The Strategic Human Resource

Management Model
As a strategic business partner, the human
resource function helps organizations and their
employees attain their goals. This section
explores some of the pressures and opportunities
faced by organizations and outlines how strategic
human resource management provides a
framework from which success can be built and
sets the frame for the rest of this book.
 CHAPTER 1

Strategic Human Resource

Management
The only vital value an enterprise has is the
experience, skills, innovativeness, and insights of
its people.
LEIF EDVINSSON1
Page 2

LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. LO1Discuss the objectives of human resource management.
1. LO2Identify the steps in the strategic management of human resources.
1. LO3Explain how human resource departments are organized and how
they function.
1. LO4Discuss the role of human resource professionals in today’s
organization.
Consider for a moment the impact that organizations have on your daily
life. From the products you consume, to the services you use, to the post-
secondary institution you are attending, the vast majority of your time is
spent interacting with organizations and their products or services. One
element ties all of these organizations together: people.
People are at the core of all social organizations—from the sole
proprietor who owns and operates a small coffee shop to an organization
like Shopify with a market capitalization value of over $100 billion.2 It is
individuals and teams that create the goals, the innovations, and the
accomplishments for which organizations are praised. They create work
environments that win awards, such as Deloitte’s award for “Canada’s
Best Managed Companies.” From the organization’s perspective, people
are resources. They are not inanimate resources, such as land and
capital; instead, they are human resources. Without them, organizations
would not exist.
At the beginning of the 1960s, the National Aeronautics and Space
Administration (NASA) was trying to figure out how to build a spacecraft
that would allow humans to return safely to Earth.3 At the time, an
aeronautical engineer named Charles Yost developed what was called “slow
spring back foam.” This product was later adapted and is now referred to as
“memory foam” and is found in football helmets, airline seats, and pillows.
Although NASA’s balance sheet did not list its human “assets,” these
resources were at work. Before the foam discovery, a casual observer
would have considered NASA’s tangible infrastructure as the company’s
most important asset. With each discovery and innovation necessary to
enable space travel, NASA’s assets continued to grow. A keen observer
would note that neither the tangible assets nor the innovation would be
of great value without capable people to manage them. Amazingly, today
NASA faces similar challenges; however, rather than returning from the
moon safely, a major innovation challenge is how to return humans
safely from Mars4 and simultaneously partnering with private
organizations like SpaceX for human space flight.5
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Organizational success depends upon careful attention to human

resources. An organization’s strategies are dependent on the people
brought together to create them. In turn, the success of an organization
relative to these strategies is dependent upon the practices used to
organize and lead human resources. Some of the best managed and most
successful Canadian organizations are those that effectively make
employees meet societal challenges creatively.

What Is Human Resource

LO1
Management?
To understand what human resource management is, we need to first
consider why people come together to form organizations. In short,
organizations bring people together in a coordinated manner to
accomplish goals or objectives that could not be accomplished by a single
individual. The goals that organizations set may be as varied as the
organizations themselves. Many organizational goals, however, may be
categorized into economic (e.g., profit, shareholder value), social (e.g.,
ethical practices), and environmental (e.g., reduction of carbon
footprint) goals. For an organization to achieve its goals, employees must
engage in actions and behaviours that move the organization toward
accomplishing them. If employees do not contribute to an organization’s
goals—or worse, they engage in behaviours or actions that move the
organization away from its goals—the organization will stagnate and
potentially fail. This principle applies to all forms of organizations—
including for-profit, not-for-profit, social, governmental, and non-
governmental organizations (NGOs), to name a few.
At its core, human resource management is the leadership and
management of people within an organization using systems, methods,
processes, and procedures that identify, select, motivate, and enable
employees to achieve outcomes individually and collectively that
enhance their positive contribution to the organization’s goals. Thus,
human resource management is not an end in itself; it is a means of
structuring the organization to facilitate and enable the organization to
achieve its objectives. The role of human resource management is
therefore critical to the success—indeed, even the very survival—of the
organization.

