Chapter 8

Performance Management
“In business, the idea of measuring what you are doing, picking the
measurements that count like customer satisfaction and performance … you
thrive on that.”

BILL GATES1

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LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. LO1 Discuss how managing employee performance relates to

achieving organizational goals.

1. LO2 Describe the various purposes of performance appraisals.

1. LO3 Describe the commonly used comparative and noncomparative

appraisal methods.

1. LO4 Discuss the advantages and disadvantages of the various raters

of performance appraisal information.

1. LO5 Describe the guidelines for effectively communicating

performance feedback to employees.
1. LO6Outline steps for creating a performance improvement plan.

1. LO7 Explain how talent management uses information about

employee performance and potential to guide employee decisions.
LO1 Introduction to Performance
Management
HR professionals run performance management strategically—to align each
employee’s performance appraisal with the strategy for the organization.
Whether the strategic focus of the organization is safe working, competitive
pricing, high quality, or exemplary customer service, the ideal performance
management system provides incentives for employees to improve things that
contribute the most value. In combination, employees meeting their individual
goals all contribute to an organization’s achieving its objectives. The examples
below illustrate issues when the measurement of performance does not align with
good business strategy:

When Britain’s ambulance service began measuring response times, call

centres falsified their data. Ambulances were arriving at emergency scenes
before their calls were logged. Also in health care, when the success rate of
surgeons was recorded, some surgeons turned away tricky cases to keep their
success rates high.2

A U.S. phone company took over local phone operations in the Dominican
Republic and implemented repair goals for repair crews. It soon became
apparent that the repair crews were sabotaging the phones of their friends
and families to increase their number of repair calls to meet the performance
goals.3

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These measurements were simple but hardly appropriate. No doubt actual

response times, responses to tricky surgical cases, and effectively repairing
phones that were legitimately broken would have been more effective. The next
example shows a strong link between performance and corporate strategy:

At Microsoft, three inputs determine a single performance rating for each

employee: (1) what employees did during the year versus their commitments
and goals as compared to the achievements of their peers, (2) the behaviour
used to achieve their results as provided in feedback from peers and
managers, and (3) employees’ proven capabilities based on their work inputs
 plus their long-term performance record. The rating triggers increases in
merit pay, bonuses, and restricted stock units. The company can target its
compensation to critical positions and disciplines, such as engineering
research and development, which are most significant in the company’s
success. Employees are able to see how their compensation would shift
based on different performance ratings through an interactive intranet
portal.4

This example shows how incentives can be used to reinforce performance that
matches desired business strategy. Business strategy, performance management,
and compensation systems should be carefully linked.

Performance Management System Goals

Sound performance management programs make clear the connection between
company goals and employee objectives and work plans.5 One approach is to
have organizational goals cascade into refined goals and expectations at the unit,
team, and individual levels. With this approach, high-level executives will
develop goals for their division that align with the organizational goals. Then,
mid-level managers will develop unit goals to meet the division goals, followed
by managers developing team goals to meet the unit goals, and so on until the
goals are cascaded down to individuals.6 The left side of Figure 8-1 shows the
cascade approach to setting performance goals.

FIGURE 8-1

Cascading
Versus
Linking Up
Approaches to
Aligning
Organizationa
l and
Individual
Performance
Goals

Table
Summary:
Summary
Although cascading goals are used to ensure line of sight between organizational
objectives and individual work, they can be time-consuming to set up (each level
is dependent on the level above to complete its goals in a timely manner), and
they risk being distorted down the chain until the individual goal no longer
contributes to the organizational goal. In the “linking up” approach, each unit and
employee clearly links their goals to the organization’s objectives (see the right
side of Figure 8-1). The linking up approach may be faster than the cascading
approach, and it allows for a more direct line of sight between the individual’s
goals and the organization’s objectives, which may produce more meaningful and
clearer goals.7 In either approach, the goal is for performance management plans
to provide clarity for what is expected of the employee and how the work of the
employee contributes to organizational success.

To assess the performance of the overall organization, one popular system—the

balanced scorecard—integrates financial measures with other key performance
indicators around customer satisfaction; internal organizational processes; and
organizational growth, learning, and innovation.8 The performance measures,
targets, and initiatives for each of these areas all align with the organization’s
vision and mission to ensure that all aspects of the organization are moving
forward together. Figure 8-2 provides an example of a balanced scorecard.

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FIGURE
8-2

A
Balanced
Scorecard
Example

Table
Summary
:
Summary
 Reprinted with permission from ClearPoint Strategy,
https://www.clearpointstrategy.com

HR plays a critical part in an organization’s performance, of course. HR has

direct links to innovation and learning, but it also influences customer
satisfaction, quality improvement programs, and other internal processes.
LO2 Performance Appraisal Purpose
Just as engineering is concerned with designing equipment, maintenance is
concerned with running equipment, and manufacturing is concerned with turning
out a quality product at minimal cost, HR should be concerned with identifying
what the people in engineering, maintenance, and manufacturing must do
(behaviour) to be proficient in their respective functions. Similarly, HR should
determine what top management must do to implement the strategic plan once it
has been formulated.

Although almost all organizations (99 percent) assess employee performance,9

the purpose of and intended use for the performance appraisals vary, and the
intended uses will impact how the process is designed and executed. The uses of
performance appraisals are outlined in Figure 8-3.

FIGURE 8-
3

Uses of
Performanc
e Appraisals

Table
Summary:
Summary
Administrative Decisions
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One of the primary purposes of the performance appraisal process is to guide

administrative decisions. Stronger performers may receive pay raises and
promotions while weaker performers may be transferred or terminated. The
ratings and comments made on performance appraisals provide necessary
documentation to justify HR decisions.10

Feedback and Performance Improvement

Performance appraisals may also serve an informational purpose to tell
employees how they are performing on the aspects of their job. As well, they are
a communication tool for managers to use to inform employees about
performance expectations.

Employee Development and Career Planning

Performance appraisals with a development focus are useful tools for managers to
coach employees for performance improvement on an ongoing basis. They are
also useful to guide discussions about areas of strength and weakness for the
employee, which may trigger training and development enrollment and inform
longer-term career planning (see Chapter 7). When employee development is the
goal, the performance appraisal may not include numeric ratings of performance.
The focus is on ongoing immediate feedback, coaching and support, and forward-
looking direction with the goal of employee engagement over control and
oversight.11

Criteria for Test Validation

As discussed in Chapter 6, the effectiveness of selection tests may be validated
against performance ratings. Stronger performers on selection tests should
perform better on performance evaluations. To this end, performance appraisals
become evidence in the event of litigation, for instance, for allegations of
wrongful dismissal.

Training Program Objectives

In addition to identifying individual training needs for specific employees when
they are not performing well in specific areas, performance appraisals provide
insights into the effectiveness of other aspects of the HR system. For instance, if
multiple employees have weak performance in a particular area, the training
program offered may be insufficient or require an adjustment to meet the
organization’s needs. If poor performance is widespread, HR may have broader
issues associated with its selection system or promotion of internal hires.

Job Redesign
Trends across the performance appraisals of employees in various jobs may also
be a useful source of information for job redesign. Observing poor performance
across employees may prompt further conversations about the reasons why
performance is suffering. Efforts to improve job characteristics or the work
environment may improve systemic poor performance.12

The purposes for which the performance appraisal is to be used will guide other
decisions about the frequency of performance appraisal, the forms to be used,
who completes the evaluations, and so on, which are discussed next.
The Performance Appraisal Process
Figure 8-4 shows an overview of the performance appraisal process: (1)
performance objectives are identified, (2) performance against those criteria is
measured, (3) feedback is given to employees, and (4) records of the
evaluation are stored and HR decisions are made. Based on the ratings and
feedback, new performance objectives are set, and employee performance will be
measured again in the next review period.

FIGURE 8-
4

The
Performanc
e Appraisal
Process

Table
Summary:
Summary

Setting Performance Objectives

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Performance objectives are the targets for employee performance that drive
toward the strategic business goals of the organization, operationalized at the
individual employee level. Increasingly, supervisors and employees set
performance objectives together at the beginning of the appraisal period and
establish a performance management plan (PMP). Input into the PMP
significantly increases the probability of acceptance by both management and
employees.13 The objectives set out in the PMP should be job-related, practical,
and based on performance standards.14 From the job analysis topic discussed in
Chapter 2, performance standards are measurable benchmarks that relate to the
desired results of employee performance.

Performance standards may relate to quality (how well the objective has been
achieved), quantity (how much, how many, and how often), and time (due dates,
adherence to schedule, cycle times, and so on). It is the responsibility of the
manager, as coach and counsellor, to set goals that the employee sees as
achievable. Studies have consistently found that when supervisors set specific
goals, performance improves twice as much as when they set general goals.15

Steve Debenport/Getty Images

 A maître d’, a server, and a wine steward all do restaurant-related work,
but each of their performance evaluations uses different criteria. Do you
recognize some criteria that they may have in common?

Performance objectives can be for specific work activities or for recurring

activities that take place many times over the appraisal period. Examples include:

Work Activity: Collaborate with others on menu development.

Performance Objective: For each new menu item, solicit feedback from at
least two other chefs to incorporate into the plate, and seek wine pairing
recommendations from the wine steward.

Recurring Work Activity: Processing travel requests.

Recurring Performance Objective: Process and approve (or decline) all

incoming travel requests. Deliver 90 percent of approval notices within five
business days of receipt.

Measuring Performance
After performance objectives are set, it is time to determine how performance can
be observed and then measured. Observations can be made either directly or
indirectly. Direct observation occurs when the rater actually sees the
performance. Indirect observation occurs when the rater can evaluate only
substitutes for actual performance. For example, a supervisor’s monitoring of a
representative’s calls is direct observation; a written test on company procedures
for handling calls from difficult customers is indirect observation. Likewise,
hearing a report about performance from a second-hand source is another form of
indirect observation.16

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Observations of performance can also be objective or subjective. Objective

performance measures are those indicators of job performance that are verifiable
by others and are typically quantitative. They include measures such as units
produced, scrap rates, response time, number of customer complaints, or some
other mathematically precise measure of performance. Objective measures are not
available in all jobs, however. For instance, measuring minutes sitting at a
computer or number of keystrokes would not give a very good indication of
performance for most desk jobs!

Subjective performance measures are based on opinion or perception by a rater.

Usually, such measures are the rater’s personal opinions, but they may be subject
to biases, which will be discussed later in the chapter. When subjective measures
are also indirect, accuracy becomes even lower. For example, measurement of a
representative’s phone etiquette is done subjectively because supervisors must use
their personal opinions of good or bad manners. Accuracy is likely to be even
lower when the rater uses an indirect measure, such as a test of phone etiquette or
another employee’s second-hand account of the employee’s phone etiquette.

Objective and direct measures of performance are preferable, but are not available
for all types of jobs. Based on the information that is available to evaluate
performance, HR will determine which performance measures to use, who the
raters should be, and what rater training they might need. To be useful,
performance measures must be easy to use, be reliable, and report on the critical
behaviours that determine performance. Evaluations can be grouped into those
that compare employees to each other, and those that do not compare employees
to each other.

LO3 Comparative Evaluation Methods

Comparative evaluation methods compare one person’s performance with that of

co-workers. The most common forms of comparative evaluations are the ranking
method and forced distributions. Although these methods are practical and easily
standardized, they offer little job-related feedback for employees to improve.

Ranking Method

The ranking method has the rater place each employee in order from best to
worst. From this list, HR knows that certain employees are better than others, but
not by how much. The employee ranked second may be almost as good as the one
who was first or considerably worse. Although rankings are easy to administer
and explain, managers can be biased by recent performance events and by
positive overall impressions of some employees.

Forced Distributions
Forced distributions require raters to sort employees into different classifications.
Usually a certain proportion must be put in each category. Figure 8-5 shows how
a rater may classify 10 subordinates plotted in a typical bell curve. As with the
ranking method, relative differences among employees are unknown, but this
method does overcome the biases of central tendency, leniency, and strictness
(discussed later in this chapter). Some workers and supervisors dislike this
method because it requires some employees to be rated relatively low even if
their performance is still good from an absolute standpoint. For instance, the
lowest employee may still meet the performance objective of 90 percent of
approvals processed within five days when all other employees achieve higher
than 90 percent.

FIGURE 8-
5

Forced
Distribution
Plot of 10
Employees
by
Performanc
e

Table
Summary:
Summary
A famous example of a forced distribution is the “Vitality Curve” used by GE
under its legendary CEO Jack (“Neutron Bomb”) Welch:

Jack Welch insisted that all managers categorize their employees into
categories of “Top 20,” “The Vital 70,” and “Bottom 10” and that the latter
be fired every year, regardless of actual performance. Many managers
strongly resisted this demand, but were given no choice. It should be noted
that under Jack Welch’s reign, GE had over 400,000 employees.17

Comparative methods are insightful for compensation decisions when top

performers are granted bonuses or higher raises than average performers. Top
performers may be offered development opportunities, recognition, or
promotions. The weakest performers may be targeted for dismissal, remedial
training, or performance improvement plans discussed later in the chapter.18

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Noncomparative Evaluation Methods

Noncomparative evaluation methods, as the name implies, do not compare one

employee against another but use scales or reports with performance objectives
and standards. These methods include rating scales, behaviourally anchored
rating scales, performance tests and observations, and management by objectives.

Rating Scales

Perhaps the oldest and most widely used form of performance appraisal is the
rating scale, which requires the rater to provide a subjective evaluation of an
employee’s performance along a scale from low to high. An example appears in
Figure 8-6.

FIGURE 8-6

A Sample of a Rating Scale for Performance Evaluation

Table Summary: Summary

NutriGrow Organic Foods
Instructions: For the following performance objectives, please indicate
your rating and the basis for your evaluation.
 NutriGrow Organic Foods
Rating Definitions and Score Points
5 Outstanding (clearly superior performance)
4 Very good (exceeds expectations)
3 Good (meets expectations)
2 Marginal (needs improvement)
1 Poor (unsatisfactory)
Performance Objectives Score Comments
1. Dependability (reliability of employee)
2. Initiative (willingness to take action)
3. Overall output (productivity of employee)
4. Attendance (overall attendance, punctuality)
...
...
...
20. Quality of work (accuracy, thoroughness, etc.)
Total

The form is completed by giving numerical values for each performance

objective. Responses enable an average score to be computed and compared for
each employee. The advantages of this method are that it is inexpensive to
develop and administer, raters need little training or time to complete the form,
and it can be applied to a large number of employees.

This method has a number of disadvantages, however. Specific performance

criteria might be omitted to make the form applicable to a variety of jobs. For
example, “maintenance of equipment” might be left off because it applies to only
a few workers. But for some employees, that item may be the most important part
of the job. Also, evaluations are subject to individual interpretations that vary
widely, so may be biased. The result is a standardized form and procedure that are
not always job-related.

To combat some of the criticisms that have been levied against rating scales,
proponents now advocate for streamlined rating scales: specifically, by limiting
the number of performance ratings to only those that are critical to job
performance and using a simplified rating scale.19 A simplified rating scale may
have only three levels, such as Unacceptable, Satisfactory, and Excellent. Each
level will have a short description that may embed both qualitative and
quantitative descriptors.

Behaviourally Anchored Rating Scales

Behaviourally anchored rating scales (BARS) attempt to reduce the subjective

interpretations by raters of terms such as “outstanding initiative” or “poor
attendance.” Specific examples of effective and ineffective performance
behaviours are placed along a scale (usually from 1 to 7), and the rater simply
matches the behaviours of the employee with the behaviours in the examples.

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Team management behaviours for a bank branch manager are illustrated in the
BARS example shown in Figure 8-7. The rater reads through the descriptions for
each level of performance, thinks back over the behaviours the employee has
engaged in over the last performance period, and indicates a rating. Since the
scale is described in terms of job-related behaviour, ratings may accurately
indicate the quality of employee performance with less subjective bias. The form
also cites specific behaviours that can be used to provide performance feedback to
employees, both from how they behave currently to how they could behave in the
future to improve. BARS are job-related, practical, and standardized for similar
jobs. If the rater collects specific incidents during the rating period, the evaluation
is apt to be more accurate and also a more effective counselling tool. One
limitation is that BARS only look at a limited number of performance categories,
such as customer relations or team management. Also, each of these categories
has only a limited number of specific behaviours, which can make matching
challenging.

FIGURE 8-7

Behaviourally Anchored Rating Scale for Bank Branch Manager

Table Summary: Summary

Team
Bank of Ontario
Management
Can be expected to praise publicly for tasks
Outstanding completed well, and constructively criticizes in
7
Performance private those individuals who have produced less
than adequate results.
 Team
Bank of Ontario
Management
Can be expected to show great confidence in
Very Good
6 subordinates, and openly displays this with the
Performance
result that they develop to meet expectations.
Can be expected to ensure that employee HR
Good records are kept right up to date, that reports are
5
Performance written on time, and that salary reviews are not
overlooked.
Acceptable Can be expected to admit a personal mistake, thus
4
Performance showing that he or she is human too.
Marginally
Can be expected to make “surprise” performance
Acceptable 3
appraisals of subordinates.
Performance
Poor Can be expected not to support decisions made by
2
Performance a subordinate (makes exceptions to rules).
Very Poor Can be expected not to accept responsibility for
1
Performance errors and to pass blame to subordinates.

A slightly different but related method is Behaviour Observation Scales (BOS).

Instead of making a judgment about whether a specific job behaviour is expected
to occur as with BARS, BOS measure the frequency of the observed behaviours
with scales ranging from high to low. The feedback to employees indicates that
they never, seldom, often, or always engage in certain behaviours such as
coordinating with others or taking initiative. BOS ratings tend to be based on
raters’ subjective assessments.

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Performance Tests and Observations

With a limited number of jobs, performance is evaluated based upon a test of

knowledge or skills. Paper-and-pencil tests are adequate to test knowledge in
some occupations, such as product knowledge in a sales job. Other jobs—in
particular those occupations where the outcomes of poor performance can be
catastrophic—require an actual demonstration of skills either through a
simulation or while doing the job.
 santofilme/iStock/Getty Images

Pilots of all major airlines are subject to evaluation by airline raters and
Transport Canada. Evaluations of flying ability are usually made both
in a flight simulator and while being observed during an actual flight.
The evaluation is based on how well the pilot follows prescribed flight
procedures and safety rules. Although this approach is expensive,
public safety makes it practical, as well as job-related and standardized.

For performance tests to be effective, observations should be made under

circumstances likely to be encountered. Similar stress levels and intensity in a
high fidelity simulation provides a better test than a simulation that does not
recreate job circumstances well.

Management-by-Objectives Approach

The heart of the management-by-objectives (MBO) approach is that each

employee and superior jointly establish performance goals for the future.20
Ideally, these goals are mutually agreed upon and objectively measurable. When
future objectives are set, employees gain the motivational benefit of a specific
target to organize and direct their efforts towards. Employees can periodically
adjust their behaviour to reach an objective provided they can measure their
progress. To adjust their efforts, performance feedback must be available on a
regular basis.

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In practice, some challenges with MBO programs include objectives that are too
ambitious or too narrow. The result is frustrated employees or overlooked areas of
performance. For example, it is easier to set objectives that are measured by
quantity rather than quality because quality, while it may be equally important, is
often more difficult to measure. When employees and managers do focus on
subjectively measured objectives, special care is needed to ensure that biases do
not distort the evaluation. Figure 8-8 shows the annual assessment of the
performance of a salesperson, using an MBO approach. The Spotlight on HRM
provides an example of the successful implementation of an MBO process at
Agilent Technologies.

FIGURE 8-8

MBO Evaluation Report for a Salesperson

Table Summary: Summary

Objectives
Performance Objectives Accomplishments Variance
Set

1. Number of sales calls 85 98 +15%

2. Number of new
10 8 –20%
customers

3. Sales of Dulcha product

2,500 3,100 +24%
line

4. Sales of Salmy product

1,500 1,350 –10%
line

10 22 +120%
5. Customer complaints
 6. Number of training
5 3 –40%
courses taken

7. Number of monthly
12 11 –8%
reports on time

Spotlight on HRM

Management by Objectives at Agilent Technologies

With 18,500 employees in 110 countries, test and measurement giant Agilent
Technologies (the now wholly independent former test and measurement division
of Hewlett-Packard) developed a management-by-objectives system. Its purpose
is to give employees freedom to do their work in the manner that suits them,
make them responsible and accountable for their objectives and results, and create
visibility for how their individual work contributes to the objectives of the
organization.

The MBO process at Agilent involves four steps:

Step 1: Define the Measures of Success

The broad measures of success at Agilent reside in four quadrants: Customer
Satisfaction (create loyal customers); Employees, Leadership, and Culture (speed
to opportunity); Financial (leverage the operating model); and Markets
(accelerate profitable growth). These four quadrants are further subdivided to set
priorities for each group, business unit, and department within a performance plan
defining individual priority objectives and development. Following this step,
employee deliverables are clear, as is their link to achieving organizational
objectives.

Step 2: Quarterly MAPS Process

The objective of MAPS (short for My Accountability and Performance

Standards) is to ensure that employees are crystal-clear about what is expected of
them, where they stand, and what their manager is doing to support their
development. The focus is on open dialogue on areas where employees are
performing well and where they need to improve. Jointly determined goals are
documented and uploaded onto the MAPS website for future reference. Function-
wide reports are also published to share and increase accountability. The entire
process is transparent, providing clarity and ownership of the objectives.

Step 3: HR Analytics

Quarterly meetings are held between HR and the function leads to discuss the
function’s HR data. Data points discussed include rank and level turnover data; a
compensation ratio (calculated as the average of the employee’s actual pay
divided by the pay range midpoint of the job grade); percentage of employees
below the minimum compensation ratio; comparison of turnover/pay between
new, existing, and exited employees; and employees on a corrective action plan.
These meetings help function leads understand and own the HR data in their
departments. HR’s role is then to help them with tools, consultation, and
brainstorming, and to partner with them on creating and executing programs. This
process helps the function leads to make prudent HR decisions, such as
distribution of wages, and provides information to HR that can be used to
improve business processes or inform policy changes.

Step 4: Leadership Audit Survey

The purpose of the Leadership Audit Survey is to provide feedback from

employees to each manager through a twice-annual survey of all Agilent
employees. The survey measures four aspects of employee engagement: customer
orientation (to surpass customer expectations), speed and decisiveness (for
addressing conflicts and making decisions), risk taking (to allow employees
freedom to take informed risks), and engagement (through feedback and clear
links between their performance and the performance of Agilent as a whole). The
survey provides leaders with feedback and allows managers with perfect scores to
share their stories with managers who are not doing as well to help them learn
and improve performance. Development support is provided to managers
requiring improvement.

Agilent has recognized the importance of paying employees well to keep them
engaged, happy, and motivated. It also provides intangible motivators like
work/life flexibility where employees are able to work from home once a week.
The company’s philosophy is to manage by objectives and not by the number of
hours in the office. It also believes in differentiation with feedback and letting
employees know where they stand with respect to their performance.

Since adopting MBO, turnover has dropped significantly below market, they have
best-in-class engagement scores, industry recognition through awards such as a
top 10 Great Place to Work, and a successful culture of differentiation within the
company.

SOURCE: Excerpts taken and adapted from: SHRM Case Studies on HR Best
Practices, “Agilent Technologies—Measures for Excellence” (2012),
https://www.shrm.org/hr-today/trends-and-forecasting/research-and-
surveys/Documents/SHRMIndiaBestworkplaces.pdf.

LO4 Raters and Rater Training

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When evaluating employee performance, significant consideration is given to

who should be conducting the evaluation and to training the raters.

Multiple Sources for Performance Ratings

Should ratings be made by the employee’s supervisor or other potential raters as

well? Although HR usually designs the appraisal system, it seldom does the
actual evaluation of performance. Although the employee’s immediate supervisor
participates in the evaluation 95 percent of the time,21 managers are not the only
source of information about employee performance. Other sources including
employees themselves, peers, direct reports/subordinates, and customers may be
able to provide feedback on different aspects of the job, given that every
contributor probably has a different focus.22

Pictured in Figure 8-9, the 360-degree performance appraisal, or “multi-source

feedback,” is used by more than 85 percent of Fortune 500 companies.23
Advantages of 360-degree systems include improved feedback from more
sources, team development, reduced discrimination risk, improved customer
service, and enhanced training needs assessment.24

FIGURE 8-
9

360-Degree
Performanc
e Appraisals
Include
Multiple
Voices

Table
Summary:
Summary

Self-Appraisals

Page 230

Getting employees to conduct a self-appraisal can be a useful evaluation

technique if the goal of evaluation is to further self-development. The onus is on
employees to recall and document the work they have performed over the
appraisal period and to highlight major accomplishments. Self-perceptions of
performance are often higher than perceptions of other sources, however, so
managers need to be prepared to provide clear reasoning for the differences in
ratings.25 Through self-evaluations, employees are also given the opportunity to
identify areas for improvement, which can help managers identify what they
might be able to do to eliminate roadblocks and obstacles.

Peer Appraisals

Peers may have unique opportunities to observe employees’ interpersonal,

collaboration, and influence skills. They may also observe other employees’
typical performance, such as when they are not on their “best behaviour” because
their boss is present. There are multiple benefits to including peer appraisals into
multi-rater feedback, including encouraging recognition, facilitating
accountability for performance improvement, increasing the accuracy of ratings,
and surfacing hidden talent when peers observe behaviours such as team
leadership or networking skills.26

Direct Report Appraisals

Many employees are in a good position to evaluate the performance of their

supervisors. Direct reports can readily assess how a supervisor provides praise or
feedback, autonomy, and guidance.27 Many direct reports may be concerned
about providing feedback and ratings to their supervisors for fear of potential
retribution if their boss finds out what they said (in particular, if the feedback was
negative). More and more organizations are including direct report appraisals, or
upward feedback, in their performance appraisal systems.

Customers

Customers or clients may provide another useful source of performance feedback.

Customer complaints or compliments, customer feedback surveys, or asking
valued clients to evaluate their employee contact can all provide informative
feedback as part of a multi-rater system.

Using multiple sources may confirm an assessment if all or a majority point in the
same direction, or they may raise a caution flag if the assessments by different
sources are at odds. While many organizations across Canada have adopted
multiple raters into their performance appraisal systems, here is one success story:
 The Greater Toronto Airports Authority (GTAA), which operates Canada’s
busiest airport (Pearson handled about 49.5 million passengers in 2018),
needed to align its human resources with its customer-centric strategy. Over
a two-year period, HR completed 360-degree feedback sessions with all
1,200 employees. They were able to address the identified shortcomings in
how staff related to its customers through their core competency training.
The result was more consistent and effective leadership at the GTAA.28

Not everybody shares the enthusiasm about the 360-degree approach. The
approach is better suited for employee development purposes (i.e., to improve
performance) as opposed to administrative decisions (e.g., to determine pay raises
and promotions)29 and can sap morale, harm motivation, and enable
disenfranchised employees to sabotage performance feedback to others if careful
attention is not paid to their development.30 Consideration must be given to how
rating sources with different perspectives on the employee’s performance are
integrated. For instance, if two sources disagree on how well the employee
performed, it could be that they observed different behaviours or that their
perspectives or expectations are different. Providing the employee with a rating
that averages the two perspectives would really not be meaningful, but rather, the
feedback and explanations are needed for development. However, it is
challenging to provide specific feedback, yet preserve anonymity of co-workers,
direct reports, or customers/clients. When ratings are used, many HR groups will
average the ratings across the same source (e.g., across all direct reports), but
provide different ratings from different sources (e.g., separate ratings from across
customers than from across co-workers). Open-ended comments are typically
provided in full. Some suggestions for how to professionally yet accurately
describe one’s boss’s performance are provided in the Spotlight on Ethics.

Spotlight on ETHICS

Evaluating Your Boss’s Performance

Being asked to rate the performance of your boss makes many employees
uncomfortable. Although upward appraisals can improve workplace climate and
help bosses improve, it is important to think through how to handle this task
ethically and consider potential consequences of your criticisms. Here are six
considerations to help you navigate providing your boss with performance
feedback.
 1. Company policy. Find out how and when performance appraisals are
conducted. Your approach to evaluating your boss may change depending on
the format of the appraisal. Is it an anonymous written appraisal, or a group
interview where your boss asks questions to you and your co-workers?
2. Determine the purpose. Ask who will see the appraisal, and how your
comments will be used. Your evaluations may help change company policies
or procedures that improve the company for employees. Other times they are
to provide feedback and development for your boss to improve, or to
determine promotion potential and compensation rewards. Shape your
feedback accordingly.
3. Be honest. Take time to consider how to evaluate the positive and negative
aspects of your boss’s performance. This isn’t the time to get back at your
boss or air old resentments. It is a good time to be constructive in your
criticisms and to use respect and generosity to frame what you say and how
you say it.
4. Make some observations. Prepare in advance for the evaluation by observing
your boss’s strengths and weaknesses. Consider how your boss acts under
pressure, their accessibility, responsiveness, fairness, problem-solving,
decision-making skills, professionalism, support of employees, and
communication of expectations. You may not be as thorough if you wait to
judge your boss’s performance on the day of the evaluation.
5. Offer examples. Be prepared to back up your opinions with examples of
your boss’s behaviour. Consider how to share suggestions for improvements
without making accusations. For example, a suggestion might be to schedule
meetings in advance or keep impromptu meetings short so that other
timelines can be met.
6. Avoid groupthink. It can be tempting to talk with co-workers about what
they are planning to write in advance or get caught up in the conversation
during group evaluations. Don’t join in on a group venting session or be
tempted to write the same feedback as your co-workers. You can
acknowledge negative performance, but your negative evaluations will be
better received if you approach them with fair-mindedness, considering
factors that may have contributed to a boss’s negative performance (e.g.,
spotty Internet, production shortages that were outside their control).

How would you feel if you were asked to evaluate the performance of your boss?
Would you feel differently if asked to provide an evaluation of your peers? How
about evaluating yourself? How about evaluating the performance of your direct
reports?
SOURCE: Adapted from: S. Johnson, “Tips for Evaluating Your Boss” (2018,
July 1), retrieved March 4, 2021, from https://work.chron.com/tips-evaluating-
boss-7179.html

Rater Training

Regardless of who the raters are going to be, they will all need some training
regarding the performance appraisal system. They will need to learn the purpose
of the performance evaluations and understand how they align with the
organization’s strategy. Some HR groups provide raters with a rater’s handbook
that describes guidelines for conducting the evaluation or for providing ratees
with feedback. Key terms, such as “shows initiative” or “provides leadership,”
may also be defined in the handbook.

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Raters also need to be trained in observation techniques and categorization skills

(e.g., the use of diaries of critical incidents and how to group job behaviours or
apply performance standards). Frame-of-reference (FOR) training aims at
improving these skills.31 FOR training will typically include calibrating the raters
so that they provide the same ratings for similar levels of performance. One can
imagine that employees and HR share the desire for ratings of strong or weak
performance to be the same regardless of the rater. Otherwise, employees with a
harsh rater would not share in compensation and promotion benefits evenly with
their colleagues rated by more lenient raters. Rater training will often also include
information about potential rating errors (e.g., the halo effect, leniency) and the
ways to minimize them. Figure 8-10 provides a summary of rating errors.

FIGURE 8-10

Common Rater Errors

Table Summary: Summary

Error
Description Example
Type
Halo A favourable opinion Friendship and favourable
of employee impression of social skill leads to a
performance in one rating of high productivity despite
category skews ratings low quantity and quality
 across multiple
categories
Reluctance to give
very poor or excellent Not giving out any ratings of 1 or 7
Central
ratings, instead placing on a seven-point scale to any
Tendency
ratings near the centre employees
of the rating scale
Raters are too easy in
All employees are rated as “above
Leniency evaluating employee
average”
performance
Raters are too harsh in
All employees are rated as “below
Strictness evaluating employee
average”
performance
Giving ratings to female welders that
A rater’s dislike for a
Personal are all lower than ratings given to
person or group
Prejudice male welders (notwithstanding
distorts ratings given
welding performance)
Just last week, an average nurse
Ratings are strongly
happened to save a patient’s life, and
Recency affected by the
his performance is praised despite
Effect employee’s most
average performance over the last
recent actions
year
Everyone’s performance is compared
Raters compare
to Javier, who is the best, and Wen,
Contrast employees to each
who is the worst, instead of to the
Errors other rather than to a
performance standards described as
performance standard
low, moderate, and high.

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Although rater error training used to form a large component of rater training, the
newer trend is training on how to make valid judgments on the basis of relatively
complex information.32 Likewise, all rating sources, including employees, will
typically receive training.33 Finally, rater training may include information on
how to communicate feedback about the performance appraisal to the employee.

LO5 Communicating Feedback

Once the performance appraisal has been completed and integrated, the results
must then be communicated with the employee. This feedback process is often
called the evaluation interview. Evaluation interviews provide employees with
feedback about their past performance or future potential. The evaluator may
provide this feedback through several approaches: tell and sell, tell and listen, and
problem solving. The tell-and-sell approach reviews the employee’s performance
and tries to convince the employee to perform better. It is best used on new
employees. The tell-and-listen approach allows the employee to explain reasons,
excuses, and defensive feelings about performance. It attempts to overcome these
reactions by counselling the employee on how to perform better. The problem-
solving approach identifies problems that are interfering with employee
performance. Then, through training, coaching, or counselling, efforts are made
to remove these deficiencies, often by setting goals for future performance.

Regardless of which approach is used to give employees feedback, the guidelines

listed in Figure 8-11 can help make the evaluation feedback session more
effective.34

FIGURE 8-11

Guidelines for Effective Performance Evaluation Interviews

Table Summary: Summary

1. Emphasize positive aspects of employee performance.

2. Tell each employee that the evaluation session is to improve

performance, not to discipline.

3. Provide immediate positive and developmental feedback in a

private location, and explicitly state that you are providing the
employee with performance feedback.

4. Review performance formally at least annually and more

frequently for new employees or those who are performing
poorly. Ongoing and regular feedback is optimal.

5. Make criticisms specific, not general and vague.

6. Focus criticisms on performance, not on personality

characteristics.
 7. Stay calm and do not argue with the person being evaluated.

8. Identify specific actions the employee can take to improve

performance, and discuss the manager’s role in supporting future
development and career planning.

9. Emphasize the evaluator’s willingness to assist the employee’s

efforts and to improve performance.

10. End the evaluation session by stressing the positive aspects of the
employee’s performance and reviewing plans to improve
performance.

