents had felt pressure to compromise their standards at work.87 The most important ethical issues confronting Canadian firms today would seem to relate to sexual harassment, cyber espionage, avoiding conflicts of interest and maintaining honest governance, employee and client privacy, environmental protection, and security of information.88

This has resulted in many Canadian firms instituting a code of ethics or code of conduct for their employees. Over 70 percent of the responding firms in a survey89 had also instituted a program to promote ethical values and practices. Needless to say, the HR department will be a key player in this important activity.

Step 3: Analysis of Organizational Character and Culture

Organization Structure

The product of all of an organization’s features and how they are arranged—people, objectives, technology, size, age, and policies.

In addition to external scans, HR strategies should be formed only after careful consideration of the internal environment and elements such as character and culture. Similarities between organizations can be found among their parts, but each whole organization has a unique character. A key element of organizational character is its structure. Organization structure is the product of all of an organization’s features and how they are arranged: its employees, its objectives, its technology, its size, and its policies, to name a few.91 Organization structure reflects the past and shapes the future. HR specialists should be familiar with and adjust to the organization’s structure. For example, sometimes objectives can be achieved in several acceptable ways. This idea, often overlooked, is called equifinality, which means there are usually many paths to any given objective. The key to success is choosing the path that best fits the organization’s character.

Take, for example, how several key managerial decisions are made and their impact on HR practices. In some organizations, an autocratic decision-making style is used along with a strong organizational hierarchy. In contrast, other organizations consciously make an effort to create an egalitarian, participative, and entrepreneurial work climate. HR practices such as seniority- and rank-based pay and top-down communication channels are likely to work best in the former situation, while results-oriented (and competency-based) pay and organic communication channels are likely to work best in the latter.

The managerial philosophy also influences the type of organizational structure and the HR