The Difference Between Human Resource

Management and a Human Resource
Department
Before moving on, it is important to differentiate between the field of
human resource management and a human resource department.
Although human resource management is central to all organizations,
not all organizations will have a dedicated human resource department.
The field of human resource management thus focuses on what leaders
and managers should do regarding organizing human resource systems,
policies, and procedures. These systems, in turn, create value by
facilitating and enabling employees to achieve individual goals that in
turn contribute to corporate or organization goals.6
A human resource department, on the other hand, is a specialized group
with the primary focus of ensuring the most effective use of human
resource systems across an organization to enhance employee
performance and accomplish organizational goals. The contribution of a
human resource department should be kept at a level appropriate to the
organization’s needs and resources. In a new venture or micro-business,
for example, human resource management may be performed by the
entrepreneur or one individual who has numerous other duties within
the organization. As the organization grows, it may decide to hire a
professional human resource manager or human resource specialist.
Within large-scale organizations, it is not uncommon to have numerous
people dedicated to organizing human resource practices. However,
resources are wasted when the human resource group is more or less
sophisticated than the organization demands. A 2015 study conducted by
Bloomberg BMA found that HR teams tend to comprise approximately
1.6 human resource staff for every 100 employees in organizations
smaller than 250 employees. That number changes to about 0.6 human
resource staff per 100 employees in organizations over 2,500
employees.7 See LO3 later in this chapter for further details on the
structure of human resource departments.
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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, product-
market 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.
FIGURE 1-1

The Interconnectivity of Human Resource Management Activities

Making Human Resource

LO2
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 long-term 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 low-cost 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.
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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
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.
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 high-value
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 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
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.
Page 6

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
To meet these demands, HR teams and senior leaders in HR need to be
strategic business partners who are able to make evidence-informed
recommendations and decisions that enable individuals and teams to
create more value for the organization. The gradual shift to strategic HR
is evidenced by the 62 percent of senior HR leaders now reporting to the
CEO or president of the organization.19

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.
FIGURE 1-2

A Model of Strategic Human Resource Management

Step 1: Organizational Mission, Vision, and

Strategy Analysis
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 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.
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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.

FIGURE 1-3

Major Forces Facing Canadian Organizations

Economic Forces
ECONOMIC FORCE: ECONOMIC CYCLES The first of four
critical economic forces is economic cycles.
Economies go through boom and bust business cycles. 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
FIGURE 1-4

How Competitive Is Canada Compared to Other Nations?

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
Page 9
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:
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 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.
Page 10
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.
FIGURE 1-5

Employment by Industry in Canada

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.
Knowledge workers form the basis of a knowledge-based 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
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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 signaled 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 Radio-television 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.
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.
Page 12
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 performance interview is conducted,
managers can identify the on-the-job competencies of an employee.
Page 13

Even the field of HR is being shaped by big data trends. For

instance, metaBUS is a technology-based 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
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 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
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 1-6

Distribution of Biological Gender in the Workforce by Industry

Table Summary: Summary
 FIGURE 1-7
Labour Force Employed Full-Time and Part-Time by Biological Gender

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

FIGURE 1-8

Number of People in the Canadian Workforce by Their Highest Level of Educational Attainment
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 participate 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 post-secondary education.
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
Page 15
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.
FIGURE 1-9

Projected Population of Canada by Age Category

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
professional and unionized industries. That said, older workers may face
ageism in technology jobs.74
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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 part-time 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.
Page 17

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.
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.
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
Page 18

