CHAPTER 2

Strategy and Human Resources Planning

Copyright © 2023 by Cengage Canada 2-1

Learning Outcomes – 1

LO1 Explain how resources planning and a firm’s

mission, vision, and values are integrally linked
to its strategy and firm performance, and the
role of High Performance Work Systems
(HPWS).
LO2 Understand how an organization’s external
environment influences its strategic planning.
LO3 Understand why it is important for an
organization to do an internal resource analysis.

Copyright © 2023 by Cengage Canada 2-2

Learning Outcomes – 2

LO4 Explain the linkages between competitive

strategies and human resources.
LO5 Understand what is required for a firm to
successfully implement a strategy and assess its
effectiveness.
LO6 Describe how firms evaluate their strategies and
human resources implementation.

Copyright © 2023 by Cengage Canada 2-3

Strategic Planning and Human
Resources
• Strategic Planning
− Procedures for making decisions about the
organization’s long-term goals and strategies
• Human Resources Planning (HRP)
− The process of anticipating and providing for the
movement of people into, within, and out of an
organization
• Strategic Human Resources Management (SHRM)
− The pattern of human resources deployments
and activities that enable an organization to
achieve its strategic goals
Copyright © 2023 by Cengage Canada 2-4
High-Performance Work Systems
(HPWS)
• Human resource practices that increase an
organization’s ability to attract, select, hire,
develop, and retain high-performing employees
• Employee involvement and a culture of
commitment rather than control is stressed
• Importance of the quest for excellence and expects
employees to be highly qualified, competent, and
engaged in improving the organization

Copyright © 2023 by Cengage Canada 2–5

Strategic Planning and HRP:
Linking the Processes
• Strategy formulation: Providing input as to what is
possible given the types and numbers of people
available
• Strategy implementation: Making resource
allocation decisions, including decisions related to
structure, processes, and human capital

• How will the human resources be allocated for

structure, processes, and human capital decisions?

Copyright © 2023 by Cengage Canada 2–6

 Human Resource Planning
• Forecasts an organization’s future demand for and
supply of employees, and matches supply with
demand
• HR department contributes to success:
− Proper staffing is critical
− Different strategies require varying HR plans
− HR planning facilitates proactive responses
− Successful tactical plans require HR plans
− HR planning can vary from capturing basic information to
live-time predictive analytics
Relationship Between Strategic and
Human Resource Plans
 Human Resource Planning
• Human resource planning can vary in sophistication
across organizations:
• No formal planning – small companies where HR activities
may be done in a reactionary way
• Basic planning – companies recognizing the need to plan for
HR activities and may engage in a mix of proactive and
reactionary planning focus on the short term (1-2 years)
• Advanced planning – direct tie between strategy and HR
planning anticipating needs 3-5 years in advance
• Sophisticated planning – Senior HR professionals are integral
to the strategic process with planning for 5+years out relying
on strong expertise and technologies to support planning
The Workforce Planning Process
 Forecasting: Identifying the Causes
that will Drive Demand

• Strategic Plan
• Demographic Impacts
• Turnover
• Legal Changes
• Technological Changes
• Competitors
• Budgets and Revenue Forecasts
• New Ventures
• Organizational and Job Design
Forecasting Techniques for Estimating
Human Resource Demand
Techniques for Estimating Future Human Resource Needs
Expert Trend Other

Informal and instant Budget and planning

Extrapolation
decisions analysis

Formal expert survey Indexation New-venture analysis

Delphi technique Statistical analysis Simulation models

Expert Projection Forecasts

Informal and Instant Decisions

• Expert forecasts of future HR needs
Nominal Group Technique
• Groups of managers are asked to make forecasts
and the manager’s ideas are discussed by the
group and ranked
Delphi Technique
• Surveys of groups of experts, summaries are
shared back with the group, and they are surveyed
again until opinions converge
Trend Projection Forecasts
Extrapolation
• Extending past rates of change into the future
Indexation
• Matching employment growth with an index (e.g. ratio
of production employees to sales)

