Human Resource Management

Human Resource Management (HRM) is the strategic practice of managing an organization’s workforce to achieve its goals effectively and efficiently. It encompasses the recruitment, training, development, and retention of employees, ensuring their skills and contributions align with the organization’s objectives. HRM involves a range of functions, including workforce planning, performance management, employee relations, compensation and benefits, compliance with labor laws, and fostering a positive organizational culture. By focusing on both employee well-being and organizational needs, HRM aims to maximize employee performance, satisfaction, and productivity, driving overall business success.

Employees at Starbucks are vital to the company’s success. They are its public face, and every dollar of sales passes through their hands.^[1] According to Howard Schultz, they can make or break the company. If a customer has a positive interaction with an employee, the customer will come back. If an encounter is negative, the customer is probably gone for good. That’s why it’s crucial for Starbucks to recruit and hire the right people, train them properly, motivate them to do their best, and encourage them to stay with the company. Thus, the company works to provide satisfying jobs, a positive work environment, appropriate work schedules, and fair compensation and benefits. These activities are part of Starbucks’s strategy to deploy human resources in order to gain competitive advantage. The process is referred to as human resource management (HRM) and consists of all actions that an organization takes to attract, develop, and retain quality employees. Each of these activities is complex. Attracting talented employees involves the recruitment of qualified candidates and the selection of those who best fit the organization’s needs. Development encompasses both new-employee orientation and the training and development of current workers. Retaining good employees means motivating them to excel, appraising their performance, compensating them appropriately, and doing what’s possible to keep them.

Human Resource Planning Process

How does Starbucks make sure that its worldwide retail locations are staffed with just the right number of committed employees? How does Norwegian Cruise Lines make certain that when the Norwegian Dawn pulls out of New York harbor, it has a complete, fully trained crew on board to feed, entertain, and care for its passengers? Managing these tasks is a matter of strategic human resource planning—the process of developing a plan for satisfying an organization’s human resources (HR) needs.

The Human Resource (HR) Planning Process is a strategic approach to ensuring that an organization has the right number of employees, with the right skills, at the right time to meet its goals. It involves analyzing and forecasting an organization’s human resource needs and aligning HR practices to support the overall business strategy.

Here are the key steps in the HR planning process:

1. Analyze Organizational Objectives and Strategy. Understand business goals. Forecast future HR needs. HR must align its planning with the company’s short-term and long-term objectives. This could include expansion plans, new product launches, or entering new markets. Anticipate the workforce requirements based on business growth, market conditions, and other factors like technological changes and regulatory impacts.
2. Assess Current Workforce. Conduct an inventory of the current employees, assessing their skills, qualifications, experience, and potential for future roles. Determine where the organization has talent shortages, skill gaps, or excess capacity. Understand the strengths and weaknesses of the current workforce to guide future development and hiring needs.
3. Forecast HR Demand and Supply. Predict future human resources needs based on business growth, turnover rates, retirements, and other factors. Assess the current and future availability of talent, considering internal talent, external labour markets, and potential new hires. Ensure the forecasted supply of talent meets the projected demand for skills, considering factors like employee retention and workforce trends.
4. Develop HR Strategies. Plan for hiring new talent or promoting from within to meet staffing needs. Identify the necessary training programs to develop employees and close skill gaps, ensuring employees are equipped to meet future demands. Prepare for key leadership roles by identifying potential internal candidates and creating development plans to groom them for future positions.
5. Implement HR Strategies. Put the HR strategies into practice, such as launching recruitment drives, rolling out employee development programs, or implementing workforce restructuring plans. Ensure that adequate resources are available to support the execution of the plan (budget, time, training materials, etc.).
6. Monitor and Evaluate HR Plans. Regularly review the progress of HR initiatives, such as hiring, training, or retention efforts, to ensure alignment with organizational goals. Assess whether HR planning outcomes are achieving desired results, such as improved workforce skills, reduced turnover, or increased productivity. Make adjustments based on feedback, changing business conditions, or unforeseen challenges to stay aligned with company goals.
7. Revise and Update Plans. As business conditions and organizational goals evolve, HR plans must be revisited and updated to stay relevant and effective. Incorporate lessons learned from past HR planning cycles to refine future efforts.

A Strategic HR Plan lays out the steps that an organization will take to ensure that it has the right number of employees with the right skills in the right places at the right times. HR managers begin by analyzing the company’s mission, objectives, and strategies. Starbucks’s objectives, for example, include the desire to “develop enthusiastically satisfied customers” as well as to foster an environment in which employees treat both customers and each other with respect.^[2] Thus, the firm’s HR managers look for people who are “adaptable, self-motivated, passionate, creative team members.”^[3] The main goal of Norwegian Cruise Lines—to lavish passengers with personal attention—determines not only the type of employee desired (one with exceptionally good customer-relation skills and a strong work ethic) but also the number needed (one for every two passengers on the Norwegian Dawn).^[4]

Forecasting HR Needs

Once they’ve analyzed the jobs within the organization, HR managers must forecast future hiring (or firing) needs. HR forecasting is the process of predicting how a company’s staffing needs change with time so that it can remain prepared to operate successfully. Organizations use HR forecasting to decide to hire more people, reduce their staffing or adjust how they divide responsibilities. There are three steps to forecasting HR needs:

1. Identify the human resources currently available in the organization (supply).
2. Predict the human resources needed to achieve the organization’s mission and objectives (demand).
3. Measure the gap between the two (shortage or surplus).

Starbucks, for instance, might find that it needs three hundred new employees to work at stores scheduled to open in the next few months. Disney might determine that it needs two thousand new cast members to handle an anticipated surge in visitors. The Norwegian Dawn might be short two dozen restaurant workers because of an unexpected increase in reservations.

After calculating the disparity between supply and future demand, HR managers must draw up plans for bringing the two numbers into balance. If the demand for labour is going to outstrip the supply, they may hire more workers, encourage current workers to put in extra hours, subcontract work to other suppliers, or introduce labour-saving initiatives. If the supply is greater than the demand, they may deal with overstaffing by not replacing workers who leave, encouraging early retirements, laying off workers, or (as a last resort) firing workers.

By predicting future workforce needs, HR can strategically recruit, train, and develop employees to align with business objectives, ensuring the organization stays competitive and adaptable in an evolving market. Forecasting staffing requirements allows HR to implement focused recruitment efforts, succession planning, and professional development initiatives that promote employee growth and reduce turnover, ensuring key roles are filled with qualified individuals, which enhances organizational performance. HR planning also helps organizations optimize staffing levels, enabling better control over labor costs while reducing the risk of both understaffing and overstaffing. By accurately forecasting workforce needs, HR can effectively manage budgets, prevent staffing shortages, and ensure compliance with labor laws and regulations, thus mitigating operational risks.

Human Rights and Employment Law

Before we go any further, it is important to point out that in recruiting and hiring, managers must comply with anti-discrimination laws; violations can have legal consequences. Discrimination occurs when a person is treated unfairly on the basis of a characteristic unrelated to ability.

Human Rights

Under Section 3 of the Canadian Human Rights Act (CHRA), it’s illegal to discriminate on the basis of “race, national or ethnic origin, colour, religion, age, sex, sexual orientation, gender identity or expression, marital status, family status, genetic characteristics, disability or conviction for an offence for which a pardon has been granted or in respect of which a record suspension has been ordered.” The Canadian Human Rights Act applies to workplaces in federal organizations or industries that are regulated by the federal government (e.g., banks, telecommunications, federal government departments). The Canadian Human Rights Commission (CHRC) investigates complaints of discrimination, ensures compliance with the CHRA, and promotes equality and human rights awareness. It focuses on addressing discrimination within federally regulated entities. Equal Pay in Section 11 of the CHRA protects employees who perform work of equal value, in the same establishment, by ensuring they receive equal pay. Individuals who experience discrimination or harassment in federally regulated workplaces or services can file a complaint with the CHRC. An investigation takes place and CHRC may mediate between the complainant and the respondent to resolve the issue. If mediation fails or the complaint involves complex legal issues, the CHRC may refer the case to the Canadian Human Rights Tribunal (CHRT) for a formal hearing. The Tribunal can order remedies (e.g., reinstatement of employment, changes to workplace policies, wage compensation, training) and the decisions are enforceable in Federal Court.