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Having managers provide guidance and feedback not only is linked to employee
performance, but also has a significant impact on employee engagement.35

Frequency of Feedback

Most performance appraisals that form the basis for administrative decisions,
such as pay raises and promotions, take place once a year. When the purpose of
the performance appraisal is to communicate performance expectations and
provide course correction feedback, ideally performance feedback would be given
immediately after effective or ineffective job behaviour was observed. However,
this is challenging in many organizational settings where both employee and
supervisor are busy completing their job tasks, and may not be nearby when
performance events occur. When the performance appraisal is intended for
employee development, feedback sessions on a monthly, quarterly, or at least
twice-yearly basis is typical.36 Notably, when the employee has received
unsatisfactory performance reviews and the employee and manager are engaged
in a performance improvement process (as discussed shortly), the appraisal and
feedback loop may be weekly or even daily.

A survey across Western Canadian employers in 2016 revealed that 56

percent perform annual performance reviews, another 16 percent perform
reviews more often, and 8 percent do not perform reviews at all. The
remaining 19 percent conduct either formal or informal ongoing
performance coaching. Smaller firms were more likely to engage in
 coaching, and the public sector was more likely to engage in formal annual
reviews.37

© Rob Daly/Getty Images.

Performance feedback is crucial for the motivation of employees.

Ongoing feedback is also ideal for another motivational tool. Which
one? Hint: Setting …

Performance Records and Decisions

Once the performance appraisal has been completed and feedback communicated
to the employee, a record of the evaluation is provided to HR. If there are
administrative consequences of the appraisal, such as pay raises or bonuses, they
should follow in a reasonably tight timeframe and be noted in the employee’s HR
records.38 Developmental goals are documented for the PMP for the following
year. When employee performance is unsatisfactory, it is time to create a
performance improvement plan. The performance appraisals across the
organization are used to improve the effectiveness of HR, and are stored for legal
documentation purposes.

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LO6 Establishing a Performance Improvement Plan

Appraisals without consequences lose their effectiveness very quickly. If the

evaluation has indicated that the employee is not meeting acceptable performance
standards, a plan needs to be put in place to bring performance up to acceptable
levels. There are multiple reasons for poor performance, such as insufficient or
inadequate training, unclear job expectations, or roadblocks preventing effective
performance. A performance improvement plan (PIP) is an effective way of
giving employees struggling to meet performance standards the opportunity to
succeed, while still holding them accountable for past performance.

Figure 8-12 summarizes six steps for creating a PIP, and these are described
below:39

FIGURE 8-
12

The
Performance
Improvemen
t Plan
Process

Table
Summary:
Summary

1. Getting Started. The first step in a PIP is to document the employee’s current
performance and the areas that require improvement. This documentation
should include the main performance issues expressed specifically and
objectively using facts, examples, and patterns of performance concerns.
 Important questions for the supervisor to address in advance include
ensuring that the performance expectations set were clear; that the employee
has the tools, resources, and skills necessary to be successful; that the
background information needed to document the performance deficit is
gathered; that the employee has been provided with feedback and that it is
nonpersonal in nature; and that the employee has had the opportunity to
respond.40

2. Develop an Action Plan. The manager should next develop an action plan
for improvement. The action plan should contain specific goals, such as “the
employee should not be late for work once during this 90-day performance
improvement cycle.” For each goal, the manager should contemplate
whether additional resources, time, training, or coaching is necessary to meet
the objectives. This action plan should help set performance expectations
and include the consequences for not meeting the objectives. Action plans
are typically 60 or 90 days in duration.41

3. Review the Performance Improvement Plan. Before meeting with the

employee, the manager should seek assistance from HR to ensure that the
plan is clear, specific, unemotional, and attainable within the set timeframe.
This is an important step in the event that the employee does not meet the
performance improvement objectives and may proceed toward termination.

4. Meet With the Employee. When meeting with the employee, the manager
should clearly lay out the areas for improvement and the action plan.
Following the employee’s feedback and input, the action plan may need
some modification. After the changes are implemented, both the manager
and employee should sign the PIP.

5. Follow Up. Regular follow-up meetings on a weekly or bi-weekly basis

should be set for the manager and employee. These meetings should discuss
any potential roadblocks encountered and required tools or training, and
provide the opportunity for the employee to ask questions or to seek
guidance or clarification.

6. PIP Conclusion. Following the PIP period, if the employee was able to meet
the objectives, then the PIP is closed and the employee continues
employment. If the employee was unable to improve and meet the objectives
in the plan, then the employer should close the PIP and terminate
employment. If the employee did improve a bit but perhaps did not quite
 meet performance expectations set out in the PIP, there are several options.
First, the employer may agree to extend the PIP for another few weeks or
months. Second, the employer may seek to revise the objectives, believing in
retrospect that the objectives were too challenging or not within the
employee’s control. In this case, the employer may end the PIP or extend the
PIP period. Third, the employer may terminate employment because the
standards simply were not met.

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When terminating an employee for not meeting performance expectations,

documentation is critical. Engaging HR to ensure proper processes are followed is
key.

Human Resource Function Feedback

The performance appraisal process also provides insight into the effectiveness of
the HR function. Once performance appraisals are received from across the
organizations, HR can review the appraisal for insights into its own performance.
If the appraisal process indicates that poor performance is widespread, many
employees are excluded from internal placement decisions. They will not be
promoted or transferred. In fact, they may be excluded from the organization
through termination.

Unacceptably high numbers of poor performers may indicate issues elsewhere in

the HR function. For example, HR may be failing to fulfill career plans because
the people who are hired during the selection process are poorly screened, or
poorly trained after hiring. Or the HR plan may be flawed because the job
analysis information is wrong or the employment equity plan seeks the wrong
objectives. Likewise, HR may be failing to respond to the challenges of the
external environment or effective job design. Sometimes, the HR function is
pursuing the wrong objectives. Or the appraisal system itself may be faulty
because of management resistance, incorrect performance standards or measures,
or a lack of constructive feedback. This is the ideal time for HR to review its
processes and set goals and action plans to improve its effectiveness.

Documentation of Performance Appraisal for Legal Purposes

A performance appraisal form is a legal document. The implication is that raters

have to be careful to use only performance criteria that are relevant to the job. In
a court challenge, for example, where an employee has lost a job as a result of
inadequate job performance, HR has to prove that the job-related performance
criteria used were valid and were used consistently. Nonrelevant criteria can be
avoided if performance standards are established through a thorough job analysis
and recorded in a job description.

It is also a legal requirement that a reasonable timeframe be set for performance

improvement.42 The length of time would depend on the job. While it may be
reasonable to expect an office clerk to improve performance within a few weeks
or months, it might take a manager a year or more to show improvement. Well
documented performance shortcomings and documentation maintained through
the performance improvement plan process will be key to establishing that
dismissal was not wrongful.43
LO7 Talent Management
Within the HR field, a more recent development is a focus on talent management.
As discussed in Chapter 7, talent management involves identifying and
developing specific individuals within the organization who are seen as having
high potential. The concept comes from recognizing that employees who are top
performers are not necessarily the people with the highest potential for working
in key organizational positions or areas, or for moving up in the organization.

One tool for conversing about the development opportunities that could be
provided to employees who might have high potential within an organization is
the 9-box grid.44 Figure 8-13 shows an example of a 9-box grid. Employees are
plotted into the grid according to both their performance in their current job and
ratings of their potential for future positions. Employees categorized into the
“future star,” “consistent star,” and “current star” boxes may be targeted for
specific developmental opportunities. Opportunities granted may include (a)
specific work assignments (often referred to as “stretch assignments”) designed to
give them the opportunity to grow their skills in a particular area, such as an
assignment to a key business unit or overseas; (b) educational opportunities, such
as advanced degree or certificate programs, or organization-specific leadership or
other training opportunities; and/or (c) inclusion in events or mentor activities
that will give the employee visibility and access to senior employees of the
organization.45

FIGURE 8-
13

A 9-Box
Grid
Depicting
Performanc
e by
Potential

Table
Summary:
Summary
Many global organizations, such as Pepsi Co., Citi, and SC Johnson, and
Canadian organizations46 including National Bank in Montreal, Xerox Canada,
and TD Bank Group, now have a talent management department or talent
management group within their HR function.47 Many times, employees will
receive evaluations of potential along with ratings of performance.

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Ratings of talent potential are used alongside ratings of performance to make

strategic decisions across employees in an organization. With the organization's
leadership, HR will make compensation and bonus decisions across employees,
and investment decisions into employee development.
SUMMARY

Performance management is an ongoing process that integrates an

organization’s vision with performance objectives for individual employees.
There are multiple purposes for which performance appraisals might be
used, and the purposes will influence the choice of performance evaluation
method used. Different methods will compare employee performance to
performance of other employees, or to established performance standards.
Standards are based on job-related criteria that best determine successful
job performance.

Multiple raters may be used to gather information and feedback on the

employee’s performance, including managers, peers, customers/clients,
direct reports, and the employee personally. The raters require training to
ensure that they will contribute effectively to the performance management
system. Once ratings are integrated into a completed appraisal, an
evaluation interview with the employee is held.

Administrative consequences of performance appraisals, such as pay raises

or bonuses, should follow shortly after the evaluation interview. If a
performance improvement plan is necessary, it should be initiated as soon
as the inadequate performance level is described to the employee.
Performance appraisals also provide feedback to HR about its performance.
HR specialists need to be keenly aware that poor performance, especially
when it is widespread, may reflect problems with previous HR activities
that are flawed.
TERMS FOR REVIEW

360-degree performance appraisal

balanced scorecard

behaviourally anchored rating scales (BARS)

comparative evaluation methods

evaluation interviews

forced distributions

management-by-objectives (MBO) approach

noncomparative evaluation methods

performance appraisal

performance improvement plan

performance management

performance management plan

performance measures

performance standards

ranking method

rating scale
Page 237

REVIEW AND DISCUSSION QUESTIONS

1. In what ways is the linking up approach a useful performance

management process?

2. Explain why Agilent is a good example of effective performance

management. What did management do to make it one of the great
employers?

3. What are the purposes of performance appraisals?

4. Suppose that your employer uses a rating scale for items that are
generally personality characteristics. What criticisms would you have
of this method?

5. If you were asked to recommend a replacement for the rating scale,

what actions would you take before selecting another appraisal
technique?

6. Why are direct and objective measures of performance usually

considered superior to indirect and subjective measures?

7. If your organization were to use subjective measures to evaluate

employee performance, what instructions would you give evaluators
about the biases they might encounter?

8. Describe how you would conduct a typical performance evaluation

interview.

9. How do the results of performance appraisals affect other HR

activities?

10. Describe the characteristics of a 360-degree performance appraisal.

11. Explain how you would go about establishing a performance

improvement plan.
12. What is the relationship between a performance appraisal system and a
selection system?

13. Explain the legal aspect of a performance appraisal system. Under

what circumstances could it become a crucial document?
SHORT CASE 8-1: The Malfunctioning Regional Human Resource
Department

Over a month-long timeframe, the corporate HR department of Universal

Insurance Ltd. had two specialists review the operations of their regional
HR department in Vancouver. A brief summary of their findings listed the
following observations:

Each employee’s performance appraisal showed little change from the

previous year. Poor performers rated poor year after year.

Nearly 70 percent of the appraisals were not initialled by the employee

even though company policy required employees to do so after they
had discussed their review with the rater.

Of those employees who initialled the evaluations, several commented

that the work standards were irrelevant and unfair.

A survey of past employees conducted by corporate office specialists

revealed that 35 percent of them believed performance feedback to be
too infrequent.

Another 30 percent complained about the lack of advancement

opportunities because most openings were filled from outside, and no
one had ever told these workers they were unpromotable.

The corporate and regional HR directors were dismayed by the findings.

Each thought the problems facing the regional office were different.

DISCUSSION QUESTIONS

1. What do you think is the major problem with the performance

appraisal process in the regional office?

2. What problems do you think exist with the regional office’s (a) job
analysis information, (b) human resource planning, (c) training and
development, and (d) career planning?
Page 238

CASE STUDY

Start Up Central

Performance Appraisal Issues

Jocelyn took a deep breath and took another look at the clock. It was 5:45
p.m. and still no Melvin. Start Up Central was running its fifth session in
the eight-week Hatchery program from 6:00 p.m. until 8:00 p.m., and
Melvin was scheduled to facilitate the session. The front door bells jingled
and two more keen entrepreneurs entered the collision space for the
reception before the session. They hung up their coats and headed toward
the coffee and snack station, joining the other entrepreneurs gathered in
anticipation of tonight’s session. The event calendar indicated they should
expect representatives from 12 early-stage companies, although Jocelyn
knew from experience that others might decide to show up at the last
minute. Tonight was their practice pitch event and all representatives would
get the opportunity to spend three minutes describing their business
opportunity to the mock investors in the room and receive feedback on their
performance. The entrepreneurs had been generating their business
canvases and crafting their pitch decks in the weeks since the Hatchery
program had begun. On the final night just three weeks from tonight, they
would be pitching their business opportunities to an angel investment crowd
in the greater Toronto area.
Back when Start Up Central was just getting off the ground, Jocelyn had led
the Hatchery program herself. She was the inaugural executive director of
Start Up Central, which was founded by a group of serial entrepreneurs in
the Toronto area. The group had put seed money into Start Up Central with
a view to developing new entrepreneurs in a boot camp type fashion.
Jocelyn herself had built a social marketing company that had been
acquired by Forbes four years ago. With a successful experience building
and then exiting a startup herself, she found the executive director role
filled her desire to give back to the community by connecting new
entrepreneurs with the various resources they needed to make their business
dreams come true. Building Start Up Central and setting new entrepreneurs
up for success was more than a job to Jocelyn; it had become her life’s
work.

But there was a reason she had hired Melvin to now shoulder some of the
Start Up Central workload. Jocelyn had been at her desk since before 8:00
a.m. that day. She had met with their advisory group over lunch, provided
input on a panel to the Ontario provincial government about the Young
Entrepreneurs program, and placed calls to secure business advisors for the
next round of the Hatchery program beginning in the fall. When Jocelyn
had decided to bring on an entrepreneur-in-residence (EiR), Melvin had
come strongly recommended by one of the advisors on the Start Up Central
advisory group. When she had met with him, he exuded confidence and was
credible in the EiR role. He had been a serial entrepreneur for 10 years, but
was still “relatable” to the new entrepreneur crowd. In Jocelyn’s experience,
the distance between start-up hopefuls and some of the successful
entrepreneurs in the greater Toronto area was perceived as vast. As well, the
travel and commitment schedules of many of the super successful
entrepreneurs meant they weren’t available for eight Wednesdays in a row
to help with the Hatchery program. Through his EiR role, Melvin was still
able to be engaged in his own start-up ventures, but he received a stipend
from Start Up Central to act as an advisor one-on-one to the start-up
companies in their programs and to attend their events. Jocelyn thought that
the $50,000 per year stipend they were paying him was at least enough to
get him to show up for the Hatchery program as the lead facilitator.
Jocelyn pushed back her chair and sighed. She stood up and grabbed her
suit jacket, prepared to go out and lead tonight’s practice pitch event. She
put a smile on her face and tried to leave her frustration with Melvin behind
as she went out to greet the budding entrepreneurs.

DISCUSSION QUESTIONS

1. Are there any differences between Melvin as an entrepreneur-in-

residence with a stipend as compared to an employee of Start Up
Central? Discuss.

2. As Jocelyn, how would you handle Melvin’s absence? How would you
ensure that Melvin has clear performance expectations?

3. If this was Melvin’s third unexplained absence as compared to his first,

how would you set up a set of steps to ensure performance
improvement?

4. Is absence a reason for just cause dismissal? Explain the

documentation and steps you would have to take to dismiss Melvin for
just cause.
Part 5

Motivating and Rewarding Human

Resources
Employees have to be compensated for their performance fairly and equitably.
HR assists managers in developing a total compensation package. This package
addresses how much employees should be paid in terms of direct compensation—
wages, bonuses, commissions and so forth—as well as employee benefits. It is
also one of the responsibilities of HR to create a motivating job environment.

Each of these topics is discussed in Part 5. They are important management tools
for HR specialists and managers alike.

Page 239
Chapter 9

Compensation Management
When determining appropriate levels of compensation, management must
determine if the employee turnover rate is too low, too high, or just right. If
turnover rate is high enough to adversely impact the entity’s performance,
then employee compensation is probably too low.

JASON CHAFFETZ1

Page 240

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. LO1 Define total compensation.

1. LO2 Explain the objectives of effective compensation management.

1. LO3 Describe what a compensation philosophy is and why

organizations need one.

1. LO4 Describe how direct compensation is determined through job

evaluation and market pricing methods.

1. LO5 Discuss skill-based approaches to pay.

 1. LO6 Describe the various forms of individual incentive and group or
team-based variable pay systems.

1. LO7 Explain the differences between “equal pay for equal work” and
“equal pay for work of equal value.”

1. LO8 Describe advantages and disadvantages of pay secrecy.

HR is responsible for developing and administering compensation systems,

which tie rewards to the achievement of company objectives. Compensation
systems aim to pay workers for the jobs they do and incentivize them
through enhancing motivation and job satisfaction. It would be rare to find
employees in any job who would claim that they are overpaid (at least not
directly to their managers!). Much more commonly, employees will
evaluate whether they are adequately paid or underpaid. When
compensation is perceived to be inadequate, the firm may lose employees
and will incur costs to recruit, select, train, and develop replacements. Even
if workers do not quit when they are unhappy with their pay, they may
become dissatisfied with the company, which can impact their performance.

Page 241

Perceptions of fair and adequate pay are based on absolute and relative
levels of pay. When the total, or absolute, amount of pay is too low,
employees cannot adequately meet their needs. In Canada, the absolute
level of pay usually is high enough to meet basic needs, at least minimally.
A more common source of dissatisfaction centres on relative pay. For
instance, employees might compare their salary with that of other
employees in relation to experience and the duties and responsibilities
required. More duties and experience and higher levels of responsibility
bring expectations of higher relative pay.
LO1 Total Compensation Model
Overwhelmingly, a total compensation model (also known as a total
rewards approach) has become dominant in the compensation field. Total
compensation includes everything that the company provides an employee
in exchange for working: wages/salary, variable pay, perks and on-site
amenities, and status/recognition, as well as benefits, discussed in Chapter
10. Figure 9-1 lists 13 components that may be included in a total
compensation package. Of note, not all of the components have a dollar
value associated with them. For instance, on-site daycare and casual dress
codes may add to an employee’s total compensation valuation through
savings in time, worry, and stress.2

FIGURE 9-1

Components of a Total Compensation System

Table Summary: Summary

Wages, commissions, and
1. Compensation
bonuses

Vacations and health and dental

2. Benefits
insurance

3. Social interaction Friendly workplace

Stable, consistent position and

4. Security
rewards

5. Status/recognition Respect, prominence

Opportunity to experience
6. Work variety different things
 Right amount of work (not too
7. Workload
much, not too little)

8. Work importance Is work valued by society?

Ability to influence others and

9. Authority/control/autonomy
control own destiny

10. Advancement Chance to get ahead

Receive information helping to

11. Feedback
improve performance

12. Work conditions Hazard free

Formal and informal training to

13. Development opportunity learn new
knowledge/skills/abilities

SOURCE: George T. Milkovich, Jerry M. Newman, Nina Cole,

and Margaret Yap (2013), Compensation (4th Canadian ed.),
Toronto: McGraw-Hill Ryerson, p. 224. Used with permission.

Studies have shown that companies with total rewards approaches enjoy
easier recruitment of high-quality staff, reduced costs because of lower
turnover, higher employee performance, and an enhanced reputation as an
employer of choice.3

Wages and salary, known as base pay, form the foundation of compensation
systems because they establish the standard of living for employees.4 This
chapter outlines how to determine wage and salary ranges for jobs based on
job evaluations, external market comparisons, and the skills and knowledge
employees hold. The chapter also discusses multiple forms of variable pay,
which is paid contingent on factors such as employees’ performance and
retention. Also central to compensation management, pay equity and pay
secrecy are discussed in this chapter.
LO2 Objectives of Compensation
Management
Page 242

When determining total compensation to pay employees, HR strives to

achieve internal equity and external equity. Internal equity requires that pay
be related to the relative worth of jobs within a company. That is, at the
same workplace, jobs of similar value should get similar pay. Jobs that have
a higher worth to the organization and/or require more skill or knowledge to
complete are paid more. Likewise, jobs that have less worth to the
organization or require less skill or knowledge are paid less. External equity
involves paying workers at a rate perceived to be fair compared to what the
market pays. In short, it compares what one firm’s employees are being
paid relative to employees in similar jobs employed by competitors.

The objectives sought through effective compensation management include

the following:

Acquire qualified personnel. Compensation needs to be high enough to

attract applicants. Companies compete in the labour market, so pay
levels must respond to the supply and demand of workers. But
sometimes a premium wage rate is needed to attract applicants who are
already employed in other firms.

Retain present employees. To prevent employee turnover, pay must be

kept competitive with that of other employers. Additionally,
employees will compare their duties and responsibilities and the pay
they receive relative to others in the organization, and they expect to
be compensated more when they are providing higher value.

Reward desired behaviour. Pay should reinforce desired behaviours.

Good performance, experience, loyalty, new responsibilities, and other
behaviours can be rewarded through an effective compensation plan.
 Control costs. A rational compensation program helps an organization
to obtain and retain its workforce at a reasonable cost. Paying
employees is typically the largest expense line for the employer.
Without a systematic wage and salary structure, the organization might
overpay or underpay its employees.

Comply with legal regulations. As with other aspects of HR, wage and
salary management must comply with applicable provincial or federal
regulations. A sound pay program ensures adherence to all government
regulations, such as minimum wage, overtime, and vacation provisions
that affect employee compensation.

These objectives can sometimes conflict. For instance, base pay must
comply with minimum wage provisions across the country and be attractive
enough to gain and keep workers. But organizations must also provide their
goods and services at prices low enough that consumers will buy them.
Finding the balance between these objectives is addressed through the
firm’s compensation philosophy, discussed next.
Determining Base Pay
Figure 9-2 depicts the major phases of compensation management. The first step
in determining the wages and salary for a job is to establish the firm’s
compensation philosophy with the objectives listed previously in mind.

FIGURE 9-2

Major Phases
of
Compensatio
n
Management

Table
Summary:
Summary
LO3 Phase 1: Establishing the Compensation
Philosophy
A compensation philosophy is a guiding principle for how the organization
manages compensation. Simply put, a strong compensation philosophy ties an
organization’s mission, core business, operating strategies, and competitive
outlook to the pay it provides its employees.5 Organizations may have lead,
match, or lag compensation philosophies,6 as illustrated in the examples below.

With a lead strategy, a company pays rates that are higher than the relative
marketplace. For instance, a high-tech company with a core strategy to
attract and retain top talent in the tech industry to outpace its competitors
may adopt a strategy of leading the market with its total compensation
package. Google has followed a lead strategy with paying its employees
more than other high-tech firms.7

In a match strategy, a company matches the market by paying comparable

rates to the relative marketplace. For instance, one retail store may choose to
match the pay of other retailers in the same mall.

A company with a lag strategy will pay rates lower than those of the relative
marketplace. For example, a warehouse with low turnover in a remote
community with a large labour pool may set a compensation strategy to
control costs and offer compensation valued at less than it would be in a
highly competitive community.

Page 243

The compensation philosophy will be determined by HR in conjunction with

management buy-in and input to understand supply, demand, and labour market
issues in the organization, and the operational and legal ramifications surrounding
compensation.

Phase 2: Reviewing the Job Analysis

It will come as no surprise that, to determine fair pay for jobs, the second step is
to understand the elements of the job and the skills needed to conduct the job by
examining job analysis information. As discussed in Chapter 2, job analyses
produce job descriptions, job specifications, and performance standards, which
describe the tasks and skills associated with jobs in the organizations.
Compensation specialists review the job analysis data to compare jobs for internal
equity and to identify comparable jobs at other organizations to make external
equity assessments.

LO4 Phase 3: Pricing Jobs

The third phase of the compensation process is to price the worth of each job.
Three approaches to pricing jobs are discussed next: job evaluation, market-
pricing, and skill-based evaluation.

Job Evaluation

Job evaluations are systematic procedures to determine the relative worth or

value of jobs. Although evaluations take several different approaches, each one
considers the duties, responsibilities, and working conditions of the job. The
purpose of job evaluation is to identify which jobs should be paid more than
others, which can be done by job ranking, job grading, or points systems.

Job Ranking

The simplest method of job evaluation is job ranking. Specialists review the job
analysis information for each job. Each job is then ranked subjectively according
to its importance in comparison with other jobs. These are overall rankings,
although raters may consider the responsibility, skill, effort, and working
conditions of each job. Most problematically, these rankings do not differentiate
the relative importance of jobs. In retail sales, for example, the job of regional
manager might be ranked as 1, the store manager might get a 2, and the sales
assistant might rank as a 3. But the store manager might be significantly more
important than the sales assistant and almost as important as the regional
manager. Pay scales based on these broad rankings ensure that more important
jobs are paid more. But because the rankings lack precision, the resulting pay
levels may be inaccurate. Ranking tends to be best suited for smaller
organizations with simple organizational hierarchies.8

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Job Grading

Job grading, or job classification, works by assigning each job a grade, as

explained in Figure 9-3. The description in the figure that most nearly matches
the job description determines the grade of the job along with its corresponding
salary range. Once again, more important jobs are paid more. The largest user of
the job grading approach has been the Public Service Commission of Canada,
which employs over a half million Canadians in occupations such as correctional
services, border services, and architecture and town planning across the country.

FIGURE 9-3

Job Classification Example

Table Summary: Summary

Job Grading Schedule
Directions: To determine appropriate job grade, match job
classification description with job description.
Job Salary
Job Classification Description
Grade Range

The Office Assistant 6 performs well defined tasks

primarily in one function, such as:

Office Pulling and filing records, preparing file $28,500

Assistant folders, filing pre-coded documents to
6 Photocopying and routine maintenance $36,500
Sorting, recording, and distributing incoming
mail; processing outgoing mail; providing
messenger service

Office $35,500
Assistant The Office Assistant 9 carries out a variety of to
9 clerical tasks requiring determination of sequencing $43,500
and priorities:
 Reception
Secretarial duties
Maintaining a file system, including assigning
numbers and codes, purging, arranging off-site
storage, searching for requested information
Checking forms, compiling information
packages

SOURCE: Based on Office Assistant Grid 6 & 9 for the B.C. Provincial
Government. Classification description retrieved November 19, 2020,
from: https://www2.gov.bc.ca/gov/content/careers-myhr/managers-
supervisors/job-evaluation-process/office-assistant

Point System

The point system evaluates the critical—also called compensable—factors of each

job. Typically, each compensable factor is judged on how much skill is required
(experience, education, ability), how much responsibility is required (fiscal vs.
supervisory), the level of effort required (physical, mental), and working
conditions (location, hazards, extremes in environment). Points are allocated to
each compensable factor based on the skill, responsibility, effort, and working
conditions required, and the total points are summed. Jobs are paid according to
their total points with more points leading to more pay. Although this quantitative
system is more difficult to develop initially, it is more precise than other methods
because it can handle critical factors in more detail. It is usually done by job
evaluation specialists using predetermined job factors and assigned points to each
factor.

Many organizations will engage a firm specializing in compensation to help them

to establish their pay systems. One well known consulting firm specializing in job
evaluation is Korn Ferry:

The Korn Ferry Hay Guide Chart—Profile Method—is widely used with
global recognition.9 This proprietary method evaluates each job on three
factors: (a) the value that is created by the job (accountability), (b) how the
value is created (problem solving), and (c) what the job requirements are that
an employee must meet to deliver the value (know-how). Expandable guide
charts help to ensure that the job evaluations fit their client’s business,
operating model, organization structure, and culture. Korn Ferry provides
 direct comparisons with the reward strategies of other organizations across
their global total compensation databases, which helps to benchmark jobs
and increase confidence in their job evaluation results.10

Page 245

Figure 9-4 shows an example of allocating points to evaluate the worth of retail
jobs. From the points allocated, the store manager would be paid a rate closer to
the regional manager than the sales assistant, which was not evident from the job
ranking approach examined above. The points system is more precise than job
ranking or grading approaches.

FIGURE 9-4

Training Costs and Financial Benefits

Regional Store Sales

Points Allocation Framework
Manager Manager Assistant
Skill (50 points per category)
1. Experience 50 40 20
2. Education 40 30 20
3. Ability 50 40 30
Responsibilities (50 points per
category)
1. Fiscal 50 40 20
2. Supervisory 40 40 10
Effort (50 points per category)
1. Physical 10 20 30
2. Mental 50 40 20
Working Conditions (30 points
per category)
1. Location 30 10 10
2. Hazards 10 10 10
3. Extremes in Environment 10 10 10
Total Points 340 280 180

Spotlight on ETHICS

Job Evaluation and the Wage Gap

The issue of the wage gap between genders has been discussed for decades, and
pay equity legislation in Canada is supposed to address it. However, Statistics
Canada reports that there is still a gap of about 13 percent in average salaries
across jobs and provinces. Consider this scenario:

To comply with pay equity legislation, a large grocery chain is switching from job
rankings to the point system for job evaluation. You are chairing the Job
Evaluation Committee, which is currently discussing point allocation to the
cashier job category, the largest category in the company. The discussion so far
has focused on how many points to allocate to the responsibility factor, and the
committee is essentially split. As it so happens, there are three women and three
men on the committee. The women argue that cashiers have the same
responsibility as the junior accountants in the office because both jobs balance
money. The male members of the committee, on the other hand, disagree,
suggesting that a cashier’s responsibility is to balance the cash register, whereas
the accountants must balance accounts, which is a more difficult task.

You seem to have the deciding vote. The dilemma from your point of view is that
all the cashiers are women while the three junior accountants are all male. In your
assessment you agree that the accountants carry a higher responsibility and
deserve more points. If you support the male members of the committee you are
pretty sure that the cashiers will launch a pay equity grievance, usually a costly
and time-consuming affair. If you agree with the female members, it means
cashiers will fall into a higher pay category, increasing payroll expenses
significantly. You know very well that the competition in the food market is
fierce, with low profit margins (2 to 3 percent). A pay increase would have a
direct impact on the bottom line. What do you do?

Market-Based Pay Structures

The job evaluation techniques discussed above all result in a ranking of jobs
based upon their relative worth. They assure internal equity, that is, jobs that are
worth more will be paid more within an organization. But how much should be
paid? What constitutes external equity? Market-pricing focuses on external
competitiveness—how much organizations should pay for jobs based on what
their competitors are offering for similar work.

To determine a fair rate of compensation, most firms rely on wage and salary
surveys, which discover what other employers in the same labour market are
paying for specific key jobs. The labour market—the area from which the
employer recruits—is generally the local community; however, firms may have to
compete for some workers in a wider market. Consider how the president of one
large university viewed the market:

Our labour market depends on the type of position we are trying to fill. For
the hourly paid jobs, such as facilities maintenance, student services, and
administrative assistants, the labour market is the surrounding metropolitan
community. When we hire professors, our labour market is typically Canada.
We have to compete with universities in other provinces to get the type of
faculty member we seek. When we have the funds to hire a distinguished
professor, our labour market is the whole world.

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Sources of Compensation Data

Wage and salary data are benchmarks against which analysts compare
compensation levels. Sources for this information include the following:

Employment and Social Development Canada

Employee trade and professional associations

Consulting companies

The major challenge of market pricing is matching jobs within the organization to
those reported in the survey. Simply matching job titles may be misleading:
Federal, provincial, and association job descriptions using the same title may be
considerably different. Compensation specialists will also have to decide whether
to use industry-specific comparables or all-industry data, and whether to use only
data from organizations of similar revenue size across all levels of positions. One
professional group suggests that HR should look for comparables beyond their
specific industry, and should include the last employer of their new hires and
companies that their employees go to when they leave.11 Data from wage and
salary surveys also needs to be aged to a common point in time. This means
projecting forward the salary rates from older surveys to account for salary
movement in the interim. Survey data older than two years is likely too old and
has lost market reliability.12
Once all comparables for a job within the identified labour market are known, the
compensation specialist can see the range of direct compensation paid by
competitors. In conjunction with comparables across all jobs, with job evaluation
rankings for internal equity, and with consideration of the compensation
philosophy, the HR group can determine the percentiles they are going to pay:

Matching the market. Targeting the fiftieth percentile means the organization
will pay at the middle of all organizations with similar positions. Fifty
percent of competitors would pay more for the same job, and 50 percent
would pay less.
Market leader. Organizations targeting a market leader position typically aim
for paying at the seventy-fifth percentile, meaning 75 percent of competitors
will pay less for the same job. When competing for employees with
specialized skill sets in a tight labour market, as Google was in the earlier
example, a market leader position makes sense.
Market lag. Paying at the twenty-fifth percentile, where only 25 percent of
firms pay less for comparable jobs, is a market lag position. This strategy
may suit loose labour markets as in the earlier warehouse example.
Organizations with strong non-monetary forms of compensation (e.g., status,
growth opportunities) may also opt for a market lag position.13

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Often, organizations will integrate job evaluation and market-based pricing to

settle on base pay that achieves both internal equity and external equity. Notably,
the use of market pricing has gone up with 9 out of 10 organizations using it to
some degree and 50 percent relying on it exclusively. The point-factor approach
to job evaluation is now only used by 20 percent of firms.14

LO5 Skill-Based Pay

Both the job evaluation and the market-pricing methods focus on paying for the
job done. An alternative method is to pay employees based on the skills or
knowledge they have. Skill- or knowledge-based pay can reward the employee
based on depth (gaining greater expertise in existing skills), breadth (increases in
the employee’s range of skills), and self-management (gaining higher level
management-type skills, such as budgeting, training, planning, and so forth).
Figure 9-5 depicts two different forms that skill-based pay systems may take.
 FIGURE
9-5

Two
Forms of
Skill-
Based
Pay
Systems

Table
Summary
:
Summary

SOURCE: Adapted from Gerald Ledford, Jr., and Herbert Heneman III
(2011, June), “Skill-Based Pay,” SHRM-SIOP White Paper Series,
https://www.shrm.org/hr-today/trends-and-forecasting/special-reports-
and-expert-views/Documents/SIOP%20-%20Skill-
Based%20Pay,%20FINAL.pdf

As pictured in the purple circle labelled A in Figure 9-5, depth-oriented plans pay
employees for gaining greater experience on existing skills. Employees in these
systems gain specialized skills, and, as their mastery of those skills goes up, their
pay goes up as well. Pay systems based on depth of skill have been around since
the Middle Ages and are commonly seen in the skilled trades (e.g., carpenter,
boilermaker, millwright), where workers move over their careers from apprentice
to journeyperson to master craftsperson.15 Depth-based pay is also used for
professors who move from assistant to associate to full professor ranks over the
course of their careers.
Depth-based pay systems are used in many white-collar careers, where there is a
dual career ladder. As shown in Figure 9-6, one branch of the career ladder leads
from technical practice into management levels, whereas the second branch
recognizes achievement of skill levels. Dual career ladders are common in
aerospace, pharmaceuticals, and high technology.16

FIGURE
9-6

Dual
Career
Ladder
Example

Table
Summary
:
Summary

Information technology employees join the organization at Level 1 and

earn promotions to Level 2. Future promotions after Level 2 will be
 into either a management branch, pictured on the left, or technical
branch, pictured on the right. Both branches are valued by the
organization. The branch on the right provides pay based on skill depth.