Statistical Analysis
• More sophisticated statistical analyses allow for
changes in the underlying causes of demand
Other Forecasting Methods
• Budget and Planning Analysis
− Organizations that need HR planning generally have
detailed budgets and long-range plans
• New Venture Analysis
− Planners estimate human resource needs by making
comparisons with similar operations
• Simulation and Predictive Models
− More sophisticated approaches
Converting a Forecast Into Human
Resource Requirements
Overview of HR Tools used to Estimate
Internal and External Supply of Labour
Internal Supply Indicators External Supply Indicators
Human Resource Audits Labour market analysis
• Skill inventories
Community attitudes
• Management inventories
• Replacement Demographic trends
charts/summaries
Transition matrices & Markov
analysis
 The Supply of Human Resources:
Internal Supply Estimates
• HR Audits
− Skills Inventories
 Summary of worker skills and abilities
− Management and Leadership Inventories
 Reports of management capabilities
− Replacement Charts
 Lists of likely replacements for each job
− Replacement Summaries
 Lists of likely replacements for each job and their relative strengths and
weaknesses.
• Transition Matrices & Markov Analysis
Figure 2.5
Hypothetical Markov Analysis For A Retail
Company

Copyright © 2023 by Cengage Canada 2-19

 Transition Matrices and Markov Analysis
(a) Transition Probability Matrix
Year Beginning Year End
Job A Job B Job C Job D Exit
Job A 0.80 0.10 0.05 0.00 0.05
Job B 0.10 0.70 0.00 0.10 0.10
Job C 0.00 0.00 0.90 0.05 0.05
Job D 0.00 0.00 0.00 0.90 0.10
(b) Expected Movements of Employees
Initial Job A Job B Job C Job D Exit
Staffing
Level
Job A 200 160 20 10 0 10
Job B 70 7 49 0 7 7
Job C 60 0 0 54 3 3
Job D 100 0 0 0 90 10
Predicted End-of-the- 167 69 64 100 30
Year Staffing Level
Figure 2.6
An Executive Replacement Chart

Copyright © 2023 by Cengage Canada 2-21

The Supply of Human Resources:
External Supply Estimates
• Labour Market Analysis
− Study of the firm’s labour market to evaluate the present or
future availability
• Community Attitudes
− Affects nature of the labour market
The Supply of Human Resources:
External Supply Estimates Cont’d
• Demographic Trends
• Affects the availability of external supply
• ESDC publishes labour force projections
• Statistics Canada publishes reports
• Canadian Occupational Projection System
(COPS)
Constant Balancing Act

Oversupply

Shortage
 Strategies to Manage an Oversupply of
Human Resources
• When the internal supply of workers exceeds the
firm’s demand, a surplus exists. There are various HR
strategies:
Headcount reduction
• Layoffs
• Leave without pay
• Incentives for voluntary separation
• Termination
Strategies to Manage an Oversupply
of Human Resources

Attrition
• Hiring freeze
• Early and phased retirement officers
Alternative Work Arrangements
• Job sharing
• Using part-time employees
Strategies to Manage a Shortage of
Employees
Develop
Source Service Existing Work
Hire Employees Employees
Providers Arrangements
Internally

•Full-time •Independent •Replacement •Overtime

•Part-time contractor charts •Flexible
•Temporary •Third party •Succession schedules
•Outsource planning •Flexible time
•Crowdsource •Career and location
development •Flex policies
•Float and
transfer
Staffing Option #1:
Hire Employees
• Hire full-time employees
− Where internal transfer or promotion is not
feasible, hiring full-time employees may be
required
− Results in additional fixed cost
• Hire part-time workers
− Popular strategy for meeting human resource
needs
 Staffing Option #2:
Contract Out the Work
• Source service providers
− Independent contractor: freelancer (self-employed)
− Consultants: hired to provide expert advice and counsel in a
particular area
− Outsource: contracting tasks to outside agencies or persons
− Crowdsource: takes a function once performed by employees
and outsources it to an undefined network of people as an
open call
− Co-source: a form of contracting that brings an external team
to support and work with an internal team
Staffing Option #3:
Develop Employees Internally
• Promotions
• Movement of an employee from one job to
another that is higher in pay, responsibility,
and/or organizational level
• Succession and career plans
• Training and development
Staffing Option #4:
Creating Flexible Work Arrangements
• Overtime
− Employees work beyond the normal hours
• Flexible retirement
− Target those employees close to retirement to extend
their contributions (e.g., retiree return)
• Float and transfer
• Movement of an employee from one job to another that is
relatively equal in pay, responsibility, and organizational level
 Program Measurement and
Evaluation
• The final step in the planning process is to evaluate
workforce planning activities against organizational
goals
− E.g., were vacancies in key roles reduced? Was
the target of internal or external recruits
achieved?
− Improvement should be measured year over year
Step 1: Mission, Vision, and Values
• Mission
− The basic purpose of the organization as well as its
scope of operations
• Strategic Vision
− A statement about where the company is headed
and what it can become in the future; clarifies the
long-term direction of the company and its strategic
intent
• Core Values
− The strong and enduring beliefs and principles that
the company uses as a foundation for its decisions
Copyright © 2023 by Cengage Canada 2–33
Step 2: External Analysis – 1
• Environmental Scanning
− Systematic monitoring of the major external forces
influencing the organization
• Business environment
− Economic and ecological changes
− Technological changes
− Demographic changes and labour market trends
− Social changes
− Legal and regulatory changes