Canada’s Charter of Rights and Freedoms (CCRF) applies to interactions between individuals and all levels of government (federal, provincial, and territorial). It covers broader rights, such as freedom of expression, equality rights, mobility rights, and legal rights, and provides protection from government action that violates these rights. The Charter applies broadly, protecting Canadians from actions by any government entity that infringe on their constitutional rights. The Charter is part of Canada’s Constitution, making it the supreme law, while the CHRA is a federal statute with narrower jurisdiction. Section 15(1) of the Charter protects every Canadian’s right to equal treatment with respect to employment regardless of race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

The Ontario Human Rights Code (OHRC) is a provincial law, and its role complements federal human rights legislation, like the CHRA and the CCRF. The OHRC applies specifically to individuals and organizations operating in Ontario, including private businesses, public services, housing, and employment. It prohibits discrimination and harassment based on protected grounds such as race, sex, age, disability, family status, and sexual orientation in key areas like employment, housing, and services. Complaints are handled by the Human Rights Tribunal of Ontario (HRTO), which resolves disputes under the OHRC. Each province and territory has its own human rights code or version of it (e.g., Ontario, British Columbia, Quebec), tailored to address regional issues and provide an additional layer of protection against discriminatory practices. The OHRC is Ontario’s version, ensuring that local businesses, landlords, and service providers comply with anti-discrimination laws. Under the Code, you have the right to be free from discrimination in five parts of society – called social areas – based on one or more grounds. The five social areas are: employment, housing, services, unions and vocational associations and contracts. The Ontario Human Rights Code (OHRC) does not apply to federal organizations. Both of these laws, the CHRA and the OHRC, cannot apply at the same time. If one applies, the other does not.

Employment Law

The Canada Labour Code (CLC) governs employment standards, workplace health and safety, and industrial relations for federally regulated workplaces. Key areas include hours of work, overtime, wages, vacation, holiday entitlements, termination, severance pay, workplace safety requirements, and collective bargaining rules.

The Employment Equity Act (EEA) is a key piece of Canadian legislation that complements the Canadian Human Rights Act (CHRA), the Canadian Charter of Rights and Freedoms (CCRF), and provincial laws like the Ontario Human Rights Code (OHRC). The Employment Equity Act of 1986 identifies specific populations which are protected from discrimination (women, visible minorities, indigenous peoples, and people with disabilities). EEA applies only to federally regulated employers. It does not apply to provincially regulated workplaces, which are governed by provincial human rights codes like the OHRC. The EEA is distinct in its proactive approach to workplace diversity and equity. Unlike laws that solely prohibit discrimination (e.g., CHRA, OHRC), the EEA requires employers to actively remove barriers and promote inclusion for the four designated groups. Individuals who feel that they have been discriminated against can take their case to the Canadian Human Rights Commission. If an employer fails to address non-compliance or refuses to cooperate, the CHRC can refer the matter to the Employment Equity Review Tribunal. The Tribunal has the authority to issue orders compelling compliance and impose penalties. Non-compliant employers may face fines or other legal consequences as determined by the Tribunal.

The Occupational Health and Safety Act (OHSA) is designed to ensure that workers are provided with safe and healthy working conditions. These laws outline the responsibilities of employers to maintain a safe work environment, including providing necessary safety equipment, conducting risk assessments, and implementing safety protocols. Employers must take steps to minimize hazards and protect their employees from potential injuries or health risks. On the other hand, employees have the right to refuse work that they believe is unsafe, ensuring they are not forced to work under hazardous conditions. In addition, these laws also facilitate workplace inspections and hazard reporting to identify and rectify potential risks. For example, the Ontario Occupational Health and Safety Act (OHSA) sets out specific regulations regarding workplace safety in Ontario. It covers everything from the duties of employers to the rights of employees, emphasizing the importance of both proactive safety measures and the right of employees to report hazards or unsafe practices without fear of retaliation. These protections are essential to promoting a safe and secure work environment for all employees. Each province and territory in Canada has its own occupational health and safety legislation that applies within their jurisdiction. These laws are similar in nature, but they may have regional variations in terms of enforcement, penalties, and specific requirements. For example: British Columbia has the WorkSafeBC program and the Workers Compensation Act and Alberta has the Occupational Health and Safety Act (OHS Act) specific to Alberta and Quebec has La Loi sur la santé et la sécurité du travail (LSST). Federally regulated employers, such as those in transportation, banking, and telecommunications, must comply with the Canada Labour Code (CLC), which also includes health and safety regulations for federally regulated workplaces.

There are other additional labour laws such as the Accessible Canada Act (ACA)(federal), Accessibility for Ontarians with Disabilities Act (AODA)(Ontario), Workplace Safety and Insurance Act (Ontario), Ontario’s Pay Equity Act, Personal Information Protection and Electronic Documents Act (PIPEDA)(federal), Personal Information Protection Acts (Alberta, British Columbia), Ontario Employment Standards Act, 2000 (ESA), but for purposes of this chapter we will not go into additional details.

Refer to Table 11.1 for a comparison of Employment Law and Human Rights discussed in this section.

Recruitment and Selection Process

The recruitment and selection process is a strategic approach to finding and hiring the right talent for an organization. It begins with workforce planning and job analysis to identify staffing needs and create detailed job descriptions and specifications. The recruitment phase involves sourcing candidates through various channels like job boards, social media, internal promotions, and networking. Once applications are received, the selection process evaluates candidates through resume screening, interviews, assessments, and reference checks to determine their suitability for the role. The process concludes with extending a job offer to the chosen candidate, followed by onboarding to integrate them into the organization. This streamlined approach ensures that the best-fit candidates are hired efficiently while aligning with organizational goals.

The recruitment and selection process in Human Resources (HR) is the series of steps taken to identify, attract, and hire the right candidates for a job position. It typically involves the following stages:

Recruiting Process:

1. Job Analysis and Planning
2. Sourcing Candidates

Selection Process:

1. Screening and Shortlisting
2. Interviews
3. Reference and Background Checks
4. Job Offer and Negotiation
5. Onboarding

Recruitment Process

Armed with information on the number of new employees to be hired and the types of positions to be filled, the HR manager then develops a strategy for recruiting potential employees. Recruiting is the process of identifying suitable candidates and encouraging them to apply for openings in the organization. When the organization is seeking to hire talent, recruiters within the HR department assume this responsibility by creating job postings, screening candidates and setting up interviews. While recruiting refers to the broader effort of attracting and sourcing candidates, selection specially focuses on evaluating and choosing the best candidate for the job.

Job Analysis and Planning

Job analysis and planning is the foundational step in the recruitment process, focusing on understanding the specific requirements of a role and preparing for effective talent acquisition. Job analysis involves examining the tasks, responsibilities, skills, and qualifications (knowledge and abilities) needed for a position, resulting in a clear and detailed job description and specification. Planning complements this by aligning recruitment efforts with organizational goals, determining the number and type of positions to be filled, and setting timelines and budgets for the hiring process. This stage ensures clarity about the role and provides a strategic framework to attract the most suitable candidates, aligning workforce capabilities with business objectives.

To develop an HR plan, HR managers must be knowledgeable about the jobs that the organization needs performed. HR managers gather information about a given job by performing a job analysis and use the information collected to prepare two documents:

• A job description, which lists the duties and responsibilities of a position
• A job specification, which lists the qualifications—skills, knowledge, and abilities— needed to perform the job

Sourcing Candidates

Sourcing candidates is a critical step in the recruitment process that involves identifying and attracting potential candidates who meet the qualifications and requirements of a job opening. This process can include internal sourcing, such as promoting or transferring current employees, and external sourcing, which involves advertising on job boards, leveraging social media platforms, using recruitment agencies, attending career fairs, and tapping into employee referrals or professional networks. The goal is to reach a diverse and qualified talent pool while optimizing the methods used to align with the organization’s needs. Effective sourcing ensures that the recruitment process begins with a strong foundation of capable and suitable candidates, increasing the chances of finding the right fit for the role.