Within the blue oval labelled B in Figure 9-5, the goal is to reward a balance
between skill breadth, depth, and self-management skills. This type of skill-based
system pays employees for their flexibility to do different jobs in the
organization, to conduct simple and more complex tasks, and to work with few or
no supervisors. These systems are most common in manufacturing, but also occur
in call centres, help desks, and processing centres for banks and insurance
services.17 Employees who can flexibly work in multiple capacities for the
organization are rewarded with higher levels of pay, as can be seen in the example
below:

Shell Canada’s Brockville Lubricants plant employs 85 people and is the

largest blender and packager of passenger-car motor oils in Canada
producing Shell, Quaker State, and Pennzoil brands. Missing are the
traditional forepersons and supervisors who tell people what to do and how
to do it. Every worker, or team operator, is a supervisor of sorts. Operators
must master all the jobs within their team, plus at least one skill in two other
groups. Pay is based on a number of defined skills. The impact on pay when
this new plant and pay system was introduced was significant. The average
salary increased by 22 percent, and some employees almost doubled their
income.18

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The greatest advantage of skill-based pay is the flexibility of the workforce. This
includes filling in after vacancies from turnover and when other employees are in
training or meetings and covering for absences. Also, if a company’s production
or service process is changing frequently, it is desirable to have a highly trained
workforce that can adapt smoothly to changes. The rise of lean systems and
trends such as cross-training, self-inspection, shorter life cycles of products, the
increasing demand for product customization, and the need to respond quickly to
market changes mean that this type of skill-based pay system is likely to grow in
popularity in the future.19 Below is an example in which a highly skilled
workforce made a major difference:
 Johnson & Johnson implemented a skill-based pay system for a plant that
makes Tylenol. As a result of the Tylenol poisoning tragedy, J&J decided to
completely redo its packaging of Tylenol to add greater safety. The skill-
based plant quickly installed the new technology needed and got back into
production. Not so with its sister plant, which was a traditional, job-based
seniority-driven plant. Seniority rights and traditional pay grades got in the
way of people’s flexibility in adapting to the new technology.20

Skill-based pay systems tend to generate higher pay rates. This does not mean
total wage costs have to be higher; if the organization can make better use of its
people, total costs can be significantly lower.21

Phase 4: Matching Employees to Pay

The final step in the compensation process includes integrating the data on
pricing jobs obtained from job evaluations, market-pricing, and/or skill-based
approaches to match pay to employees. This involves establishing the appropriate
pay level for each job and grouping the different pay levels into a structure that
can be managed effectively.
 Brian Gable/The Globe and Mail. Reprinted with permission from The
Globe and Mail/CP Images

Pay Levels

The appropriate pay level for any job reflects its relative and absolute worth. A
job’s relative worth is determined by its ranking through the job evaluation
process. The absolute worth of a job is influenced by market pricing for what the
labour market pays similar jobs. Setting the right pay level means combining the
job evaluation rankings and the survey wage rates and/or skill-based data through
the use of a scattergram.

As Figure 9-7 illustrates, the vertical axis of the scattergram shows the pay rates.
If the point system is used to determine the ranking of jobs, the horizontal axis is
in points. The scattergram is created by plotting the total points and wage level
for each key job. Thus, each dot represents the intersection of the point value and
the wage rate for a particular key job. For example, Key Job A in Figure 9-7 is
worth 500 points and is paid $22 an hour.

FIGURE 9-7

The
Developmen
t of a Wage-
Trend Line

Table
Summary:
Summary
 Page 249

Through the dots that represent key jobs, a wage-trend line is drawn as close to as
many points as possible. The wage-trend line uses two steps to help determine the
wage rates for nonkey jobs. First, the point value for the nonkey job is located on
the horizontal axis. Second, a line is traced vertically to the wage-trend line, then
horizontally to the dollar scale. The amount on the vertical scale is the appropriate
wage rate for the nonkey job. For example, Nonkey Job B is worth 700 points. By
tracing a vertical line up to the wage-trend line and then horizontally to the
vertical (dollar) scale, Figure 9-7 shows that the appropriate wage rate for Job B
is $24 per hour.

The Compensation Structure

When organizations have multiple people working in the same job, paying all of
them exactly the same rate has both advantages and disadvantages. While equal
pay would ensure that no person is paid less based on protected factors such as
gender or race, the problem with flat rates is that exceptional performance is not
rewarded. Higher performance or longstanding tenure may warrant a merit raise
in pay. To solve these problems, most firms use rate ranges. A rate range is
simply a pay range for each job.

For example, suppose that the wage-trend line indicates that $24 is the
average hourly rate for a particular job. Using a flat rate, every employee in
that job is paid $24. With a rate range of $6, a marginal performer can be
paid $21 at the bottom of the range. Then, an average performer is placed at
the midpoint in the rate range, or $24. When performance appraisals indicate
above-average performance, the employee may be given a merit raise of,
say, $1 per hour for the exceptional performance. If this performance
continues, another merit raise of $1 can be granted. Once the employee
reaches the top of the rate range, no more wage increases will be
forthcoming. Either a promotion or a general across-the-board pay raise
needs to occur for this worker’s wage to exceed $27. An across-the-board
increase moves the entire wage-trend line upward.

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Where rate ranges are used, the new employee will start at the bottom of the
range and receive raises, where appropriate, to the top of the rate range.

Challenges Affecting Compensation

Even the most rational methods of determining pay must be tempered by several
challenges. The implications of these contingencies may cause wage and salary
analysts to make further adjustments to employee compensation.

Prevailing Wage Rates

Market forces sometimes indicate that a job must be paid more than its relative
worth. For instance, data scientists are currently in short supply.22 Fitting these
jobs onto a wage-trend line would result in a wage rate below their prevailing
wage rate. Because demand outstrips supply, market forces cause wage rates for
these specialists to rise above their relative worth when compared with other jobs.
Firms that need these talents are forced to pay a premium. Some shortages
become so serious that firms offer huge hiring bonuses, which eventually force
them to raise salaries for these jobs, even at the entry level.23

Some companies will pay an employee with long-standing tenure more than the
maximum in the pay range. Alternatively, some jobs may be paid less than the
established minimum. This happens when an organization uses salary caps or
limits. For example, a company may pay newly hired employees with no
experience rates 10–20 percent below the pay minimum until they have “learned
the ropes.”

Union Power

When unions represent a portion of the workforce, they may be able to use their
power to obtain wage rates out of proportion to their relative worth. For example,
wage and salary studies may determine that $20 an hour is appropriate for a truck
driver. But if the union insists on $22, HR may believe paying the higher rate is
less expensive than a strike. Sometimes the union controls most or all of a
particular skill, such as carpentry or plumbing. This enables the union actually to
raise the prevailing rate for those jobs.
© Design Pics/Don Hammond
 Electricians belong to a dominant union, which is why their wage rates
are so high. Should an electrician be paid double—or close to double—
what a carpenter makes?

Productivity

Companies must make a profit to survive. A company cannot pay workers more
than they contribute back to the firm through their productivity over the long
term. When this happens (because of scarcity or union power), companies usually
redesign those jobs, train new workers to increase their supply, or automate.

Wage and Salary Policies

Most organizations have policies that cause wages and salaries to be adjusted.
One common policy is to give nonunion workers the same raise as that received
by unionized workers. Some companies have automatic cost-of-living clauses that
give employees automatic raises when the Statistics Canada cost-of-living index
increases. Raises or policies that increase employee compensation move the
wage-trend line upward.

Employment Standards and Labour Codes

Page 251

Canada is a nation of wage-earners. What people earn bears a direct relationship

to the economy and general welfare of the population. The federal government
and each provincial government have established employment standards that
regulate the rights, restrictions, and obligations of nonunionized workers and
employers in Canada. (Labour codes, which apply to unionized workers, are
discussed below.) The federal employment standards apply to federally regulated
occupations (such as banking, media, and transportation) that cross provincial
boundaries, and all other employees are governed by the employment standards
of their respective province. The provisions in the legislation cover such things as
the following:
 Minimum wage

Annual vacations and other types of leave

Public (statutory) holidays

Hours of work, including standard hours, overtime, and emergency

requirements

Staff records

The minimum wage provisions require employers to pay at least a minimum

hourly rate of pay regardless of the worth of the job. When the minimum is
increased by law, it may mean adjusting upward the wages of those who already
earn above the minimum. If those just above minimum wage do not also get
raises, wage differentials will be squeezed together. This is called wage
compression.24 The current minimum wage rates at the provincial and federal
levels can be found at payworks.ca. The rates shown are typical for persons 18
years of age and over.

While minimum wages are intended to create a minimum standard of living to

protect the health and well-being of employees, some argue that minimum wage
regulations increase the cost of production in Canada. Increases in minimum
wages are usually accompanied by increases in unemployment figures of low-
skilled and young persons in the workforce. Continual increases in minimum
wage rates may actually contribute to the inflationary trends in the economy.25

In terms of overtime, for every covered job, the organization must pay 1.5 times
the employee’s regular pay rate for all hours over a stipulated maximum number
per day or per week. Executive, administrative, professional, and other employees
are exempt from the overtime provisions.

The employment standards also furnish information relating to hours of work,

general holidays, annual vacation, and conditions of employment. Accurate
records are also to be kept, for example, on maternity leave and severance pay
relating to all affected employees. This is to ensure that all provisions of the
legislation relating to such things as minimum wages, maximum weekly hours,
and overtime payments are strictly adhered to by each employer. Further
information defining the employment standards in a particular jurisdiction can be
found here.
In parallel to the employment standards guiding nonunionized employment,
federal and provincial labour laws regulate the rights, restrictions, and obligations
of trade unions, workers, and employers in Canada. These labour codes guide
industrial relations (such as collective bargaining, dispute resolution, strikes and
lockouts), occupational health and safety, and federal labour standards. In a union
context, the specific conditions of employment are guided by the collective
agreement between the union and management. The union–management
framework is the topic of Chapter 13. Of note, about 94 percent of employees fall
under provincial legislation, with 6 percent covered by the Canada Labour
Code.26
LO6 Variable Pay
There is strong evidence that the prevalence and variety of variable pay
programs at Canadian companies is on the rise. One recent report suggests
that 74 percent of Canadian companies now use variable pay, with that
number rising to 82 percent of top-performing companies and 85 percent of
enterprise companies.27 WorldatWork reports that variable pay plans were
used by 88 percent of organizations.28 Figure 9-8 shows the frequency with
which various types of variable pay programs are used by companies
around the world.

FIGURE 9-8

Types of Variable Pay Plans Used Around the World

Table Summary: Summary

Performance
Sharing Individual
Bonuses
(based on Incentives Recognition
Profit (e.g.,
other (other than (e.g., spot
Sharing sign-on,
financial or sales award)
retention)
nonfinancial incentives)
goals)
United
19% 65% 52% 80% 73%
States/Canada
Africa 16% 66% 43% 66% 59%
Asia-Pacific 13% 67% 53% 68% 64%
Eastern
14% 66% 56% 66% 64%
Europe
Western
16% 67% 52% 71% 64%
Europe
Middle East 14% 61% 45% 73% 67%
Latin 19% 64% 57% 68% 62%
America
 Contents © 2016. Reprinted with permission from WorldatWork.
Content is licensed for use by purchaser only. No part of this
article may be reproduced, excerpted or redistributed in any form
without express written permission from WorldatWork.

Page 252

The objectives of variable pay are (1) to improve business performance

through efficient and productive employee behaviour, (2) to keep
compensation competitive, and (3) to enhance employee recruitment,
engagement, retention, and employer branding.29 The advantage of the
variable compensation approach is that it provides employees with
incentives linked to performance. Unlike merit pay, it can incorporate the
performance of individuals, groups, business units, and corporate financial
and stock price performances. The cost advantage of a variable pay plan to
the organization is that the award must be re-earned every year and does not
permanently increase base salary.

Variable pay systems provide the clearest link between pay and
performance or productivity. Performance is the accomplishment of
assigned tasks; productivity is the measure of output. Incentive pay offered
through variable pay systems is directly linked to an employee’s
performance or productivity. Employees who work under a financial
incentive system find that their performance (productivity) determines, in
whole or in part, their income. A typical example of an incentive pay is a
salesperson’s commission. The more the salesperson sells, the more they
earn.

The HR function has a significant role in the design and implementation of

incentive compensation programs, including the following:30

Surveying employees about the incentives they value

Explaining how incentives work, and the level of performance

necessary to achieve the incentives
 Checking in with employees regularly to gauge their satisfaction with
the incentive plan

Interviewing employees who are leaving the organization to determine

if the incentive plan had anything to do with their exit decision

Keeping upper-level management aware of how the incentive plan is

working

One of the most significant benefits of financial incentives is that better

performance is reinforced on a regular basis. Unlike raises and promotions,
the reinforcement is generally quick and frequent—usually with each
paycheque. Since the worker sees the results of the desired behaviour
quickly, that behaviour is more likely to continue. The employer wins
because wages are given in proportion to performance, not for the indirect
measure of time worked. And if employees are motivated by the system to
expand their output, recruiting expenses for additional employees and
capital outlays for new workstations are minimized. A switch from hourly
to direct incentive pay can be quite dramatic:

At Safelite Glass Corporation, the changeover from hourly pay to

incentive pay led to an increase in productivity of 44 percent per
worker. Incentive pay induced (1) higher output per worker, (2) lower
quitting rates among the highest output workers, and (3) the company’s
ability to hire more productive workers.31

Offsetting these advantages are some potential challenges. The

administration of an incentive system can be complex. As with any control
system, standards have to be established and results measured. For many
jobs, the standards and measures are too imprecise or too costly to develop.
This means that the incentive system may result in inequities. Some
incentive systems require less effort than other systems that pay the same.
Sometimes, workers make more than their supervisors, who are on salary.
Another problem is that the employee may not achieve the standard because
of uncontrollable forces, such as work delays, machine breakdowns, or
pandemic shutdowns.

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Variable pay programs tend to focus efforts on only one aspect (output,
sales, or stock prices), sometimes to the exclusion of other dimensions
(quality, service, and long-term objectives). Some of the more common
individual incentive plans, team (or group) incentive plans, and employee
ownership and profit sharing systems are outlined below.

Individual Incentive Plans

There are multiple forms that individual incentive plans can take. In
general, these pay plans reward the accomplishment of specific results.
Typically, the amount of the reward is tied to expected results from the
outset so that employees know what their compensation will be for
particular levels of performance. Common individual incentive plans
include piecework, production bonuses, sales commission, discretionary
bonuses, and spot awards.

Piecework

Piecework is an incentive system that compensates the worker for each unit
of output. Daily or weekly pay is determined by multiplying the output in
units times the piece rate per unit. For example, in agricultural labour,
workers are often paid a specific amount per bushel of produce picked.
Piecework does not always mean higher productivity, however. Group
norms may have a more significant impact if peer pressure works against
higher productivity. And in many jobs, it may be difficult to measure the
person’s productive contribution (e.g., receptionist), or the employee may
not be able to control the rate of output (e.g., an assembly-line worker).

Production Bonuses

Production bonuses are incentives paid to workers for exceeding a specified

level of output. They are used in conjunction with a base wage rate or
salary. Under one approach, the employee receives a predetermined salary
or wage. Through extra effort that results in output above the standard, the
base compensation is supplemented by a bonus, usually figured at a given
rate for each unit of production over the standard.
A variation rewards the employee for saving time. For example, if the
standard time for replacing an automobile transmission is four hours and the
mechanic does it in three, the mechanic may be paid for four hours.
Through taking on an additional task during the fourth hour, the
organization can service more vehicles and the employee is compensated
for their speedy work.

A third method combines production bonuses with piecework by

compensating workers on an hourly basis, plus an incentive payment for
each unit produced. In some cases, the employee may get a higher piece
rate once a minimum number of units are produced. For example, the
employee may be paid $15 an hour plus $0.30 per unit for the first 30 units
each day. Beginning with unit 31, the production bonus may become $0.50.

Commissions

Commission is commonly paid in sales jobs. The salesperson may be paid a

percentage of the selling price or a flat amount for each unit sold.
Organizations often tie commission rates to sales quotas.32 Salespeople
meeting the highest quotas will be paid the highest commission rates, with
those meeting lower targets paid lesser commission rates. For instance,
salespeople may receive 10 percent commission on each unit sold up to the
tenth one, and 20 percent commission on each unit sold thereafter. The
salesperson is motivated to sell more units to make more money. Another
approach is to tie commission rates to revenue goals. The goal may be to
sell, say, $100,000 worth of goods with a higher commission rate paid for
each dollar of goods sold over that amount.

When no base compensation is paid, the salesperson’s total earnings come

from commissions. Real estate agents and car salespeople are often paid
this form of straight commission. Variations on straight commission plans
include combining commissions with base wages, as one example below
depicts:

EchoSign, a software as a service company, initially based its

compensation plan on a high quota, base salary, and low commissions.
Problems with the system included that retention was poor, that the
 relatively low commission did not inspire reps to spend time serving
their customers once signed, and that the mediocre reps were being
paid too much while the best reps were not making enough. The
company redesigned its compensation structure so that it included a
competitive base salary, but reps had to cover their base salary with
their sales before bonuses would kick in. After covering their base
salary, they would make twice the rate of commission. The company
also inspired reps to take care of their customers by paying them on
receipt of payment as opposed to at contract e-signing. New reps
became highly motivated to perform at their peak performance
watching the top performers driving their M6 convertibles. Mediocre
reps voluntarily left the organization.33

Discretionary Bonus Plans

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With discretionary bonus plans, employees are paid base wages and then
are paid a bonus at the discretion of management. When these bonuses are
paid on the basis of performance, management will typically determine the
size of the total bonus pool and then allocate amounts to individuals after a
performance period. The top employees may receive bonus amounts
commonly around 10 percent of their base salary. Employees who did not
meet performance expectations will get no bonus. A related form of
discretionary bonus is pay-at-risk. Employees can earn the additional
amount or percentage of their wages that is pay-at-risk provided they meet
specific targets.

Other discretionary bonuses may be paid as sign-on bonuses to prompt new

employees to join and stay at the organization. These are one-time
payments made at the start of employment, ranging from cash amounts of
$5,000 to $10,000 most commonly, or as a percentage of salary.34 Such
bonuses often make the sought-after new employee’s salary more affordable
for the organization.

Sign-on bonuses aim to increase the length of time that employees will
stay at an organization. However, similar-sized sign-on bonuses show
 the relationship with tenure not to be strong. For instance, Tesla
Motors, Pandora, and Spotify all had average sign-on bonuses around
$20,000 and employees stayed about two years. Microsoft had a
similar-sized sign-on bonus and employees stayed, on average, 44
months. Hewlett-Packard Enterprise paid an average of only $8,265
and employees stayed about 3.5 years.35

Other bonuses may be paid as retention bonuses. With retention bonuses,

employees who are still working for the organization after the stipulated
period of time will receive a lump-sum bonus. These are common with
overseas employment, where the organization has invested a lot of money
in moving the employee (and potentially their family as well). Employees
may be paid the retention bonus when they hit three- or five-year time
points. They are also used when companies are going through transitions,
such as a merger. Companies in difficult situations may pay retention
bonuses to have existing employees see them through their tough times.36
One criticism of retention bonuses is that employees may stay just for the
money and not because they are committed and engaged.

Amid negative news and RCMP investigations, SNC-Lavalin paid

cash rewards of 50 percent of salary to key employees to keep them
from leaving the “sinking ship.”37

Spot Awards

Spot awards recognize special contributions as they occur. Employees may

receive spot awards for a project or task, generally accomplished in a short
period.38 These types of recognition awards can range from gift certificates
and thank-you notes to paid time off to cash awards or salary increments
unrelated to annual merit increases. Their aim is to acknowledge the
employee’s noteworthy contribution and reinforce the behaviours and
values. Spot awards that are given to the deserving employee publicly have
higher status than private ones. While thank-you notes and celebrations can
be valued, it is fair to say that “good old-fashioned cash” is still one of the
best incentives.39
Team (or Group) Incentive Plans
Several plans have been developed to provide incentives based on the
performance of a group or work team. These programs often are used when
measurable output is the result of group effort and it is difficult to separate
individual contributions.

Team Results

Under team-based pay plans, employee bonuses and salary increases are
based on a team’s overall results and typically shared equally. There can be
a number of advantages in a team-based pay system. For example, in
project teams, many jobs are interrelated; that is, they depend on each other
for making progress. A team approach tends to foster group cohesion and
organizational commitment. Communication in cohesive teams tends to be
more open, and decision making can be more effective if a consensus
approach is in the team’s interest. Team-based pay often includes rewards
for developing better interpersonal skills to improve cooperation and
incentives for cross-training.

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There can also be disadvantages to team-based pay systems. If team

cohesiveness is not strong, a “freeloader effect” may take place. As in any
group, individual contributions to team goals vary. Some put in more effort;
others, less. If these differences are significant and the high performers do
not receive satisfaction for their input, they may cut back their
contributions. Usually, however, high-input members get their satisfaction
from being recognized as team leaders or higher status members, for
example as experts or specialists. Another potential drawback is social
pressure on high performers to lower their input to avoid drawing
management’s attention to the low performers. This issue will most likely
occur in a hostile management–union environment. It is also possible that
the team approach may be too effective, resulting in competition between
teams and undesirable consequences, such as hoarding of resources or
withholding of important information.
Production Incentive Plans

Production incentive plans allow groups of workers to receive bonuses for

exceeding predetermined levels of output. They tend to be short-range and
related to very specific production goals. A work team may be offered a
bonus for exceeding predetermined production levels, or it may receive a
per-unit incentive that results in a group piece rate.

Profit-Sharing and Ownership Plans

Apart from individual incentive and team-based incentives, organizations
may also compensate employees through profit-sharing plans and employee
stock ownership plans.

Profit-Sharing Plans

A profit-sharing plan shares company profits with the workers. When the
organization is profitable, the employer shares profits with all, or a
participating group of, employees. The amounts paid are given to a trustee
and invested for the benefit of all of the beneficiaries of the plan.
Profitability, however, is not always related to employee performance: A
recession or new competitors may impact whether or not the company
makes money. Furthermore, it is often difficult for employees to perceive
their efforts as making much difference. Some companies further reduce the
effectiveness of the incentive by diverting the employees’ share of profits
into retirement plans. Thus, the immediate reinforcement value of the
incentive is reduced because the incentive is delayed. However, when these
plans work well they can have a dramatic impact on the organization
because profit-sharing plans can create a sense of trust and a feeling of
common fate among workers and management.

How effective are profit-sharing plans in motivating employees? The

evidence is not that clear-cut. Profitable companies with profit-sharing
plans also tend to have open and two-way communication between
management and employees. In addition, managers in these companies tend
to have participative management styles, resulting in a supportive and
satisfying work environment.40 Although companies with profit-sharing
plans tend to be more profitable, it is by no means certain that the plan is
the cause of increased profitability.41 As usual, many factors play a role.

Employee Stock Ownership Plans (ESOPs)

Employee stock ownership plans (ESOPs) have become very popular in

North America and Europe. One study indicates that 28 million U.S.
employees participating in 11,000 employee ownership plans own 8 percent
of corporate equity in the U.S. In Europe, 85 percent of publicly traded
firms have employee stock ownership plans, with 10 million employees in
Europe holding some form of company stock.42 Many Canadian firms, such
as WestJet and Golder Associates, have adopted ESOPs. Unlike the more
traditional profit-sharing plans, ESOPs give employees genuine ownership
and voting power when it comes to major decisions relating to the
company’s future.

Beau’s, the largest independent producer of organic beer in Canada,

plans to maintain its independence from large breweries by handing
ownership over to its employees. Around 4–5 percent of the company
was offered to employees during the first year of the ESOP. Employees
could spend up to 2 percent of their salary buying shares in the
company. Future-year share offerings will depend on how much the
Beauchesne family decides to put up for sale. Other craft breweries in
the area have been acquired by Labatt Breweries of Canada. The
ESOP plan was adopted to maintain legacy and protect workers from
layoffs in the event of an acquisition.43

In addition to motivating employees and improving their productivity, some

Canadian employers are using ESOPs as a succession planning tool and to
transition out of their business.44 Viive Tamm, president of Toronto-based
advertising and branding agency Tamm Communications, is using an ESOP
as her exit strategy. She is selling 49 percent of the business to her
employees, aiming for the company to flourish as workers take on
ownership. Over time, she plans to sell the remainder of the company to
employees.45
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Although some stock-ownership plans vest shares to employees as

compensation for their work, a variation on this is offering the employee a
stock option. Stock-option plans grant employees the right to buy a certain
amount of company shares at a predetermined price for a certain period of
time. With stock options, the employees are not granted stocks
automatically but, rather, are given the opportunity to buy in to the
company over time.
LO7 Pay Equity
As first mentioned in Chapter 4, an important issue in compensation management
and equal opportunity is equal pay for work of equal value, the concept that jobs
of comparable worth to the organization should be equally paid (referred to as
pay equity). The idea goes beyond equal pay for equal work (referred to as equal
pay), which requires an employer to pay men and women the same wage or salary
when they do the same work.

The pay equity concept, and legislation stemming from the Canadian Human
Rights Act, makes it illegal to discriminate on the basis of job value (or content).
For example, if a nurse and an electrician both received approximately the same
number of job evaluation points under the point system, they would have to be
paid the same wage or salary, regardless of market conditions. This approach to
compensation is sought by governments as a means of eliminating the historical
gap between the income of men and women, which results in women in Canada
earning about 87 percent as much as men.46 This gap exists in part because
women have traditionally found work in lower paying occupations, such as
teaching, retailing, nursing, and secretarial work.

Tesco supermarket is embroiled in the employment tribunal process under

claims that female shop workers should get the same wages as male
warehouse staff. Currently, the shopworkers are paid about $5 less per hour
than the warehouse staff.47

It should be emphasized, however, that the above-mentioned figure of 87 percent

as the earnings gap between men and women is misleading, although it is widely
used by proponents of equal pay to point to the discrimination in pay against
women. This figure emerges if one compares all men and women wage-earners
regardless of job tenure and skill level. However, women have greater career
interruptions during which their male colleagues may have obtained training and
advancement opportunities. By using comparable groups, the pay gap decreases
to 5–10 percent, depending on the group studied.48 For example, the income of
single women aged 35–44 was 94.5 percent of that earned by men of the same
age. If one looks only at the most educated members of that age group—single
females with a university degree—women actually made 6 percent more than
their male counterparts. Taking all of the above factors into account, a gap of 5–
10 percent still exists that is not explained. The COVID-19 pandemic
disproportionately affected women because of layoffs in female-dominated
industries such as the service sector, and initially only half of women who
became unemployed were seeking to return to work due to childcare.49 The
participation rate of women in the labour force was reduced to levels not seen in
30 years.

One contributing factor to the gap may be in the form of differential pay to
permanent full-time jobs versus part-time and casual jobs. An arbitration decision
in Ontario saw a wage increase for casual workers, who were mostly female, to
make their wages the same as full-time workers, who were mostly men:

An arbitration decision compelled the Liquor Control Board of Ontario

(LCBO) to pay casual workers the same wages as full-time workers. The
casual workers performed essentially the same work as the full-time workers
but were paid $2 to $7 per hour less. Of the casual workers, the “vast
majority” are female.50

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Although the casual category is frequently used to justify a pay difference, it

becomes an issue of unequal pay if one of those jobs is gendered. Notably, a job
is gender-dominated if, depending on jurisdiction, 60–70 percent of the job
occupants are from one sex. There is no evidence that there is a conspiracy
among entrepreneurs and managers to keep the wages of female-dominated jobs
down.
 Jupiterimages/Stockbyte/Thinkstock

In 2015–2016, nearly 1,900 women in Canada received more than $6.8

million in compensation adjustments following workplace
investigations of pay inequity.51

What makes the issue of equal pay for work of equal value very tricky is the lack
of any generally acceptable definition of “equal value” and how it can be
measured. The definition offered in the guidelines issued by the Canadian Human
Rights Commission is not of much help:

“Value of work is the value which the work performed by an employee in a

given establishment represents in relation to the value of work of another
employee, or group of employees, the value being determined on the basis of
approved criteria, without the wage market or negotiated wage rates being
taken into account.”52

The “approved criteria” referred to above are skill, effort, responsibility, and
working conditions. These criteria will be considered together; that is, they will
form a composite measure. This does not mean that employees must be paid the
same salary, even if their jobs are considered equal. The equal wage guidelines
define seven “reasonable factors” that can justify differences in wages:

1. Different performance ratings (ratings must be based on a formal appraisal

system and be brought to the attention of each employee)

2. Seniority (based on length of service)

3. Red-circled rate, where an employee is paid higher wages because it was

what they were paid prior to a job re-evaluation (rather than cut the
employee’s salary, they red-circle and freeze the salary until future pay raises
bring others up to match the red-circled rate of pay)

4. Rehabilitation assignment (e.g., after lengthy absence because of sickness)

5. Demotion pay procedures (because of unsatisfactory work performance, or

reassignment because of labour force surplus)

6. Procedure of phased-in wage reductions

7. Temporary training positions

These factors justify a difference in wages only if they are applied consistently
and equitably. It must be clearly demonstrable that existing wage differences are
not based on sex.

Where does this leave the HR manager? An HR manager has to make sure that
the company’s pay system is in line with the province’s or the federal
government’s legislation. An overview of pay equity in various Canadian
jurisdictions can be found here. The Spotlight on HRM provides a series of
suggestions to examine pay equity and then act on inequities identified.
Spotlight on HRM

What Can Employers Do to Address Gender Pay Inequity?

Executives can begin by gaining a high-level understanding of the state of gender

equity at their organizations. Some simple metrics to start with include metrics
such as “female ratio” (looking at the percentage of total head count that are
female) by department, role or location, and in hiring pipelines.

Next, executives should dig deeper to find out if pay and performance ratings are
unbiased for men and women. Compa-ratio is a classic compensation calculation
that indicates how close a person’s base pay is to the pay level midpoint for the
role they perform. The best practice for ensuring pay equity is a well-designed,
individual compensation plan that takes into consideration job difficulty,
education and training requirements, experience and performance.

If women have a lower than average compa-ratio, then it is likely pay decisions
are not being made equitably. Similarly, understanding the proportion of
employees who receive each level of performance rating, and then comparing this
to the proportion of each rating for female employees, will uncover if
performance ratings are handed out in an unbiased manner.

To address the manager divide and increase the representation of women in

manager roles, companies need to measure not only promotions by gender, but
also the nature of the promotions—by role, department or location—and analyze
if the percentage of women promoted to or holding manager positions is lower
than the percentage of men promoted to or holding manager positions.

Lastly, executives need to take steps to correct gender inequity, starting with their
processes for hiring and promotion. One idea is to implement the Rooney Rule—
for every open manager position, consider “at least one woman and one
underrepresented minority” in the slate of candidates.

Originally implemented by the National Football League (NFL) and named after
Pittsburgh Steelers chair Dan Rooney, the Rooney Rule sought to increase the
opportunities for minorities to hold NFL head coaching positions.

Executives can also consider blind screening of resumés (removing names or

other gender identifiers from resumés) when selecting applicants for interviews.

It is important to note that even with these policies in place, society must be
willing to give women a reasonable job experience credit for time spent raising
children, and promote women to enter management ranks at the same rate as men.

Without these changes, the pay gap inside a given profession is likely to remain.

SOURCE: John Schwarz (2017, October 16), “Best Practices for Gender Pay
Equity,” Canadian HR Reporter.

Although much of the focus of pay equity is about gender, racial and sexual
orientation-related wage disparities also exist. A recent study found that white
men are paid more than Black men, despite similar educational attainment and
family backgrounds.53 A study of Canadian-born men and women who are white,
Indigenous, and members of visible-minority groups revealed that, compared to
white men, white women earned 30 percent less, visible minority women earned
17 percent less, and Indigenous women earned 44 percent less. Visible-minority
men earned 8 percent less than white men, and Indigenous men earned 18 percent
less. The earnings gap for recent immigrants is larger, with male recent
immigrants who are visible minorities earning 40 percent less.54

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Not a lot of data is available on the wage gap in the LGBTQ+ community.
Women in same-sex couples may make significantly less than men in same-sex
couples, according to a Student Loan Hero study. Transgender women may earn
one third less after they transition, and transgender people experience high rates
of poverty and are more likely to earn less than $10,000 per year in the United
States.55

Although some progress has been made in the past 20 years towards narrowing
the gap, organizations are being encouraged to take an “equity pledge” rather than
rely solely on adherence to policy changes.56 But policy changes are also being
made to address pay gaps. As of 2021, Canadian federally regulated employers
must include aggregated wage gap information for women, Indigenous people,
persons with disabilities, and members of visible minorities in their annual
reporting on employment equity.57

Not only is pay equity a human right, but it also makes good business sense. The
pay equity process helps organizations and employees accurately see the value of
all jobs in the organization, identify potential biases, and remove barriers to
engagement and productivity. Workplaces that establish pay equity have a
recruitment advantage, lower turnover, and better organizational and financial
performance.58

The gender pay gap represents $18 billion in forgone income per year,
according to a 2016 analysis by Deloitte.59 Imagine the economic impact
through additional taxes paid and consumer spending if the gap were
eliminated. From societal and economic perspectives, pay equity makes
good sense.
LO8 Pay Secrecy
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Pay secrecy is a touchy topic. Many employers prefer not to publish salary
levels to avoid having to defend their pay decisions. If a pay policy is
indefensible, disclosure may cause significant dissatisfaction among
employees. Research has shown that employees generally prefer secrecy
about individual salaries but favour disclosure of pay ranges and pay
policies.60 Figure 9-9 shows the advantages and disadvantages of insisting
on secrecy.