Copyright © 2023 by Cengage Canada 2-34

Step 2: External Analysis – 2
• Competitive Environment
− Customers
− Rival firms
− New entrants
− Substitutes
− Suppliers
− Stakeholders

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Step 2: External Analysis – 3
• Stakeholders
− Key people and groups that have an interest in a
firm’s activities and that can either affect them or
be affected by them

• Primary stakeholders: investors, employees, customers,

suppliers, and creditors
• Secondary stakeholders: the community in which the
firm operates, the government, business groups, and
the media

Copyright © 2023 by Cengage Canada 2-36

Step 3: Internal Analysis – 2
• Core Capabilities
− Integrated knowledge sets within an organization that
distinguish it from its competitors and deliver value to
customers
• Can consist of a combination of three resources:
1. processes
2. systems (technologies), and
3. people
• Value Creation is what the firm adds to a product or service
by virtue of making it; the amount of benefits provided by
the product or service once the costs of making it are
subtracted

Copyright © 2023 by Cengage Canada 2-37

Sustaining a Competitive Advantage
through People
• Four criteria:
− The resources must be valuable.
− The resources must be rare.
− The resources must be difficult to imitate.
− The resources must be organized.
• Different skill groups in any given organization can
be classified based on the extent to which they add
strategic value and are unique to that organization.

Copyright © 2023 by Cengage Canada 2-38

Corporate Culture
• Cultural audits - Audits of the culture and quality of
work life in an organization
− How do employees spend their time?
− How do they interact with each other?
− Are employees empowered?
− What is the predominant leadership style of
managers?
− How do employees advance within the
organization?

Copyright © 2023 by Cengage Canada 2-39

Step 4: Formulating Strategy
• Strategy Formulation
− Moving from simple analysis to devising a
coherent course of action
• SWOT Analysis
− A comparison of strengths, weaknesses,
opportunities, and threats for strategy
formulation purposes
− Using the strengths of the organization to
capitalize on opportunities, counteract threats,
and alleviate internal weaknesses
Copyright © 2023 by Cengage Canada 2-40
Corporate Strategy
• A firm's corporate strategy includes the markets in
which it will compete, against who, and how.
• Some firms choose a concentration strategy that
focuses on only a limited portion of the industry.
• Growth and diversification
− Growth hinges on three related elements:
1. increased employee productivity,
2. a greater number of employees, and
3. employees developing or acquiring new
skills

Copyright © 2023 by Cengage Canada 2-41

Business Strategy – 1
• Low-cost strategy: competing on productivity
and efficiency
− Keeping costs low to offer an attractive price to
customers (relative to competitors)
• Differentiation strategy: competing on unique value
added
− Involves providing something unique and
distinctive to customers that they value

Copyright © 2023 by Cengage Canada 2-42

Business Strategy – 2

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Functional Strategy:
Ensuring Alignment
• Vertical Fit/Alignment
− Focuses on the connection between the
business objectives and the major initiatives in
HR
• Horizontal Fit/Alignment
− Aligning HR practices with one another
internally to establish a configuration that is
mutually reinforcing