Internal Versus External Recruiting

The first step in recruiting is to find qualified candidates. Where do you look for them, and how do you decide whether they’re qualified? Companies must assess not only the ability of a candidate to perform the duties of a job, but also whether he or she is a good “fit” for the company– i.e., how well the candidate’s values and interpersonal style match the company’s values and culture.

Where do you find people who satisfy so many criteria? Basically, you can look in two places: inside and outside your own organization. Both options have pluses and minuses. Hiring internally sends a positive signal to employees that they can move up in the company—a strong motivation tool and a reward for good performance. In addition, because an internal candidate is a known quantity, it’s easier to predict his or her success in a new position. Finally, it’s cheaper to recruit internally. On the other hand, you’ll probably have to fill the promoted employee’s position. Hiring externally gives you an opportunity to bring fresh ideas and skills into the company. In any case, it’s often the only alternative, especially if no one inside the company has just the right combination of skills and experience. Entry-level jobs are usually filled from the outside.

Publicize the Job

Whether you search inside or outside the organization, you need to publicize the opening. If you’re looking internally in a small organization, you can alert employees informally. In larger organizations, HR managers generally post openings on bulletin boards (often online) or announce them in newsletters. They can also seek direct recommendations from various supervisors.

Recruiting people from outside is more complicated. It’s a lot like marketing a product to buyers: in effect, you’re marketing the virtues of working for your company. Starbucks uses the following outlets to advertise openings:^[5]

• A dedicated section of the corporate web site (“Job Centre,” which lists openings, provides information about the Starbucks experience, and facilitates the submission of online applications)
• College and university campus recruiting (holding on-campus interviews and information sessions and participating in career fairs)
• Internships designed to identify future talent among college students
• Announcements on employment web sites like LinkedIn, Workopolis, Indeed, LeapOut, JobBank, Eluta.
• Social Media
• Local job fairs
• In-store recruiting posters
• Informative “business cards” for distribution to customers

When asked what it takes to attract the best people, Starbucks’s senior executive Dave Olsen replied, “Everything matters.” Everything Starbucks does as a company bears on its ability to attract talent. Accordingly, everyone is responsible for recruiting, not just HR specialists. In fact, the best source of quality applicants is often the company’s own labour force.^[6]

Contingent Workers

Though most people prefer to hold permanent, full-time positions, there’s a growing number of individuals who work at temporary or part-time jobs, either by choice or as the only available option. Many of these are contingent workers hired to supplement a company’s permanent workforce. Most of them are independent contractors, consultants, or freelancers who are paid by the firms that hire them. Others are on-call workers who work only when needed, such as substitute teachers. Still others are temporary workers (or “temps”) who are employed and paid by outside agencies or contract firms that charge fees to client companies.

The use of contingent workers provides companies with a number of benefits. Because they can be hired and fired easily, employers can better control labour costs. When things are busy, they can add temps, and when business is slow, they can release unneeded workers. Temps are often cheaper than permanent workers, particularly because they rarely receive costly benefits. Employers can also bring in people with specialized skills and talents to work on special projects without entering into long-term employment relationships. Finally, companies can “try out” temps: if someone does well, the company can offer permanent employment; if the fit is less than perfect, the employer can easily terminate the relationship. There are downsides to the use of contingent workers, including increased training costs and decreased loyalty to the company. Also, many employers believe that because temps are usually less committed to company goals than permanent workers, productivity suffers.

Social Networking and Employee Recruitment

Referrals and professional networking are commonly used methods of identifying job prospects, particularly for managerial, professional, and technical positions. Several software applications and social networks facilitate employee referrals, reference checking, and hiring based on networks of personal relationships. ExecuNet and ExecRank are just two of the many career sites that allow members to search for contacts and network with other professionals in their fields.

LinkedIn is the most popular social network for professionals. It is a giant database of contacts with profiles that provide an overview of a person’s past and present professional experience, skills, professional referrals, and affiliations with business and professional associations. A member can search through an extended network of contacts based on his or her professional acquaintances. The basis for a search can be job, job title, company, geography, zip code, or membership in a professional organization. LinkedIn uses the concept that there are no more than six degrees of separation between two people, or one person can be linked to any other individual through no more than six other people. With 1 billion members in more than 200 countries and territories worldwide, LinkedIn’s extensive platform is an ideal network for both recruiters and those looking to make their next career move.^[7]

Did you know that 90% of recruiters report hiring someone from LinkedIn? That’s the power of social media recruiting; it offers a host of advantages, such as broader reach, cost-effectiveness, and real-time engagement!

Recruiters utilize various social media platforms because they provide unparalleled reach to potential candidates. By utilizing these platforms, recruiters can access a vast pool of talent and increase the visibility of job opportunities. Social media recruiting is also more cost-effective than traditional recruitment methods. Posting job ads, sharing content, and engaging with candidates on social media platforms are generally more affordable than other advertising channels. Moreover, with the rise of remote work and digital nomadism, job seekers increasingly use their mobile devices for job hunting. Social media platforms are easily accessible via mobile devices, making them convenient for job seekers to browse job postings anytime, anywhere. ^[8]

Selection Process

After a firm has attracted enough job applicants, employment specialists begin the selection process. Selection is the process of determining which people in the applicant pool possess the qualifications necessary to be successful on the job. The steps in the employee selection process are shown in Figure 10.1. An applicant who can jump over each step, or hurdle, will very likely receive a job offer; thus, this is known as the successive hurdles approach to applicant screening. Alternatively, an applicant can be rejected at any step or hurdle. Selection steps or hurdles are shown in Figure 11.1 below.

Initial Screening

During the initial screening phase, applicants typically complete an application form and/or submit a résumé and participate in a brief interview lasting 30 minutes or less. The job application generally includes details about the applicant’s educational background, prior work experience, and specific job responsibilities performed. For some positions, applicants may be asked to provide additional materials such as work samples, certificates, credentials, or other supporting documents, either along with the résumé or shortly after advancing past the selection interview.

Initial screenings can vary in format—they may take place over the phone, through online conferencing, or occasionally be bypassed altogether, with candidates proceeding directly to the interview stage. These variations depend on factors such as the position’s seniority, the hiring company’s practices, industry norms, and specific job requirements.

Will There Be Employment Testing?

Following initial screening, the applicant may be asked to take one or more tests, such as the Wonderlic Personnel Tests. Wonderlic offers a suite of pre-employment tests for each phase of the hiring process. Used individually or together, the tests can assess cognitive ability (ability to learn, adapt, and solve problems), motivation potential (attitude, behavior performance, and productivity), and knowledge and skills (math, verbal, data entry, software proficiency).^[9] Job candidates are scored on how well they complete the employment tests.