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, securities 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. Page 19
Spotlight on ETHICS
What Is a “Right” Behaviour?
Ethics are moral principles that guide human behaviours and are often
based on a society’s cultural values, norms, customs, and beliefs, which
means that different cultures and even individuals within the same
society have widely varying standards of behaviour. How are we to
differentiate “right” from “wrong” or “good” from “bad”? There are no
simple answers. Many adopt one of the following postures in dealing
with such ambiguous situations:
1. Universalist approach: Persons who embrace this view assert that
some moral standards are universally applicable. In other words,
regardless of society or place, a wrong act (such as killing,
stealing, or lying) is wrong. There are no exceptions to moral
“rights” and “wrongs.”
2. Situational approach: What is right or wrong depends essentially
on the situation or culture surrounding the actor. While telling
the truth is desirable, there may be situations in which lying is
acceptable or even necessary, or other cultures may not value
truth to the same extent. Similarly, while killing is bad, there may
be situations in which this act is justified. It all depends on the
situation. While high morals are to be followed, an individual may
have to make exceptions when the context justifies them.
3. Subjectivist approach: In this approach, the individual decision-
maker facing a situation determines what is right and wrong
after considering all aspects of the situation. Moral decisions are
based on personal values and preferences. Needless to say, the
 standards imposed by individuals are vastly different depending
on their upbringing, current circumstances, values, and beliefs.
Another useful model by which to understand and guide ethical
behaviour is offered by Lawrence Kohlberg, an American psychologist.
Kohlberg posits six stages that form an invariant and universal sequence
in individual development; thus, everyone is supposed to go through the
same stages in the same sequence. It is possible, however, for a person to
be “stuck” at one of the following stages and not proceed to the next
level. The six stages of moral development identified by Kohlberg90 are
as follows:
Stage 1: Obedience and Punishment Stage: The only reason for a person
to perform the “right” act at this stage is obedience to others who have
the power to punish.
Stage 2: Reciprocity Stage: Here, the individual enters into reciprocal
agreements with others in order to receive the greatest good or reward.
The focus is on achieving one’s own objectives and on self-interest; for
this, the individual concerned is willing to take actions that others want
them to take.
Stage 3: Interpersonal Conformity Stage: What is “right” is determined
by expectations of others who are close to the individual. Close relatives,
friends, and other “reference groups” help the individual identify the
“right” action in any setting.
Stage 4: Law and Order Stage: Doing one’s duty and obeying society’s
rules is considered the “right” behaviour at this stage.
Stage 5: The Social Contract Stage: Here, the individual goes beyond the
minimal standards established by laws and rules. “The greatest good of
the greatest number” in the society is the maxim that guides the
individual’s behaviour at this stage.
Stage 6: Universal Ethical Principles Stage: At this stage, the individual
is guided by high moral principles. People are to be treated as ends in
themselves, not just as means to one’s ends or even to the ends of a
whole group or society. People are considered as inherently valuable and
to be treated in the “right” way. Very few individuals reach this level.
The field of human resource management is full of situations that involve
hard choices between good and bad, right and wrong, desirable and
undesirable.
The Spotlight on Ethics feature in this book will introduce you to one or
more ethical challenges associated with the topic discussed in each
chapter. Once you have identified your responses, compare your answers
to those of your friends or family members. Find out why each person
chose differently. Try to categorize the responses under the three
categories and six stages of moral development listed above. Which
approach seems to be used by most of your friends and acquaintances?
At what stage of moral development are you and your friends? Why?
What are the implications for you and for your employer? What prevents
you and your friends from moving to the next stage?
Instructions: Consider the following situation. Make a note of your answer and compare it
with those of your friends and acquaintances.

“Blind” review versus social media

Your organization has taken to using “blind” reviews of applicant
information to diminish the potential for unconscious bias in recruiting
efforts. In a bid to appeal to Generation Z applicants, your organization
has decided to hire an individual to serve as a social media “influencer”
on behalf of your organization. One member of the search committee has
indicated that they would like to review the social media presence of all
candidates. Another member of the committee has reminded the group
about the importance of “blind” review. The discussion has become
somewhat heated among the group with no obvious conclusion in sight.
As a member of the search committee, what would you offer as a path
forward?

Step 3: Analysis of Organizational Character and

Culture
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.
Page 20

The managerial philosophy also influences the type of organizational

structure and the HR department’s role within the firm. For instance, in
a highly formal bureaucracy that is structured along functional lines
(e.g., marketing, finance, production, etc.), HR’s role is often to preserve
the existing division of work by providing clear job descriptions, hiring
specialists for each division, and introducing training systems that foster
functional expertise. In contrast, in organizations that have flexible
structures, the socialization of employees to create an organization-wide
perspective and the creation of broad job classes may assume greater
importance. Finally, an organizational culture, the core beliefs and
assumptions that are widely shared by all organizational members,
shapes work-related and other attitudes and significantly influences
overall job commitment and performance. Clearly, human resource
management has a role in shaping this; however, even here, the culture
has to be consistent with the overall mission and strategy of the
organization concerned.