FIGURE 9-9

Advantages and Disadvantages of Pay Secrecy

Table Summary: Summary

Advantages Disadvantages
Most employees prefer
to have their pay kept May generate distrust in the pay system
secret
Employees may perceive that there is
Gives managers greater
no relationship between pay and
freedom
performance
Covers up inequities in
the internal pay
structure

According to Edward Lawler, founder and director of the Center for

Effective Organizations, pay secrecy has two major effects: (1) it lowers the
pay satisfaction of employees and (2) it reduces employees’ motivation to
perform.61 It is practically unavoidable that employees will talk about and
compare salaries. On the basis of rumours and speculations, employees tend
to overestimate the salaries of their colleagues, causing feelings of
unfairness, inequity, and resentment. Pay secrecy also prevents employees
from perceiving the connection between their performance and their pay.

When it comes to asking about salary histories during hiring, some U.S.
jurisdictions are currently prohibiting employers from asking about salary
history in an effort to improve pay equity. However, WorldatWork suggests
that employers should have access to all relevant employment information
to determine fair compensation—including a candidate’s total rewards
history. WorldatWork rationalizes that compensation should then be tied to
specific job requirements and market pricing to determine the rate of pay
for a job.62
Page 260

SUMMARY

Employee compensation, if properly administered, can be an effective tool

to improve employee performance, motivation, and satisfaction.
Mismanaged pay programs can lead to high turnover and absenteeism, more
grievances, poor performance, and job dissatisfaction.

A total rewards model aims to examine all forms of compensation provided

to an employee, including base wages, variable pay, and benefits and
services. For compensation to be appropriate, it must be internally and
externally equitable. The organization must first establish a compensation
philosophy to determine whether it will lead, match, or lag its market
competitors. Referring to job analysis data and with their compensation
philosophy in hand, organizations can begin the process of pricing jobs.
Jobs are priced within an organization through job evaluation techniques.
This assures internal equity. Wage and salary surveys are used to determine
external equity by comparing what similar jobs are paid by competitors.
Another approach is to value employee pay according to the knowledge and
skills held by the employee. With knowledge of the relative worth of jobs
and external pay levels, each job can be properly priced with pay matched
to individuals within the organization.

Variable pay offers incentives to employees to reach peak performance or

meet other desired behaviours. Individual incentives, such as commission
and discretionary bonuses, relate pay to productivity. Group or team-based
incentive plans, such as a bonus for reaching a production target, aim to
inspire high team performance. Profit sharing plans and employee stock
ownership plans share the company’s profits with workers and may inspire
loyalty through ownership in the company.

Determining compensation rates is affected by multiple factors, including

union power, the productivity of workers, and government constraints on
pay. Pay equity legislation requires “equal pay for work of equal value,”
which requires employers to compare the content of jobs when determining
pay scales and to pay equal wages for jobs of comparable value.
The next chapter describes the range of benefits and services offered by
employers.
TERMS FOR REVIEW

compa-ratio

equal pay for equal work

equal pay for work of equal value

external equity

incentive pay

internal equity

job evaluations

job grading

job ranking

key job

merit raise

pay equity

pay secrecy

piecework

point system

production bonuses

profit-sharing plan

rate range
red-circled rate

skill- or knowledge-based pay

total compensation model

wage and salary surveys

REVIEW AND DISCUSSION QUESTIONS

1. What is the difference between absolute and relative pay?

2. Why is job analysis information, discussed in Chapter 2, necessary

before job evaluations can be performed?

3. Suppose that when you interview new employees, you ask them what
they think is a fair wage or salary. If you hire them, you pay them that
amount as long as it is reasonable and not below minimum wage laws.
What problems might you expect?

4. Assume that your company has a properly conducted compensation

program. If a group of employees asks you why they receive different
hourly pay rates even though they perform the same job, how would
you respond?

5. Why is the point system superior to the other job evaluation systems?
Discuss the advantages and disadvantages of the system.

6. If you are told to find out what competitors in your area are paying
their employees, how would you get this information without
conducting a wage and salary survey?

7. Even after jobs are first priced using a wage-trend line, what other
challenges may cause you to adjust some rates upward?

8. Since variable pay gives employees feedback for good performance

and relates pay to performance, why do most companies pay wages
and salaries instead of variable pay?

9. Explain the difference between “equal pay for equal work” and “equal
pay for work of equal value,” and the implications of the difference for
an HR manager.

10. Under what circumstances are pay differentials justified?

11. Why is it so important to explain to employees the performance–
reward relationship?

12. In what ways does the total compensation model differ from the
regular compensation approach?
Page 261

SHORT CASE 9-1: Compensation Administration at Reynolds Plastic

Products

The family-owned Reynolds Plastic Products Co. in London, Ontario, was

recently purchased by a much larger company, International Plastics Ltd.
When the HR director of International Plastics, Hans Himmelman, looked
at Reynolds Plastic compensation policies, he became concerned that some
of them were questionable and in some cases actually seemed to violate the
law. When he asked the plant manager, an engineer who also acted as an
HR manager, how he determined pay rates, the manager explained that he
would ask applicants what they had earned in their previous job and just
add 25 or 50 cents to this amount, depending on their job experience.
Additionally, two recently hired visible-minority machinists complained
that they were paid less for the same work than their white colleagues. The
machine shop supervisor disputed their claim, asserting that the white
employees had more work experience and deserved higher pay.
Himmelman also discovered that productivity in the subsidiary was lower
than in other plants of International Plastics. An HR consultant was hired to
assess the compensation system of the Reynolds Plastic subsidiary. The key
points of her report are summarized below:

Executives in the past have received an annual bonus determined by

the owner at his discretion.

Wages for hourly employees ranged from $16.00 per hour for
employees during their probationary period to $28.00 per hour for the
more skilled or experienced ones.

The amount of overtime paid by Reynolds was very modest; overtime

was paid for all hours over 180 per month.

The wage rates for different workers varied widely even on the same
job; those employees who were not from historically marginalized
communities received approximately 18 percent more than those
workers who were.
 Visible minority employees were paid 10–20% less in all job
categories.

On highly technical jobs, the firm paid a rate of 20% above the
prevailing wage rate for these jobs. All other jobs were paid an average
of 15% below the prevailing rate.

Production workers were eligible for a $200 draw each month if there
were no accidents during the month.

Sales personnel were paid a commission and received a $200 bonus for
every new customer.

Whenever sales went up 10%, all the hourly employees got a day off
with pay or could work one day at the double-time rate.

Turnover averaged a modest 12%. However, in technical jobs turnover

was less than 2%; in nontechnical jobs turnover was nearly 20%.

Absenteeism followed the same pattern.

DISCUSSION QUESTIONS

1. What laws were probably being violated?

2. What problems do you see with the incentives for (a) executives, (b)
production workers, (c) salespeople, and (d) hourly employees?

3. Himmelman read about new approaches to pay policies such as

variable pay and profit sharing, and he wondered whether either one
would be a suitable solution for the subsidiary, especially profit
sharing to increase low productivity. How would you advise him?

4. Develop a step-by-step plan of actions you would take and the order in
which you would undertake them if you were made HR director of the
Reynolds subsidiary.
Page 262

CASE STUDY

Greener Environmental Services, Inc.

Flexible Benefit Program

Raj Chandra looked over the auditor’s report for the company’s financials
from the last year. It was official: Greener Environmental Services had
weathered the tough economic times and was finally back in the black.
Nearly 10 years ago, Raj had left his position as an incident commander for
Shell Canada to launch his own environmental consulting firm. Raj founded
Greener with the vision of comprehensive environmental assessments pre-
disturbance and remediation strategies that would renew the environment
back to its pre-disturbance state.

In the decade since its inception, both the number of people and the range
of environmental services offered by Greener had grown. Greener’s current
suite of offerings included comprehensive environmental services from
environmental site, risk, and pre-disturbance assessments to monitoring,
reclamation, and remediation services. Although most staff had
environmental backgrounds (including environmental technology,
environmental science and engineering, soil science and wetlands ecology),
Greener also employed equipment operators, project managers,
accounting/billings, and a small office staff. Lagging economic slowdowns
for its mining and energy customers had significantly diminished the Phase
I and Phase II environmental site assessment and pre-disturbance
assessment aspects of their business. While the soil and groundwater
monitoring and remediation services related to potash mining had remained
reasonably strong, Raj and Greener had faced some fiscal challenges over
the past three years.

Raj sat back in his chair and thought about the employees who had been
with the company during the past few tough years. Raj knew they would be
relieved to see confirmation that the company was at a turnaround. It was
not hard to recall memories of an all-staff meeting he had held 18 months
ago to lay out the company’s financial situation to employees. He had asked
employees to stick with the company based on projections for economic
recovery of their customers in the energy sector. As their customers
returned to new projects, Greener would be hired to conduct environmental
assessment work. Rather than cut any staff from the assessment side of the
business and focus only on the profitable monitoring branch, Raj had
convinced Greener’s investors that the assessment side would see recovery
and growth. He had proposed that rather than lay staff off only to rehire
them later as the company rebuilt, they should keep everyone on staff.
However, Raj had implemented a salary freeze across all employees. Staff
in the slow assessments areas had been asked to assist with business
development and sales to drum up business, and to assist staff on
monitoring and mining remediation projects.

It had now been three years since Greener staff had seen a pay raise, and
Raj knew that he would have to invest some of the company’s recovered
profits in direct pay. Last week, chief financial officer Natalia Wong and
Raj had determined that 4 percent of revenue should be invested in
employee compensation.

The question Raj was now facing was whether to implement a flat increase
across all Greener staff or to differentially reward some key contributors.
Raj wondered if, even though the salary freeze had been implemented
evenly across all employees, he would have to provide equal raises to all
staff. He really wanted to channel some of the hard-won funds toward a few
of his assessment staff who had really added value on the monitoring and
mining remediation projects, even though the projects weren’t in their focal
areas of expertise. Furthermore, Raj knew that the mining remediation and
monitoring groups had sought-after skill sets. These areas had been busy
throughout the slowdown and would be key to revenue generating projects
for Greener over the next few years. While Raj was pleased that the overall
compensation news would finally be good news, he needed an effective
compensation distribution plan.

DISCUSSION QUESTIONS

1. What are the pros and cons of providing even increases in base pay to
all Greener staff?

2. What type(s) of variable pay might Raj want to consider? Which staff
should be eligible for the variable pay plans?

3. What proportion of the 4 percent of revenue that Greener has available

should be allocated to base pay increases versus variable pay? Justify
your decision.

4. What recommendations would you have for Raj on how to

communicate with Greener employees about the changes to their base
pay and/or variable pay?
Chapter 10

Employee Benefits
“Take care of your employees. They’ll take care of your business.”

SIR RICHARD BRANSON1

Page 263

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. LO1 Describe the objectives of providing benefits to employees.

1. LO2 Explain how government furthers employee security and which

major Canadian laws relate to it.

1. LO3 Discuss the types of benefits organizations may provide to their

employees.

1. LO4 Describe the major types of pension plans.

1. LO5 Explain flexible benefit packages and emerging employee

assistance programs.

1. LO6 Describe the costs of employee benefits and ways to control

them.
 1. LO7 Explain the implications of employee benefits for HR.

Many people think of compensation as pay. In addition to compensation in

the form of pay, most companies offer benefits to employees. In
combination, compensation and benefits form the total rewards or total
compensation provided to employees. Whereas various forms of
compensation including salaries, variable pay, bonuses, and so forth were
discussed in Chapter 9, this chapter will explore benefits in terms of
insurance (health, dental, vision, life, disability, accidental death and
dismemberment), income security (Employment Insurance, pension
contributions, and workers’ compensation), and time off (vacations, paid
leave, and scheduling benefits), in addition to educational, financial, and
employee assistance programs.

The value of benefits has gone up over time relative to pay, and they are an
increasingly important part of the total compensation package used to
attract, motivate, and keep key employees. This chapter discusses the broad
scope of benefits that organizations may choose to offer their employees as
well as legally required benefits.
LO1 The Objectives of Benefits
Employee benefits seek to satisfy several objectives. These include societal,
organizational, and employee objectives.

Societal Objectives
Page 264

Industrial societies have changed from rural nations of independent farmers

and small businesses to urban nations of interdependent wage earners. This
interdependence was illustrated forcefully by the mass unemployment of
the Great Depression of the 1930s. Since that time, industrial societies have
sought group solutions to societal problems.

To solve social problems and provide security for interdependent wage

earners, governments rely on the support of employers. Through favourable
tax treatment, employees can receive most benefits tax-free, while
employers can deduct the cost of benefits as a regular business expense.

Today, benefits and services give many employees financial security against
illness, disability, and retirement. Although providing benefits helps to
fulfill an essential societal objective, these outlays by employers are a major
and growing cost of doing business. Benefit programs have become a
significant piece of the total compensation price tag, ranging between 1.25
and 1.4 times salary.2 This means that an employee with an annual salary of
$50,000 actually costs between $62,500 and $70,000 in payroll expenses
for the company once benefit costs are included.

Organizational Objectives
What do employers gain for these large outlays for benefits? Companies
must offer some benefits if they are to be able to recruit successfully. If a
company did not offer retirement plans and paid vacations, recruits and
present employees would work for competitors who did offer these forms of
benefits. Similarly, many employees will stay with a company because they
do not want to give up benefits, so employee turnover is lowered. For
example, employees may stay to save pension credits or their rights to the
extended vacations that typically come with greater seniority.

Vacations, along with holidays and rest breaks, help employees reduce
fatigue and may enhance productivity during the hours the employees do
work. Similarly, retirement, health care, and disability benefits may allow
workers to be more productive by freeing them from concern about medical
and retirement costs. In sum, benefits do the following:

Reduce fatigue

Discourage labour unrest

Satisfy employee objectives

Facilitate recruitment

Reduce turnover

Minimize overtime costs

Benefits will not replace performance incentives as motivators, but—

especially for older employees—health and pension benefits can make a
great difference in corporate loyalty.

Making benefits an important part of the company’s compensation

strategy has paid off tremendously for Husky Injection Molding
Systems Ltd. in Bolton, Ontario. The firm spends more than $4 million
a year on its 2,800 employees at a time when most companies are
considering cutting back. However, Husky managers say that the
program more than pays for itself in higher productivity and,
ultimately, lower costs.

Husky’s voluntary turnover rate is about 15 percent, or 5 percent

below the industry average. Absenteeism averages four days a year in
 contrast with an industry average of 7.3 days. And injury claims are
1.2 for every 200,000 hours worked, against an industry average of
5.8.

In addition to an above-market retirement savings plan and market-

competitive group benefits, Husky offers a fitness and wellness centre;
intramural sports activities; an on-site cafeteria; and clean, state-of-the-
art manufacturing facilities with outstanding safety records.3

Undoubtedly, benefits contribute towards meeting organizational strategy.

Employee Objectives
Employees usually seek employer-provided benefits because of lower costs
and greater availability. For example, company insurance benefits are
usually less expensive because the employer may pay some or all of the
costs. Even when workers must pay the entire premium, rates are often
lower because group plans save the insurer the administrative and selling
costs of many individual policies. With group plans, the insurer also can
reduce the adverse selection of insuring just those who need the insurance.
Actuaries—the specialists who compute insurance rates—can factor these
savings into lower premiums for policyholders.

For some employees, the primary objective may be to obtain benefits—

especially supplementary health and life insurance. Without employer-
provided insurance, these policies may not be obtainable if the employee
has a pre-existing medical condition.

The objectives of society, organizations, and employees have encouraged

rapid growth of benefits. There are two types of benefits: those that are
legally required and those that an employer voluntarily gives. Legally
required benefits are discussed next.
LO2 Legally Required Benefits
Page 265

Legally required benefits are imposed upon organizations by the government and
designed to help employees. In general, government seeks to ensure minimum
levels of financial security for the nation’s workforce. Figure 10-1 shows that the
objective of providing financial security is to ease the monetary burdens of
retirement, death, long-term disability, and unemployment. The loss of income
from these causes is cushioned by the security provisions. The financial problems
of involuntary unemployment are lessened by unemployment compensation. And
job-related injuries and death are compensated under workers’ compensation
laws. None of these programs fully reimburses the affected workers; nevertheless,
each worker does get a financial base to which additional protection can be
added.

FIGURE 10-1

Sources of Financial Protection for Workers

Table Summary: Summary

Protection for Legislating
Source of Protection
Workers Government
Federal and
Fair remuneration Minimum wage acts
provincial
Federal (except in
Retirement Canada Pension Plan
Quebec)
Involuntary
Employment Insurance Federal
unemployment
Workers’ compensation Federal and
Industrial accidents
acts provincial
Medical care Health insurance plans Provincial
Family allowances and Federal and
Child sustenance
childcare provincial

The HR group of an organization is usually tasked with ensuring compliance with

legally required benefits. If the legal obligations are improperly handled, the
result can be severe fines and more taxes.

Financial Security
Most Canadians are financially dependent on their monthly paycheques. Only
about 15 percent of the population is self-employed;4 most others work for
another person or organization. To protect the well-being of society,
governmental regulations on retirement plans, Employment Insurance, disability
compensation, and health care are imperative. The major legal provisions
concerning the above matters will be discussed below. Note that in Canada
(unlike in the United States or in some other Western countries), many of these
regulations are provincially administered. To suit the specific work environments,
many of these statutes and provisions vary from province to province.

Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and

Public Service Pension Plan (PSPP)

The Canada Pension Plan (CPP) (Quebec Pension Plan in the province of
Quebec and Public Service Pension Plan for federal employees) is a mandatory
plan for all self-employed persons and employees in Canada. CPP, QPP, and
PSPP are contributory plans—that is, both the employer and the employee pay
part of the costs. Portability clauses are applicable to the plans in Canada,
meaning that pension rights are not affected by changes of job or residence. The
plans are also tied to cost-of-living changes.

Government-determined formulas calculate the amount of the contribution toward

CPP (or QPP or PSPP) that an employee will make based on the amount of their
paycheque with an annual maximum. The employer withholds this amount from
the paycheque and remits the employee’s contribution along with an equal
contribution from the employer to the Canada Revenue Agency (CRA). At age 65
(or age 60 with reduced benefits), the employee will receive a monthly pension
benefit. There are also provisions for disability benefits if an employee becomes
unable to work and death benefits to provide for the surviving spouse and
children. Since 1999, both common-law relationships and same-sex relationships
are treated equally to spousal relationships under federal law.

Page 266

Employment Insurance (EI)

Employment Insurance (EI) helps to alleviate people’s financial problems during
the transition from one job to another. Most salaried and hourly workers who are
employed for a minimum number of hours, depending on regional unemployment
rates, are covered by EI. Employers withhold a contribution to EI from the
employee’s paycheque up to an annual maximum and remit this along with their
own contribution (which is 1.4 times the size) to CRA. If employees lose their job
through no fault of their own (for instance, due to a shortage of work or seasonal
or mass lay-offs), they will receive biweekly payments from EI while they are
looking for work. Information about eligibility and amount an individual would
receive through EI is available at the Government of Canada website. An estimate
is that individuals could receive 55 percent of their previous earnings up to a
maximum insurable salary of $56,300.

Starting in 2009, self-employed people could register for EI for maternity,

parental, adoption, medical, and compassionate-care benefits.

Workers’ Compensation Acts

Page 267

All provinces and territories have some act (usually called the Workers’
Compensation Act or Ordinance) that entitles workers to workers’ compensation
in the event of personal injury by accident during their regular work. The
industries covered by the act are classified into groups according to their special
hazards, and all employers in each group are collectively liable for payment of
compensation to all workers employed in that group. All employers make an
annual contribution to workers’ compensation as a percentage of their total
annual payroll figures. However, an employer can also be charged a higher rate of
contribution if there are many workers’ compensation claims.
 © Halfpoint/Shutterstock

Workers’ compensation covers a wide variety of benefits, but the law

stipulates that workers cannot sue their employers in case of injury. Is
this just?

Spotlight on ETHICS

Today’s Decisions Can Become Tomorrow’s Dilemmas

Total compensation decisions often have ethical components owing to fairness

across employees. However, decisions that HR makes regarding compensation
and benefits today can create ethical dilemmas for later points in time when
circumstances change or evolve. While it is easier to judge situations where
someone purposefully acts deceitfully or the actions cause harm to an individual
or are unethical, additional considerations include how the company would be
construed if the decision appeared as headline news and how the decision will
affect ongoing relationships. Consider the situations below and see what solutions
you might recommend.
 1. An employee is caught having embezzled $20,000 from the company.
As you go to dismiss them for cause, they cry and ask you to think of their
children and give “elimination of the job” as the official reason for their
leaving. That way they will be able to collect EI benefits and have a better
chance to find another job. A precedent was set when the owner laid an
employee off for “lack of work” when the employee had stolen company
property.
2. Maureen is a 60-year-old employee whose children are adults and her
parents have both passed away. The company offers childcare and eldercare
benefits to employees. Should alternative benefits be offered to employees
like Maureen who have no use for the benefits currently being offered?
3. Fred spends his time away from work volunteering for organizations
including by picking up donations for the Canadian Diabetes Association,
delivering Meals on Wheels, and helping at his church. The company
publishes the statistic of how many of its employees donate to the United
Way as part of its community image branding. Should the company pressure
Fred to make a financial donation to the United Way given his high level of
time donations?
4. During a tight labour market, it was necessary to bring on entry-level staff at
an hourly rate of $20/hour. A year later, sales have fallen off and the labour
market is much looser. New staff would be willing to be hired for $15/hour.
Should you pay new hires $15 or $20 per hour? Should you consider
lowering the salaries of current staff down to $15/hour?

Health Insurance Plans

Canada’s health and medical insurance, also referred to as simply health
insurance, is provided by provincial governments with assistance from the federal
government. Much of the cost of Canada’s universal health care system is paid for
by taxes collected at the federal level. Detailed explanations of health insurance
plans in all provinces can be found at the Government of Canada website.

Employers may opt to provide extended health plans that cover costs for
prescription medications, dental care, and so forth, for their employees. These
supplementary health plans are discussed in this chapter under “Voluntary
Benefits.”

Holidays and Vacations

Vacations are usually based on the employee’s length of service, but federal and
provincial laws specify a two-week (in Saskatchewan, three-week) minimum
vacation entitlement. In some regions, this increases to three weeks (in
Saskatchewan, four) after five, six, or ten years of service. Holidays are also
federally and provincially regulated. A listing of federal and provincial holidays
can be found here.

To memorialize the tragic legacy of residential schools, September 30 is now

the annual national day for truth and reconciliation and is a statutory holiday
for federally regulated employers.5
LO3 Voluntary Benefits
In addition to the legally required benefits that employers must provide to
employees, many offer an additional series of benefits voluntarily. These include
insurance, income security, retirement security, and paid time-off benefits, as well
as employee assistance programs.

Insurance Benefits
Insurance benefits spread the financial risks encountered by employees and their
families, by pooling funds in the form of insurance premiums. Then, when an
insured risk occurs, the covered employees or their families are compensated.

Life Insurance

Life insurance is almost universally offered by Canadian companies for their

employees.6 There are two types of plans. Under the first, the deceased’s family
receives a lump sum payment. Under the second, the family receives a generally
lower lump sum than in the first case, plus a survivor’s pension payable to the
deceased’s spouse for life. Employers generally pay the cost of these life
insurance plans. Coverage is commonly based on the employee’s pay, often 100
or 200 percent of annual pay. Optional expanded coverage is usually available if
the employee chooses to pay for it.

Health-Related Insurance

All Canadian citizens—and landed immigrants—are covered by provincial health

care programs. For this reason, employers in Canada offer only supplementary
health insurance plans. This is in contrast to the United States, where health
insurance is the most common form of benefit.7
 © Anderson Ross/Getty Images.

Dental insurance is a common benefit offered by many companies to

their employees, but it is a voluntary one. Should it be mandatory?

Page 268

Extended health insurance will pay for expenses that government plans do not
fully cover, such as costs for prescription medications, dental care, paramedical
expenses (for instance, physiotherapy, massage therapy, chiropractic), ambulance
services, vision care, and travel insurance. In many cases, the cost of health and
dental premiums is shared between the employer and the employee, and there
may be annual maximums set for each category of coverage. Figure 10-2 shows
the percentage of Canadian organizations providing various forms of health
coverage.

FIGURE
10-2

Percentag
e of
 Employers
Offering
Forms of
Health
Coverage

Table
Summary:
Summary

SOURCE: Haberl, M., & Stewart, N. (February 28, 2019). “Benefits

Benchmarking 2019: Innovation and Flexibility Lead the Way,” The
Conference Board of Canada.

Disability Insurance

If an employee misses a few days because of illness, it is usually not crucial from
a financial point of view since most employers grant paid sick leave for a limited
time. It becomes more of a problem when an employee becomes disabled for a
longer period of time or even permanently. Many Canadian companies offer
short-term and long-term disability plans.
A short-term disability plan typically involves crediting or allocating a certain
number of days to an employee, to be used as sick leave for nonoccupational
accidents or illnesses. Sick leave credits may be cumulative or noncumulative. A
plan is cumulative if insured credits earned during one year may be transferred to
the following year; it is noncumulative when the employee’s entitlement is
reviewed on a yearly basis or after each illness.

For workers who are disabled for a prolonged time, employers offer some form of
long-term disability insurance. Such plans generally have a long waiting period
(six months is very common), and they pay the employee a smaller amount
(usually 50–60 percent) of the employee’s working income. Under most plans,
these payments, if necessary, are made until the normal retirement age is reached.

Income Security Benefits

In addition to insurance, there are noninsurance benefits that enhance employee
security and seek to ensure an income before and after retirement.

Employment Income Security

Discharges or layoffs may entail severe economic consequences for an employee;

the impact, however, can be cushioned by employer-provided benefits. If
employees have not been given at least two weeks’ notice, and if the dismissal
was not for just cause, according to the Canada Labour Code they are entitled to
severance pay equal to 2 days' regular wages for each full year that they worked
for the employer before their termination of employment with a minimum benefit
of 5 days' wages. For executives, who usually work on a contract basis, severance
pay can reach six months or a year in compensation.

Page 269

The auto industry is a leader in another method, supplemental unemployment

benefits (SUB). When employees are out of work, Employment Insurance benefits
are supplemented by the employer from monies previously paid to the SUB fund.
This assures covered employees an income almost equal to their previous
earnings for as long as the SUB fund remains solvent.

During the pandemic in 2020, General Motors of Canada and Ford Motors
of Canada were not able to use their registered SUB plans to top up workers’
salaries beyond the amount paid by the Canada Emergency Response
 Benefit (CERB) of $500 up to $847 per week for their 50,000 laid off
workers. A loophole made the SUB plans not apply to CERB, whereas they
would have supplemented EI. Both companies negotiated SUB plans to
protect up to 75 percent of workers’ wages during lay-offs.8

LO4 Retirement Security Benefits

Retirement plans were originally designed to reward long-service employees.
Through employer generosity and union pressure, retirement plans have grown in
scope and coverage so that in Canada the average firm spends 4.95 percent of its
total payroll costs on legally required payments (CPP/QPP, EI, and workers’
compensation) alone.9 As of 2019, 97 percent of organizations surveyed by the
Conference Board of Canada offered some form of retirement savings plan.10 The
most common retirement savings plans are defined benefit (DB) plans, defined
contribution (DC) plans, group registered retirement savings plans (RRSPs), and
tax-free savings accounts (TFSAs).

Defined Benefit (DB) Plans

With a defined benefit (DB) plan, upon retirement the employee receives a fixed
dollar amount as a pension, depending on age and length of service. Employees
may receive a percentage of their highest annual salary for each year of service
they worked for the employer, as shown in the example below.

An employee and their employer may contribute to a DB pension plan over

30 years of employment. If the employee made an average of $100,000 per
year in their last three years before retirement and the plan pays 2 percent
per year of service, they would receive a $60,000 pension (30 years × 2
percent/year × $100,000 = $60,000 pension benefit). If the pension benefit is
not indexed to inflation, the employee would receive $60,000 each year for
the rest of their life. If it is indexed to inflation, then the $60,000 per year
pension would increase by the amount of inflation, or roughly 2 percent each
year. Many pension plans also include spousal benefits where, if the
pensioner dies, their spouse will still receive a percentage of the pension
benefit for the rest of their life (e.g., 50 percent or two-thirds). This example
demonstrates why DB pensions are a coveted retirement benefit.

Many employees and unions prefer DB plans because of their predictable

outcomes. This type of plan is strictly regulated by the Employee Retirement
Income Security Act. The advantage for employees is that they know in advance
what their retirement benefits will be. The advantage to employers is that, by
providing a predictable, guaranteed benefit at retirement that is valued by
workers, the pension plan can promote worker loyalty and retention. However,
these plans can be costly for both employees and employers to fund given that
they specify the amount of income the employee is to receive at retirement. On
average in Canada, employees contribute about 8.2 percent of their salaries to DB
plans.11 Employers typically contribute 60 percent of the money invested in
pension plans, and employees contribute 40 percent.12 If the investments do not
perform well, higher contributions are needed to make up the benefit the
employee is to receive.

About 67 percent of the employees in Canada who have a pension plan have a
DB type. However, the number of DB pension plans has gone down from 90
percent in the 1980s due to their costliness.13

Defined Contribution (DC) Plans

Page 270

Employees and employers may also make contributions to a defined contribution

(DC) plan. If only the employer makes the contributions, it is called a
noncontributory plan. In a contributory plan, the employee will add a percentage
of their paycheque towards the DC plan, which is matched by the employer. A
typical arrangement would be that the employee allows monthly or weekly
deductions from their salary, say 5 percent, and the employer either matches this
or makes a higher contribution, up to a specific level. These amounts are usually
invested in secure funds regulated by the Employee Retirement Income Security
Act. After the employee’s retirement, the money is used to purchase an annuity or
other approved financial arrangement that pays a regular income to the retiree.
The amount that the retiree receives depends entirely on how well the investments
did. If the pension investments did well, the pensioner will receive a greater
annual benefit, but if the investments did poorly, the pensioner will receive a
lower annual benefit, making it more challenging to plan for retirement. DC plans
make up 18 percent of all registered pension plans in Canada.14

Two significant problems have developed in the administration of pension plans.

First, some employers go out of business, leaving the pension plan unfunded or
only partially funded.
 Although DB plans are thought to be certain retirement funds, when Sears
Canada went bankrupt in 2017, many employees were shocked to learn that
they would only be receiving 81 percent of the value of their pension plans
as part of the company’s insolvency problem. The other 19 percent was “up
in the air,” to be figured out over the next five years. Employees need to be
sure that the pension plans are not underfunded before they count on them as
retirement income.15

Second, some companies minimize their pension costs by having very long
vesting periods. Vesting gives workers the right to pension benefits even if they
leave the company. Employees who quit or are fired before the vesting period is
over, however, often have no pension rights or are entitled only to receive their
contributions to the plan but not the employer’s matched contributions or the
investment returns earned during employment.

The Pension Benefits Standards Act regulates pension plans and requires that
pension funds be held in trust for members and that the funds not be held under
the complete custody and control of either the employer or the employees. To
accomplish this, the funding of a private pension plan must be carried out by an
insurance company, a trust, or a corporate pension society, or be administered by
the government. One challenge is that pension fund managers are paid a
percentage fee to manage the pension investments, which is payable annually
regardless of whether the investments made or lost money that year. Second, fund
managers may seek costlier alternative investment strategies to traditional
investments during periods of historically low interest rates to meet target returns
of 6 percent annually (4 percent net of inflation).16 In combination, the high
management fees and low returns can significantly limit the overall pension
benefit ultimately payable to pensioners.

Group RRSPs

As an alternative to pension plans, many Canadian organizations offer matching

contributions to registered retirement savings plans in a group RRSP. Employees
are able to contribute up to 18 percent of their salary in pre-tax dollars to their
RRSP each year up to an annual maximum, which in 2021 was set at $27,830.
Funds invested in the RRSP grow tax-free and are taxed upon withdrawal during
retirement. Organizations with group RRSPs will typically match 3–5 percent of
employees’ contributions to their RRSPs. The employer’s contributions are
taxable as income for the employee. The group RRSP is typically administered by
an insurance company or investment firm, and may have limited investment
selections for the individual employee.17 When given investment options for
within their group RRSP, employees may want to consider management fees,
investment track records, and a ratio of fixed income to equities that suits their
age and risk tolerance.

Tax-Free Savings Accounts (TFSAs)

Since 2009, every Canadian over 18 with a valid Social Insurance Number
receives annual contribution room into a TFSA. In 2021, for instance, the annual
contribution room was set at $6,000, with allocations from previous years
carrying over into the next year. An individual who was 18 by 2009 would have a
total of $75,500 in TFSA room in 2021. Money that Canadians put into their
TFSA accounts is post-tax (meaning they have already paid income tax on it), and
any investment proceeds that occur on investments inside the TFSA are tax-free
for life. Therefore, unlike pension plans and RRSPs, when individuals withdraw
money from their TFSA, it is entirely tax-free. Individuals can contribute to their
own retirement future by investing in a wide variety of investment types inside
their TFSA (e.g., exchange traded funds, mutual funds, bonds). Money from an
individual’s TFSA can be withdrawn at any point and used to fund, for instance,
the down payment on a home. Amounts withdrawn can be recontributed the
following calendar year.

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Some Canadian employers provide money to employees that they intend for the
employee to put directly into their TFSA, but only individuals can contribute
directly to their own TFSAs. Because TFSA funds are not taxable upon
withdrawal, they do not affect marginal tax rates on pensions or RRSP
withdrawals and do not contribute towards Old Age Security clawbacks. In short,
the TFSA is a powerful savings and retirement tool and, unlike pensions or group
RRSPs, is under the individual’s control. Employees with and without
employment pension plans can help fund their retirement lifestyles through
RRSPs and TFSAs.

Paid Time-Off Benefits

Time periods during which the employee is not working but is getting paid are the
result of time-off benefits. Time-off benefits include legal (such as statutory
holidays and vacation) and voluntary benefits (such as wash-up time). Although
these benefits may seem minor, according to one survey they were the costliest
major category, making up 16 percent of gross annual payroll.18

On-the-Job Breaks

Some of the most common forms of time-off benefits are those found on the job.
Examples include rest breaks, meal breaks, and wash-up time. Taking a break
from the physical and mental effort of a job may in fact increase productivity. The
major problem for HR and line managers is the tendency of employees to stretch
these time-off periods:

When one HR manager was confronted by a supervisor with the problem of

stretched breaks, she suggested a simple solution. Each employee was
assigned a specific break time—from 9:15 to 9:30 a.m., or 9:30 to 9:45 a.m.,
for example—but could not leave for break until the preceding employee
returned. Since each employee was anxious to go on break, the peer group
policed the length of breaks and the stretched breaks ended.