McDonald’s, for example, employs over 1.7 million people across the globe and the company uses personality tests to assess whether a candidate is a good fit to become a part of the McD family. Personality questionnaires are tools to gauge a candidate’s behavioural preferences, and the company uses these tools to assess a wide range of applicants. By gleaning the results of such standardized questionnaires, the company quickly determines the most suitable candidates for particular roles.^[10]

Another example is Ford Motor. The multinational automaker employs over 190,000 people across the globe, with a widespread presence in 73 countries. Building and managing such a diverse workforce requires an exceptional hiring strategy. The company uses a two-part psychometric test, namely, numerical reasoning and verbal reasoning tests. These tests enable recruiters to objectively assess a wide range of candidates with diverse qualifications and experience. As a result, Ford Motor can quickly identify suitable applicants for a given role by analyzing the tests’ outcomes. Gathering such granular insights into candidates’ skills from just interviews and resumes seems rather unlikely, so the company employs professional psychometric tests at various stages of the hiring process.^[11]

Selection Interview

The tool most widely used in making hiring decisions is the selection interview, an in-depth discussion of an applicant’s work experience, skills and abilities, education, and career interests. For managerial and professional positions, an applicant may be interviewed by several people, including the line manager, for the position to be filled. This interview is designed to determine a person’s communication skills and motivation. During the interview, the applicant may be presented with realistic job situations, such as dealing with a disgruntled customer, and asked to describe how they would handle the problem. Some organizations have multiple interviews with candidates at various levels of management. When designing interviews, the HR department will provide the interviewer(s) with score sheets.  The candidates are scored on how well they answer the questions during the interview. In Canada, it’s illegal for job applications to ask questions about race-related grounds, such as physical characteristics like eye color, hair, height, and weight. When you complete a course in career planning you will learn how to complete a successful interview.

Do I Need Physical Exams and Drug Testing?

A firm may require an applicant to have a medical checkup to ensure they are physically able to perform job tasks. In the U.S. Drug testing is common in the transportation and health care industries. Southwest Airlines, BNSF Railway, Texas Health Resources, and the U.S. Postal Service use drug testing for reasons of workplace safety, productivity, and employee health. In Canada, pre-employment drug testing could be considered discriminatory (Canadian human rights law). This is because drug and alcohol testing could reveal a person’s substance dependency and addiction and poses a risk of discrimination against the candidate if a job offer is rescinded. Unless an employer can prove that there is a bona fide occupational requirement (BFOR) for testing, it is best practice for employers not to conduct pre-employment drug testing for non-safety positions. If an employer is recruiting for a safety-sensitive position, then pre-employment drug testing could be justifiable as policy for the promotion of workplace safety.^[12] Generally, you do not need a physical exam to get a job, but certain jobs that require physical strength or endurance or jobs in the public health sector may require a physical exam. A few of these job examples include firefighter, police officer, lifeguard, truck driver, bus driver, and military personnel.

Background and Reference Check

If applicants pass the selection interview, most firms examine their background and check their references. References are people who will attest to your skills and abilities because they have observed you in action. The most valuable references are those from former or current employers, as they carry the most weight with potential employers. While friends and family may offer positive feedback, hiring managers are more interested in learning about your past performance in a professional setting. In recent years, an increasing number of employers, such as American Airlines, Disney, and Microsoft, are carefully researching applicants’ backgrounds, particularly their legal history, reasons for leaving previous jobs, and even creditworthiness. If the company has not already collected supporting evidence of your credentials (e.g., educational credentials, industry certifications, etc.) then they will most likely do so at this stage. Not all job positions require that you have supporting evidence, but higher-level jobs usually do.  If a candidate were to, for example, submit fraudulent credential documents and then the company were to discover this after hiring, the company would most probably terminate employment.

Decision to Hire

If an applicant successfully completes all stages of the selection process, a decision to hire is made. For higher-level positions or roles within unionized environments, this decision is often based on a combination of test results (if applicable) and interview scores. However, not all jobs require testing or a formal scoring process for interview questions. To ensure fairness and objectivity, many companies adopt scoring methods to evaluate candidates systematically. Ultimately, the job offer is extended to the candidate who best aligns with the role’s requirements and organizational needs.

Developing Employees

Because companies can’t survive unless employees do their jobs well, it makes economic sense to train them and develop their skills. This type of support begins when an individual enters the organization and continues as long as he or she stays there.

New-Employee Orientation

Have you ever started your first day at a new job feeling upbeat and optimistic only to walk out at the end of the day thinking that maybe you’ve taken the wrong job? If this happens too often, your employer may need to revise its approach to orientation—the way it introduces new employees to the organization and their jobs. Starting a new job is a little like beginning college; at the outset, you may be experiencing any of the following feelings:

• Nervous or anxious
• Confusion
• Loneliness
• Imposter syndrome
• Stress and exhaustion^[13]

The employer who understands how common such feelings are is more likely not only to help newcomers get over them but also to avoid the pitfalls often associated with new-employee orientation:

• Failing to have a workspace set up for you
• Failing to implement a feedback mechanism for new hires to give feedback
• Failing to introduce new employees to their coworkers
• Failing to share clear expectations and goals for new employees^[14]

Initially, when an employee is hired the organization uses an orientation program to introduce the employee to the company’s people, policies, and procedures. A good employer will take things slowly, providing you with information about the company and your job on a need-to-know basis while making you feel as comfortable as possible. You’ll get to know the company’s history, traditions, and culture over time. You’ll learn more about salary and benefits and how your performance will be evaluated. Most importantly, you’ll find out how your job fits into overall operations and what’s expected of you. Over the first few weeks, the manager should schedule check-in meetings to review expectations, progress, responsibilities and answer any questions the new employee may have. Failure to integrate new hires into a company adequately leads to low retention rates.

Training and Development

When you start a new job, you may enter that job role with many skills and knowledge gained through education or previous work experience. Even with some experience, knowledge, and skills your new employer will still want to provide you with training specific to the technologies, processes, and practices used by the organization.

As you grow with your new employer you will need to continually learn, after all, life is about life-long learning and our world continues to grow around us. We need to keep up with the times. Companies ensure their employees have the skills and knowledge to support company goals and for the company to remain competitive in its field. Often, employers pay for programs/courses whereby employees can update their knowledge and skills. This helps retain employees, increase employee satisfaction and brings new ideas and skills into the business.

Types of Training

Corporate training is essential for employee onboarding and employee retention. Onboarding is a perfect moment to deliver training. A new staff member is bursting with excitement about joining your company. Existing employees are also eager to extend and develop their skills. In any case, for the sake of learning effectiveness, the training method is as important as the content and activities.

Below are seven of the best types of employee training methods:^[15]

• Case Studies
• Coaching/mentoring
• Technology-based Learning (eLearning)
• Instructor-led Training
• Interactive Training
• On-the-job Training
• Video-based Training

Training Costs

It would be nice if employees came with all the skills they need to do their jobs. It would also be nice if job requirements stayed the same: once you’ve learned how to do a job, you’d know how to do it forever. In reality, new employees must be trained; moreover, as they grow in their jobs or as their jobs change, they’ll need additional training. Unfortunately, training is costly and time-consuming. How costly?

In a U.S. analysis of corporations and educational institutions with 100 or more employees, companies spent $954 per employee for training in 2023, and the average hours of training each employee received was 57. Services organizations spent the most per learner this year ($1,172), followed by nonprofits ($1,105). Small ($1,420) and midsize ($751) companies spent more per learner than large corporations ($481). On average, organizations allocated the biggest portions of their training budget to mandatory compliance training (13 percent), management/supervisory training (12 percent), and onboarding (11 percent). Diversity, equity, and inclusion was a new category added this year (2023)—it came in at 7 percent.^[19]

Canadian firms invest modestly in training—an estimated $240 per employee annually—and lag their international peers in rates and hours of instruction. Larger firms are more likely than smaller firms to provide training. Employers in utilities, finance and insurance, and other knowledge-based, technology-rich industries train at above-average rates, while firms in retail, forestry, and oil and gas extraction provide below-average levels of training. Firms in Québec and Ontario are more likely to provide training than firms in the Prairies or Atlantic provinces. Given their concern for return on investment (ROI), firms tend to invest in training for immediate needs—such as onboarding and orientation, technology adoption, addressing skills gaps, and implementing innovations—and favour on-the-job and at-workplace modes of delivery over classroom and other external options.^[20]

Compliance Training

Compliance training covers the standards for a healthy working environment and teaches safety and accident prevention procedures.

Play the YouTube video below, “Planning an Effective Employee Training Program ” YouTube video below to learn about how a business can train their employees and specifically provide compliance training for employees.^[21] Transcript for “Planning an Effective Employee Training Program” Video [PDF–New Tab]. Closed captioning is available on YouTube.