Copyright © 2023 by Cengage Canada 2-44

Taking Action:
Reconciling Supply and Demand – 2
• Layoff Strategies:
− Attrition: natural departure of employees
through quits, retirements, and deaths
− Hiring freeze: new workers are not hired as
planned or workers who have left are not
replaced
• Termination: initiated by an employer to separate
an employee from the organization permanently
− Severance pay: lump-sum payment given to
terminated employees, is calculated on the basis
of years
Copyright © 2023 by Cengage Canada 2-45
Step 6: Evaluation and Assessment
• Firms must establish a set of “desired” objectives as
well as metrics to monitor how well their organization
delivered against those objectives.
• Benchmarking: The process of comparing the
organization’s processes and practices to those of other
companies
• Two categories of metrics:
1. Human capital metrics: Assess aspects of the
workforce
2. HR metrics: Assess the performance of the HR
function itself
Copyright © 2023 by Cengage Canada 2-46
Figure 2.10:
An Example of an HR Dashboard

Copyright © 2023 by Cengage Canada 2-47

Measuring a Firm’s Strategic
Alignment
• Balanced Scorecard (BSC)
− A measurement framework that helps managers
translate strategic goals into operational
objectives
• The model has four related cells:
1. financial
2. customer
3. processes
4. learning

Copyright © 2023 by Cengage Canada 2-48

Activity 1:
SWOT Analysis
• Using your educational institution as the example,
describe:
− Current issues facing the organization
− The organization’s strengths and weaknesses
− The competition’s strengths and weaknesses
− What are the opportunities and threats in
education?
• Then, using the SWOT analysis in class, describe a
possible future for higher level educational
institutions.
Copyright © 2023 by Cengage Canada 2-49
 CHAPTER 3
Equity, Diversity, and Inclusion:
The Legal Environment

Copyright © 2023 by Cengage Canada 3-50

Learning Outcomes – 1

LO1 Explain the reasons for and main aspects of

equity-related legislation.
LO2 Identify the legal framework related to diversity,
equity, and inclusion, including the Charter and
human rights legislation.
LO3 Understand the need for and role of pay equity
legislation.

Copyright © 2023 by Cengage Canada 3-51

Learning Outcomes – 2

LO4 Discuss the Employment Equity Act with respect

to its origins, its purpose, and its continued
enforcement and the implementation of
employment equity in many Canadian
organizations.
LO5 Discuss sexual harassment as an employment
equity issue.
LO6 Explain and give examples of diversity
management and inclusionary policies.

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Employment Equity – 1
• Employment equity is
the employment of
individuals in a fair and
nonbiased manner.

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Employment Equity – 2
• Managers and HR professionals are expected to
manage employees in ways that comply with and
respect the laws and regulations of Canada.
• The Canadian Charter of Rights and Freedoms, the
federal Canadian Human Rights Act (CHRA), and
pay equity and employment equity acts are the
governing pieces of legislation dealing with
employment equity.

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The Legal Framework – 1
• The Canadian Charter of Rights and Freedoms:
− guarantees some fundamental rights to every
Canadian
• A 2007 case in British Columbia ruled that the
Charter does protect the right to bargain
collectively.
• Protects only the right of government and public-
sector employees, not private-sector employees.

Copyright © 2023 by Cengage Canada 3-55

The Legal Framework – 2
• The Canadian Human Rights Act (CHRA)
− every individual should have an equal opportunity
with other individuals to make for himself or herself
the life that he or she is able and wishes to have,
consistent with his or her duties and obligations as a
member of society, without being hindered in or
prevented from doing so by discriminatory practices
based on race, national or ethnic origin, colour,
religion, age, sex, or marital status, or convictions
for an offence for which a pardon has been granted
or by discriminatory employment practices based on
physical handicap

Copyright © 2023 by Cengage Canada 3-56

The Canadian
Human Rights Act (CHRA) – 1
• Prohibited grounds of
discrimination in
employment include
race, religion, sex, age,
national or ethnic
origin, physical
handicap, and marital
status.