Paid Sick Leave

Absences from work are unavoidable. Today, most companies pay workers when
they are absent for medical reasons by granting a limited number of days of sick
leave per year. Unfortunately, this is one of the most abused benefits; many
workers take the attitude that these are simply extra days off. If HR policies
prohibit employees from crediting unused sick leave to next year’s account,
absences increase near the end of the year. To minimize abuses, some companies
require medical verification of illness or pay employees for unused sick leave.

A few firms avoid the abuse question by granting “personal leave days.” This
approach allows an employee to skip work for any reason and get paid, up to a
specified number of days per year. Sick leave banks allow employees to “borrow”
extra days above the specified number when they use up their individual
allocation. Then, when they earn additional days, the days are repaid to the sick
leave bank.
 THE CANADIAN PRESS/Frank Gunn

During COVID-19, the Canada Recovery Sickness Benefit (CRSB)

provided up to 20 days of paid leave for recovery from COVID-19 or
for self-isolation or quarantine. Travellers returning to Canada were
obligated to undertake a 14-day quarantine, but were stopped from
using the 10 days of sickness benefit because it “incent[ed] people to
disregard the clear public health advice against travelling abroad.”19
Should the government have to provide sickness benefits during all
mandatory quarantines?

Holidays and Vacations

Most employers grant vacation days beyond the minimum required number of
federally and provincially regulated holidays and vacation days, depending on
tenure. Policies for vacations vary widely. Some companies allow employees to
use vacation days a few at a time. Other companies insist that the worker take the
vacation all at once. A few employers actually close down during designated
periods and require vacations to be taken during this period. Still other companies
negate the reason for vacations completely by allowing employees to work and
then receive vacation pay as a bonus.
Page 272

Employee Assistance Programs

Some companies go beyond pay and traditional benefits and also provide
educational, financial, and social programs to assist their employees.

Educational Assistance

Tuition refund programs are among the more common employer services. These
programs partially or completely reimburse employees for furthering their
education. They may be limited only to courses that are related to the employee’s
job, or the employer may reimburse workers for any educational expenditure. In
the future, more companies may follow the lead of Kimberly-Clark Corporation
in the United States:

Kimberly-Clark created an educational savings account for employees and

their dependants. The company gives employees credits for each year of
service. Then, an employee or their dependant who wants to go to college
can be partially reimbursed from the educational savings account established
by the company.

Financial Services

Probably the oldest service is the employee discount plan. These programs,
common among retail stores and consumer goods manufacturers, allow workers
to buy products from the company at a discount.

Another common financial perk is providing employees with a smartphone and

paying for the monthly expenses. Employees may enjoy not having to pay for a
personal phone and data plan, and employers benefit from easy access to
employees even when they are not at work and during nonwork hours. But
company policies are varied in whether the employee is allowed to use the device
for personal as well as work purposes. Issues associated with privacy when using
a corporate device for personal use abound. Some companies are using a variation
to provide employees with mobile access to circumvent the privacy issue, as seen
below:

VMware ended the distribution of corporate phones, instead choosing to

provide subsidies for employees’ personal devices, assuming they would be
 used, at least in part, for business purposes. Employees get their privacy, and
the company gets the value of having its employees access work from their
personal smartphones along with cost savings.20

Stock purchase programs are another financial service. These plans enable
employees to buy company stock, usually through payroll deductions. In some
stock purchase programs, employee outlays may be matched by company
contributions. Another financial service offered in some organizations is financial
well-being, as shown in the Spotlight on HRM.

Social Services

Employers provide a wide range of social services. At one extreme are simple
interest groups, such as bowling leagues and softball teams; at the other are
comprehensive employee assistance programs (EAPs) designed to assist
employees with personal problems. EAPs may provide assistance with child care
or transportation, with individual and group counselling, with employee quarrels,
and with family disputes, or may even assist managers in dealing with employee
complaints.

Recognizing that employee problems affect company performance through

productivity losses and on-the-job injuries,21 EAPs that can lessen these problems
by addressing mental health problems, substance abuse, and so forth offer
potential dividends in employee performance, loyalty, and reduced turnover.
Spotlight on HRM

Four Steps to Building a Successful Financial Wellness Program

With studies showing high levels of employee stress about their finances that’s
translating into lost productivity, absenteeism, or health issues, the time is right
for financial wellness programs in the workplace.

There’s an opportunity for employers to step in and offer much-needed guidance,

but they could (and should) be helping workers with far more than the basic
advice about where to put their retirement contributions. Employees need help
navigating day-to-day money issues, such as repaying student loans, managing
credit card debt, saving for a down payment. and building emergency funds. And
older workers fret that they may outlive their retirement savings—assuming they
have any in the first place.

Just like supporting employees’ physical or mental health, the first step to
improving their financial well-being is through awareness, education, and
supports. Here are four considerations for building a financial wellness strategy.

1. Commit to financial well-being

Organizations that believe they have a responsibility to educate their employees

on financial issues tend to have more successful programs. Most workplace
wellness programs offer seminars or lunchtime sessions on topics such as
physical activity, nutrition, and managing stress. Adding seminars about financial
health may be the first step to helping employees understand concepts like
budgeting or the difference between registered retirement savings plans,
registered education savings plans, and tax-free savings accounts.

2. Offer varied topics and methods

Workplaces with successful programs provide education on multiple topics,

including savings, debt repayment, investments, mortgages, insurance, spending,
wills, health care in retirement, and pre-retirement financial planning.

Employers can offer financial wellness training through a variety of formats,

including personal consultation services, classes and workshops, online resources,
workbooks, and calculators. Employers can partner with and leverage
relationships with third-party subject matter experts, such as their financial
institution or employee assistance program provider.

3. Target programs to employee needs

Information is more effective if it resonates with the learner. While that seems
obvious, many employers use generalized communication strategies to reach
diverse team members. With five generations in the workforce, employers will
have greater success with customized educational programs that vary according to
age or income level.

4. Offer financial counselling

When we think of employee assistance programs, we immediately think of

mental-health or crisis-counselling services. Yet employee assistance programs
can offer a wide variety of personal counselling supports, from nutritional
coaching to financial advice. Personalized financial counselling is an emerging
support tool because counsellors can readily adapt to different types of employees
in highly diverse workforces.

When introducing financial wellness supports in the workplace, some companies

worry about backlash or lawsuits from employees or retirees over advice that
didn’t generate profits. For employees, there’s the very real concern about
privacy.

But the benefits far outweigh the risks. In addition to increased productivity and
lower absenteeism, a more holistic financial wellness program can help with
employee attraction and retention. Above all, the goodwill employers generate
from offering financial counsel to employees struggling with personal finance
stresses is worthwhile.

SOURCE: © Linda Lewis-Daly (2018, April 2), Benefits Canada,

http://www.benefitscanada.com/benefits/health-wellness/four-steps-to-building-a-
successful-financial-wellness-program-111508

Relocation programs are the support in dollars or services a company provides to

its transferred or new employees. At minimum, this benefit includes payment for
moving expenses. Some employees receive fully paid house-hunting trips with
their spouse to the new location before the move, subsidized home mortgages,
placement assistance for working spouses, and even family counselling to reduce
the stress of the move.

Caregiver programs support employees providing care to children or adult family

members, and compassionate care at end-of-life. During the COVID-19
pandemic, government support is available for employees who take time away
from work to care for critically ill or injured children (for up to 35 weeks) or adult
family members (up to 15 weeks), and to provide compassionate care (for up to
26 weeks). Employers may also have caregiver programs for childcare benefits,
or increasingly, for eldercare.

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Childcare benefits are typically granted in the form of financial subsidies for
professional childcare. Some workplaces offer on-site daycare programs, which
are convenient for working parents, but also benefit employers when employees
can work potentially longer hours during daycare opening and closing times
because of reduced travel time.

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In 2018, 25 percent of Canadians (7.8 million people) provided care to a family

member or friend with a long-term health condition, a physical or mental
disability, or problems related to aging.22 Additionally, 17 percent of working
men and 20 percent of working women are in the sandwich generation, taking
care of both children and elders simultaneously.23 While flex-time has been an
option considered by employers to help their employees meet caregiving
requirements, eldercare requirements such as medical appointments may be better
met through compressed workweeks to reduce caregiver stress, burnout, and
absences.24

Employee assistance programs have traditionally involved personal interaction;

especially if they were concerned with counselling services, face-to-face
communication was important. However, with technology advances, employers
can respond to their employees’ needs not only faster but also more effectively
and efficiently. The scope of possibilities is vast: opportunities for live chat
rooms, one-on-one video counselling, group-help bulletin boards, and online self-
help applications are only the tip of the iceberg. The goal of online assistance
programs is not to replace counselling, but mostly to provide an enhancement to
services already offered.25 Additional assistance activities are discussed in
Chapter 11 in connection with counselling.
LO5 Flexible Benefits and Emerging
Employee Assistance Programs
Flexible Benefits
Many benefit packages were originally designed with a “one size fits all”
approach in which employees had little discretion over benefits that would
particularly suit their individual needs. For example, pension and maternity
benefits usually were granted to all workers equally regardless of age and family
status. This uniformity failed to recognize individual differences and wishes.
Admittedly, uniformity leads to administrative and actuarial economies; but when
employees receive benefits they neither want nor need, these economies are
questionable.

In many organizations, offering only one benefit package has given way to
flexible benefit programs. Flexible benefit programs, also known as cafeteria
benefit programs, allow employees to select benefits and services that match their
individual needs. Workers are provided a benefit and service account with a
specified number of dollars in the account. Through deductions from this account,
employees shop for specific benefits from among those offered by the employer.
The types and prices of benefits are provided to each employee in the form of a
cost sheet that describes each benefit. In Canada, the average cost of employee
benefits not including pensions or paid time off (e.g., vacation, holidays, parental
leave) was $8,330 per full-time equivalent in 2015.26 Figure 10-3 illustrates how
two employees may select their package of benefits and services for the coming
year based on the $8,330 average.

FIGURE 10-3

Hypothetical Benefit Selection of Two Different Workers

Table Summary: Summary

Worker A Worker B
27, married woman 56, married male.
with one child. Spouse does not
 Partner in graduate have a benefit
school. package.
Paramedical services
(massage, physio, chiro, $1,000 $1,500
etc.)
Dental care 890 1,090
Extended health care
(e.g., prescription drug
1,035 760
coverage, out-of-
province)
Optional life insurance
235 300
($100,000)
Spousal life insurance
250 0
($50,000)
Long-term disability
300 0
insurance
Short-term disability
1,270 305
insurance
Accidental death &
200 200
dismemberment
Vision care 250 360
Concierge services 1,200 200
Employee assistance plan 400 200
Wellness spending
1,300 3,415
account
Total $8,330 $8,330

Although the approach shown in Figure 10-3 creates additional administrative

costs and an obligation for HR to advise employees, there are several advantages.
The main advantage is employee participation. Through participation, employees
come to understand exactly what benefits the employer is offering, and
employees can better match their benefits with their needs. In 2019, 30 percent of
Canadian organizations offered flexible benefit plans, with 70 percent offering
traditional benefit plans.27

Flexible benefits, until recently, have offered the usual choices of better long-term
disability insurance, dental or vision care, prescription drug coverage, life
insurance, group legal services, etc., but it has become more common that
employers offer the opportunity to “purchase” more vacation. Some companies
also allow employees to sell back their vacation time for extra money.28

Emerging Employee Assistance Programs

One emerging trend is to offer employees a health spending account. Employees
can use the credits in their health spending account toward eligible medical and
dental expenses not covered by the extended health coverage. The services are
paid with nontaxable dollars on a broad range of medical expenses in accordance
with the Income Tax Act. Examples include deductibles, orthodontic procedures,
glasses or contacts purchases, and the services of dietitians and acupuncturists.
Sixty-five percent of Canadian organizations had health spending accounts in
place as of 2018, with an average of $761 per eligible employee.29

Page 275

A related trend is employee wellness accounts. Credits in a wellness account can

be spent toward proactive health and a broad range of wellness domains. For
instance, gym memberships, fitness equipment and activities, and even
purchasing a canoe, financial planning, education courses, or a big screen TV—
anything that benefits the employee’s wellness and health—may be eligible;
however, dollars in wellness accounts are taxable benefits. The average amount
granted to a wellness account in Canada among organizations who offer them is
$350.30

Another emerging trend is to offer concierge services, where employees may seek
a broad variety of services limited only by what’s legal, ethical, and within
imagination. These types of services may include free laundry, backup child care,
or dog walking services. One concierge service even aims to use artificial
intelligence (AI) to predict what services an employee might
potentially be interested in:

Through John Paul concierge services, a leader in innovative loyalty

programs, employees can obtain access to a huge variety of concierge
services from event ticketing, dry-cleaning pickup, or home repair services.
Depending on the company’s selection of loyalty program, on-site
concierges may be available or employees may be able to access 24/7
chatbots offering personalized service. John Paul has recently introduced AI
to predict client behaviour and provide personalized solutions and
suggestions for ultimate employee satisfaction.31
 © IT Stock Free/Alamy Stock Photo

Child care, with the employer providing either full or partially

subsidized care facilities and staff, is an extended benefit for
employees. What advantages does this benefit offer to workers?

While benefits used to be reserved for full-time employees, part-time employees

are now offered benefits by 93 percent of Canadian organizations.32 Most require
part-time employees to work a minimum of 20 hours per week to qualify.
LO6 Management of Voluntary
Benefit and Service Programs
Page 276

Administration of increasingly complex benefit packages is a major

challenge for HR. The administrative burden is significantly eased by
technology designed to handle flexible benefit enrollment and
communication. Many companies rely on the digital administration of their
health plan providers, such as Blue Cross Canada, as seen in the example
below:

Blue Cross Canada offers health spending account administration

services for companies with flexible benefit plans. It saves these
companies the headaches of administering the plans and claims to be
cheaper than if the company managed the plan on its own.33

One challenge for HR groups is effectively communicating about benefits

to workers. Ignorance about the mix of benefits often leads to pressure from
employees for more benefits to meet their needs. For example, older
workers may request improved retirement plans, while younger workers
seek improved insurance coverage of dependants. Often the result is a
proliferation of benefits and increased employer costs. These costs, which
represented 15.1 percent of an employer’s gross annual payroll in 1953,
escalated to about 40 percent in 2010.34 Still, employees’ ignorance and
confusion can lead to complaints and dissatisfaction about their benefit
package.

One remedy to poorly understood benefit packages is to increase employee

awareness, usually through publicity. Publicizing benefits often includes
orientation sessions for new employees as new benefits are introduced, and
online notices with links to benefit resources as regular parts of company
communications and annually during benefit allocation season. Some tips
for effectively communicating employee benefits include sending benefit
communications home to spouses as well as to employees, providing access
through QR codes and smartphone apps, and anticipating that HR will have
to communicate a benefit fact 19 times before it is understood and
accepted.35

LO7 Implications for Human Resources

Change in the field of employee benefits has been dramatic over the last
decade. Retirement plans have been and are under constant legal review, tax
reforms have added complexity, and health care policies have changed and
their expenses have gone up. Following the COVID-19 pandemic, many
paramedical services were also being administered remotely, including
physiotherapy, digital psychologists, digital gyms, and even triage dental.36
All of this has added to the complexity of benefit administration by the HR
professional.

The implications of financial security plans for HR are several. First, HR

should make sure that the firm adheres to all provisions relating to
minimum wages and pension deductions. For example, the Canada Labour
Code requires every employer to furnish, from time to time, information
relating to employee wages, hours of work, general holidays, annual
vacations, and conditions of employment. As well, the Canada Labour
Standards Regulations require that each employee’s Social Insurance
Number, sex, and occupational classification be recorded and kept ready for
inspection. Accurate records of maternity leave, overtime, and termination
should also be maintained.

Second, to avoid duplication, HR managers need to consider CPP (or QPP

or PSPP) and other benefits available to employees when designing their
firm’s own benefit and service plans. In many provinces, some of the items
included in private group insurance plans are already covered under the
workers’ compensation and health insurance plans.

Third, HR specialists need to be concerned about reducing accidents in

order to lower the cost of workers’ compensation. These costs are directly
related to the claims made against the company by employees. The more
that must be paid to these employees, the greater the cost. Aside from cost
considerations, many managers feel a moral obligation to provide a safe
working environment.

To keep ballooning benefit costs under control, employers may want to

consider the following measures:37

Reducing prescription drug coverage to 80 percent from 100 percent

Introducing a combined maximum amount of coverage across all

paramedical services (e.g., massage, physiotherapy, chiropractic)
rather than separate maximums for each service

Stopping out-of-country medical coverage for personal travel, or

setting a 30-day limit or a dollar maximum

Investigating whether six-month dental checkups are necessary,

keeping in mind that many dental plans were designed in pre-fluoride
days

Where available, encouraging generic drug substitution, multi-tiered

formularies, and case management for specialty or high-cost
medications, in order to save a possible 12 percent per employee38

Encouraging employees to seek pharmacies with lower dispensing fees

and to request several months of refills at a time

Introducing a health care spending account to allow employees to

focus their benefit dollars and forgo coverage across all domains

Embracing proactive health maintenance apps and care for employees

Page 277

Given the trends outlined above, it will be critical for top management in
general and HR in particular to adopt a total compensation approach when
decisions have to be made relating to pay. Organizations cannot afford to
treat employee benefits as being independent of total compensation,
especially since they are growing at twice the pace of wages and salaries.
Retention

The issue was raised earlier as to what role benefits play in retaining
employees. Retention of key employees has become a major issue,
especially in high-tech companies.39 Several studies have shown that
innovative and flexible benefit plans are very effective tools in attracting
and retaining highly skilled staff.40

Benefit Audit

Often, the administration of benefit plans still leaves room for

improvement. One approach that readily identifies inefficiencies is a benefit
audit. It usually consists of two components: a claims audit, which
examines claims and claim trends, and an organization audit, which
examines the efficiency and effectiveness of handling employee benefits
within the employer organization, including dealings with an insurer or
third-party administrator.

A benefit audit enables employers to do the following:

Identify opportunities for financial and human resource savings.

Ensure that insurers or third-party administrators are doing a good job.

Exert effective control over their benefit area.

Identify who is in control of the benefit budget.

Check how their employee claiming habits compare against other

Canadian employers.

Tax Application to Benefits

GST and GST/HST apply to some benefits, but not to others. Generally,
GST/HST has to be paid on the following benefits:

Company cars (if also used for private purposes)

 Car operating costs

Tax return preparation

Short-term residential accommodation

Holiday trips within continental North America

Frequent flyer points

Financial counselling

Parking

Not affected are awards, health benefits, stock options, low-interest or no-
interest loans, tuition fees, child care, a Christmas turkey, and gifts under
$100.

Benefits and Strategy Implications

As outlined in Chapter 1, management has to look at the long-term
objectives of the organization and match these with organizational
conditions to create the necessary environment for reaching the objectives.
Specifically, the following steps have to be taken:

Define the organization’s objectives.

Link HR objectives with those of the organization.

Assess the needs of the employees.

Assess the legal requirements to ensure that laws are followed.

Compare the company’s benefits with those of the competition.

Make sure the benefits are valued by the employees.

Conduct an annual benefit audit.

It is important for HR to integrate benefits into the total compensation
package. This compensation package has to fulfill both short- and long-term
goals. The short-term goals, for example, high motivation and productivity,
are usually satisfied with merit pay and incentive systems that reward high
performers. A common long-term goal is to retain good employees, an
objective that can be achieved by a valued pension or a profit-sharing plan.
Another strategy may address the need for downsizing by using an
appropriate severance package. These are just a few items contributing
toward a comprehensive pay strategy.41
Page 278

SUMMARY

Employee benefits are the fastest-growing component of compensation. The

Canadian government has instituted compulsory programs that provide
citizens with certain benefits and services. Financial security is achieved
partially through such benefits as the Canada Pension Plan (or QPP or
PSPP), Employment Insurance, and workers’ compensation. The CPP
provides income at retirement or upon disability. It also provides the family
members of a deceased worker with a death benefit and a survivor’s
annuity, under certain conditions.

Employment Insurance pays the worker a modest income to reduce the

hardships of losing a job. These payments go to employees who are
involuntarily separated from their jobs. Payments last until the worker finds
suitable employment or until the worker receives the maximum number of
payments permitted by the government.

Workers’ compensation pays employees who are injured in the course of

their employment. The payments are made to prevent the employee from
having to sue to be compensated for injuries. If an employee dies, benefits
are paid to the employee’s survivors.

Whereas the provincial governments provide basic health coverage to

Canadians, most organizations also provide extended health and dental
coverage to their employees and their families. Additional forms of
voluntary benefits include insurance, security, and time-off benefits.
Employee assistance programs encompass educational, financial, and social
programs. To accommodate diverse needs, many employers are now
offering flexible benefit programs and other forms of health spending
accounts. However, a major issue is ballooning benefit costs.

To ensure that benefits are meeting the needs of employees and at a

reasonable cost, employers should be conducting an annual benefit audit,
consisting of a claims and organization audit. The audit examines the
efficiency and effectiveness of handling employee benefits, including
insurers and third-party administrators.
TERMS FOR REVIEW

benefit audit

Canada Pension Plan (CPP)

caregiver programs

contributory plans

defined benefit (DB) plan

defined contribution (DC) plan

employee assistance programs (EAPs)

Employment Insurance (EI)

flexible benefit programs

health insurance

long-term disability insurance

Pension Benefits Standards Act

portability clauses

relocation programs

retention

severance pay

short-term disability plan

supplemental unemployment benefits (SUB)

vesting

workers’ compensation
Page 279

REVIEW AND DISCUSSION QUESTIONS

1. Why has government been interested in providing financial security to

workers through laws? What areas do you think are likely to receive
government attention in the future to ensure employee financial
security?

2. Some people believe that Employment Insurance has, over a period of

time, worked against workers rather than for them. What is your
opinion of Employment Insurance? Why?

3. Suppose a friend of yours contracted lead poisoning on the job. What

sources of income could this person rely on while recovering during
the next two months? What if it took two years for your friend to
recover? Are other sources of income available?

4. Besides retirement income, what other benefits are provided through

the Canada Pension Plan?

5. What changes should be made to the Employment Insurance program

to address its present weaknesses?

6. How would you design a benefit package for a diverse group of

workers?

7. Briefly describe the benefits that an organization might give

employees to provide them with greater financial security.

8. How would you reduce the cost of benefits to the employer without
reducing coverage for employees?

9. What are the common problems you would expect to find with the
benefit program of a large company?

10. If you were asked to increase employee awareness of benefits, what

actions would you take without changing the way the company
provides benefits? If you could change the entire benefit program,
what other methods would you use to increase employee awareness?
SHORT CASE 10-1: Low Uptake on Benefits at Blueprint Technologies

The HR group at Blueprint Technologies had just rolled out a new benefit
program across the company when the COVID-19 pandemic struck. The
total benefit package included core benefits (supplemental health with
vision and dental care, life and disability insurance, and a group RRSP
matching program) plus flexible benefits in the form of a health care
spending account (HCSA). With data now in from the first year of running
the benefit program, the HR group is surprised to see lower uptake on some
aspects of the program. The data revealed:

1. Only 50 percent of staff contributed to the group RRSP program

despite a company match of contributions up to a full 5 percent of
salary.
2. While Blueprint had added a HCSA in response to a benefit audit and
following emerging practices, only 60 percent of staff accessed the
HCSA in its first year. Of staff who accessed their HCSA, the average
expenditure was only 70 percent of the available funds.

Although the HR group had planned to also implement wellness initiatives

including tai chi breaks, standing meetings, and walking meetings,
implementation of those initiatives was put on hold while the entire
workforce was working virtually. However, it was becoming apparent that
many staff would never return full-time to the physical office. Because
“sitting is the new smoking,” the HR group wanted to discuss how to
implement some wellness initiatives virtually and sooner rather than later.

DISCUSSION QUESTIONS

1. Why might staff uptake on some of the new benefit offerings be lower
than predicted?

2. How might HR communicate with staff more effectively about the

benefit offerings available?
3. How might the HR group go about implementing wellness initiatives
in a digital work world?
Page 280

CASE STUDY

Aptech Medical Laboratories

Flexible Benefit Program

Sara Ipsides, senior vice-president HR, sat across the meeting room table
from Bennett Fox, Aptech Medical Laboratories’ CEO. Bennett had called
Sara to a meeting to discuss the lab’s benefit expenses. Both came prepared
with copies of their recent annual financial statement. The report indicated
that the lab’s benefit expenses had reached almost 40 percent of the
company’s total payroll. Bennett also produced benchmark data from a
survey that showed that the health sector average was closer to 30 percent.

“Sara, why are our benefit expenses are so much higher than those of our
competitors?” he asked.

Sara was prepared for the question. Over the past two and a half years, Sara
had made some purposeful increases in the health benefits offered to staff
across their medical laboratories. Specifically, she had worked with their
health insurance provider to add a health care spending account in the
amount of $1,000 per employee in an effort to add some flexibility to the
company’s otherwise uniform benefit offerings. In addition, and with
executive and board of director approval, Aptech had implemented a health
benefit program for all part-time staff working 20 hours per week or more.
Sara had also diligently read communications from the health insurance
provider announcing that the cost of offering the same coverage in terms of
health, dental, and travel insurance was rising at a rate faster than inflation.
In short, some of the higher benefit expense was due to increases in benefits
offered to staff, some was due to offering benefits to staff who previously
had not qualified for the company’s benefit package, and the remainder was
due to escalating costs from its health insurance provider.

As she looked at the benchmark data that Bennett passed across the table,
Sara pointed out that the data Bennett was referring to had assessed the
health sector as a whole, not just medical laboratories, and that the sector
included medical equipment manufacturers. Medical equipment
manufacturers typically had much lower benefit levels than laboratories—
which, by and large, had benefit expenses similar to those of Aptech.
Undeniably, however, Aptech certainly occupied the high end of the scale.

Bennett wondered whether these expenses were really justified. “Where is

the payoff?” he asked.

Sara had no problem defending the laboratories’ benefit outlays. She

pointed out that Aptech had the lowest turnover rate among large medical
laboratories—nearly 2 percent lower than any other—and that every
employee engagement survey showed that Aptech staff felt that the lab was
a very good place to work; job satisfaction and engagement were high. In
particular, because the company’s diagnostic and imaging staff was largely
female with nearly half working 20 to 30 hours per week, Sara felt strongly
that providing health insurance benefits to its part-time staff was a huge
retention incentive and the right thing to do. She also mentioned that
Aptech was able to recruit top-flight new hires. She was convinced that the
lab’s generous benefit package contributed significantly to this level of
satisfaction.

She concluded her explanation by saying, “Bennett, look at the level of

customer satisfaction. We beat out every other lab company on this
measure. I am sure the reason is that happy employees mean happy
customers. And there is the main payoff.”
Bennett appreciated Sara’s explanation. He always had been proud when he
saw the results of Aptech’s employee engagement surveys. There was no
doubt that people liked to work for Aptech. “Still,” he wondered, “are there
ways to cut the expenses without doing too much damage to employee
satisfaction?”

Sara agreed to look into that matter and to make suggestions regarding
more efficient methods of delivering benefit services.

Sara headed back to her office, logged onto Aptech’s intranet, and created a
new file folder she named Benefit Audit and Changes. She had been
keeping current on trends for benefit offerings and knew that some
organizations were reducing the amount of coverage they offered, or
increasing employee deductibles. Sarah thought that she could probably
work with Aptech’s health insurance provider to come up with a list of
potential cost saving changes. However, Sara also wanted to be sure that the
company did not cut benefits that would endanger employee attachment to
it. She would need some employee input into coverage reductions. Sara
realized it had been a couple of years since Aptech’s last benefit audit. It
was time to take a fulsome look.

Additional Information

The lab’s benefit package included supplementary health and life insurance,
child care, elder care, a prescription payment plan, an EAP, educational
support in the form of tuition reimbursements, and financial advising. It was
also possible to purchase more vacation time pro-rated based on the
employee’s salary. These benefits were standard to all employees across the
labs who worked 20 or more hours per week. There was also the new health
care spending account in the amount of $1,000 per employee, which added
some flexibility and responded to staff requests for coverage for massage,
vision care, and physiotherapy and chiropractor expenses. The health
insurance provider, Magenta Providers Cross, managed all of Aptech’s
benefits, and employees were able to access their benefit resources through
its website.

DISCUSSION QUESTIONS
1. What steps will Sara need to take to conduct a benefit audit?

2. What are some suggestions you would have for Sara on how to save
money on the benefit package? In addition to reducing benefit
coverage or increasing employee deductibles across all staff, what
other options could Sara explore?

3. As part of the audit process, Sara will gather information relating to

employees’ understanding of the company’s current benefit offerings.
How might information about staff understanding of current benefits
be useful in her decisions on where to make cuts?

4. What recommendations would you have for Sara about how to

communicate the changes in the benefit package once they are
determined? Discuss whether you think staff should be involved in the
process of changing the benefit package.

5. One option could be to retract the benefit package offering to part-time

staff. What are the pros and cons of this strategy?
Part 6

Maintaining High Performance

An organization’s culture and working environment has an effect on the
motivation and job satisfaction of its employees. Good interpersonal
relations require an effective communication process as well as appropriate and
fair discipline procedures. Workplace safety is also very important. Managing in a
union environment requires familiarity with the legal requirements in dealing
with unions, the collective bargaining process, and administration of the
collective agreement.

The three chapters in Part 6 discuss ways to create a positive work environment,
maintain proper discipline, ensure a safe workforce, and deal with union–
management issues.

Page 281
Chapter 11

Managing Employee Relations

When people are financially invested, they want a return. When people are
emotionally invested, they want to contribute.

SIMON SINEK1

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LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. LO1 Discuss the importance of downward and upward

communication in organizational settings.

1. LO2 Define employee counselling and the major types of counselling.

1. LO3 Describe how progressive discipline and wrongful dismissal

work.

1. LO4 Explain the different techniques available to improve the quality

of work life.

1. LO5 Outline the major issues relating to downsizing the workforce

and their implications for strategic human resource management.
In many ways, this entire book is about employee relations. How well the
human resource department handles human resource planning, placement,
training and development, evaluation, and compensation largely determines
the state of employee relations. Even when these activities are performed
properly, solid employee relations demand careful attention to
organizational communication, employee counselling, discipline, and
management of work groups. In addition, a number of organizations are
becoming high-involvement workplaces that emphasize human resource
management.

A number of employees express frustration with their employer and their

manager/supervisor. In a study of Canadian employees, only 15 percent
reported having jobs with both clear feedback and a significant impact (that
is, the work is important). Almost 25 percent of employees indicated that
their job had both little recognition and low satisfaction. According to study
author Paul Fairlie, “Engagement, commitment, and performance are
important, but these are outputs. They don’t happen unless employees view
their work as meaningful.”2

A Canadian HR Reporter survey on problem managers revealed that 46

percent of respondents viewed problem managers as a big problem and 27
percent reported that they are a huge problem. More than half of the
respondents said that one in 10 managers is a problem manager. The survey
identified what types of behaviours create the most problems: inappropriate
comments (74 percent), showing favouritism (70 percent), failing to follow
due process (63 percent), treating employees in a disrespectful manner (62
percent), and bullying or intimidation (57 percent). About 35 percent of
participants indicated that their organization tolerates just about anything if
the manager delivers results, while about 14 percent reported little tolerance
for managerial misbehaviour. Only about 17 percent of respondents stated
that they were able to get problem managers to change their behaviour most
of the time.3

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Although the focus of this chapter is on employee relations, an effective

organization also pays considerable attention to relationships among
workers. Several human resource initiatives—such as policies on workplace
and sexual harassment, conflict resolution procedures, and employee
involvement programs—play an important role in enhancing human
relations.
Strategic Importance of Employee
Relations Practices
“Employee relations” is a complex blend of organizational culture, human
resource practices, and individual perceptions. Virtually everything the human
resource department does affects employee relations, directly or indirectly. But
many human resource activities (such as recruitment, selection, and benefits
administration) go largely unnoticed by employees. Other important human
resource functions affect employees only periodically, as in the case of
performance appraisal and salary review sessions. This necessitates ongoing
activities to foster good employer–employee relations.

Why are employee relations practices important? At least four major reasons can
be offered:

1. Good employee relations practices improve productivity. Employee

productivity is significantly affected by two factors: ability and attitude.
Ability is simply whether the employee is able to perform the job. Ability is
influenced by such things as training, education, innate aptitude, tools, and
work environments. Attitude, on the other hand, refers to an individual’s
willingness to perform the job. Attitude is affected by myriad factors, such
as level of motivation, job satisfaction, and commitment to work. Good
employee relations practices help improve both the ability and attitude of the
employee. What is the relationship between social media and productivity?

Research suggests that about eight in 10 employees believe that social

media (LinkedIn, Facebook, and Twitter) use improves relationships at
work and 60 percent report that it supports decision-making processes.
According to Lorenzo Bizzi, social media interactions with co-workers
enhances motivation and innovation but interactions with people
outside the organization result in greater distractions and lower
productivity. Moreover, while social media use by employees is
associated with higher levels of engagement, workers using social
media for work-related purposes are also more likely to leave the
organization.4
 2. Good employee relations ensure implementation of organizational
strategies. In Chapter 1, the importance of the role that human resource
activities play in achieving organizational goals was discussed. Good
employee relations practices ensure that organizational goals and strategies
are properly communicated and that the employees are committed to
achieving them.

3. Good employee relations practices reduce employment costs. When concern

for and interest in employees becomes part of the overall organizational
culture, significant cost savings can emerge in terms of reduced absenteeism
and turnover. Good employee relations practices also give employers a
recruiting advantage as most job applicants prefer to work for an
organization that treats them fairly and offers them a challenging job with
potential for career growth.

4. Good employee relations help employees grow and develop. As discussed in

Chapter 1, an important goal of human resource departments today is to help
employees achieve their personal goals. A keen interest in the employee’s
work-related and career goals not only brings benefits to the organization (in
terms of improved employee morale, loyalty, improved productivity, and
ready availability of skilled personnel within), but also helps it meet its
social objectives.

A 2019 study by CareerBuilder revealed that about 50 percent of employees

perceive that they have a career while the other 50 percent feel that they just have
a job. About 32 percent of workers intend to change jobs in the next year. About
58 percent of employees believe that their employer does not offer enough
opportunities to learn new skills; only 32 percent are satisfied with career
advancement opportunities and 37 percent are satisfied with training
opportunities.