Performance Appraisal

Performance appraisals are structured evaluations that assess an employee’s job performance, contributions, and achievements over a defined period. The process typically includes reviewing goals, providing constructive feedback, and identifying areas for growth or development. Employees often seek clarity from their managers on three key points: what is expected of them, how well they are meeting those expectations, and how they can enhance their performance. While effective managers provide ongoing feedback, formal appraisals are generally conducted annually or semiannually. These evaluations may involve methods such as self-assessments, peer reviews, and manager evaluations. When implemented effectively, performance appraisals promote open communication, boost employee motivation, and inform decisions regarding promotions, salary adjustments, and career development. Appraisal systems differ between organizations and vary based on the employee’s role and level within the company.

The Basic Three-Step Performance Appraisal Process:

1. Before managers can measure performance, they must set goals and performance expectations and specify the criteria (such as quality of work, quantity of work, dependability, initiative) that they’ll use to measure performance.
2. At the end of a specified time period, managers complete written evaluations that rate employee performance according to the predetermined criteria.
3. Managers then meet with each employee to discuss the evaluation. Jointly, they suggest ways in which the employee can improve performance, which might include further training and development.

It sounds fairly simple, but why do so many managers report that, except for firing people, giving performance appraisals is their least favorite task?^[22]

Performance appraisals serve multiple purposes:

• For a manager and employee to discuss the employee’s performance and to set future goals and performance expectations
• To help identify and discuss appropriate training and career-development opportunities for an employee
• To create formal documentation of the evaluation that can be used for salary, promotion, demotion, or dismissal purposes
• To help organizations recognize and reward high-performing employees
• To align the employee’s goals with organizational objectives

As for disadvantages, most stem from the fact that appraisals are often used to determine salaries for the upcoming year. Consequently, meetings to discuss performance tend to take on an entirely different dimension: the manager may appear judgmental (rather than supportive), and the employee may get defensive. This adversarial atmosphere can make many managers not only uncomfortable with the task but also less likely to give honest feedback. (They may give higher marks in order to avoid delving into critical evaluations.) HR professionals disagree about whether performance appraisals should be linked to pay increases. Some experts argue that the connection eliminates the manager’s opportunity to use the appraisal to improve an employee’s performance. Others maintain that it increases employee satisfaction with the process and distributes raises on the basis of effort and results.^[23]

360-Degree and Upward Feedback

Instead of being evaluated by one person, how would you like to be evaluated by several people—not only those above you in the organization but those below and beside you? The approach is called 360-degree feedback, and the purpose is to ensure that employees (mostly managers) get feedback from all directions—from supervisors, reporting subordinates, coworkers, and even customers. If it’s conducted correctly, this technique furnishes managers with a range of insights into their performance in a number of roles. Some experts, however, regard the 360-degree approach as too cumbersome.^[24]

“It should be no surprise that tech companies like Google and Netflix are among the adherents to 360 feedback. Another use case from our own roster of clients is the Nissan Corporation, where 360 feedback took off among its North American engineering team. It all started with a senior manager wanting to improve their leadership skills by taking the G360 Survey for Managers. Before long, 360 feedback fever had spread to other teams and different departments.”^[25]

Inclusion, Diversity, Equity, and Accessibility (IDEA) in the Workplace

The acronym used to refer to equity, diversity and inclusion may appear in various resources such as EDI, DEI, IDE, or IDEA, but they all represent the same concepts. Inclusion, diversity, equity, and accessibility (IDEA) are a set of practices that aim to ensure that people from a variety of backgrounds are represented and can thrive.

Most companies today strive for diverse workforces. HR managers work hard to recruit, hire, develop, and retain a diverse workforce. In part, these efforts are motivated by legal concerns: discrimination in recruiting, hiring, advancement, and firing is illegal under federal law and is prosecuted by the Canadian Human Rights Tribunal. Companies that violate anti-discrimination laws are subject to severe financial penalties and also risk reputational damage.

Reasons for building a diverse workforce go well beyond mere compliance with legal standards. It even goes beyond commitment to ethical standards. It’s good business. People with diverse backgrounds bring fresh points of view that can be invaluable in generating ideas and solving problems. In addition, they can be the key to connecting with an ethnically diverse customer base. In short, capitalizing on the benefits of a diverse workforce means that employers should view differences as assets rather than liabilities.

Equity

Equity is a process that ensures everyone has access to the same opportunities. Equity appreciates that privileges and barriers exist and, as a result, we all don’t start from the same place. Instead, each of us comes from a different background. Equity is an approach that begins with acknowledging this unequal starting place and making efforts to address and change this imbalance.^[26]

Diversity

Diversity is the presence, in an organization or a community, of a wide range of people with different backgrounds, abilities and attributes including ethnicity, race, colour, religion, age, gender and sexual orientation.^[27]

Inclusion

Inclusion refers to taking into account differences among individuals and groups when designing something (e.g., policy, program, curriculum, building, shared space) to avoid creating barriers. Inclusion is about people with different identities feeling or being valued and welcomed within a given setting.^[28]

Accessibility

A key part of equity is accessibility. Accessibility is the practice of making information, activities, and/or environments sensible, meaningful, and usable for as many people as possible. As an overview:^[29]

• Accessibility is about equity
• Accessibility is about cultural practice
• Accessibility is about people
• Accessibility is about compliance
• Accessibility is about usability
• Accessibility is about context

The makeup of the Canadian workforce has changed dramatically over the past 50 years. In the 1950s, more than 70 percent was composed of males.^[30] Today’s workforce reflects the broad range of differences in the population—differences in gender, race, ethnicity, age, physical ability, religion, education, and lifestyle. A diverse workforce benefits organizations by supplying a broad range of viewpoints necessary to compete in a globalized marketplace.  Such variety promotes creative problem solving with improved results. Products and services need to cater to customers and clients with diverse backgrounds, and if a company’s workforce does not understand the nuances of different cultural needs, it may be missing some opportunities.

Unfortunately, a diverse workforce can have its obstacles. Differences in culture, age, religion, and sexual orientation can create misunderstandings and conflict, even over the most well-intentioned behaviors. Therefore, it is important that employers provide effective diversity training for their employees. It is also important for co-workers to look at situations from a perspective different from their own. Modifications to workplace practices, policies or procedures, such as flexible scheduling, voluntary substitutions, swaps, job reassignments and lateral transfers, are a few examples of how an employer might accommodate an employee’s religious beliefs, practices and observances.

Retaining Valuable Employees

What makes a company a great place to work? Ask yourself, what would you want as an employee? Flexible hours, high pay, prestige, recognition, autonomy, empowerment, interesting projects, friendly colleagues, fun events, medical benefits, or something else? We each have our own intrinsic and extrinsic motivators when it comes to work. Managers need to find ways to motivate employees to perform at a high level. This may mean motivating different employees in different ways. Many organizations offer several perks or benefits to employees in an attempt to satisfy many different employees’ needs and wants. Companies would much rather make their employees happy and retain them than have a continuous rotation of hiring new employees; it costs more to hire new employees than it does to keep existing employees. Happy employees also are shown to provide better customer service and take more interest in doing quality work. Employers strive to provide employees with a work-life balance, challenging and interesting work, and rewards that will motivate employees.

Great Place to Work® provided a 2024 list of the best places to work in Canada based on the organizations 1000+ employees that provide an outstanding employee experience. Some of the companies on the list include Cisco, SAP, Deloitte, ATB Financial, KPMG, TD Canada Trust, FedEx Express Canada, RBC, and Sun Life.^[32]

Job Redesign

The average employee spends more than two thousand hours a year at work. If the job is tedious, unpleasant, or otherwise unfulfilling, the employee probably won’t be motivated to perform at a very high level. Many companies practice a policy of job redesign to make jobs more interesting and challenging. Common strategies include job rotation, job enlargement, and job enrichment.