Step 4: Choice and Implementation of Human

Resource Strategies
Giving consideration to both the internal and external environments
provides the opportunity for the human resource professional to begin
evaluating potential human resource practices and activities and whether
each is viable. Unsuitable strategic options must be dropped from
consideration. The ones that appear viable should be scrutinized in detail
for their advantages and weaknesses before being accepted for
implementation.
Strategic choice and implementation involve identifying, securing,
organizing, and directing the use of resources both within and outside
the organization. Ultimately, there should be a clear line of sight between
the HR strategy and the corporate goals (see Figure 1-10). Similarly, the
strategic human resource plan needs to integrate with other plans in the
organization.
FIGURE 1-10

Line of Sight in Human Resource Strategy

As the above example shows, the HR strategy must reflect every change
in the organizational strategy and support it. Simply stating that “we are
strategic in our focus” does not, in fact, result in a contribution to
organizational strategy.
A survey of 1,030 HR and non-HR business leaders revealed that 60
percent of HR teams spend more time performing administrative tasks
than strategic ones. Interestingly, 85 percent of HR professionals believe
that strategic HR is important, while only 67 percent of non-HR leaders
believe the same.92 In another study, 73 percent of the respondents
believe that the word strategic is overused in human resources.93
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Creating an organization’s HR strategy is often a complex task. Because

of the dynamic nature of both the internal and external environments, it
is not uncommon to see a difference between an organization’s stated
HR strategy and its “emergent” HR strategy.94 Although in any given
organization there tends to be a dominant HR strategy, multiple bundles
of HR practices are likely to develop to cater to the unique needs of
organizations in a subgroup or industry.95 Mere use of the
term strategic without clear actions that support it simply reduces the
credibility of the HR profession and its members.
In formulating strategies, HR professionals must continuously focus on
the following activities:

1. Identifying opportunities, risks, and challenges

Strategic human resources necessitates a constant vigilance on foreseen
and emergent opportunities, risks, and challenges that can be addressed
through either people or the processes and systems by which we organize
people in organizations. For instance, human resource planning as
covered in Chapter 3 enables the determination of the demand and the
supply of various types of human resources within the firm. Proactive
human resource professionals, however, also ensure that there are
regular systematic reviews of the current state of HR practices in an
organization and the identification of needed HR processes, tools, and
activities. The results of human resource planning shape the overall
human resource strategies in the short and long run and identify any
gaps in people or processes that need to be fulfilled.

2. Making data-informed decisions aligned to

strategy
A second element of the strategic process is the eventual choice of
appropriate human resources or the practices that will fill the gaps
identified in the first stage. Many of the details of this choice
environment will be discussed in the chapters that follow. Regardless of
the decision environment, a key focus must remain on utilizing data to
support decisions and confirmation of whether those decisions are
consistent with the strategy.

3. Optimizing for high performance

With the right talent in the right place along with the right processes and
practices, attention must turn to optimizing both the employee’s time
and the activities and processes that guide human resources in a
company. For example, once hired, new employees need to be oriented
to the organization’s policies and procedures and placed in their new job
positions. Since new workers seldom fit the organization’s needs exactly,
they must be trained to perform effectively. They must also be prepared
for future responsibilities through systematic career planning and
development.
The human resource strategy should ensure that the productive
contribution from every member is at the maximum possible level. In
today’s work setting, internal work procedures and organizational
policies must be continuously monitored to ensure that they meet the
needs of a diverse workforce and ensure safety for every individual.
To be effective, a strategy should also have clearly defined action plans
with target achievement dates. Otherwise, it will simply end up being an
exercise on paper.