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Almost three-quarters of employees use mobile devices and are turned off by
applications that are overly complex (42 percent) or too long (31 percent). Only
15 percent of respondents stated that low compensation or poor benefits are
among the major reasons why they quit their last job and 59 percent mentioned
commute time as a key factor in a job’s attractiveness. About 29 percent of
employees regularly search for jobs while employed and 78 percent would
consider a new job if an attractive opportunity came along.5
As Figure 11-1 shows, there are five major components of effective employee
relations: communication, counselling, discipline, rights, and involvement. Each
of these will be discussed in some detail in this chapter. In addition, a section of
the chapter will address the issues of employee retention, job security, and
organizational downsizing.

FIGURE
11-1

Five Key
Dimension
s of
Employee
Relations

Table
Summary:
Summary
LO1 Effective Employee
Communication
Information about the organization, its environment, its products and services,
and its people is essential to management and employees. Without information,
managers cannot make effective decisions about markets or resources,
particularly human resources. Likewise, insufficient information may cause stress
and dissatisfaction among employees. Moreover, effective communication is an
essential component of high performance organizations.

The need for information is met through an organization’s communication

system. In small or less-sophisticated firms, communication may be informal, but
in large multibillion-dollar enterprises, specialists may serve as employee
communications directors or as chief information officers.

Most organizations use a blend of formal, systematically designed

communication efforts and informal ad hoc arrangements. For convenience, most
of these approaches can be divided into downward communication systems, which
exist to get information to employees, and upward communication systems, which
exist to obtain information from employees.

A global study of more than 3,800 employees by Dell and Intel revealed that
about 62 percent of employees perceived that their job could be made easier with
the assistance of artificial intelligence. However, about 44 percent of employees
felt that their workplace was not smart enough while 41 percent said it was as
smart as they wanted it to be. There is still considerable reliance on desktop
computers and landline telephones at many organizations. About half of
respondents worked remotely at least a few times a week. While 57 percent
preferred face-to-face communication, about 51 percent believed that better
communication technology and remote teams would make face-to-face
communication obsolete. In addition, just over 70 percent reported that
workplaces are more collaborative now than in the past.6

Downward Communication Systems

Human resource professionals try to facilitate an open, two-way flow of
information, although often messages are of the top-down variety. Downward
communication is information that begins at some point in the organization and
proceeds down the organizational hierarchy to inform or influence others. Top-
down methods are necessary for decision makers to have their decisions carried
out. These communications also help give employees knowledge about the
organization and feedback on how their efforts are perceived.

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Organizations use a variety of downward communication methods because

multiple channels are more likely to overcome barriers and reach the intended
receivers. For example, limiting messages to email or text messaging may
exclude large numbers of employees. Some common examples of downward
communication approaches include in-house publications, information booklets,
employee bulletins, prerecorded messages, email, and jobholder reports and
meetings.

An OfficeTeam study revealed that the majority of workers (62 percent)

believed it is appropriate to connect with co-workers on Facebook, followed
by Twitter (52 percent), Instagram (45 percent), and Snapchat (33 percent).
Senior managers tended to be less supportive of connecting with co-workers
on social media, with 54 percent agreeing it is appropriate to connect with
co-workers on Facebook, followed by Twitter (34 percent), Instagram (34
percent), and Snapchat (29 percent).7

In-House Publications and Prerecorded Messages

Many organizations publish internal magazines, newspapers, or information

booklets for employees (in hard copy or electronic formats or both). Their
purpose is to inform employees about current developments and to foster a long-
term understanding about objectives and missions.

Human resource departments often distribute information on various subjects to

employees. For instance, an employee handbook is often given to new employees
to inform them about regulations and benefits. It is important that the information
in employee handbooks be updated regularly and carefully reviewed—in some
instances, information contained in employee handbooks has been used by former
employees in litigation against the organization.
Information on specialized subjects relating to human resource activities—such
as suggestion programs, employee assistance programs, occupational health and
safety, wage incentives, retirement, and fringe benefits—is also frequently
provided, often as online publications. Also, a number of organizations develop
internal video programs for employees to access.

Electronic Communication

Using electronic communications (such as email) is commonplace in most

organizations. However, a recent study revealed that almost 61 percent of
employees ignore emails while working, about one-third report sometimes
ignoring emails from HR, and 5 percent always ignore HR emails. Three in 10
employees never check emails outside of work hours and 44 percent report that if
someone from HR is trying to reach them, sending a text message is preferable to
an email. Almost one in two employees indicated that getting fewer emails would
increase job satisfaction.8

Moreover, using electronic communications (such as Zoom) may not be

appropriate for some employer–employee interactions:

In May of 2020 (about two months into the COVID-19 pandemic), WW

International (formerly known as Weight Watchers) simultaneously
dismissed an undisclosed number of employees by means of a three-minute
Zoom call. Employees logged into Zoom and watched as their boss read
from a prepared script and informed workers that they were being fired.
Nick Hotchkin, the company’s chief financial officer, stated that “It wasn’t
practical to have the conversations be one on one. We decided to restructure
our studio business, and make substantial changes to our corporate structure
and workforce.”9

In addition, more and more employers are using intranets (internal

communications systems that function like a smaller version of the Internet).
Denis Zenkin, an E2.0 expert, calls intranets and HR a “perfect match”:

Zenkin identifies several uses of an intranet by HR specialists, including

information dissemination of HR documents and collection of employee
information, HR transactions (use of eforms), training (such as a slideshow,
video, or text embedded in a wiki), collection of feedback information (such
as surveys and blog posts), community building (for example, tracking
 birthdays and organizing special events), performance management, and
recruitment.10

Firms use intranets for a variety of purposes, ranging from tracking benefit
enrollments to providing copies of employee handbooks, policy manuals, and
company newsletters.11 Human resource departments have found intranet
communication to be particularly effective as a means of updating handbooks and
manuals and in eliminating some of the administrative burden associated with
forms management.

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With intranet communication, the traditional top-down communication system is

altered, with communication opportunities extended to a much larger group of
employees. However, the use of technology needs to be carefully managed.
Although more than half of North American organizations report having a self-
service HR portal, another 20 percent of organizations are working to develop
one. Of those with employee portals, more than six in 10 assess the portals to be
at least somewhat effective.12 Still, technology can be a very valuable tool:

Some organizations are using “assistive technology” (software and/or

hardware) to help both individuals with disabilities and nondisabled
employees. In addition to the continuing development of established
technologies, new apps for use on smartphones and tablets are increasing
productivity for employees with sensory or motor impairments. For
example, next generation screen readers (such as Window-Eyes) can read the
screen content to employees and provide speech and Braille output.
Similarly, technology aimed at assisting motor skill impairments ranges from
speech recognition software to physical assistance, such as the X-Ar (an
exoskeletal arm that supports an employee’s natural range of motion). A
drywaller who had rotator cuff surgery, for example, could use the tool to
hold up their arm for more extended periods of time.13

Many employers have developed policies on Internet usage. Among the issues to
consider are the restriction of the Internet to business purposes, the right of
employers to monitor employee usage of the Internet, and specific prohibitions
(relating to such concerns as copyright, distribution of viruses, or the posting or
downloading of material that is threatening, abusive, defamatory, or obscene). In
addition, firms must be concerned about hackers obtaining confidential company
and employee data.
A seven-step plan to protect the organization from the misuse of electronic
communications includes (1) developing and implementing a policy addressing
electronic communications; (2) being aware of legal issues and limitations
associated with monitoring electronic communications; (3) training employees
and managers concerning the policy; (4) encouraging prompt reporting of policy
violations and immediately addressing all complaints; (5) understanding your
system; (6) examining the available tools for controlling Internet access; and (7)
developing a policy for telecommuting.14

However, a continual online presence can be distracting. According to

ValueWalk, about one-third of employees claim to be distracted by their
organization’s chat messenger while working. More than three-quarters of
employees use company chat messengers and the majority believe that this
technology has led to improved relationships with both co-workers and their
supervisor. About 90 percent of employee use chat messengers to discuss work-
related tasks but 21 percent also use it to gossip and 23 percent to complain about
co-workers, bosses, or the company, with complaints about co-workers being
more common among senior and executive level employees. About two-thirds of
employees avoided certain communications because of concern that the company
may be privy to such messages. Almost 90 percent of respondents reported that
they sometimes or often spoke to a digitally distracted person face-to-face and 94
percent found it annoying. During meetings, 81 percent worked on other work-
related matters and 63 percent worked on personal tasks.15

How often do Canadians use the web? New evidence from Statistics Canada
showed that more than 91 percent of Canadians over the age of 15 use the
Internet at least a couple of times each month. Internet usage has grown
dramatically over the past three years for older individuals, with 71 percent of
seniors reporting using the Internet. About 57 percent of Canadian Internet users
had a cyber-security incident, such as being redirected to a fraudulent website that
requested personal information (19 percent) or getting a virus (11 percent). About
30 percent of employed users said that their employer expected them to be
connected outside regular work hours.16

An issue that has caused some concern for employers revolves around employee
blogs. From an organizational perspective, employers are worried about
employees leaking confidential information about the company (intentionally or
unintentionally), hurting the organization’s reputation, describing the business in
a negative way, or exposing the employer to potential liability. Rather than simply
trying to ban employees from blogging, some organizations are developing a
blogging policy; typical guidelines include writing in the first person (using I) to
make it clear that the views are not those of the company, being aware of the
responsibilities with respect to corporate information, and adhering to
professional standards.17

Workplace social media policies are gaining more and more attention as
employers become increasingly concerned about employee abuse of social media
at work to the detriment of the brand and image of the organization. A recent
study on professionalism in the workplace indicated that about half of HR
professionals believed that IT abuses had increased over the past five years, with
about two-thirds indicating problems with excess tweeting and Facebook use.18

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Social Media and the Use of Mobile Devices

An issue for human resource professionals is the ever-increasing use of mobile

devices by employees. About 43 percent of Millennials check their phone at least
every 20 minutes and a typical user touches, taps, or swipes their phone more
than 2,600 times a day. At work, one in five employees check their phone at least
once every 20 minutes, 80 percent believe it is inappropriate to check your phone
during a meeting but 50 percent do it anyway, 10 percent have had their phone
out during an interview, and more than three-quarters bring their phone to the
bathroom at work.19 Is banning social media use associated with improved
productivity?

In 2016, 100,000 computers used by civil servants in Singapore were

disconnected from the Internet with the goal of increasing security. However,
research by the Pew Centre suggests that banning social media use may not
increase productivity. While employees indicate that the top two reasons for
using social media are taking a mental break from work (34 percent) and
connecting with family and friends (27 percent), other important reasons
include fostering professional connections (24 percent), solving work-related
problems (20 percent), and seeking answers to work-related queries from
other people (12 percent).20

A major concern with the increased use of mobile devices, such as laptops and
tablets, is the security of networks and data. Experts are calling for good mobility
management as part of an enterprise security management system. Concerns
include protecting precious data from attacks and human error and meeting
ongoing changes to privacy laws.

A BMO report revealed that 45 percent of small business owners have a social
media account and three-quarters understand how social media works. Main uses
of social media include promoting products or services (35 percent),
communicating with customers (22 percent), and finding prospective customers
(20 percent). Almost two-thirds plan to make major changes/investments in their
online presence.21

The increasing use of mobile devices is also associated with growing security
concerns. A new study on data breaches revealed that 79 percent of CIOs believe
that employees accidentally put sensitive data at risk (and 61 percent felt that
employees did so maliciously) over the past 12 months. The top reasons for data
breaches included employees rushing and making mistakes (60 percent), lack of
awareness (44 percent), lack of training and security tools (36 percent), and
employees leaking data to harm the organization (30 percent). The most troubling
data breach threats were employees leaking data to a competitor (32 percent),
taking data to a new job (21 percent), leaking data to cybercriminals (21 percent)
and sharing data to personal systems (21 percent). About one in five employees
believed that certain workplace data belonged to them and only 40 percent agreed
that workplace data belong exclusively to the organization. About 13 percent of
employees indicated that they had intentionally shared data because they were
upset with the employer.22

In a study of executives, 33 percent of respondents reported having a social media

policy, 40 percent were considering developing a policy or had other related
policies, and 27 percent had no policy or plans to develop one. While 71 percent
of participants indicated that their company was concerned about risks associated
with social media, only 36 percent provided any type of social media training.
The four biggest concerns were damage to the employer brand, disclosure of
confidential or proprietary information, corporate identity theft, and
legal/regulatory and compliance violations. Almost 60 percent of organizations
did not have a social media risk assessment plan in place.23

With increased reliance on social media and concern by organizations about their
reputation, more and more employers are hiring a chief reputation officer. Most
employers do not have anyone directly responsible for reputation management
with the expertise to address issues related to the reputation of the business.24
Having individuals or departments address reputation issues on an ad hoc basis
may result in inconsistent application of policies by employees who may not have
proper training in reputation management.

The growth in cloud-based tools provides new challenges for organizations with
particular impacts on information sharing, meetings, and communication
throughout the organization. Among the issues for human resource professionals
are social communication (such as integrating social networking capabilities,
blogs, wikis, and activity feeds), unified communication (for instance, instant
messaging; conferencing; Enterprise Voice capabilities using PC, browser, and
mobile devices), rich communication services (such as audio/video calling and
rich online meetings), and accessible software (for instance, being able to access
PowerPoint or Excel from a mobile device or browser).25

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Among the benefits of cloud computing are (1) reduced paperwork, (2) real-time
performance assessments, (3) greater employee engagement (such as the use of
pulse surveys), (4) access to pay and benefits information, (5) less expensive HR
solutions (lower upfront costs than proprietary software), (6) data security (digital
storing of employee information), (7) access to innovation (easy updating using
the cloud), (8) strategic HR (more time and data access), and (9) predictive
analytics (use of AI).26

However, employers need to be aware that social media must be used responsibly.
There is an increasing trend among employers meeting a new job candidate or
client to Google the person or check the individual out on Facebook, Twitter, or
other social networking sites. There are risks to using social media to check an
individual’s background, however. The information may not be accurate or up-to-
date, or you might be obtaining information about the wrong person. Employers
need consent to collect certain information under privacy laws, and collecting
information pertaining to an individual’s background (age, sex, race, etc.) may
make the organization susceptible to a claim of discrimination by the individual.
Under the privacy guidelines, simply viewing the information is considered
collection.27

Due to the COVID-19 pandemic, more and more employees are working from
home. A ServiceNow 2020 study indicated that about one-third of employees
reported lower productivity while working from home. The top barriers to
productivity include technology issues (37 percent) with many workers feeling
that their employer is not providing them with state-of-the-art technology. More
than two-thirds of respondents stressed that work–life balance was very important
to them and more than half indicated that personal responsibilities get in the way
when working from home.28

Information Sharing and Open-Book Management

Some employers provide reports to employees about the organization’s economic

performance. The reasoning is that economic information is as important to
employees as it is to shareholders. The report is often presented in the same style
as the annual report, except that it shows how the annual economic results affect
workers. The release of the report may be followed by meetings that are
organized and conducted in the same way as shareholder meetings. Top
management attends the meetings, and all employees are invited. Management
formally presents the report, and employees are invited to question management
and make proposals in the same way that owners do in stockholder meetings.
These meetings improve communication and give jobholders a stronger feeling of
belonging.

While many companies believe that the firm’s financial performance and budget
goals are not the business of employees, some firms have adopted an approach of
sharing such information with employees. Using open-book management, some
firms are making employees assume more responsibility for the firm’s success.
The basic concepts involve educating employees about how the firm earns profits,
giving workers a stake in the performance of the business, and providing
feedback on how the company is doing.

Should employees be required to respond to email around the clock? A collective

agreement in France contained a provision that addressed the issue, limiting
employee obligations to respond to emails sent after 6:00 p.m. Among the
concerns associated with after-hours emails are demands by employees for
overtime pay, allegations of harassment, higher error rates if people are tired, and
increased employee stress and burnout. In response to such concerns, Edelman
Canada’s Toronto office established a “7 to 7 rule” prohibiting emails outside of
the hours of 7:00 a.m. to 7:00 p.m.29

Upward Communication Systems

Perhaps no area of communication is more in need of improvement in most
organizations than upward communication. Upward communication consists of
information initiated by people who seek to inform or influence those higher up
in the organization’s hierarchy. The cornerstone of all such messages is the
employee and the supervisor. When a free flow of information travels between an
employee and the supervisor, informal day-to-day communication is often
sufficient for most situations. If open communication does not exist, or exists
only for a limited range of issues, other approaches are needed.

How do organizations create open, upward communication? No universal formula

exists—the type of approach used may vary depending on the situation. However,
one common element in many organizations is a genuine concern for employee
well-being combined with meaningful opportunities for ideas to flow up the
organization’s hierarchy. Some of the more common upward communication
channels include the grapevine, HR management and technology, in-house
complaint procedures, manager–employee meetings, suggestion systems, and
attitude survey feedback.

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Grapevine

Grapevine communication is an informal system that arises spontaneously from

the social interaction of people in the organization. It is the people-to-people
system that arises naturally from human desires to make friends and share ideas.
For instance, two employees chatting at the water cooler about their problems
with a supervisor is a grapevine communication. The COVID-19 pandemic is
having a major impact on traditional face-to-face grapevine communication.

The grapevine provides a large amount of useful off-the-record feedback from

employees. There are many opportunities for feedback because human resource
specialists are in regular contact with employees as they discuss benefits, counsel
employees, and perform other functions. Employees feel somewhat free to talk
with human resource specialists since the occupation of human resource
management is oriented toward helping people, and human resource specialists
do not directly supervise employees in other departments. Some of the types of
grapevine feedback that come to the human resource department include
information about employee problems, the quality of labour–management
relations, important grievance issues, areas of job dissatisfaction, difficulties with
supervisors, and acceptance by employees of changes within the organization.
However, the Internet and the use of social media have radically changed how
employees communicate.
 Fabio Cardoso/Getty Images

An informal gathering around the water cooler or coffee station is one

method by which employees exchange information and also gossip and
rumours. What can management do to curtail rumours?

Human Resource Management and Technology

Technological advancements have paved the way for the growth of working
remotely, and this has been accelerated by COVID-19. An HSBC survey of more
than 2,500 businesses in 14 countries revealed that about 37 percent of firms
expect remote working to become the norm over the next two years, but only one
in five companies report that their infrastructure and culture are sufficiently agile.
Globally, 35 percent of organizations report supporting a culture of innovation
and 27 percent report a culture of inclusivity. More than half anticipate more
virtual internal and external meetings.30

Using workplace surveillance is not new, but technological advances let

employers monitor employee actions in detail. Consider talent management
 company Crossover, where photos of employees (even those working
remotely) are taken every 10 minutes using its productivity tool WorkSmart.
Screenshots of employee work stations in combination with other data such
as app use and keystrokes are used to calculate productivity scores for
employees. Other employers can monitor activities such as web-use patterns,
text messages and emails, screenshots, social media posts, and private
messaging apps, and examine trends and deviations in use.31

Having a record of email communications may be helpful to a party involved in

litigation—in the case described below, an examination of email messages may
be more helpful to the dismissed employee:

During a wrongful dismissal trial in which a CIBC portfolio manager was

terminated after a margin-related glitch cost his clients $35 million, a judge
ordered that the approximately 3,500 emails in the employee’s account
should be made available by CIBC to his lawyers. The judge stated that the
emails could aid the court in determining whether trades made by the
employee were properly authorized by CIBC.32

While a lot of focus on the use of social media has been on the concern for abuse,
social media may prove to be a valuable tool for HR professionals. Some of the
benefits cited include mentoring (such as one-to-many, using blogs; or many-to-
many, using forums), performance management (and the provision of timely
feedback), leadership (transparency and visibility), e-recruiting (trying to attract
both active and passive candidates), and communications (timely messages,
information, and feedback to employees and customers).33

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An issue that is beginning to impact employers is the growing use of “wearables”

at the workplace. Wearables include activity monitors (which can track an
individual’s body behaviour), head-mounted displays (such as Google Glass and
GoPro), and smart watches. Associated with such devices are key questions
relating to privacy. For example, while a device that monitors employee health
conditions may allow an employer to improve productivity, reduce injuries, and
enhance employee wellness, there are major issues relating to employee privacy
and concerns over hacking and data theft, who can access the data, and the use of
the information against a current or prospective employee:34
 A global study of corporate surveillance and employees found that 22
percent of organizations were tracking employee-movement data, 17 percent
were tracking computer-usage data, and 16 percent were monitoring
Microsoft Outlook or other calendar-usage information. New technology is
changing the workforce. Although not in use yet, Amazon recently received
a patent for an ultrasonic bracelet that can monitor an employee’s location
and when the person accesses an item in an inventory bin using ultrasonic
sound pulses. Employers believe that using employee data can increase
productivity but employees are concerned about privacy and how the
organization is using the data (for instance, to increase productivity, enhance
safety, or discipline workers). Almost two-thirds of employees stated that
they were concerned about breaches of their personal data.35

In-House Complaint Procedures

How does an employee solve a problem if the supervisor is not willing to discuss
it? In some organizations, the employee has no other option except to talk with
the supervisor’s superior. Although that may seem reasonable, most people in
organizations are very reluctant to do that because they do not want to create
negative feelings between themselves and their supervisor. To lessen the burden
of “going over the supervisor’s head,” some organizations have installed in-house
complaint procedures.

In-house complaint procedures are formal methods through which an employee

can register a complaint. Normally these procedures are operated by the human
resource department and require the employee to submit the complaint in writing.
Then, an employee relations specialist investigates the complaint and advises the
employee of the results. In some companies, the employee’s name is known only
by the employee relations investigator. However, if a supervisor is questioned
about the issue, it may be obvious who filed the complaint.

In recent years, there has been growing interest in alternative dispute resolution
(ADR) programs. The goal of ADR is to resolve disputes in a timely, cost-
effective manner. Some types of ADR programs include the following:

1. An open-door policy in which an employee is encouraged to meet with their

supervisor or another member of management to resolve workplace conflict.

2. A peer review panel, or ombudsperson, who hears an employee’s

presentation of the problem and makes recommendations. While the
 composition of the peer review panel may vary, a typical structure involves
two individuals from a similar job classification as the employee and one
management representative. It is estimated that about 90 percent of disputes
getting to peer review are settled at this level.

3. Mediation, in which a neutral third party meets with the parties and tries to
resolve the issue. Although the mediator cannot impose a settlement, their
involvement is often instrumental in resolving the conflict.

4. Arbitration, in which a neutral third party hears both parties’ views of the
case and makes a binding decision. While arbitration is common in
unionized environments, it is also becoming more popular as a means of
resolving disputes in nonunion settings.36

The previous two decades have seen considerable growth in the presence of a
grievance system for nonunion employees. A nonunion grievance procedure can
be defined as one that is in writing, guarantees employees the right to present
complaints to management, and is communicated to employees.37 In setting up a
nonunion grievance procedure, several issues exist. Some questions to consider
are as follows:

What subjects may be grieved? For example, can disciplinary actions be

grieved?

Are all nonunion employees eligible to participate in the procedure?

Are employees protected from retaliation if they use the procedure?

Must the grievance be filed in writing? Are there time limits for employee
filing and management response?

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How many steps will the grievance procedure contain? Can an employee
bypass their supervisor? What are the specific steps in the procedure?

Does the employee have the right to be present throughout the procedure?
Can the employee have someone else (such as another employee, human
resource staff member, lawyer) present the case? Can the employee call
witnesses?
 What is the final step in the procedure? For instance, who ultimately
resolves the issue? Some options include a senior line manager, HR
professional, a panel (which can be comprised of just managers, managers
and employees, or just employees), or outside arbitration.38

It is important that grievance procedures be fair to both employers and

employees. Consider the following: Part of the standard form driver contract for
Uber drivers included a clause requiring disputes to be settled through mediation
and arbitration in the Netherlands. The clause required drivers seeking to resolve
a dispute to pay US$14,500 in up-front filing and administration fees (and the fee
did not include travel expenses, legal fees, or other costs of disputing). The
Supreme Court of Canada concluded that the clause was unconscionable and
consequently invalid, thus paving the way for drivers to settle claims by a court in
Ontario.39

Manager–Employee Meetings

Closely related to in-house complaint procedures are meetings between managers

and groups of employees to discuss complaints, suggestions, opinions, or
questions. These meetings may begin with some information sharing by
management to inform the group about developments in the company. However,
the primary purpose of these meetings is to encourage upward communication,
often with several levels of employees and lower-level management in attendance
at the same time. Attendance at such meetings varies according to how the
meetings are planned. In small facilities, it may be possible to get all the
employees together annually or semi-annually; however, this does not reduce the
need to keep in touch with employees on a regular basis. In some organizations,
there is a growing focus on virtual meetings. Depending on the employer
structure, different meeting formats may be needed:

One major bank’s Open Meeting Program arranges meetings of about a

dozen employees at a time. Meetings are held with different groups until at
least one in five employees from each department attends. Employees are
selected randomly and may decline to participate if they wish. A human
resource specialist coordinates each meeting and develops the group report
on a newsprint sheet in open discussions with the group. No employee
names are used in the report, which becomes the basis of action plans with
management. The program is repeated annually, and it has significantly
improved upward communication.
Does an employer or employee have the right to record performance review or
disciplinary meetings? Employment lawyer Lisa Stam notes that recording a
conversation you are part of is not a crime but recording one you are not a part of
is criminal. However, an employee recording a conversation without consent of
the other party may be in breach of a workplace privacy policy. Although
smartphones easily allow employers and employees to secretly record
conversations, having a policy prohibiting such activity without the consent of all
involved parties is desirable.40

Suggestion Systems

Suggestion systems are formal methods for generating, evaluating, and

implementing employee ideas. All three of these elements are crucial to a
successful suggestion system.

A successful suggestion system begins with the employee’s idea and possibly a
discussion with the supervisor. The suggestion system office or committee
evaluates the idea, and the decision is communicated to the employee. If it is
considered a good idea, implementation follows, with the employee receiving
recognition and usually some award (often awards are equal to about 10 percent
of the first year’s savings from the suggestion).

Although most suggestion systems pay employees a percentage of the first-year

savings, some companies pay a flat dollar amount in order to minimize the need
for precision in evaluating the suggestion’s exact dollar savings. This approach
means that employees receive feedback about their suggestions much faster. In
addition, organizations that place a higher focus on teamwork may need to
revamp their suggestion system program to reflect a group contribution. For
suggestion systems to work, management must provide prompt and fair
assessment of the ideas, supervisors must be trained to encourage employee
suggestions, and top management must actively support the program.

While suggestion systems can work in government, there is some evidence that
they are harder to implement because management changes when a new
administration takes over. This results in variations in the types of suggestions
that are made.41

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Employee Attitude/Opinion Surveys

What do employees think about the organization? Do they have problems or
concerns? How engaged are the employees? Do they understand the human
resource department’s benefit plan? Compensation program? Career planning
efforts? Answers to these and many other questions can make a useful addition to
the human resource department’s information system.

An employee attitude/opinion survey is a systematic method of determining what

employees think about their organization. While surveys may be conducted
through face-to-face interviews, they are usually done through questionnaires that
employees complete anonymously. Many organizations are now using web
technology to conduct employee surveys.

An employee survey typically seeks to learn what employees think about working
conditions, supervision, human resource policies, and other organizational issues.
New programs or special concerns to management also may be a source of
questions. The resulting information can be used to evaluate specific concerns,
such as how individual managers are perceived by their employees.

Attitude/opinion surveys can be a frustrating experience for employees if they do

not receive any information on the survey results. Therefore, a summary of the
survey results should be provided to employees for their reaction. In addition,
employees need to see that the survey findings result in problems being solved.
Feedback of the results and action on the problem areas make survey feedback a
powerful communication tool.
LO2 Employee Counselling
Counselling is the discussion of a problem with an employee, with the
general objective of helping that employee resolve the issue or cope with
the situation so that the person can become more effective both at work and
away from the workplace:

One company has a program available to employees and their families

that covers both personal and work-related problems. The company
maintains a 24-hour hotline and uses both company counsellors and
community agencies. The service is strictly confidential. An average of
750 employees use the service each month. Many successes have been
reported, although the program is unable to solve every employee
problem. A study of alcohol-dependent employees reported a
remarkable 85 percent reduction in lost work hours, a 47 percent
reduction in sick leave, and a 72 percent reduction in sickness and
accident benefit payments. In a survey, 93 percent of the employees
reported that they believe that counselling is a worthwhile service.

Some firms advise managers to avoid giving personal advice to employees

that is not related to the job because the managers are not professionally
qualified to do so. There is a chance that they will give inappropriate or
wrong advice that aggravates an employee’s problem. A growing number of
organizations have formal arrangements with outside professional
counselling agencies to help their employees.

Employee Assistance Programs

Organizations may establish an employee assistance program (EAP) to
assist employees with personal problems (such as family or marital
difficulties, substance abuse, or stress) that may be affecting their
performance at work.

While a number of employees may prefer a face-to-face meeting with an

EAP counsellor, there is a substantial growth in digital EAPs (such as chat
messaging, e-counselling, video counselling, and mobile apps). For
instance, use of mobile health apps tripled from 16 percent in 2014 to 48
percent in 2018 and health technology can be used to enhance EAPs. In
addition to digital EAPs, digital platforms can also provide additional
services including cognitive behavioural therapy sessions, benefit
information, and health care provider searches.42

Privacy, security, and quality issues are obviously important, but digital
EAPs allow workers to get assistance around the clock from local and
remote locations.52 However, online services are not appropriate for every
case; rather, they represent one of a number of alternative approaches to
providing EAP services.
LO3 Employee Discipline
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Even after counselling, there are instances where an employee’s behaviour

remains inappropriately disruptive or performance is unacceptable. Under
these circumstances, discipline is needed. Discipline is management action
to encourage compliance with organization standards. It is a type of action
that seeks to inform employees about organizational expectations and
change worker attitudes and behaviour.

There are two types of discipline: preventive and corrective.

Preventive Discipline
Preventive discipline is action taken prior to an infraction to encourage
employees to follow standards and rules. The basic objective is to
encourage self-discipline among employees. In this way, employees
maintain their own discipline, rather than having management impose it.

Management has the responsibility for building a climate of preventive

discipline. If employees do not know what standards are expected, their
conduct is likely to be erratic or misdirected. Employees will better support
standards that they have helped to create.

The human resource department has a major responsibility for preventive

discipline. For example, it develops programs to manage absenteeism and
employee grievances. It communicates standards to employees and
encourages employees to follow them. It also provides training programs to
explain the reasons behind standards and to build a positive spirit of self-
discipline.

Corrective Discipline
Corrective discipline is an action that follows a rule infraction. It seeks to
discourage further infractions so that future acts are in compliance with
standards. Typically the corrective action is a penalty of some type and is
called a disciplinary action. Examples are a warning or suspension without
pay. The objectives of disciplinary action are as follows:

To reform the offender

To deter others from similar actions

To maintain consistent, effective group standards

The objectives of disciplinary action are positive, educational, and

corrective. The goal is to improve the future rather than punish past acts.
The corrective disciplinary interview often follows a “sandwich model,”
which means that a corrective comment is sandwiched between two
positive comments in order to make the corrective comment more
acceptable. An example: “Your attendance is excellent, Jason (a positive
comment), but your late return from coffee breaks disrupts our repair
operations (negative). Otherwise, your work is among the best in our
department (positive).” The supervisor then focuses on ways in which the
two of them can work together to correct the problem. However, corrective
discipline is frequently not used or not used properly. Many managers
receive little or no training in addressing employee discipline or in the
consequences if the disciplinary process is not managed effectively.

Restrictions on Discipline
The ability to discipline may be restricted by union contracts and
government legislation. Corrective discipline is an especially sensitive
subject with unions, who may see it as an area where employees need
protection from unreasonable management authority. In addition, the union
wants to show employees that the union leadership cares for their interests.

Government legislation makes it illegal for an employer to discipline a

worker who is asserting rights protected by law. For example, an employee
cannot be disciplined or dismissed for union activities (the right to
participate in union activities is protected under labour relations statutes) or
for refusing to perform work that is hazardous, unsafe, or unlawful. Other
employment restrictions may also apply, depending on the circumstances
and the laws of the provinces concerned.

Due process for discipline may be required of the employer by courts of

law, arbitrators, and labour unions. Due process means that established rules
and procedures for disciplinary action need to be followed and that
employees are provided an opportunity to respond to allegations or
complaints made against them. It is the human resource department’s
responsibility to ensure that all parties in a disciplinary action follow the
proper rules and procedures so that due process will be used.

If a disciplinary action is challenged, the human resource department must

have sufficient documentation to support the action; therefore, human
resource policy should require proper documentation for all employer
disciplinary actions.

Page 294

Proper documentation should be specific, beginning with the date, time, and
location of an incident. It should also describe the nature of the undesirable
performance or behaviour and how it relates to job and organizational
performance. Specific rules and regulations that relate to the incident must
be identified. Documentation should include what the manager said to the
employee and how the employee responded, including specific words and
actions. If there were witnesses, they should be identified. All
documentation must be recorded promptly, when the incident is still fresh in
the memories of the parties. The evidence recorded should be objective, that
is, based on observations, not on impressions.

A useful guide for corrective discipline is the hot-stove rule, which states
that disciplinary action should have the same characteristics as the penalty a
person receives from touching a hot stove: Discipline should be with
warning, immediate, consistent, and impersonal.

Progressive Discipline
Most employers apply a policy of progressive discipline, which means that
there are stronger penalties for repeated offences. The purpose of this is to
give an employee an opportunity to take corrective action before more
serious penalties are applied. Progressive discipline also gives management
time to work with an employee to help correct infractions.

A typical progressive discipline system is shown in Figure 11-2. The first

infraction leads to a verbal reprimand by the supervisor. The next infraction
leads to a written reprimand, with a record placed in the file. Further
infractions result in stronger discipline, leading finally to discharge.
Usually, the human resource department becomes involved at the third step
or earlier to ensure that company policy is applied consistently in all
departments.

FIGURE 11-2

A Progressive Discipline System

Table Summary: Summary

1. Verbal reprimand by supervisor

2. Written reprimand, with a record in file

3. One- to three-day suspension from work

4. Suspension for one week or longer

5. Discharge for cause

It is essential that employers document efforts made to help employees. One

possible program involves four steps:
 1. Clearly indicate in writing the nature of the problem and the impact of
the employee’s performance or conduct on the organization.

2. Provide the employee with a clear and unequivocal warning that

failure to improve behaviour will result in discipline (up to and
including termination).

3. Establish through progressive discipline that the employee’s

performance was still unacceptable despite repeated warnings.

4. Demonstrate that discipline was applied in a fair and consistent

manner.43

Some progressive systems allow minor offences to be removed from the

employee’s record after a period of time (typically between one and five
years). However, serious offences, such as fighting or theft, are usually not
dealt with by means of progressive discipline. An employee who commits
these offences may be discharged on the first offence.