Job Rotation

Specialization promotes efficiency because workers get very good at doing particular tasks. The drawback is the tedium of repeating the same task day in and day out. The practice of job rotation allows employees to rotate from one job to another on a systematic basis, often but not necessarily cycling back to their original tasks. A computer maker, for example, might rotate a technician into the sales department to increase the employee’s awareness of customer needs and to give the employee a broader understanding of the company’s goals and operations. A hotel might rotate an accounting clerk to the check- in desk for a few hours each day to add variety to the daily workload. Through job rotation, employees develop new skills and gain experience that increases their value to the company. So great is the benefit of this practice that many companies have established rotational training programs that include scheduled rotations during the first 2-3 years of employment. Companies benefit because cross-trained employees can fill in for absentees, thus providing greater flexibility in scheduling, offering fresh ideas on work practices, and becoming promotion-ready more quickly.

Job Enlargement

Instead of a job in which you performed just one or two tasks, wouldn’t you prefer a job that gave you many different tasks? In theory, you’d be less bored and more highly motivated if you had a chance at job enlargement—the policy of enhancing a job by adding tasks at similar skill levels. The job of sales clerk, for example, might be expanded to include gift-wrapping and packaging items for shipment. The additional duties would add variety without entailing higher skill levels.

Job Enrichment

Merely expanding a job by adding similar tasks won’t necessarily “enrich” it by making it more challenging and rewarding. Job enrichment is the practice of adding tasks that increase both responsibility and opportunity for growth. It provides the kinds of benefits that, according to Maslow and Herzberg, contribute to job satisfaction: stimulating work, sense of personal achievement, self-esteem, recognition, and a chance to reach your potential.

Consider, for example, the evolving role of support staff in the contemporary office. Today, employees who used to be called “secretaries” assume many duties previously in the domain of management, such as project coordination and public relations. Information technology has enriched their jobs because they can now apply such skills as word processing, desktop publishing, creating spreadsheets, and managing databases. That’s why we now use a term such as administrative assistant instead of secretary.^[33]

Giving employees the freedom to make decisions within their roles and empowering them to take ownership of their work fosters a sense of trust and responsibility. This autonomy leads to greater job satisfaction and motivation to stay with the organization.

Work-Life Balance

Work-life balance generally refers to a balance between your personal and work life. The goal is to strive to keep that balance so that we are managing stress and burnout by fulfilling other areas of our lives that aren’t swallowed up by work.

Building a career requires a substantial commitment in time and energy, and most people find that they aren’t left with much time for non-work activities. Fortunately, many organizations recognize the need to help employees strike a balance between their work and home or personal lives. By helping employees combine satisfying careers and fulfilling personal lives, companies tend to end up with a happier, less stressed, and more productive workforce. The financial benefits include lower absenteeism, turnover, and healthcare costs.^[34]

Flexible Work Arrangements

One way, companies help employees maintain a work-life balance by offering flexible work arrangements, such as remote work options, flexible hours, and compressed workweeks, allowing employees to adjust their schedules based on personal needs and preferences. This flexibility helps employees manage their time more effectively, balancing work with family, hobbies, and other responsibilities.

The accounting firm KPMG LLP is committed to help “employees balance work and their personal lives through a variety of flexible work options” and has consistently made the list of the “Canada’s Top Family-Friendly Employers”.^[35]

Remote Work

Remote work, also known as Telecommuting, means that you regularly work from home (or from some other non-work location). You’re connected to the office by computer and cell phone. You save on commuting time, enjoy more flexible work hours, and have more opportunity to spend time with your family.

While roughly 40% of Canadian jobs can be done from home, telework capacity varies substantially across industries. For example, about 85% of workers in finance and insurance can work remotely, compared to only 4% of those in the agricultural fields. One challenge for employers seeking to implement telework is to accommodate the diversity of employee preferences. Around 90% of Canadians feel as productive or more productive when working from home. Approximately, 41% of remote workers would prefer to work half their weekly hours remotely.^[36]

Telecommuting isn’t for everyone. Working at home means that you have to discipline yourself to avoid distractions, such as TV, personal phone calls, and home chores and also not be impacted by feeling isolated from the social interaction in the workplace.

Flextime

Employers who provide for flextime set guidelines that allow employees to designate starting and quitting times. Guidelines, for example, might specify that all employees must work eight hours a day (with an hour for lunch) and that four of those hours must be between 10 a.m. and 3 p.m. Thus, you could come in at 7 a.m. and leave at 4 p.m., while coworkers arrive at 10 a.m. and leave at 7 p.m. With permission you could even choose to work from 8 a.m. to 2 p.m., take two hours for lunch, and then work from 4 p.m. to 6 p.m.

Compressed Workweeks

With compressed workweeks, rather than work eight hours a day for five days a week, you might elect to earn a three-day weekend by working ten hours a day for four days a week.

Job Sharing

Under job sharing, two people share one full-time position, splitting the salary and benefits of the position as each handles half the job. Often, they arrange their schedules to include at least an hour of shared time during which they can communicate about the job.

Personal Time

Additionally, generous paid time off policies, including vacation days, parental leave, and personal time, give employees the opportunity to recharge and attend to personal matters without financial stress. Employers also support work-life balance by promoting wellness programs, providing access to mental health resources, and fostering a work environment that encourages employees to take breaks and disconnect from work outside of business hours. Employee Assistance Programs (EAPs) provide confidential support for personal issues, ranging from stress management to financial and legal advice.

Caring for Self

Both KPMG LLP and BASF Canada provide employees with generous vacation allowances and personal days for employees to use in any way they want, in addition to offering employees comprehensive health and dental benefit coverage programs. Both organizations also offer an Employee Assistance Program for employees experiencing personal and/or work-related problems that may negatively affect their job performance and overall well-being. If staying fit makes you happier and more productive, BASF Canada offers a $400 fitness club subsidy and KPMG LLP offers the equivalent of 1.25% of an employee’s salary for home gym equipment.^[37]

Parental Leave and Support

Beyond the standard maternity and paternity leave, many companies offer extended paid parental leave for both primary and secondary caregivers. This provides employees with time to care for their new child without the financial strain of taking unpaid leave. New parents in Canada are guaranteed paid leave via Employment Insurance Maternity and Parental Benefits. BASF Canada tops-up these payments for new parents to 100% of salary for up to 17 weeks. KPMG LLP further supports new parents by providing those on leave support with their transition back to work.

Concierge and On-Site Services

Some companies offer concierge services to help employees with personal tasks such as scheduling appointments, making travel arrangements, or even organizing home services. This service allows employees to delegate time-consuming tasks, freeing up personal time for other activities.

Some employers provide on-site amenities like childcare services, dry-cleaning, fitness centers, or even grocery delivery services. These perks save employees time that would otherwise be spent outside of work, allowing them to focus on their job and personal life.

Family-Friendly Programs

Moreover, many companies offer benefits that assist employees in managing family responsibilities, such as on-site childcare, family leave policies, or subsidies for childcare services.

In addition to alternative work arrangements, many employers, including KPMG LLP and BASF Canada, offer programs and benefits designed to help employees meet family and home obligations while maintaining busy careers. As exemplar companies, they offer the following benefits.^[38]

Dependent Care

Caring for dependents—young children and elderly parents—is of utmost importance to some employees, but combining dependent-care responsibilities with a busy job can be particularly difficult.

Some employers provide on-site childcare which allows employees to pop-in at lunch to see their child. This also reduces time spent commuting to and from daycare and offers peace of mind knowing their child is nearby. Many employers provide access to backup or emergency childcare services for employees who experience last-minute disruptions in their regular care arrangements. This can include a network of approved childcare providers or services that offer temporary care when needed. Employers may offer financial assistance to help employees cover the cost of childcare. This could include subsidies, vouchers, or a reimbursement program that partially or fully offsets childcare expenses.