Step 5: Review, Evaluation, and Audit of Human

Resource Strategies
Human resource strategies, however effective they prove to be, must be
examined regularly. An organization’s contextual factors, such as
technology, environments, government policies, and so on, change
continuously; so too do several of its internal factors, such as
membership characteristics, role definitions, and internal procedures.
All these changes necessitate regular strategy evaluation to ensure their
continued appropriateness.
Hewlett-Packard has carried out formal research to identify links
between employee experience and the firm’s operational performance.
The company grouped employees based on their function, recognizing
that certain functions have more direct impact on operational outcomes.
Results from the study indicate that “effective collaboration” combined
with “empowerment to make decisions” tends to be related to customer
attitudes.96
Results of program evaluation such as the above produce
valuable feedback, which is information to help evaluate success or
failure. Such information, in turn, helps the firm to fine-tune its practices
or even abandon some actions that do not seem to have performance
potential. Alternatively, additional resources can be allocated to
successful projects to reap full benefits.
A holistic review of the HR strategies in an organization with the
intention of identifying and correcting deficiencies is referred to as
a human resource audit. The audit may include one division or an entire
company.
Page 22
The benefits of a human resource audit are many and include the
following:
• The audit helps align the HR department’s goals with larger
organizational strategies.
• It almost invariably uncovers better ways for the department to
contribute to societal, organizational, and employee objectives.
This, in turn, clarifies the human resource department’s duties
and responsibilities.
• It ensures timely compliance with legal requirements.
• It discloses how well managers are meeting their human resource
duties.
• It uncovers critical human resource problems and possible
solutions.
• It reduces human resource costs through more effective
procedures.
• It provides specific, verifiable data on the human resource
department’s contributions.
• It stimulates uniformity of human resource policies and practices.
• It helps review and improve the human resource department’s
information system.
• It enhances the professional image of the department among
various stakeholders.
Human resource research grows more important with each passing year,
for several reasons. First, human resource work carries with it many
legal implications for the employer. Failure to comply with equal
employment or safety laws, for example, subjects the organization to
potential lawsuits. Second, “people costs” are significant. Pay and
benefits are often major operating expenses for most employers.
Improper compensation plans can be costly, even fatal, to the company’s
survival. Third, the department’s activities help shape an organization’s
productivity and its employees’ quality of work life. Fourth, the critical
resource in many organizations today is not capital but, rather,
information and knowledge. This means that an audit of the calibre of a
critical resource—namely, human resources—is necessary for the success
of the organization. Human resource audits provide the information
needed by human resource managers to validate the alignment (or
misalignment) of human resource strategies with those of the
organization as well as the organization’s key performance indicators.
Human resource audits will typically focus on compliance, best practices,
strategic elements, and function-specific areas.97
Finally, the growing complexity of human resource work makes research
necessary. Today, more than ever before, human resource activities
aimed at productivity improvement, succession planning, and cultural
change are critical to competitive survival. More and more executives
expect the department to make strategic contributions and place the
function at a higher level in the organizational hierarchy.
Over 50 percent of organizations surveyed in one study were found to
have human resource departments report to the CEO or the
president/owner of the organization.98
Moreover, HR departments are being reviewed for their effectiveness.
One study, conducted by Aon, found that 68 percent of HR’s time
continues to be spent on administrative functions. The same study found
that 35 percent of typical HR functions could be automated.99
Today, organizations are participating in human resource metric
benchmarking. Through this process, organizations contribute
information about human resource practices and associated metrics. In
return, the participating organizations have access to aggregated data
about other organizations so that they may benchmark their own
practices and performance.100
The metrics established through an audit also result in the initiation of
new programs, such as literacy training, and better responses to
employees with disabilities, which can significantly improve employee
productivity and morale. The major areas covered in such an audit are
described in Figure 1-11.
FIGURE 1-11

Major Areas Covered in a Human Resource Audit

Human Resource Management Information
Human rights legislation and Human resource plans
employment legislation
• Supply and demand
• Information on compliance estimates
• Skills inventories
• Replacement charts and
summaries
Job analysis information Compensation administration
• Job standards • Wage and salary levels
• Job descriptions • Benefit package
• Job specifications • Employee value proposition
Staffing and Development
Recruiting Selection
• Source of recruits • Selection
ratios
• Availability of recruits • Selection procedures
• Employment applications • Human rights legislation
compliance
Training and orientation Career development
• Orientation
program • Internal
placement success
• Training objectives and • Career planning program
procedures • Human resource
• Learning rate development effort
Performance appraisals Labour–management relations
• Standards
and measures of • Legalcompliance
performance • Management rights
• Performance appraisal • Dispute resolution
techniques problems
• Evaluation interviews
Human resource controls Human resource audits
• Employee communications • Human resource function
• Discipline procedures • Operating managers
• Change and development • Employee feedback on
procedures human resource
department
FIGURE 1-11

Major Areas Covered in a Human Resource Audit

Table Summary: The table has 2 sections titled: Human Resource Management Information
and Staffing and Development.