Copyright © 2023 by Cengage Canada 3-57

The Canadian
Human Rights Act (CHRA) – 2
• Bona fide occupational qualification (BFOQ)
− A justifiable reason for discrimination based on
business reasons of safety or effectiveness

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The Canadian
Human Rights Act (CHRA) – 3
• Enforcement of the Canadian Human Rights Act
− Canadian Human Rights Commission (CHRC)
deals with complaints concerning discriminatory
practices covered by the Act.
− Figure 3.1 provides a complete listing of
prohibited grounds of discrimination in Canada.

− Individuals have a right to file a complaint if they

feel they have been discriminated against.

Copyright © 2023 by Cengage Canada 3-59

The Enforcement of Provincial
Human Rights Laws
• Provincial human rights laws are enforced in a
manner very similar to that of the federal system.
• Employers tend to be small and medium-sized
businesses, many of which lack an HR professional
who is knowledgeable about human rights
legislation.
• The majority of cases are resolved at the
investigation stage. If no agreement can be
reached, the case is presented to the province’s
human rights commission.

Copyright © 2023 by Cengage Canada 3-60

Pay Equity
• Covered by all Canadian jurisdictions, either
through explicit laws or policies, except Alberta.
• Illegal to discriminate on the basis of job content
− helps address the discriminatory portion of the
historical wage gap between men and women
and to ensure that salary ranges reflect the
value of the work performed
• Equal pay for work of equal value – pay equality
• Equal pay for work of comparable worth, or equal
pay for work of comparable value – pay equity
legislation
Copyright © 2023 by Cengage Canada 3-61
Employment Equity – 1
• Labour force statistics
− changing patterns of immigration, rising labour
force participation rates for women, and an aging
population with a proportionally higher incidence of
disabilities
• Equity means fairness and impartiality:
− establish practices and policies to ensure equitable
representation in the workforce
• Figure 3.2 (next slide) shows the workforce
representation of the designated groups in the
Canadian population.
Copyright © 2023 by Cengage Canada 3-62
Employment Equity – 2
• Designated groups –
Women, Indigenous
people, persons with
disabilities, and
members of visible
minorities, who have
been disadvantaged in
employment

Copyright © 2023 by Cengage Canada 3-63

Figure 3.2
Representation of Designated Groups in
the Labour Force

Copyright © 2023 by Cengage Canada 3-64

Status of Designated Groups – 1
• Women
− underrepresented as semi-professionals and
technicians, as supervisors in trades, and in
natural and applied sciences
− underrepresented in management positions and
as members of boards
− female earnings lag behind those of men

Copyright © 2023 by Cengage Canada 3-65

Status of Designated Groups – 2
• Indigenous People
− Many face major barriers to employment, which
are often compounded by low educational
achievement, Lack of job experience, or
language and cultural barriers.
− Strategies to retain Indigenous individuals
include inclusion practices, cultural awareness
training, encouraging traditional practices and
community and family obligations, offering
professional development opportunities, and
providing mentorship, coaching, and cohort
programs.
Copyright © 2023 by Cengage Canada 3-66
Status of Designated Groups – 3
• People with Disabilities
− At least 22 percent of Canadians aged 15 and
over have a disability.
− People with disabilities face attitudinal barriers,
physical demands that are unrelated to job
requirements, and inadequate access to the
technical and human support systems that
would make productive employment possible.

Copyright © 2023 by Cengage Canada 3-67

Status of Designated Groups – 4
• Members of Visible Minorities
− Comprise about 22 percent of the labour force.
− Visible minority groups vary in their labour force
profiles and in their regional distributions.
− Systemic barriers that negatively affect
employment include culturally biased aptitude
tests, a lack of recognition of foreign credentials,
and excessively high language requirements.

Copyright © 2023 by Cengage Canada 3-68

Benefits of Employment Equity
• Makes good business sense
• Contributes to the bottom line by broadening the
base of qualified individuals for employment,
training, and promotions
• Enhances an organization’s ability to attract and
keep the best-qualified employees
• Enhances employee morale by offering special
measures
• Improves the organization’s image in the
community
Copyright © 2023 by Cengage Canada 3-69
The Employment Equity Act (1995)
• Employers and Crown corporations that have 100
employees or more and that are regulated under
the Canada Labour Code must implement
employment equity and report on their results.
• The concept of employment equity is rooted in the
wording of federal and provincial employment
standards legislation, human rights codes, and the
Charter