Flexible schedules, remote work, or compressed workweeks are often offered to employees with dependent care responsibilities. These arrangements allow employees to manage their work and caregiving duties more effectively by adjusting hours or working from home.

Employers are increasingly offering support for employees who care for aging parents or other elderly dependents. This can include access to elder care resources, counseling, and even subsidies for caregiving services.

The Personal Care program at KPMG LLP provides employees with up to 50 hours of paid time off annually to help with a range of personal matters. They also offer emergency backup dependent care all year round, either at a provider’s facility or in the employee’s home. KPMG LLP also has a Working Parents Network, Special Parents Network, offering support for parents raising children with physical, emotional and behavioural (virtual support group for parents raising children with physical, emotional and behavioural issues. Meanwhile, BASF Canada offers its employees a privately-run on-site childcare facility.

Positive Work Culture

A company’s work culture is the shared set of values, beliefs and attitudes that guide your organization, and it’s reflected in the way customers and employees are treated. Companies create a positive work culture by fostering an environment where employees feel valued, respected, and motivated. This is achieved through clear communication of organizational values, promoting openness and transparency, and recognizing employee achievements. Emphasizing diversity, equity, and inclusion, as well as supporting work-life balance and providing opportunities for professional growth, also contributes to a positive atmosphere. Supportive leadership, team collaboration, and a healthy work environment further strengthen this culture, leading to increased employee satisfaction, engagement, and long-term success for the organization.

Regularly recognizing and appreciating employees’ hard work, contributions, and achievements boosts morale and motivation. This can be done through verbal praise, awards, or other forms of recognition, fostering a positive workplace culture where employees feel valued.

A positive workplace culture that encourages open communication, sets clear expectations about work hours, and discourages an “always on” mentality also plays a critical role in maintaining work-life balance. By promoting a healthy, supportive work environment, companies can help employees achieve a better balance between their professional and personal lives, leading to greater job satisfaction, productivity, and overall well-being.

Workplace culture impacts the types of candidates a firm attracts for open positions, and having a strong work culture also boosts productivity, decreases turnover and improves employee engagement. Work culture can have a profound impact on several significant aspects of the employee experience, like individual and team morale, workplace engagement and job satisfaction. For example, experiencing happiness in the workplace could raise employees’ productivity by 12 percent.^[39]

Elements of Work Culture Employees Care About

Research from the MIT Sloan School of Management and CultureX based on Glassdoor data identified 10 elements of culture employees care most about:^[40]

• Feeling respected
• Having supportive leadership
• Whether leaders’ actions align with core values
• Managers who foster a toxic work environment
• Witnessing unethical behavior
• Benefits
• Perks and amenities
• Opportunities for learning and professional development
• Job security
• Frequency and quality of reorganizations

People report experiencing workplace culture most strongly through their employers’ approach to performance, recognition and celebrations and company mission and values, according to a 2022 Quantum Workplace survey. These foundational elements of work culture involve making sure employees feel their individual contributions are valued and their voices are being heard.

Toxic Work Culture

Researchers have pinpointed six key signs that a work culture is toxic:^[41]

• Treating employees and colleagues with disrespect.
• A lack of diversity or a failure to include and promote people from all backgrounds.
• Unethical behavior, dishonesty and false promises.
• A dog-eat-dog or cutthroat environment where employees constantly undermine or one-up each other.
• A hostile environment.
• Job insecurity and the absence of any kind of employee recognition activity

Compensation and Benefits

In addition to salary and wages, compensation packages often include other financial incentives, such as bonuses and profit-sharing plans, as well as benefits, such as medical insurance, vacation time, sick leave, and retirement accounts. Offering attractive salaries, bonuses, and comprehensive benefits packages, including health insurance, retirement plans, and paid time off, helps ensure that employees feel valued and financially secure, making them more likely to stay with the company.

Wages and Salaries

The largest, and most important, component of a compensation package is the payment of wages or salary. Salaried employees are paid the same amount each time they receive a paycheck, while wages can fluctuate depending on how many hours an employee works. The benefits of salaried employment include access to employee benefits like health insurance, greater job security, steady pay, higher income, and better chances for career advancement, while disadvantages include less flexibility and the potential for longer working hours. Wage-based employment has advantages, including greater job flexibility and fewer working hours, and disadvantages, including a lack of employment benefits, less job security, fluctuating pay, lower income, and fewer opportunities for career advancement.^[42]

Piecework and Commissions

Sometimes it makes more sense to pay workers according to the quantity of products that they produce or sell. Piecework pays employees based on how much work they complete. Commission is typically a percentage paid on sales or deals closed. It’s commonly used in sales and real estate jobs.

Incentive programs

In addition to regular paychecks, many people receive financial rewards based on performance, whether their own, their employer’s, or both. Other incentive programs designed to reward employees for good performance include bonus plans and stock options.

Bonus Plans

If the company has a profitable year, and if you contributed to that success, you’ll get a bonus.

Cisco Systems Canada’s year-end bonuses—annual income given in addition to salary—are based on individual and company-wide performance. If the company has a profitable year, and if you contributed to that success, you’ll get a bonus. They refer to it as “rewarding people for their performance, not their seniority”.^[43]

Bonus plans have become quite common, and the range of employees eligible for bonuses has widened in recent years. In the past, bonus plans were usually reserved for managers above a certain level. Today, companies have realized the value of extending plans to include employees at virtually every level. The magnitude of bonuses still favors those at the top.

Profit-Sharing Plans

An employee’s profit share is paid annually as a percentage of the employee’s earnings and is based on the company’s net profit.

Nature’s Path Foods and Canadian Tire both have profit-sharing arrangements with employees. Today, many Canadian companies offer some type of profit-sharing program. Canadian Tire’s plan has long been part of its operating principles —having been around since the late 1960’s. Here’s how it works. An employee’s profit share is paid annually as a percentage of the employee’s earnings and is based on the company’s net profit. Profits in the most recent years have averaged to be about 10%. Interestingly, because this profit share is part of an employee’s retirement savings, it is put into a deferred profit-sharing account.^[44]

Stock-Option Plans

WestJet’s compensation plan also gives employees the right to participate in their Employee Share Purchase Plan. This enables employees to purchase WestJet shares amounting to up to 20 per cent of their gross salary and the company will match their contributions. This is used as an incentive to attract and retain good people.

U.S.-based Starbucks, by contrast, isn’t nearly as selective in awarding stock options. At Starbucks, all employees can earn “Bean Stock”—the Starbucks employee stock-option plan. Both full- and part-time employees get Starbucks shares based on their earnings and their time with the company. If the company does well and its stock goes up, employees make a profit. CEO Howard Schultz believes that Bean Stock pays off because employees are rewarded when the company does well, they have a stronger incentive to add value to the company (and so drive up its stock price). Starbucks has a video explaining their employee stock option program on this webpage.^[45]

Benefits

Another major component of an employee’s compensation package is benefits— compensation other than salaries, hourly wages, or financial incentives. Types of benefits include the following:

• Legally required benefits (Employment Insurance, Canada Pension Plan, Workplace Safety and Insurance Boards)
• Paid time off (vacations, holidays, sick leave)
• Insurance (health benefits, life insurance, disability insurance)
• Retirement benefits

Because Canadian health and dental plans vary, it’s difficult to know an average cost. According to MaRS, the average annual premium works out to about 15% of payroll for a smaller businesses or up to 30% of payroll for large companies. ^[46]

Many workers received benefits in addition to those required by law, including vision care, semi-private hospital stays and out-of-country medical coverage. Some companies also provide benefits to permanent part-time employees who work a minimum number of hours per week.