Page 23

Preparing for the Future

Evaluations and audits are necessary, but they are backward-looking.
They uncover only the results of past decisions. Although past
performance should be evaluated, human resource departments also
should look to the future to be proactive. A proactive approach requires
HR managers and their staff to develop a future orientation. They must
constantly scan their professional and social environment for clues about
the future. New developments may mean new challenges.
 The Organization of
LO3
Human Resource
Management
The responsibility for human resource management activities rests with
each manager. If a manager does not accept this responsibility, then
human resource activities may be done only partially or not at all. This is
not to suggest that every manager needs to be a human resources
professional, but even when an HR team is created, the manager
continues to have a key role in enabling, following, and administering
HR practices.
Page 24
As noted earlier, a separate HR department or HR group usually emerges
only when human resource activities need to be coordinated in a manner
that cannot be done organically or when the expected benefits of a
human resource usually exceed its costs. Until then, managers handle
HR activities themselves or may delegate them to subordinates. When a
human resource department emerges, it is typically small and reports to
a middle-level manager. Figure 1-12 illustrates a common placement of
a human resource department at the time it is first formed. The activities
of such a department are usually limited to maintaining employee
records and helping managers find new recruits. Whether the
department performs other activities depends upon the needs of other
managers in the firm.
FIGURE 1-12

The Human Resource Department in a Small Organization

As demands on the department grow, it increases in importance and

complexity. Figure 1-13 demonstrates the increased importance by
showing the head of human resources reporting directly to the chief
operating officer, who is the company president in this figure. The
greater importance of the head of human resources may be signified by a
change in title to vice-president. In practice, increased complexity also
results as the organization grows and new demands are placed on the
department or as jobs in the department become more specialized. As
the department expands and specializes, it may become organized into
highly specialized subdepartments.
FIGURE 1-13

A Large Human Resource Department

The Service Role of the Human Resource

Department
Although they are organizational strategic partners, human resource
departments continue to be service and support departments. They exist
to assist employees, managers, and the organization. Their managers do
not have the authority to order other managers in other departments to
accept their ideas. Instead, the department has only staff authority,
which is the authority to advise, not direct, managers in other
departments.
Page 25

In contrast to staff authority, line authority, possessed by managers of

operating departments, allows these managers to make decisions about
production, performance, and people. It is the operating managers who
normally are responsible for promotions, job assignments, and other
people-related decisions. HR specialists advise line managers, who alone
are ultimately responsible for employee performance.
For something like recruitment and retention, the line manager may
provide details of performance standards and job success, interview job
candidates, and utilize the information provided by human resources to
make a final decision. The HR professional, on the other hand, will
ensure compliance with human rights laws and organizational policies
regarding equity in addition to planning and organizing all of the
activities related to recruiting, interviewing, hiring, and communicating
about a new employee. In the case of employee and labour relations, the
line manager is likely to communicate with employees, implement
motivational structures, coach employees, provide conflict resolution,
and promote teamwork. The HR professional is then left to focus on
establishing grievance handling procedures, negotiating with the
bargaining unit, and planning and initiating change initiatives. In short,
HR departments tend to provide technical expertise while line managers
use this expertise to effectively manage their subordinates.
In highly technical or extremely routine situations, the HR department
may be given functional authority. Functional authority gives the
department the right to make decisions usually made by line managers
or top management. For example, decisions about fringe benefits are
technically complex, so the top manager may give the HR department
the functional authority to decide the type of benefits offered to
employees. If each department manager were to make separate decisions
about benefits, there might be excessive costs and inequities. To provide
control, uniformity, and the use of expertise, functional authority allows
HR specialists to make crucial decisions effectively.