Copyright © 2023 by Cengage Canada 3-70

The Implementation of Employment
Equity in Organizations – 1
• The process generally involves six main steps:
1. Senior management commitment
2. Data collection and analysis
3. Employment systems review
4. Establishment of a workplan
5. Implementation
6. Follow-up process that includes evaluation,
monitoring, and revision

Copyright © 2023 by Cengage Canada 3-71

The Implementation of Employment
Equity in Organizations – 2
• Step 1: Senior Management Commitment and
Assignment of Accountable Senior Staff
• Step 2: Data Collection and Analysis
− an internal workforce profile is an important tool
and it helps determine where a company stands
relative to its external workforce.
− profiles must be based on stock data and flow data
• Stock data: Data showing the status of
designated groups in occupational categories and
compensation levels
• Flow data: Data that provide a profile of the
employment decisions affecting designated
groups
Copyright © 2023 by Cengage Canada 3-72
The Implementation of Employment
Equity in Organizations – 3
• Step 2: Data Collection and Analysis (cont’d)
− Underutilization – Designated groups that are
not utilized or represented in the employer’s
workforce proportional to their numbers in the
labour market
− Concentration – Designated groups whose
numbers in a particular occupation or level are
high relative to their numbers in the labour
market

Copyright © 2023 by Cengage Canada 3-73

The Implementation of Employment
Equity in Organizations – 4
• Step 3: Employment Systems Review
− Means by which employers carry out personnel
activities such as recruitment, hiring, training
and development, promotion, job classification,
discipline, and termination
− Systemic Barriers in Employment Practices:
• Systemic discrimination:
• The exclusion of members of certain
groups through the application of
employment policies or practices based
on criteria that are not job related

Copyright © 2023 by Cengage Canada 3-74

The Implementation of Employment
Equity in Organizations – 5
• Step 3: Employment Systems Review (continued)
− Special Measures and Reasonable
Accommodation
• Reasonable accommodation involves
adjusting employment policies and practices
so that no individual is denied benefits,
disadvantaged with respect to employment
opportunities, or blocked from carrying out
the essential components of a job because of
race, colour, sex, or disability.

Copyright © 2023 by Cengage Canada 3-75

The Implementation of Employment
Equity in Organizations – 6
• Step 4: Establishment of a Workplan
− A narrative statement or summary of the
conclusions drawn from the examination of the
workforce analysis forms part of the
employment equity workplan.
• Step 5: Implementation
− Each strategy should be designed to meet the
needs of the particular organization
• Step 6: Evaluation, Monitoring, and Revision

Copyright © 2023 by Cengage Canada 3-76

Sexual Harassment – 1
• Sexual harassment is
unwelcome advances,
requests for sexual favours,
and other verbal or
physical conduct of a
sexual nature in the
working environment.

Copyright © 2023 by Cengage Canada 3-77

Sexual Harassment – 2
• The two main sources of the employer’s duty to
prevent harassment in the workplace are:
1. human rights legislation, which prevents
harassment only on the basis of the
designated grounds in the legislation (e.g.,
sex, race, religion); and
2. law obligation to treat workers with decency
and respect

Copyright © 2023 by Cengage Canada 3-78

Managing Diversity and Inclusion – 1
• Diversity Management
− The optimization of
an organization’s
multicultural
workforce in order to
reach business
objectives

Copyright © 2023 by Cengage Canada 3-79

Managing Diversity and Inclusion – 2
• A diverse workforce does not necessarily equate to
an inclusive workforce.
• Managing diversity is a broader, more inclusive
concept. It involves ensuring that employees feel a
sense of belonging and feel valued, respected, and
encouraged to participate in the organization.
• Cultivating cultural intelligence is compulsory for a
diverse workforce.

Copyright © 2023 by Cengage Canada 3-80

Inclusionary Practices:
Creating an Environment for Success
• Diversity initiatives should be taken slowly so that
everyone can understand that this change is an
evolutionary process and that expectations should
be realistic.
• Individuals must fully understand the time, effort,
commitment, and risk involved and the need for a
systematic approach to diversity and inclusion.
• Figure 3.3 outlines some of the key factors in a
diversity management strategy.

Copyright © 2023 by Cengage Canada 3-81

Figure 3.4
Why Diversity?

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