When designing the benefits program, employers can use strategies to limit or contain costs in the longer term. These may include:^[47]

• Sharing the cost of premiums between the company and employee
• Building deductibles into the coverage
• Considering the level of coverage, or “co-insurance” (e.g., does the employer cover 80% of dental costs, or 90%, or 100%?)
• Capping coverage at certain limits (e.g., $400 for vision care over a set period of time)
• Limiting carry-over of unused sick days

Losing Valuable Employees

When a valued employee quits, the loss to the employer can be serious. Not only will the firm incur substantial costs to recruit and train a replacement, but it also may suffer temporary declines in productivity and lower morale among remaining employees who have to take on heavier workloads. Given the negative impact of turnover—the permanent separation of an employee from a company—most organizations do whatever they can to retain qualified employees. Compensation plays a key role in this effort: companies that don’t offer competitive compensation packages tend to lose employees. Other factors also come into play, such as training and development, as well as helping employees achieve a satisfying work/non-work balance. In the following sections, we’ll look at a few other strategies for reducing turnover and increasing productivity.^[48]

Voluntary Employment Termination

Voluntary termination is when an employee chooses to leave their job of their own accord, without pressure from their employer. It’s also known as voluntary resignation.

As important as such initiatives can be, one bad boss can spoil everything. The way a person is treated by their manager may be the primary factor in determining whether an employee stays or goes. According to the Indeed Career Guide, employees quit for many reasons, a few of which are listed below:^[49]

• Needing more of a challenge
• Seek a higher salary
• Wanting to feel valued
• Seeking a better management relationship
• Moving to a new location
• Feeling conflicted with workplace policies
• Needing a better work-life balance
• Looking for more recognition

Holding managers accountable for excessive turnover can help alleviate the “bad-boss” problem, at least in the long run. In any case, whenever an employee quits, it’s a good idea for someone—other than the individual’s immediate supervisor—to conduct an exit interview to find out why. Knowing why people are quitting gives an organization the opportunity to correct problems that are causing high turnover rates.

Involuntary Employment Termination

Involuntary termination is when an employer ends an employee’s employment without the employee’s consent. It can happen for a number of reasons, including poor performance, unprofessional behavior, policy violations, economic factors, and organizational changes.

While voluntary separations can create problems for employers, they’re not nearly as devastating as the effects of involuntary termination on employees. Losing your job is what psychologists call a “significant life change,” and it’s high on the list of “stressful life events” regardless of the circumstances. Sometimes, employers lay off workers because revenues are down and they must resort to downsizing—to cutting costs by eliminating jobs. Sometimes a particular job is being phased out, and sometimes an employee has simply failed to meet performance requirements.

A good practice in managing terminations is to maintain written documentation so that employers can demonstrate just cause when terminating an employee. If it’s a case of poor performance, the employee would be warned in advance that his or her current level of performance could result in termination and then be permitted an opportunity to improve performance. When termination is necessary, communication should be handled in a private conversation, with the manager explaining precisely why the action is being taken.

Unions

A union is a group of workers who join together to negotiate with an employer over pay, benefits, scheduling, and other workplace policies and conditions. The process of negotiating with an employer as a unified entity is known as collective bargaining, and it gives workers some power to set the terms of their employment.^[50]

Collective bargaining is a formal negotiation process where union representatives and employers work together to create or renew a contract that sets the terms of employment, such as wages, benefits, and working conditions. When negotiations between unions and employers stall, they may use mediation or arbitration to resolve disputes. Mediation involves a neutral third party helping both sides reach a voluntary agreement, while arbitration entails a neutral arbitrator making binding decisions. If these processes fail, unions or employers may employ tactics to strengthen their positions.

Union Tactics

Unions have several options at their disposal to pressure company management into accepting the terms and conditions union members are demanding. The tactics available to the union include striking, picketing, and boycotting.

Striking

A strike is a collective work stoppage by employees in response to an employer to force them to agree to certain terms of employment. Strikes are usually a last resort when a union and employer are unable to reach an agreement during collective bargaining.

Picketing

Picketing is a labor tactic where workers gather outside a workplace to protest and persuade others to take industrial action.

Boycotting

A boycott is a nonviolent, organized protest where workers encourage the public to refuse to buy the company’s products or services, or participate in activities, as a way to express their disapproval. Boycotts are often used by unions to protest unfair practices and demand better working conditions and wages.

Lockout

Employers might respond with a lockout, preventing workers from entering the workplace until an agreement is reached. These measures are intended to exert pressure on the opposing side to finalize negotiations.

Challenges

Convincing workers to unionize can be challenging due to a combination of social, economic, and organizational factors:

• Fear of Retaliation. Workers may worry about negative consequences from employers, such as job loss, reduced hours, or other forms of subtle retaliation. Even though laws exist to protect employees’ rights to unionize, the fear of repercussions can discourage participation.
• Lack of Awareness or Misconceptions. Many workers many not fully understand the benefits of unionization or may have misconceptions about unions being ineffective, corrupt, or unnecessary. Employers sometimes foster these views by highlighting union dues or emphasizing direct communication without a union.
• Diverse Workforce Needs. Modern workplaces often include employees with varying priorities and needs. Convincing a diverse group of workers to unite around shared goals can be difficult, as some may feel their interests aren’t aligned with union objectives.
• Employer Resistance Campaigns. Employers often actively resist unionization efforts through campaigns that discourage union membership. These campaigns may involve spreading anti-union messaging, emphasizing the potential downsides, and offering improved benefits and conditions to reduce perceived need for a union. Business managers resist unions because they generally add to the cost of doing business.
• Economic Pressure. Workers may fear losing income during a strike. They may worry about immediate job stability over the long-term benefits unions can provide.

Company Examples

Starbucks workers: On July 19, 2024, workers at a Starbucks located in The Mall at Robinson in Pittsburgh voted to unionize. On July 18, workers at a Starbucks located on Mass. Ave in downtown Indianapolis announced it would unionize with Starbucks Workers United. On July 17, workers at Starbucks location at Speedway & Park in Tucson, Arizona voted to unionize. Some 10,500 baristas at 460 Starbucks locations nationwide are now unionized with Starbucks Workers United.^[51]

Disney character workers: On May 18, 2024, about 1,700 Disneyland Resort cast members voted to unionize under the Actors’ Equity Association. On May 29, federal labor officials certified the vote.

Union Examples

The Canadian Union of Public Employees (CUPE) is Canada’s largest union, with 750,000 members across the country. CUPE represents workers in health care, emergency services, education, early learning and child care, municipalities, social services, libraries, utilities, transportation, airlines and more. CUPE has 68 offices across the country, in every province.^[52]

OPSEU/SEFPO represents approximately 180,000 members across Ontario. They are full- and part-time workers, young and old. They trace their ancestry to all parts of the globe – as diverse a group as you could imagine. Our members work for the Ontario government, inside community colleges, for the LCBO, in the health care sector, and they are employed in a wide range of community agencies within the broader public sector.^[53]

The United Food and Commercial Workers union (UFCW Canada) – a proud union that feeds, serves, and provides for Canada’s hard-working families. It is a private sector union with more than a quarter million members. Some of the most recognizable companies and brands are members, including Coca-Cola Canada, FreshCo, Loblaw Companies, Swiss Chalet, The Keg, Molson Breweries, Rexall, and LensCrafters. UFCW is one of Canada’s most youthful unions with more than 40 percent of UFCW Canada members under the age of 30.^[54]

Percentage of Employees in Canada in Unions

Statistics Canada reports union membership across Canada from 1981 to 2022 in Figure 11.2^[55]

Country Comparison of Percentage of Workforce in Unions

Review Table 11.1 below to compare the percentage of the workforce being members of labour unions in various countries as of 2019 and 2020.^[56]

Table 11.1 data source: (statista, 2022)

Union Activity in North America

Review the video below to learn about what’s happening with unions in North America.

Play the YouTube video below, “Are labour unions making a comeback in North America?” YouTube video below for some time management tips for stress-free productivity.^[57] Transcript for “Are labour unions making a comeback in North America?” Video [PDF–New Tab]. Closed captioning is available on YouTube.

Attributions

The contents of this chapter is a compilation sourced from various OER resources, please refer to the Book Information for details.

References

(Note: This reference list was produced using the auto-footnote and media citation features of Pressbooks)