In some organizations, lawyers play an important role in the disciplinary

process, while in others they are consulted after a problem arises. More than
one-quarter of HR professionals view their lawyer or legal team as a
strategic partner, while 46 percent use lawyers only for transactional
assistance. A Canadian HR Reporter survey indicated that lawyers are most
likely to be consulted for certain issues, such as terminations (87 percent),
wrongful dismissal lawsuits (40 percent), employment contracts and hiring
(37 percent), accommodation and return to work (32 percent), and
harassment claims (31 percent).44

While progressive discipline is frequently used in managing employee

behaviour and discipline, it has been asserted that performance coaching is
a better approach. Progressive discipline requires that managers follow a
prescribed framework which is time-consuming and bureaucratic, fails to
let managers evaluate a problem in a thoughtful way, and doesn’t really deal
with an employee unwilling to change behaviour.

Performance coaching involves preparing in advance for a conversation

with an employee with a focus on citing clear examples of improper
behaviour or performance, and how the behaviour affects the employee, the
supervisor, co-workers, and other stakeholders. Next, probe for causes of
the behaviour to uncover the reasons behind the behaviour. Finally,
facilitate resolutions (rather than just provide them). Work with the
employee to fix the problem and provide your support.45

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Positive Discipline
Instead of using punishment to discipline employees, some organizations
employ an approach called positive discipline. Positive discipline is a
process that highlights the positive aspects of an employee’s behaviour and
explains what positive employee actions the employer is seeking, with a
focus on behaviour and outcomes. The objective is to frame the discussion
in such a way that the two parties are working together to achieve their
goals and objectives, rather than punishing an employee for inappropriate
behaviour.46

While employee discipline may be viewed as a process of control, some

experts assert that there is a better approach for today’s workplace. A recent
SHRM article by Randy Pennington suggests that a collaborative approach
to discipline, based on treating employees as valued partners, emphasizing
mutual respect, and expecting accountability, is preferable to the old top-
down disciplinary approach (and is especially appropriate for Millennial
employees). Pennington observes that disciplinary interviews are difficult
but offers four suggestions:

1. Focus on the conversation, not the disciplinary action.

2. Change the name of the disciplinary steps (from reprimand and

warnings to notice and conversation).

3. Provide employees with an opportunity to clear their record.

4. Avoid unpaid suspensions.47

Dismissal
The ultimate disciplinary action is dismissal, which is separation from the
employer. According to one former CEO:

“Building a new culture also means you get rid of people who aren’t
prepared to accept best practices and move toward that. You cannot
afford to have a naysayer on the team. If someone’s not in support, you
have to take them out of the company.”48

A nonunion employer who does not have just cause for dismissing an
employee may be sued for wrongful dismissal. Consider the experience of
one small business:

The owner of a small business with 18 employees terminated a

manager who had been with the firm for 22 years. Although there was
no documented evidence to support his claim, the owner said that the
manager’s performance had been slipping over the past few years.
Shortly after being released, the employee contacted an employment
lawyer and the parties settled out of court for in excess of $100,000.
The business owner had never heard of the law of wrongful dismissal,
and the settlement put the business in jeopardy.

The law of wrongful dismissal is very complicated, and human resource

professionals without considerable expertise in this area are advised to seek
prudent legal advice. Note that the dismissal of unionized employees
(slightly less than 30 percent of the nonagricultural workforce) is governed
by the provisions of the collective agreement, and the remedy exists with
the grievance arbitration process (see Chapter 13). Save for a few
exceptions, an employer can terminate a nonunion employee at any time if
just cause exists; however, in the absence of just cause, the employer is
usually obligated to give the former employee “reasonable notice” or
compensation in lieu of notice.
All provinces and the federal jurisdiction have employment standards
legislation providing minimum periods of notice for employees terminated
without cause. The amount of advance notice an employer is required to
give an individual is dependent on the employee’s length of service with the
employer, and some jurisdictions have specific notice periods that apply if
the employer engages in a mass layoff or termination. However, the
provisions under employment standards legislation are statutory minimums,
and the amount of reasonable notice awarded by the courts frequently
exceeds such provisions.

One human resource manager indicated that the company’s practice

was to provide the minimum notice provisions under employment
standards legislation if terminating an employee. The reason for this
approach was simply that the manager was uninformed about the law
of wrongful dismissal.

Page 296

Three jurisdictions (federal, Quebec, and Nova Scotia) provide an

alternative forum for some wrongfully dismissed employees meeting
specified period of service requirements (10 years in Nova Scotia, five
years in Quebec, and one year for the federal jurisdiction). While the
provisions of the statutes vary, the thrust of the legislation is to permit
employees to bring their cases to an adjudication process in which the
adjudicator may order reinstatement and damages if sufficient cause for
dismissal does not exist. The specifics of the legislation are quite detailed,
and legal assistance is advised.

Determining Just Cause

Cause for dismissal under common law includes any act by the employee
that could have serious negative effects on the operation or reputation of the
organization. This typically includes incompetence and employee
misconduct (such as fraud, drunkenness, dishonesty, insubordination, or
refusal to obey reasonable orders). The onus for proving the existence of
just cause is on the employer.49 Ideally, there is a carefully planned
termination interview to ensure that the separation is as positive and
constructive as possible—the Supreme Court of Canada has ruled that an
employer must act in a way that demonstrates good faith and fair dealing in
the dismissal of employees.50

While an employer may terminate an employee at any time if just cause

exists, the courts’ interpretation of what constitutes just cause for dismissal
is often much different from managers’ perceptions of cause. Note that in
many instances, cases are settled out of court:

An executive of the Nova Scotia Liquor Corporation was terminated

after eight months of service. The employer asserted that the individual
did not fit in and failed to get along with other executives. The former
employee was given a severance package that included six months’
pay and a bonus (for a total compensation package of $62,000).51

When considering federally regulated employees, the Supreme Court of

Canada in Wilson v. Atomic Energy of Canada held that there is an onus on
employers to provide reasons why dismissal is appropriate and that
employment contracts giving the employer the right to terminate without
just cause are unenforceable. In addition, even if an employee is provided
with notice and given severance, this will not prevent the individual from
claiming unjust dismissal under the Canada Labour Code.52

Incompetent Work Performance

When considering dismissal on the basis of incompetence, the employment

contract contains an implied warranty that the employee is “reasonably
competent” and able to perform the work for which the person was hired. If
the employee proves to be incompetent, the employer may dismiss the
employee on the basis of just cause.

However, employers and the courts often differ in their assessment with
respect to cause involving dismissal for incompetence. Employers were
able to establish employee incompetence in less than 25 percent of the cases
in which they argued just cause for termination on the basis of
incompetence—establishing cause on the grounds of incompetence is not
easy (see Figure 11-3).
 FIGURE 11-3

Requirements in Dismissing an Incompetent Employee

Table Summary: Summary

1. The employer must provide reasonable, objective standards

of performance in a clear and understandable manner.

2. The employee must fail to meet those standards.

3. The employer must have given the employee a clear and

unequivocal warning that she or he has failed to meet the
standards, including particulars to the specific deficiency.

4. The warning must clearly indicate the employee will be

dismissed if she or he fails to meet the requisite standards.

SOURCE: Andrew Treash (2011, September 26), “Terminating

Underperforming Employees a Delicate Act,” Canadian HR
Reporter, p. 26.

Page 297

The employer must establish real incompetence, an inability to carry out

job duties, or substandard work performance that fails to improve even after
the employee has been put on notice that their performance is not adequate.
Performance standards must be nondiscriminatory, reasonable, and applied
fairly, while warnings must clearly describe what constitutes acceptable
performance and what specific actions the employee should take to improve
performance. Merely giving an employee average or substandard ratings is
not enough. Also, the employer should make it clear to the employee that
their job is at risk if performance does not improve. A single incident of
incompetence will rarely justify dismissal, especially if the incident is a
single blemish on an otherwise clean work record.

Employee Misconduct

The courts have repeatedly found that an allegation of employee

misconduct must be decided with reference to the unique factors of each
case. Four classes of misconduct identified in the case law include (1)
unfaithful service to the employer; (2) misconduct of a general nature; (3)
theft, fraud, or dishonesty; and (4) willful disobedience of a reasonable and
lawful order.

Acts of unfaithful service, such as conspiracy and competition against the

employer or serious conflict of interest, are generally regarded as being in
that class of misconduct justifying immediate dismissal. The employer’s
case is relatively straightforward when there is an intent on the part of the
employee to commit an act of unfaithful service and the threat of loss to the
employer is real.

What about cases involving drug or alcohol abuse; abuse of co-workers,

clients, or customers; or improper activity outside the workplace? In
determining whether the misconduct is sufficient to justify dismissal, the
courts consider both the nature of the misconduct and the employee’s
position within the organization. A serious act of misconduct may justify
immediate discharge. In addition, employees in senior management or in
positions of trust (such as a teacher) may be held to higher standards of
conduct regarding misconduct both at and away from the workplace.

Consider the following case and decide if there is cause for dismissal.
The case involved two Research in Motion (now BlackBerry) vice-
presidents who became drunk and disorderly on an Air Canada flight
from Beijing to Toronto. Their behaviour became so bad that flight
attendants and passengers had to subdue the two men, one of whom
even chewed through his plastic handcuffs. The men received
suspended sentences, one year’s probation, and a requirement that each
 pay about $35,000 to Air Canada. In this case, RIM fired the two
executives.53

Theft, fraud, and dishonesty are among the most serious grounds for
dismissal because they call into question the honesty and integrity of the
employee. Depending on the circumstances, a single isolated act of theft,
dishonesty, or fraud may justify dismissal, but the court carefully reviews
any explanation for the employee’s behaviour. Employers may be justified
in worrying about employee theft and fraud:

A survey of almost 3,500 employees in the United States, United

Kingdom, and Australia revealed that 22 percent of American, 29
percent of Australian, and 48 percent of British workers with access to
employer or client confidential data would feel comfortable doing
something (intentionally or accidentally) with that data, and 10 percent
of American, 12 percent of Australian, and 27 percent of British
workers reported that they would be willing to forward the data to a
nonemployee.54

Willful disobedience (which may include absenteeism, tardiness, or a

breach of rules or policy) is considered to constitute a repudiation of the
employment contract. An employee who refuses to obey the lawful and
reasonable order of the employer is in breach of the employment contract.
However, disobedience must be seen to be willful or deliberate; petty
disagreements and personality conflicts usually do not amount to cause.
Furthermore, a reasonable excuse for disobedience will negate the intent
required for cause.55

A survey on employee misconduct by ClearView revealed that 42 percent

of Canadian workers have witnessed incidents of misconduct. Among the
violations were misuse of company property (28 percent); harm to other
employees (25 percent); privacy violations (17 percent); fraud (17 percent);
conflict of interest (13 percent); environmental violations (12 percent); and
bribery, corruption, or both (9 percent). However, 48 percent of employees
witnessing misconduct did not report it due to such reasons as a lack of
faith that an investigation would be conducted properly (69 percent), a
perception that disciplinary measures would not be consistently applied (66
percent), or a fear of retaliation or negative consequences (23 percent).56

Business or Economic Reasons

Contrary to the impressions of many managers, courts have consistently

held that terminating an employee because of business or economic factors
is not just cause for dismissal because such factors are not related to the
employee’s behaviour. It is critical that employers seeking to dismiss
employees due to declining demand or as a result of an organizational
downsizing ensure that terminated employees are provided with reasonable
notice or appropriate compensation. It is advisable to seek legal assistance
to review the process and compensation or severance package offered to
terminated employees.

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Constructive Dismissal
Rather than terminate an employee, an employer may decide to change the
individual’s job in such a way that the employee decides to quit. A major
change in the employment terms that results in an employee’s resigning
may be considered as constructive dismissal. Some examples of
constructive dismissal include a significant change in job function, a
demotion, a demand for an employee’s resignation, or a forced transfer.57
The law relating to constructive dismissal is technical in nature, and human
resource professionals are advised to seek legal advice prior to changing a
major term of an employment contract. Consider the issue of layoffs during
COVID-19:

Although many employers during the pandemic believe that they have
the right to temporarily lay off employees, employment lawyer Stuart
Rudner explains that temporary layoffs may constitute a constructive
dismissal. An employer who has an employment contract permitting
layoffs or who is able to obtain employee agreement to layoffs would
not be considered to have constructively dismissed an employee.
 Simply imposing temporary layoffs may be entirely reasonable during
the pandemic but could constitute a constructive dismissal.58

In its 2015 decision in Potter v. New Brunswick Legal Aid Services

Commission, the Supreme Court of Canada identified two branches of
constructive dismissal (a single act by the employer that breaches an
essential term of the contract or a series of acts that, in combination, show
that the employer no longer wants to be bound by the employment
contract). The court made it clear that an administrative suspension cannot
be justified if there is no basic communication with the employee or no
reason for suspension is given. The court also underscored the importance
of an employer’s acting in good faith in dealing with an employee and that
this requires being honest, forthright, candid, and reasonable.59

A recent Ontario case (Morningstar v. Hospitality Fallsview Holdings)

involved a claim of constructive dismissal on the basis of injury stemming
from co-worker harassment and bullying. The decision established the
principle that an employee alleging a psychological injury due to
harassment or bullying at work may not go to court but rather seek damages
under the Workplace Safety and Insurance Act.60

Reasonable Notice
An employer that does not have just cause for dismissal must provide a
dismissed employee with “reasonable notice” or compensation (typically
salary, benefits, and reasonable job search expenses) in lieu of notice. While
several managers believe that the organization need only provide the
minimum notice period outlined under employment standards legislation,
these provisions are only minimums and courts may (and frequently do)
award much greater notice periods. Further, establishing just cause at
common law does not mean that an employer will also always have
sufficient cause under provincial labour or employment standards
legislation to avoid providing minimum statutory severance.61

The major factors used to predict notice include the following:

 The former employee’s age, length of service, salary, and occupational
status: On average, older employees, long-service employees, more
highly paid employees, and employees occupying more senior
positions in the organization tend to receive higher periods of notice.
However, the character of employment variable (an employee’s
position and responsibilities) has come under criticism in recent case
law.

An attempt to mitigate losses: Employees who are terminated must

make reasonable efforts to find similar alternative employment.

A less favourable labour market: When alternative employment

opportunities are limited, courts tend to award greater notice periods.

While each case is settled based on its own particular facts, some guidelines
relating to wrongful dismissal have been developed. However, these are
only guidelines to provide some guidance to students relating to wrongful
dismissal awards. Based on the guidelines, an employee in a clerical/blue-
collar position will receive about two weeks’ notice (or compensation in
lieu of notice) for each year of service; an employee in a supervisory or
lower-level management position will receive three weeks’ notice (or
compensation) for each year of service; and senior management and
professional employees will receive one month’s notice (or compensation)
for each year of service. In the past, it has been rare (but not unheard of) for
notice periods to exceed 24 months.62

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The law firm of Samfiru Tumarkin has developed an app to calculate

severance pay. The app looks at factors such as an employee’s union status,
age, salary, length of service, and type of job to give an estimate of
severance.

Do employees have to give notice? Although labour standards legislation

may require an employee to provide notice of resignation, the period is
typically a week or two. However, if any employee fails to provide
reasonable notice of resignation (or the notice provided in the employment
contract), the employer may sue for damages (such as lost business or costs
of recruiting another employee) arising from the contractual breach.63
Consider the following case:

Sebastien Marineau-Mes, an executive with BlackBerry, signed a

contract with the company. Among the terms of the agreement was a
provision providing for the right to resign at any time upon providing
six months’ prior written notice and the obligation to provide active
service during the notice period. Marineau-Mes wasn’t happy at
BlackBerry and decided to join Apple without giving the six months’
notice. An Ontario court held that the notice period was reasonable and
the contract was binding, thus requiring Marineau-Mes to satisfy the
terms of the agreement.64

An employer has the right to provide “working notice” and have employees
continue working during the notice period. The Target withdrawal from
Canada included a minimum of 16 weeks’ compensation to employees.
However, the company had employees continue working for at least some
of the notice period and then receive payment from a $70 million trust fund
as a top-up or pay in lieu of notice. An employee refusing to work would
have been viewed as having resigned and would not have been entitled to
additional compensation. Having employees work during the notice period
may be cost effective but often results in lower morale, reduced
productivity, and sometimes even sabotage.65

The “Wallace Effect”

The 1997 decision of the Supreme Court of Canada in Wallace v. United
Grain Growers has led to the awarding of extended periods of notice in a
number of wrongful dismissal cases in which the employer was found to
have terminated an employee in bad faith. In the Wallace case, the court
ruled that the employer had dismissed Wallace in “bad faith” and thus
added an additional nine months onto a reasonable notice award of 15
months. However, as MacKillop, Nieuland, and Ferris-Miles observe, the
trend in recent decisions has been to close the floodgates relating to
punitive damage claims.66
In the Honda Canada v. Keays case, the Supreme Court of Canada
addressed the issue of Wallace damages. Employment lawyer Stuart Rudner
noted the following:

The Supreme Court of Canada completely revamped the manner in

which bad-faith damages are calculated. The court replaced the notice
extension with a compensatory approach that appears to require the
employee to prove not only that the employer acted in bad faith but
that the employee actually suffered damages as a result. The court also
determined that punitive damages are restricted to advertent wrongful
acts that are so malicious and outrageous that they are deserving of
punishment on their own.67

Managing the Dismissal

There are several guidelines to follow in dismissing an employee:

Prepare for the interview and conduct a rehearsal.

Conduct the interview in private.

Consider the dismissal process from the employee’s perspective and

ask, “How would I like to be treated in such a situation?”

Get to the point. Some experts suggest that you convey the message of
termination within the first few sentences.

Select the time and place. Experts often suggest a meeting in the
morning and during the middle of the week.

Have any necessary information ready (such as a severance package

and outplacement counselling assistance).

Notify others in the organization and ensure that the individual’s duties
are covered.

In some instances, special security arrangements may be necessary.

 Discuss the process with other colleagues who have had to terminate
employees.68

For an example of how not to dismiss an employee, consider the following

case:

Gail Galea joined Walmart Canada in 2002 as a district-manager-in-

training and was ultimately promoted to vice-president of General
Merchandising. In 2010, Galea was removed from her role and given
different responsibilities and one month later was transferred from the
senior management team to a supporting position. Later in the year, her
performance was rated lower so that she was not eligible for
promotion, her personal effects were moved to another office, and in
November 2010 she was offered either a position below her experience
or a severance package. Ten days later, she was terminated, and 11
months later her benefits were cut off (even though she had signed a
noncompete agreement assuring her of two years’ severance if she was
dismissed without just cause). Galea sued Walmart for the remaining
severance and punitive and moral damages. The Ontario Superior
Court awarded her more than $1.6 million, including $750,000 in
moral and punitive damages. According to Galea’s lawyer, Natalie
MacDonald, “This is about how not to dismiss an employee. This is
about how not to embarrass and humiliate an employee, and how an
organization must conduct itself throughout as appropriate.”69

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Should employers specify a notice period in employment contracts? As

lawyer Tim Mitchell points out, this practice is not without its dangers and
any attempt to limit the notice period to statutory minimum periods outlined
in employment or labour standards legislation must be based on clear and
unambiguous language. According to Mitchell, it is essential to recognize
“the importance of careful drafting in an employment contract and the
importance of reviewing the contract periodically, particularly where some
change has occurred. The providing of a specific notice entitlement is a
dangerous practice based on the jurisprudence.”70
What should an employer do when terminating an employee who may be
potentially violent? Among the suggestions are trying to identify the high-
risk worker (What are the common characteristics of such individuals? Are
there warning signs?), protecting the organization and employees during
and after the termination, protecting the intellectual property of the
employer, and tracking or monitoring the social media and communication
activities of the former employee immediately after the dismissal.71

What if an employee reveals terms of a confidential settlement? In one

decision, the Ontario Divisional Court upheld a decision of an arbitrator
who had ordered Jan Wong, a former reporter with The Globe and Mail, to
pay back a settlement of $209,912 to the paper after she disclosed some of
the confidential terms of the settlement in a book. Wong wrote about her
experiences in her 2012 memoir but the court did not support her argument
that it was acceptable to discuss the settlement as long as she did not reveal
the actual settlement amount.72
Employee Rights
Employee rights refer to those rights desired by employees relating to
working conditions and job security. Some of these rights are protected
under law, others under the collective agreement with the union (if one
exists), and yet others may be listed in the letter of appointment given to the
employee at the time of hiring. Regardless of whether these rights are
recorded in writing or currently protected by law and agreements, they have
a significant impact on the human resource management activities of an
organization. Progressive human resource managers recognize this and strive
to provide fair and equitable working conditions that help the employee to
maintain dignity on the job. Would you be willing to have a computer chip
implanted in your body? Consider the following:

Three Market Square, a Wisconsin technology company, is giving

employees the opportunity to have a chip about the size of a grain of
rice injected between their thumb and index finger. The majority of
workers have volunteered to have the chip implanted and will be able to
do any task using RFID technology, such as paying for food in the
cafeteria or swiping to enter a building, by simply waving their hand.
The company says the chip does not have GPS tracking ability but
security experts worry about issues such as hacking or using the data
for more invasive purposes, such as monitoring employee breaks.73

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Are employees becoming more litigious? What are the implications for
human resource professionals? A Canadian HR Reporter survey revealed
that 84 percent of 533 participants believe that competence in dealing with
litigation has become somewhat or much more important for HR
professionals in the past five years. About 70 percent of respondents
perceived that employees are becoming somewhat or much more litigious
compared to five years ago, and almost 69 percent believe that when in
court, the playing field is slanted in favour of the employee. The issues that
are most problematic include wrongful dismissal (68 percent), termination
and severance pay (58 percent), human rights issues (54 percent), and
reasonable accommodation (31 percent). As Robert Smith, managing partner
of Injury Management Solutions, observes, once a legal action has started, it
is imperative that HR gather witness statements and all of the appropriate
documentation as soon as possible—the longer the delay, the less likely HR
will get the true story.74

Spotlight on HRM

Termination Time

Consider the following scenario. David is a 22-year-old barista working at

Local Lou’s Café. He has been employed there for just under 19 months and
is well liked by his supervisor, co-workers, and customers. By all accounts,
he is a very good employee.

Three days ago, an unfortunate incident occurred. David was carrying a cup
of hot tea when he slipped a bit and accidentally spilled the beverage on a
female university student. He and other staff members immediately attended
to the woman, who did not suffer any injuries although her clothes were
doused in tea. The Café staff apologized to the woman and provided her with
a gift card for 10 free coffees and funds to have her clothes dry-cleaned. The
woman told David that she was fine and thanked him and the staff for their
concern.

The next day, David contacted the woman through her LinkedIn profile to
check on how she was doing and to thank her for how she handled the
accident. Shortly after, the woman filed a complaint with David’s employer
for contacting her. Contacting a customer through social media is a clear
violation of the company’s social media policy. The company is trying to
decide whether dismissal is the appropriate remedy.

What do the experts suggest? First, consider whether termination is

warranted. Among the considerations are the following:

1. Reflect and consider the root cause of the problem.

2. Get input from others.

3. Be honest and open with the employee.

4. Speak to HR early in the process.

5. Collect more data if you need more information.

6. Don’t put off the termination once you decide it is the appropriate
response.

Second, assuming you conclude that termination is necessary, Peterson

(2020) has developed some guidelines to dismissing with compassion. These
include:

1. Don’t wait for a “firing offence”—if training, coaching and mentoring

fail, don’t put off dismissal.

2. Do be willing to fire friends or family.

3. Don’t surprise people—provide frequent and honest feedback.

4. Do prepare and practise—rehearse difficult conversations.

 5. Don’t hand off the dirty work—it is your responsibility.

6. Do deliver the message immediately and clearly—deliver the message

within 30 seconds of commencing the meeting.

7. Don’t overexplain the decision—a termination meeting is the time to

communicate the decision, not debate or defend it.

8. Do be human—recognize the difference between empathy and

compassion (which are desirable) and sorrow and sympathy.

9. Don’t shift the blame—avoid the “I’m just the messenger” approach.

10. Do be generous—severance and other forms of assistance may be

appropriate.

Of note, the organization in the scenario gave the employee the option of
termination or resignation and the employee opted to resign.

SOURCES: Rebecca Knighton, “How to Decide Whether to Fire

Someone,” Harvard Business Review, January 28, 2019; Joel Peterson,
“Firing With Compassion,” Harvard Business Review, March–April 2020.

Right to Privacy
Employer concerns about employee privacy rights mean that many
employers are careful to collect only job-related information at the point of
hiring. There is an increasing realization among employers that collecting
nonwork information is an unnecessary intrusion into the private lives of job
applicants. Even when such additional information is not considered illegal,
many employers feel that such an action constitutes a moral violation of
workers’ rights.

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A number of recent high-profile cases have demonstrated that the lines

between workplace and private rights are blurring, and that conduct away
from the workplace may lead to discipline or dismissal. The Supreme Court
of Canada, in Bhasin v. Hrynew, imposed an obligation on both employers
and employees to deal with each other honestly and in good faith. As lawyer
David Whitten notes, “Employees should always be mindful that comments
and postings on the Internet are permanent and publicly accessible.
Therefore, they really need to consider whether the content they post is
appropriate by asking ‘would an employer care?’”75

The Personal Information Protection and Electronic Documents Act

(PIPEDA) came into force in January 2004 in every province without its
own privacy legislation. The aims of the legislation include requiring
organizations to hold personal information about individuals in a responsible
manner, permitting individuals to access and correct personal information,
and allowing individuals control over the handling of information about
them (see Figure 11-4).

FIGURE 11-4

The 10 Principles of the Personal Information Protection and

Electronic Documents Act

Table Summary: Summary

Principle 1: Accountability
An organization is responsible for personal information under its
control and shall designate an individual or individuals who are
accountable for the organization’s compliance with the following
principles.
Principle 2: Identifying Purposes
The purposes for which personal information is collected shall be
identified by the organization at or before the time the
information is collected.
Principle 3: Consent
The knowledge and consent of the individual are required for the
collection, use, or disclosure of personal information, except
where inappropriate.
Principle 4: Limiting Collection
The collection of personal information shall be limited to that
 which is necessary for the purposes identified by the organization.
Information shall be collected by fair and lawful means.
Principle 5: Limiting Use, Disclosure, and Retention
Personal information shall not be used or disclosed for purposes
other than those for which it was collected, except with the
consent of the individual or as required by law. Personal
information shall be retained only as long as necessary for the
fulfillment of those purposes.
Principle 6: Accuracy
Personal information shall be as accurate, complete, and up-to-
date as is necessary for the purposes for which it is to be used.
Principle 7: Safeguards
Personal information shall be protected by security safeguards
appropriate to the sensitivity of the information.
Principle 8: Openness
An organization shall make readily available to individuals
specific information about its policies and practices relating to the
management of personal information.
Principle 9: Individual Access
Upon request, an individual shall be informed of the existence,
use, and disclosure of their personal information and shall be
given access to that information. An individual shall be able to
challenge the accuracy and completeness of the information and
have it amended as appropriate.
Principle 10: Challenging Compliance
An individual shall be able to address a challenge concerning
compliance with the above principles to the designated individual
or individuals accountable for the organization’s compliance.

SOURCE: Adapted from Office of the Privacy Commissioner of

Canada, Privacy Principles, http://www.priv.gc.ca.

What is personal information? As defined in PIPEDA, personal information

is “factual information, recorded or not, about an individual.” Under
PIPEDA and provincial privacy legislation, information should be kept only
as long as required for the purpose for which it was intended. The main
problems with information security often revolve around security expertise
and responsibility for security, poor enforcement of policies and procedures,
outdated security software, and poor hiring (about 70 percent of identity
theft occurs at the workplace).

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Some Canadian health insurance firms are starting to focus on

pharmacogenetics (examining how genetics affect how a person reacts
to medication) as an approach to addressing disability and mental
illness cases. Although genetic information can be easily obtained from
a saliva sample or cheek swab, there are privacy concerns. While the
results are confidential and the employee is supposed to have control
relating to the use of personal information, genetic information could
also reveal other information about the health of an employee, and there
is always a fear that the data could be used for other nonapproved
purposes.76

On November 1, 2018, new legislation required businesses to notify the

Federal Privacy Commission and affected individuals of a data breach that
poses the risk of significant harm. One year later, the Office of the Privacy
Commission reported that it had received 680 data breach reports (about six
times more reports than for the previous year) affecting more than 28 million
Canadians.77 In a recent poll, more than 50 percent of participants indicated
they would do business with an organization specifically because it does not
collect personal data, but only 16 percent perceive that employers take their
obligation to protect personal information very seriously. According to
federal privacy commissioner Daniel Therrien, firms should limit the
information they collect to what is necessary for delivering the product or
service, and should make it clear why such information is needed (through a
privacy policy). The most common complaints involve the use and
disclosure of personal information for purposes other than specified or an
employee’s accessing a person’s file without authorization. A survey by
Therrien’s office revealed that 55 percent of companies do not have a
privacy policy and 67 percent do not have policies or procedures designed to
assess the privacy implications of new products, services, and
technologies.78
Privacy in the workplace is becoming an extremely sensitive issue, and HR
professionals must be aware of the legal and ethical challenges surrounding
it. For example, there is considerable difference of opinion about an
employer examining an employee’s social media activity:

Can your employer monitor your social media accounts?

A CareerBuilder survey revealed that 70 percent of employers use
social media to screen candidates, 57 percent are less likely to interview
an applicant without an online presence, and 54 percent have not hired
an applicant based on social media profile information.79

According to lawyer Amelia Phillips, Subsection 5(3) of PIPEDA

prohibits requiring job applicants and current employees to provide
social media passwords for the federal jurisdiction. However, the law is
still unsettled regarding employers examining public social media
accounts and will depend on how the information is being used (for
instance, for legitimate business purposes or to discriminate against a
job applicant).80

The Supreme Court of Canada is immersed in the privacy debate. The case
of R. v. Cole involved a charge of possession of child pornography when a
computer technician performing maintenance on a teacher’s computer found
a hidden folder containing nude pictures of an underage female student. The
court held that employees may have a reasonable, but limited, expectation of
privacy in their work computer, but the court did not specifically address
employer monitoring of employee computers. In R. v. Telus
Communications, the court found that text messages are considered private
communications, in R. v. Vu, the court ruled that police must have specific
authorization in a search warrant to search data in a computer, and in R. v.
Reeves, the court held that Reeves had a direct interest and an expectation of
privacy in the home computer and the data it contained. In addition, a third
party can’t waive someone’s right to privacy or their Charter rights. These
cases are quite complex, and HR professionals are advised to seek legal
advice in developing and administering privacy policies at work.81
Employers need to balance employee privacy rights with operational
requirements. Advice to employers includes that they do the following: (1)
communicate to employees what personal information will be collected,
used, and disclosed, and for what purposes; (2) disclose to employees the use
of any recording or surveillance and that the information can be used for
specific purposes, such as safety or discipline; (3) develop a clear, written
policy and communicate it to employees if the employer is going to monitor
employees. The policy, which should be signed by employees, needs to
explain that employees should not have any expectation of privacy and that
the information may be used by the employer for performance, conduct, and
workplace security monitoring.82

While an Apple Watch or a Fitbit provides users with a vast amounts of

data about the wearer, a new mobile-sensing system designed by
researchers at Dartmouth College is able to measure employee
performance with accuracy rates in the 80 percent range. The system,
which consists of fitness bracelets, sensors, and an app, monitors
emotional and physical signals during the day. The researchers see
several positive uses for the data, such as eliminating bias in
evaluations and providing workers with information on factors (such as
stress or a lack of sleep) that may be affecting their performance. Initial
results indicated that high performers tended to spend less time on their
phones, had deeper sustained sleep, and were more physically active.
However, there are ethical and privacy concerns with constant
employee monitoring.83

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Canada’s Anti-Spam Legislation came into effect on July 1, 2014, and on

January 1, 2015, new rules made it illegal to install programs, such as
malware, on someone’s computer without consent. The definition of spam is
“any electronic commercial message sent without the express or implied
consent of the recipient.” The legislation had major implications for
businesses that now needed to obtain consent from members of the public
before sending a message. There was concern that the legislation is
particularly problematic for small businesses that may be unaware of the
legislation and lack the expertise or resources to comply with the law. From
an HR perspective, it may be necessary to develop a policy to address the
legislation or amend an existing social media policy as well as provide
training for employees to make sure that they understand their rights and
responsibilities.84

When can an employer discipline an employee for off-duty social

media use? Employers may discipline an employee whose off-duty
social media use negatively impacts the employer’s business in a real
and substantial way. For example, conduct that harms the organization’s
reputation or product, or is a serious breach of law (such as the
Criminal Code or human rights law), or results in other employees
refusing to work with the employee has been held to warrant discipline.
The type and severity of discipline is dependent on the severity of the
misconduct by the employee and will vary depending on the
circumstances. This points to the need for a clear social media policy
that sets out the standard of conduct expected of employees both at and
away from the workplace and provides notice on the potential
consequences of breaching the policy.85

The need for training on privacy is critical. The Office of the Privacy
Commissioner of Canada, which oversees PIPEDA, asserts that
organizations should provide training for both management and front-line
workers. Although training should vary depending on the organization, the
training should include some background information on privacy, define key
terms and key privacy concepts, describe the organization’s activities with
regard to privacy, review policies and procedures, introduce the employer’s
privacy officer or team, and highlight each person’s role and responsibilities
relating to privacy, according to Ottawa-based privacy lawyer Rick
Shields.86

Right to Fair Treatment

Earlier in this book we saw that an individual’s age, race, sex/gender,
religion, physical disability, and so on, should not be considered when hiring
unless it is a bona fide job requirement. As previously noted, an employer
has an obligation to make reasonable accommodation to meet employee
needs. The right of employees to fair treatment requires that these principles
govern the actual work once the applicants are hired. Thus, employees have
the right not to be discriminated against in all employment decisions (such as
compensation, training, and promotion issues), as well as the right to work in
a safe and harassment-free environment. In a split decision, the Supreme
Court of Canada held that an Irving Oil policy providing for random alcohol
testing of unionized employees in “safety-sensitive positions” is not justified
in the absence of evidence that there was a problem with alcohol use at
work. The court concluded that Irving was only able to cite eight alcohol-
related incidents over a decade and a half; thus, there was insufficient
evidence of a serious enough problem to warrant an invasion of union
workers’ privacy in the absence of consent by the union.87

Proactive employers continuously monitor working conditions through

employee surveys, open-door policies, and the presence of grievance
committees. They also initiate new programs and policies to meet the
changing needs of the workforce. However, not all employers respect
employee rights:

Temporary foreign workers in British Columbia were being tracked

using wearable devices and scanning stations at the end of fruit and
vegetable rows. When a box was full, it was scanned and at lunchtime,
the names of workers who were slow were posted on a large screen. If
their productivity didn’t improve, workers were at risk of having their
employment terminated. Worker vulnerability and a lack of
understanding of Canadian employment and privacy law were among
the factors identified as contributing to the practice.88

Page 305

Cannabis Legalization
Not surprisingly, employers are concerned about the workplace implications
of cannabis now being legal (as of October 17, 2018). A Health Canada
survey showed that 28 percent of Canadians consider smoking marijuana
occasionally for nonmedicinal purposes to be socially acceptable. Among
employer concerns are a lack of product knowledge, the unavailability of an
accurate and reliable test of impairment, and concern over cannabis use by
people in safety-sensitive positions.89
A new study by the Institute for Work and Health compared cannabis use in
June 2018 (prior to legalization in October 2018) and approximately 12
months later. About 29 percent of participants reported using cannabis prior
to legalization while 38 percent indicated using cannabis post-legalization.
However, use of cannabis at work has not increased. Workers were asked if
they had used cannabis within two hours of beginning work, at work or
during breaks, or at the end of a shift. The results were stable over the two
time periods with about 8 percent of workers stating that they had used
cannabis. About 79 percent of workers indicated that their employer had a
substance abuse policy but only one-quarter said that their employer had
provided education or information on cannabis use and its effects at work.90

According to Jason Fleming, director of HR at MedReleaf, it is important to

distinguish between recreational and medical cannabis. If an employee
requires medical cannabis for treatment, the employer may need to
accommodate, using options such as medical leave or an alternative work
assignment. As Fleming notes, “No employer will have to tolerate
impairment at work.” Lawyer Robert Weir believes that there is legal risk in
having a blanket, zero-tolerance policy on cannabis use, but the employer
has the right to prohibit alcohol and drug use while an employee is working.
Similarly, banning employees from coming to work while impaired is fair.
Implications for HR professionals include developing a policy on cannabis
use, training employees and supervisors on best practices, and seeking the
assistance of occupational therapists and legal professionals.91

Commentators are suggesting that principles from past legal decisions are
applicable to drug and alcohol cases. For instance, in the case of Stewart v.
Elk Valley Coal Company, the company had a drug and alcohol policy that
required employees to disclose any addictions prior to any drug- or alcohol-
related incident. In addition, while an employee disclosing an addiction
would be provided with treatment, failure to disclose could lead to
termination. The employee, who worked in a safety-sensitive position at the
mine, failed to disclose an addiction to cocaine, was involved in an accident
at work, subsequently tested positive for cocaine, and was dismissed. The
Supreme Court of Canada upheld the initial decision of the Alberta Human
Rights Tribunal, which concluded that the dismissal was justified because
the employee was terminated for being in breach of the company policy and
not because of an addiction.92

With the legalization of recreational cannabis in October 2018, the impact on

employers and employees is still evolving. Some key issues to consider
include:

1. Workplace policy on substance abuse. Such a policy should address use

of drugs and alcohol at work and recreational use of cannabis. Proper
communication to employees, appropriate training, and having every
employee sign off on an awareness of the policy are critical.