Today’s Human Resource

LO4
Management Professional
In the last 50 years, there has been a surge in the number of HR
managers. In 1971, there were only 4,055 human resource managers in
this country.101 In 2018, the corresponding number was more than
50,000.102 However, historically, the status of HR professionals within
organizations has not been high.
Despite its enormous growth, human resource management was slow to
evolve into a full-fledged profession. Since the actual capability of
practising HR experts varied widely, however, it became increasingly
evident that professionalism of the human resource management field
was needed.
In a recent study, a majority of CEOs reported that HR professionals
need to further develop business acumen and a deeper connection to the
business in order to enrich the value of HR.103 Furthermore, HR
professionals need to be well versed in data-driven decision making and
financial operations.104
To achieve these goals, accreditation and/or certification of the HR
professional was considered imperative. The Chartered Professionals in
Human Resources Canada is a collaborative effort of human resource
associations across Canada (except Ontario) that currently represents the
interests of most HR practitioners in this country and coordinates the
nationally recognized designation in HR called the Chartered
Professional in Human Resources (CPHR), based on a series of national
standards. Although the CPHR is granted by each provincial HR
association, it is recognized and transferable across Canada—except in
Ontario.
Based on extensive national and regional consultations with employers,
HR professionals, and researchers, CPHR Canada has identified a set of
competencies referred to as the “Chartered Professional in Human
Resources Competency Framework” in key HR areas, such as strategy;
engagement; labour and employee relations; learning and development;
human resource metrics, reporting, and financial management;
professional practice, workforce planning, and talent management;
health, wellness, and safe workplaces; and total rewards. These
standards are regularly being reviewed and updated. For a summary of
the requirements for the CPHR designation, see CPHR Canada.
Page 26
Ontario Human Resource Professionals are accredited through
the Human Resource Professional Association (HRPA). In Ontario, a
series of HR designations are available, including the Certified Human
Resources Professional (CHRP), Certified Human Resources Leader
(CHRL), and Certified Human Resources Executive (CHRE). Similar to
the CPHR, the designations available through the HRPA are based on a
set of competencies.
A third credentialing body for human resource professionals is
the International Personnel Management Association.
Certification or designation alone does not make human resource
management a profession or improve its status in the eyes of
organizations. One approach to improving the HR manager’s status
within the organization may be to strengthen the position’s contribution
to the enhancement of organizational performance and effectiveness.
This is already beginning to take place. The higher status given to HR
experts in job ads and organizational charts indicates that the
importance of human resource management activity is being recognized.
The roles and responsibilities of today’s HR professionals are quite
varied. In some cases, individuals serve as a “generalist,” helping
organizations in all aspects of their human resource needs. In other
situations, professionals end up specializing in a particular domain of
human resources such as compensation and benefits, job evaluation,
recruitment, or labour relations. In yet other contexts, HR professionals
are taking on more executive roles, leading major portfolios of
organizations. In short, the professional opportunities for HR specialists
are quite varied.

The Framework Used in This

Book
This textbook is divided into six parts.
PART 1: THE STRATEGIC HUMAN RESOURCE MANAGEMENT
MODEL offers a strategic model of managing human resources
in Chapter 1. The key objectives of the human resource function are
outlined here along with the steps for implementing a strategic HR
approach in practice.
PART 2: PLANNING HUMAN RESOURCES is contained in two
chapters. Chapter 2 deals with the important topic of job analysis—
detailing the various methods of collecting data about jobs and the steps
involved in writing job descriptions and job specifications and setting
performance standards. Chapter 3 discusses the various factors that
need to be considered when planning the supply of and demand for
human resources in organizations.
PART 3: ATTRACTING HUMAN RESOURCES deals with the various steps
in acquiring human resources. Chapter 4 details key provisions of
human rights legislation and the Canadian Constitution along with their
implications for hiring employees; it also discusses the issue of
diversity. Chapter 5 (Recruitment) and Chapter 6 (Selection) deal with
the various tools, options, and strategies open to the human resource
manager in attracting and selecting qualified applicants for the job.
PART 4: PLACING, DEVELOPING, AND EVALUATING HUMAN
RESOURCES deals with all key activities involved in orienting, training,
developing, and evaluating employees. Chapter 7 outlines the key steps
involved in the orientation and training of employees; it also focuses on
the development of employees to take on greater responsibilities in the
future, including career counselling to staff. Chapter 8 deals with various
appraisal techniques that help an organization to monitor and improve
employee performance.
PART 5: MOTIVATING AND REWARDING HUMAN RESOURCES discusses
the critical tasks of motivating and rewarding employees. Chapter
9 deals with direct compensation, including methods of evaluating the
worth of each job and the incentive schemes currently available. Chapter
10 discusses how careful planning enables an organization to make the
most of its benefits package. It also deals with various work options and
other arrangements that have implications for employee motivation.
PART 6: MAINTAINING HIGH PERFORMANCE focuses on the various
human resource actions to ensure high performance. Chapter 11 details
the methods of improving communication and enforcing discipline when
employees violate organizational policies. Chapter 12 discusses two
types of security offered by modern human resource departments:
financial and physical. Chapter 13 discusses strategies for dealing with
unions and outlines the human resource manager’s role during
negotiations with unions. Page 27
Spotlight on HRM
Human Capital: A Key to Canada’s Competitiveness
What makes an economy accelerate or stagnate? In answering this
question, many will point to key economic indicators such as real gross
domestic product (GDP), consumer price index (CPI), and consumer
confidence. Others may point to effective policy or the flow of goods and
services among the numerous individuals and companies in an economy.
Regardless of the micro- or macro-economic drivers, the shape of an
economy is highly influenced by people. It is people who set policy and
regulations. It is people who lead the many micro, small, medium, and
large organizations that make up our economy. It is people who purchase
or use the goods and services within an economy.
With people at the core of an economy, the importance of human
resources or human capital cannot be overstated. Part of the human
capital equation is productivity, that is, how much output an individual
can create in relation to the inputs. According to the Conference Board of
Canada, Canada scores a B for productivity and growth.a
At points in history, organizations have turned to technology as the basis
for improving productivity. Today, however, this approach is insufficient
for Canada to keep pace or to catch up with the productivity
improvements in other developed countries. The Conference Board of
Canada has pointed to the importance of innovation in strengthening
Canada’s productivity.b
Similar to productivity, human ideas and ambitions rest at the core of
innovation. As a result, an increased focus is being placed on the role of
human capital in creating long-term and sustainable productivity
improvements.
The role of human talent in creating long-term sustainable economic and
social benefits to organizations and communities through productivity
necessitates a collaborative and long-term approach among
organizations, governments, communities, and numerous other support
structures.
Among the key elements to creating innovation and, in turn, productivity
is education.c Because knowledge is a necessary precursor to realizing
the full potential of human capital in creating productivity
improvements, governments, communities, and education systems must
come together in developing and enhancing citizens’ overall knowledge
base. Canadian communities must also understand the importance of
life-long learning. Because of the time required for learners to progress
through education systems, a long-term approach to planning in relation
to the development of human talent must be taken.
More recently, we have seen growing examples of how productivity
enhancements are often found through new innovations. Similar to
developing a learning city, significant lead time and planning is needed
to create a community in which innovation thrives. Examples abound of
communities that have come together to create ecosystems in which
innovation and entrepreneurism are strong (e.g., Silicon Valley).

SUMMARY
The central challenge for organizations today is to thrive in a highly
complex and continuously changing world. To do this, most
organizations find it necessary to maintain high productivity and
effectiveness levels and to have a global focus. Strategic management of
organizations is one approach to adapting to a continually changing
global context. Human resource management aims to optimize the
contribution of employees to the organization’s goals. The field of human
resource management thus focuses on what managers and human
resource specialists do and what they should do.
This chapter pointed out that human resource management is the
responsibility of every manager. The HR department provides a service
to other departments in the organization. In the final analysis, however,
the performance and well-being of each worker is the dual responsibility
of that worker’s immediate supervisor and the HR department.
Strategic human resource management is systematically linked to the
strategic needs of an organization and aims to provide the organization
with an effective workforce while meeting the needs of its members and
other stakeholders. It is important that human resource strategies and
tactics are mutually consistent and provide direct support to the
organization’s mission, goals, and strategies. Even the best-conceived
strategies may fail if they are not accompanied by sound programs and
procedures and aligned with organizational strategies.
Strategic human resource management necessitates an exhaustive
evaluation of an organization’s internal and external environments. This
chapter discussed factors that should be reviewed before formulating
human resource strategies. These include economic, technological,
demographic, and sociocultural challenges. As well, the chapter pointed
out that continuous evaluation of strategy and proactive management
are critical to ensuring the successful management of human resources.
This section of the text has emphasized a strategic approach to human
resource management. This is because, increasingly, HR managers are
expected to contribute to the organization’s strategic thinking and be
strategic business partners to other executives in organizations.
Marketing, production, and financial strategies depend upon the abilities
of the firm’s human resources to execute these plans. The status of the
HR function within an organization is likely to be determined by its
contribution to the organization’s overall success. Strategic management
of human resources may be one key to this success. To assist with the
“people side” of implementation, HR professionals will be forced to
uncover, through audits and research, the causes of and solutions to
people-related problems. Their diagnostic abilities to assess present and
potential human resource issues will be needed as they and their staff
increasingly serve as internal consultants to others who are facing HR–
related challenges. They then will be called on to facilitate changes in the
organization that maximize the human contribution. In short, the
traditional administrative skills associated with human resource
management must grow to accommodate diagnostic, assessment,
consulting, and facilitation skills.