2. Observation and investigation. For instance, how will employees be

observed? Will there be testing in safety-sensitive workplaces?

3. Support and return to work. What assistance is available to employees?

What is the organization’s accommodation policy when an employee
returns to work?

4. Discipline. What are the rules and what if the employee is in breach of
the policy? There is a need to balance individual rights with the
obligation of the employer to provide a safe workplace.

5. Evaluation. Policies should be reviewed regularly and modified where

appropriate.93
LO4 Employee Involvement
To increase employee productivity and satisfaction, human resource departments
often attempt to increase employee involvement at the workplace. Most of the
approaches to employee involvement focus on the increased participation of
workers. The quality of an employee’s life while at work is affected by many
factors, including the quality of supervision, working conditions, pay and
benefits, an interesting and rewarding job, and employee engagement. Consider
the experience of Starwood Hotels:

Starwood Hotels CHRO Jeff Cava believed that improving employee

engagement and increasing collaboration between departments were
associated with reduced customer complaints and increased occupancy, and
extensive data analysis supported this belief. Starwood wanted people to
work together and thus gave front-desk, housekeeping, and
engineering/maintenance employees new communication devices so they
could interact in real time. In addition, an immediate feedback loop was
established and employees were encouraged to diversify their skills and
assume the appropriate level of autonomy. The results revealed improved
organizational culture and an enhanced guest experience.94

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A three-year study of more than 10,000 employees in 131 countries examined

factors associated with employee well-being. The most important factor in
employee well-being was supportive, meaningful relationships with others,
followed by meaning (having a sense of purpose and direction), and
accomplishment (pursuing success or mastery for its own sake). When
considering global well-being, the highest scores were from Australia/New
Zealand and Latin America, and the lowest score was for respondents from Asia.

There was little difference in well-being when comparing men and women,
although women tended to have higher scores on engagement and positive
emotions (feelings of contentment or pleasure). Well-being increases with age. In
addition, participants employed in education, training, and library occupations
reported the highest level of well-being, while the lowest scores were observed
for workers in food preparation and food services.
Well-being was also associated with organizational outcomes with higher scores
related to job satisfaction, desire to stay with the organization, identification with
the employer, and both individual and organizational citizenship behaviours.
Lower scores were associated with a greater likelihood of planning to quit the job
and engage in job search activities.95

A popular method used to improve the quality of work life is employee

involvement—“creating an environment in which people have an impact on
decisions and actions that affect their jobs. It is a management and leadership
philosophy about how people are most enabled to contribute to continuous
improvement and the ongoing success of their work organization.”96 Today, some
North American organizations provide employees with considerable involvement
in the decision-making process.

Employee involvement is based on two important principles. First, individuals

tend to support systems or decisions that they helped to make. For example, if an
employee was actively involved in developing a new credit collection procedure,
then this individual is more likely to ensure that the new procedure is carried out
correctly. Second, employees who actually perform a task know more about it
than anyone else, including their supervisor. Asking for information from
employees who actually perform the job can provide insights not available from
their supervisors or outside experts.

A recent report showed a strong link between best practices in human resource
management and stronger performance on such outcomes as faster revenue
growth and higher stock prices. Some of the best practices included spending
significant amounts of time on nurturing talent and leadership, encouraging
leaders to support employee engagement, and planning for succession. The study
also showed a positive relationship between having certified HR professionals
and better business performance.97

Employers are also expressing increased interest in corporate culture. A new

study on corporate culture revealed that about 40 percent of Canadian workers
would not accept a job that was a perfect fit if the corporate culture clashed with
their values. Also, nine out of 10 Canadian managers believed that a candidate’s
fit with the organization is as important or more important than the person’s skills
and experience; however, managers must be mindful of human rights issues (see
Chapter 4). Although about one-third of participants indicated that the ideal
corporate culture is supportive or team-oriented, almost half reported their
organization’s culture as being traditional.98
How is COVID-19 affecting culture? A survey of employees during the pandemic
revealed that about half of the participants felt less connected to their company
culture while working from home, while 47 percent perceived that their employer
valued company culture and was taking steps to enhance culture using virtual
tools. Employees working from home tended to miss small talk and
communicating with colleagues (57 percent), in-person collaboration with a team
(53 percent), and managing the separation between home and work (50
percent).99

Employee Involvement Interventions

A number of different interventions have been used to increase employee
involvement and improve overall employee satisfaction at work.

Self-Directed Work Teams or Groups

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A common approach to employee involvement is self-directed work teams or

groups—teams of workers without a formal, company-appointed supervisor who
decide among themselves most matters traditionally handled by a supervisor.
These groups of workers typically decide daily work assignments, the use of job
rotation, orientation for new employees, training, and production schedules. Some
groups even handle recruitment, selection, and discipline.

Some observers are critical of the increased focus on innovation and workplace
teams. In a number of organizations, managers “stress the system” by speeding up
the line, cutting the number of employees or machines, or having workers take on
more tasks (at times through “multiskilling”). Under such systems, workers may
be required to act like machines. While management by stress may help in raising
productivity (at least over the short term), workers often experience considerable
personal stress and a sense of being “dehumanized.”100

How is technology shaping how teams operate? A survey of more than 1,600
executives from 90 countries revealed that 89 percent work on a virtual team and
more than a quarter are part of at least four virtual teams (and 48 percent never
meet other virtual team members in person). However, 84 percent believe that
virtual communication is harder than meeting in person and less than one-quarter
of participants received training to increase productivity on virtual teams. In
addition, only 15 percent perceive themselves as being very effective in leading
teams across countries and cultures, with the top challenges including time zones
(88 percent), understanding different accents (80 percent), timeliness (80
percent), and non-participation by colleagues (76 percent).101

High-Involvement Work Practices

There is growing evidence that human resource management practices do matter
and are related to organizational performance. In one study, high-involvement
work practices were related to lower turnover, higher productivity, and improved
financial performance. In another study, “low road” practices (such as use of
short-term contracts, low levels of training, little commitment to job security, and
low levels of HR sophistication) were negatively associated with corporate
performance, while “high road” practices (characterized by high-commitment
human resource management) were strongly related to a high level of
organizational performance. The thrust of the work in this area has been away
from focusing on any single human resource practice in favour of studying
systems or bundles of practices and the strategic impact of human resource
management on organizational performance. In addition, a growing number of
researchers are examining employee perceptions of high-involvement work
systems and the roles that workers play in both low- and high-involvement
workplaces.102

Kincentric’s Trends in Global Employee Engagement revealed an increase in the

global employee engagement rate with a 2020 score of 68 percent (for 2010, the
average score was 56 percent). The top five dimensions for driving engagement
included talent and staffing, senior leadership, rewards and recognition, career
and development, and collaboration.103
 MoMo Productions/Getty Images

Quality circles involve a small group of employee volunteers with a

common leader who meet regularly to identify and solve work-related
problems. Why the emphasis on volunteers?

What does this mean for human resource management? The human resource
function must focus on business-level outcomes and problems, become a strategic
core competency with the ability to understand the human capital dimension of
the organization’s major business priorities, and develop a systems perspective of
human resource management.104 Seven practices of successful organizations are
(1) focusing on employment security, (2) using selective hiring, (3) implementing
self-managed teams and decentralizing accountability and responsibility as basic
elements of organizational design, (4) having comparatively high compensation
contingent on organizational performance, (5) implementing extensive training,
(6) reducing status differentials, and (7) sharing information with employees.105

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To what extent are Canadian organizations pursuing high-involvement workplace

strategies? The results of one study are presented in Figure 11-5. A survey of
more than 600 Canadian workplaces found that 50 percent had problem-solving
groups, just over one-quarter had a total quality management (or similar)
program, and just under 40 percent had training in employee involvement. About
70 percent reported having project teams.

FIGURE 11-
5

Employee
Involvement
Programs in
Canadian
Organization
s

Table
Summary:
Summary

SOURCE: Terry H. Wagar (2009), Human Resource Management and

Workplace Change, Saint Mary’s University.
Employee Self-Service
Although employee self-service was a fairly new concept a decade ago, a
growing number of organizations are introducing self-service as a means of
reducing the amount of administrative work performed by human resource
professionals. Human resource activities that can be addressed by employee self-
service have been divided into two groups:106

Productivity applications. This includes management of personal data,

retirement plans, and health and benefits management. In addition,
productivity applications for managers may include the use of management
reports and approval applications. For example, an employee seeking an
approval to participate in a training program could request such an approval
electronically and the process could be set up to route the request by email to
the appropriate manager.

Strategic applications. This includes online recruitment and skills

management applications. By way of example, there are a growing number
of programs designed to increase management productivity and free up time
for more strategic initiatives.

Employee self-service applications are becoming more common and their use has
increased dramatically over the past 10 years:

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A 2018–2019 survey revealed that about 80 percent of HR, information

technology, and operations leaders in small, medium, and large businesses
around the world use employee self-service (ESS) applications and 68
percent use management self-service (MSS) technology.

As noted by Jeanne Meister, founding partner of Future Workplace, “the

days of employees calling or emailing the HR service centre for answers to
routine questions are almost over. Those transactions are increasingly being
handled by AI-driven chatbots and other self-service apps.” While use of
ESS and MSS may lead to reduced costs for employers, Meister notes the
importance of having a human fail-safe option (known as “human in the
loop”) to assist workers when the automated service is unable to address
employee concerns.107
Spotlight on ETHICS

The Ethics of Employee Monitoring

There are growing concerns that employee monitoring software (such as Hubstaff
and Time Doctor), also known as “time-tracking technology” or “tattleware,”
may be going too far. Such software can monitor computer key strokes and mouse
activity and time taken to complete tasks, provide GPS location data, take
automated screenshots of computer screens, and observe workers over a webcam.
Similarly, implanted microchips can be used to store personal data, to provide
access to workplace facilities and equipment, and to unlock devices such as
smartphones and smartlocks.

Proponents of the software argue that it gives employers clear metrics on

productivity, doesn’t require a manager to be constantly monitoring employee
performance, and allows workers to demonstrate that they are actually working.

According to employment lawyer Howard Levitt, use of such software is legal as

long as the employee is informed of its use. There has been increased interest in
employee monitoring during the pandemic as more employees work from home.
However, privacy experts question whether extensive monitoring is necessary and
assert that it may lead to reduced levels of employer–employee trust, impair
relationships among co-workers, and lead to a competitive and toxic work
environment.

What are your views on the use of employee monitoring software? What are
some of the ethical issues? Are current laws meeting the needs of employers and
employees?

SOURCES: Graham Slaughter, “Companies Are Finding New Ways to Track

Workers at Home, But Are They Going Too Far,” CTV News, May 19, 2020. Also
see Adam Satariano, “How My Boss Monitors Me When I Work From Home,”
New York Times, May 6, 2020.
LO5 Job Security, Downsizing, and
Employee Retention
No-Layoff Policies
In the past, loyal, hardworking employees could expect a secure job in return for
dedicated work for the organization. However, this is no longer the case and the
traditional psychological contract (the unwritten commitment between employers
and employees) has been radically rewritten.108

Contrary to the downsizing trend of the 1990s, some organizations have

developed no-layoff policies. These firms are using such policies as part of an
integrated system of progressive HR practices—the idea is that employees who
have job security are more receptive to change, more likely to be innovative and
suggest changes that will improve the organization, and more willing to “go the
extra mile.” However, as a result of the COVID-19 pandemic, many organizations
engaged in massive layoffs:

To give just a few examples, Air Canada planned to eliminate about 20,000
jobs, Porter Airlines laid off the majority of its employees, Leon’s cut about
3,900 employees, and Bombardier furloughed 12,400 workers. However,
Amazon hired several thousand employees as online sales increased
markedly and some employers began rehiring employees with the
establishment of the federal wage assistance program.109

Organizational Downsizing
Downsizing may be defined as “a deliberate organizational decision to reduce the
workforce that is intended to improve organizational performance.”110 It has also
been described as a set of activities undertaken on the part of management and
designed to improve organizational efficiency, productivity, and/or
competitiveness.111 It is possible to identify three types of downsizing strategies:

1. Workforce reduction. This is a short-term strategy focused on cutting the

number of employees through programs such as attrition, early retirement or
 voluntary severance incentive packages, or layoffs.

2. Page 310

Work redesign. This strategy takes somewhat longer to implement and

requires that organizations critically examine the work processes and
evaluate whether specific functions, products, or services should be changed
or eliminated.

3. Systematic change. This is a long-term strategy requiring a change in the

culture and attitudes and values of employees with the ongoing goal of
reducing costs and improving quality. This strategy takes a long time to
implement, and thus the benefits only accrue over time.112

While firms frequently believe that downsizing will enhance organizational

performance, study after study shows that “following a downsizing, surviving
employees become narrow-minded, self-absorbed, and risk averse. Morale sinks,
productivity drops, and survivors distrust management.”113

88studio/Shutterstock
 Downsizing and layoffs often cause a drop in employee morale and
lower productivity. What are the ways to avoid these consequences or at
least to reduce the negative impact?

In addition, there is growing evidence that firms engaging in downsizing do not

perform better financially—the bulk of the research indicates that the stock price
of downsized firms often declines after a layoff announcement is made.114

Downsizing efforts often fail to meet organizational objectives. This is not

surprising, considering that many workforce reductions are carried out with little
strategic planning or consideration of the costs to the individuals and employer.
Frequently, cutting jobs is a short-term response to a much more serious problem.
In several instances, little attention is given to carefully examining and resolving
critical human resource issues.

One day, Liat Honey, a married mother of two children, showed up at the
Cobequid Children’s Centre where she had worked for two years to find that
the doors were locked and she was out of work. Not only did she have to
fight for wages and vacation pay she was due, but Liat was devastated by the
loss of her job. In her words: “I was very, very angry, and I was very
depressed. I was crying for literally two months. Now I am doing a lot better,
but I was very angry that they didn’t let us know. I understand businesses go
down, but why wouldn’t they tell us before, to give us time to plan?”115

While downsizing may be an appropriate strategic response for some

organizations, it is not a “quick fix” remedy. Before implementing such a
program, it is critical to carefully consider the decision, plan the process, and
assess the consequences from the perspectives of the organization, the customer,
the “survivors” (those employees who remain), and the victims (those who lose
their jobs).

Don Walker has more than 33 years in the forest industry. However, he lost
his job as a hydraulic log loader when his employer closed down. Walker
says he has taken all he can and no longer has the will to pull himself back
up after losing his job. He is running out of money and suffering from
depression. “I’ve been beaten down my whole life and pulled myself back
up off the ground so many times, but I just don’t give a damn anymore.
There are zero prospects—I’ve applied everywhere.”116
Of those organizations that engage in the workforce-reduction stage of
downsizing, many ignore the critical elements of redesigning the organization and
implementing cultural change.117 One organization had planned to contract out
the maintenance of vehicles to local garages. While huge savings were projected,
several of the local garages did not have repair bays big enough to accommodate
the vehicles, and the hoists were not strong enough to support the trucks. From a
best practices perspective, six key principles deserve attention:

1. Change should be initiated from the top but requires hands-on involvement
from all employees.

2. Workforce reduction must be selective in application and long term in

emphasis.

3. There is a need to pay special attention both to those who lose their jobs and
to the survivors who remain with the organization.

4. It is critical that decision makers identify precisely where redundancies,

excess costs, and inefficiencies exist and attack those specific areas.

5. Downsizing should result in the formation of small semi-autonomous

organizations within the broader organization.

6. Downsizing must be a proactive strategy focused on increasing

performance.118

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Human resource professionals have an important role to play in downsizing

efforts and should be involved in the strategic process. HR people are often in a
good position to advise on the impact of restructuring an organization (from a
variety of perspectives, including work groups, teams, departments, and
individuals) to maximize productivity and retain quality performers. Similarly,
HR can develop skill inventories and planning charts to evaluate the effects on
human resource needs and projected capabilities.

Organizational changes such as downsizing, restructuring, and redesigning

jobs are associated with greater stress, with about 40 percent of employees
reporting that such changes had negatively affected their health and 46
percent reporting that they or a co-worker had taken more time off as a result
of workplace change.119
Moreover, in light of the compelling evidence that most downsizings have
dramatically negative impacts on those who survive, human resource experts can
assist in coordinating and communicating the downsizing decision. Effective
communication can reduce some of the negative consequences associated with
downsizing.

More and more, former employees who have been downsized or terminated air
their views on social media. According to Stacy Parker, managing director of the
Blu Ivy Group, “The reality is that most people will use social media, particularly
when they are not so happy with the way things have taken place. Especially
during a downsizing, it is a very challenging time for the entire employment
culture.”120

Finally, HR can assist in evaluating the downsizing program. Issues include

monitoring who left the organization and who remains, job design and redesign,
worker adjustment to change, the need for employee counselling, organizational
communication, and a comprehensive review of the appropriateness of existing
HRM policies and programs (such as training, compensation and benefits, and
orientation of employees into the “new” organization).121 However, research has
shown that downsizing employees is professionally demanding and that the
“downsizers” may experience social and organizational isolation, a decrease in
personal well-being, and poorer family functioning.122

While managing layoffs is extremely difficult, the challenges are magnified

during a pandemic. A Harvard Business Review article made several suggestions
for this circumstance:

1. Gather information. This includes how and when to notify employees about
layoffs, how to deliver the information on an individual basis, what the
conversation will entail, and how to answer questions employees are likely
to ask.

2. Understand your limitations. One suggestion is to ask each employee if there

is a time when you can have 15 minutes of their concentrated attention.

3. Set the right tone. A particular challenge is that the conversation will need to
be held remotely, and using a video link may be more effective than a phone
call as it allows for more personal contact and expression of care.

4. Be human and direct. The message should be clear, concise, and unequivocal
and provide the time period when the individual’s employment will end.
 Also address that the global pandemic is the reason for the layoff (not
employee performance).

5. Offer assistance but don’t overpromise. Outline available resources and

opportunities for government assistance but don’t promise that the
employee’s job is safe once the pandemic ends.

6. Be transparent. Remaining employees are also going to have questions and

concerns about their continued employment. One suggestion is to have an
ongoing “ask me anything” forum.

7. Vent and focus on your own well-being. The responsibilities of laying off
employees during a pandemic are huge and there may be times when you
need to express your feeling and emotions. Also, don’t forget to focus on
your own physical and mental health.123

Artificial Intelligence and Job Loss

Advancements in artificial intelligence, machine learning, and computerization
are being projected to radically change the job market and the nature of work.
The doomsayer perspective suggests that AI may lead to “technological
unemployment,” particularly in certain occupations and countries. The optimist
perspective may lead to job loss for specific labour types but efficiency gains
from AI greatly outweigh transition costs and create new opportunities for
workers with evolving skill sets.124

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A frequently quoted 2013 Oxford University study reached the conclusion that
about 47 percent of total U.S. employment is at risk of being replaced by
computerization.125 Similarly, in 2016, the Brookfield Institute for Innovation +
Entrepreneurship concluded that about 42 percent of Canadian jobs are at risk of
being lost due to automation, while the Organisation for Economic Co-operation
and Development’s estimate was 38 percent and the C.D. Howe Institute’s
projection was 35 percent.126 The Brookfield Institute report identified the
occupations most at risk (retail salesperson, administrative assistant, food counter
attendant, cashier, and transport truck driver) and jobs with a low risk of
becoming obsolete (management, teaching, science, technology, engineering, and
math). Of course, not all of the jobs will disappear, but many will change
dramatically and new jobs will be created.127
A 2017 report, The Intelligence Revolution: Future-Proofing Canada’s Workforce,
observed that the major forces that will change work are (1) robotic process
automation, (2) artificial intelligence, and (3) human enhancement technologies,
such as devices and wearables aimed at overcoming limitations or improving
human capabilities.128

Futurist Martin Ford argues that highly routine jobs (such as telemarketing and
tax preparation) are almost guaranteed to be automated, while food preparation
jobs in the fast food industry have about an 80 percent chance of being replaced
by robots (such as Flippy, which is already in place at CaliBurger restaurants).129
When discussing AI and COVID-19, Abnormal Security CEO Evan Reiser stated
bluntly that “we have seen two years of digital transformation in the course of the
last two months.”130

At Amazon, a warehouse worker whose job was to stack small bins weighing up
to 11 kilograms over a 10-hour shift is now employed to monitor several robots in
the warehouse and troubleshoot when problems arise. The goal in using robots
was to avoid people having to perform monotonous tasks and to reduce the
amount of walking around by employees, leaving workers to do jobs that engage
them mentally.131

The COVID-19 pandemic has led to an acceleration of replacing employees with

technology as employers seek to minimize workplace infections and manage
operating costs. For example, robots are now cleaning buildings and taking
workers’ temperatures, a robot called Sally is making salads, and chatbots are
replacing call-centre employees. According to economist Daniel Susskind, “This
pandemic has created a very strong incentive to automate the work of human
beings. Machines don’t fall ill, they don’t need to isolate to protect their peers,
[and] they don’t need to take time off work.”132

Retaining Top Performers

Keeping high-performing employees is often a challenge for both growing and
downsized organizations. A study by Right Management indicated that a shortage
of talent was the top HR challenge (identified by 34 percent of Canadian
executives), followed by low engagement/productivity (24 percent of
respondents).133 Ed Kwan, VP of HR at Global Container Terminals, observes
that the war for talent is heating up again as baby boomers retire and fewer
individuals join the labour market. As Kwan observes, “It’s not a job-for-life
mentality; it’s not just a paycheque. People and culture really is a competitive
advantage. We’re starting to see much more emphasis on creating a culture that
really attracts and retains people.”134

Of course, some organizations may adopt a strategy in which people are not
important and are easily replaceable, and thus they may be willing to accept high
levels of employee turnover. One study suggests that the number one reason
employees leave their jobs is “shock”—some precipitating event (such as a
heated argument with the boss, uncertainty over a corporate merger, or an
unexpected and unsolicited job offer) is more likely than job dissatisfaction to
cause an employee to leave their current job.135

A LinkedIn study of 32 million profiles indicated that about three-quarters of

employees remain with a company for a least one year, 59 percent for two years,
48 percent for three, 41 percent for four, and 38 percent for five years. Three key
factors are associated with retention:

1. Employees who change positions internally are more likely to stay. For
instance, 90 percent of employees who were promoted stayed at least one
year, compared to 75 percent who had no internal moves. About 69 percent
of promoted employees remained at least three years, while only 45 percent
who had no internal moves stayed.

2. Employers with highly rated management have higher retention rates (78
percent versus 69 percent after one year, 46 percent versus 32 percent after
three years, and 32 percent versus 20 percent after five years). This supports
the old adage that employees don’t quit jobs—they quit their managers.

3. Employees who are empowered are also more loyal (retention rates
comparing employers with high levels of empowerment compared to lower
empowerment scores were 78 percent versus 72 percent after one year, 47
percent versus 35 percent after three years, and 33 percent versus 23 percent
after five years).136

Research by Professor Tim Gardner indicates that employees who are thinking of
quitting often give off behavioural cues and start disengaging at the workplace.
The 10 characteristics identified in the research were as follows:

1. Offering fewer constructive contributions in meetings

2. Page 313
 Being reluctant to commit to long-term projects

3. Acting more reserved and quiet

4. Being less interested in advancing in the organization

5. Showing less interest in pleasing the boss than before

6. Avoiding social interactions with the boss and other members of

management

7. Suggesting fewer new ideas or innovative approaches

8. Doing the minimum amount of work needed and no longer going beyond the
call of duty

9. Participating less in training and development programs

10. Demonstrating a drop in work productivity

Gardner found that, if an employee exhibited at least six of these behaviours, his
model could predict with 80 percent accuracy that the employee was going to
quit.137

Some industries are developing programs aimed at attracting and retaining

employees. Consider, for example, the construction industry in British Columbia:

A new program called the Builders Code is focused on defining an

“acceptable” workplace and providing resources to promote safe and
productive workplace behaviour. The definition of safety is expanded to
include stress or distraction resulting from discrimination, hazing, bullying,
or harassment.

The construction industry in British Columbia is facing a shortage of almost

8,000 employees and less than 5 percent of skilled tradespersons are female.
In addition to attracting more female workers, the Code is aimed at
increasing retention (currently, the retention rate for female apprentices is
under 50 percent, compared with 70 percent for males).138

A number of studies have examined whether there is a relationship between an

organization’s human resource management practices and employee retention.
The findings suggest that employers with high-involvement human resource
systems tend to have lower employee turnover.139
SUMMARY

The human resource department’s role in organizational communication is

to create an open, two-way flow of information. If management sincerely
strives to provide an effective downward and upward flow of information,
then the human resource department can help develop and maintain
appropriate communication systems.

Downward communication approaches include in-house publications,

information booklets, employee bulletins, prerecorded messages, email,
jobholder reports, and open-book management. Multiple channels are used
to help ensure that each message reaches the intended receivers. Perhaps the
greatest difficulty in organizational communication is to provide an
effective upward flow of information. In-house complaint procedures,
manager–employee meetings, suggestion systems, and attitude survey
feedback are commonly used tools.

Counselling is the discussion of a problem with an employee to help the

worker cope with the situation. It is performed by human resource
department professionals as well as supervisors. Counselling programs
provide a support service for both job and personal problems, and there is
extensive cooperation with community counselling agencies.

Discipline is management action to enforce organizational standards, and it

is both preventive and corrective. The hot-stove rule is a useful general
guide for corrective discipline. Most disciplinary action is progressive, with
stronger penalties for repeated offences. Some disciplinary programs
primarily emphasize a counselling approach.

Employee involvement efforts are systematic attempts by organizations to

give workers a greater opportunity to take part in decisions that affect the
way they do their job and the contribution they make to their organization’s
overall effectiveness. They are not a substitute for good, sound human
resource practices and policies. However, effective employee involvement
efforts can supplement other human resource actions and lead to improved
employee motivation, satisfaction, and productivity. Whether that
involvement is in solving workplace problems or participating in the design
of jobs, employees want to know that their contribution makes a difference.

In this era of downsizing and restructuring, it is important to understand the

basic principles relating to wrongful dismissal law. Also, there is evidence
that many downsizing efforts fail to meet organizational objectives. Human
resource professionals have an important role to play in both growing and
downsized workplaces.
Page 314

TERMS FOR REVIEW

constructive dismissal

corrective discipline

counselling

discipline

downsizing

downward communication

due process

employee attitude/opinion survey

grapevine communication

high-involvement work practices

hot-stove rule

in-house complaint procedures

just cause

open-door policy

preventive discipline

progressive discipline

self-directed work teams or groups

suggestion systems
upward communication

wrongful dismissal
REVIEW AND DISCUSSION QUESTIONS

1. Think of a situation in which you learned some new information from

the grapevine and took action on the basis of that information. Discuss.

2. List and describe the different types of programs that can be used by
the human resource department to improve communication.

3. Discuss differences between preventive and corrective discipline.

What examples of either one were applied to you in the last job you
had?

4. What is progressive discipline? How does it work? Is its basic

approach realistic in work situations? Explain your answer.
SHORT CASE 11-1: The High-Involvement Workplace Dilemma

Consider the following situation.

You are a human resource management associate at a manufacturing

company with just under 800 employees. You report to the human resource
manager who, in turn, reports to the vice-president of human resource
management. Neither you nor the manager is part of the senior executive
team. Your most recent project involves an assessment of whether your
organization should incorporate a high-involvement workplace strategy.

A few days ago, the following memo appeared (by mistake) in your email
inbox:

All members of the senior executive team:

As you are aware, we are carefully considering the implementation of

a high-involvement workplace system. The key to making this project
succeed is to get employee buy-in. I have had chats with some other
friends in our industry, and the gist of what they are saying is that if we
sell this right, we can really save ourselves on labour costs. One
company set up workplace teams and rewarded employees for coming
up with labour-saving ideas—nine months later, the firm was able to
cut almost 20 percent of the workforce. I figure we can follow a
similar approach and will be able to get rid of between 125 and 150
jobs. Of course, we can’t let the employees find out about this.

Maggie Pool (Vice-President of Human Resources)

You are unsure what you should do in this situation. On one hand, it is not
illegal for a company to reduce the size of its workforce. On the other hand,
both you and the human resource manager believe that the organization is
interested in considering a high-involvement strategy as a way of increasing
employer performance and employee satisfaction (not as a tool for reducing
labour costs and cutting jobs).

DISCUSSION QUESTION
1. Outline the key issues affecting your decision. What is your
recommendation?
Page 315 Page 316

CASE STUDY

Doan v. City of New Halidart

Carl Doan Background

Carl Doan is a 37-year-old employee of the City of New Halidart. He began

working for the city as a dispatcher 16 years ago, after completing a
community college diploma in business studies. Nine years ago, Doan was
promoted to dispatcher-scheduler specialist. The main components of his
job involve scheduling transit buses and dispatching buses and access-a-bus
vehicles. Note that Doan and the other dispatcher-schedulers are not
members of a trade union.

Doan, who currently earns $45,900 a year, is a single father with two
children: 14-year-old Horace; and 12-year-old Boris, who is autistic and
requires considerable child-care assistance.

Over the past five years, the city has moved to a more automated system of
transit dispatching and scheduling. While Doan frequently works on his
own, it is important that he communicate with other dispatcher-schedulers
concerning transit services. Doan and the other dispatcher-schedulers report
to Brian Campbell, who is the supervisor of Transit Services. The city is
highly committed to providing quality public services and has invested
heavily in both employee training and automating its operations. It has a
good public image, and its slogan—Quality Service Delivery By Quality
People—is heavily promoted in the New Halidart area. As part of an
information sharing program, Campbell meets with groups of employees on
a regular basis. For example, every Tuesday morning is the meeting with
the dispatcher-scheduler group. The meetings are fairly informal: Campbell
will share relevant business information with employees and address any
questions or concerns that employees may have. Typical meetings last about
10–15 minutes.

Employee Handbook Provisions

Under Section 11.2 of the City of New Halidart Employee Handbook, the
city retains all rights with regard to “the maintenance of discipline at the
workplace, including the right to demote or discharge for just cause.”

All employees receive a copy of the handbook when they commence

employment at the City of New Halidart; every two years, each employee
receives an updated version of the handbook. Carl Doan acknowledged
receiving the most recent copy last January.

Doan’s Previous Record

A review of Doan’s file indicates that he has received two citations within
the past five years. The disciplinary actions are as follows:

28 months ago: Doan received a written warning for being late for
work. He had slept in and was 25 minutes late for his scheduled shift.

16 months ago: Doan was given a five-day suspension (without pay)

for inappropriate behaviour at work. He was one of five employees
who had made Brian Campbell a special chocolate brownie dessert to
celebrate Campbell’s birthday. However, as a joke, the group decided
to put a laxative in the brownie. Campbell ate the brownie, became ill,
and had to miss the following workday. While the employees argued
that they were just playing a practical joke, the company viewed the
matter as very serious. After reviewing all of the evidence, the
employer suspended each of the five employees for five days. In the
incident letter placed in each employee’s file related to this suspension,
 the city indicated that the behaviour was clearly unacceptable and that
any repeat infractions could result in discharge.

Doan’s co-workers generally agree that Doan is a very pleasant guy with a
sense of humour. As his close friend Pat Carson said, “Carl is a good person
to work with. He does his job well and is very dependable but doesn’t take
things too seriously.”

At the city, the performance appraisal form for the dispatcher-schedulers is

very basic. It is determined by averaging the scores of four items (job
knowledge, ability to work with others, dependability/accuracy, and
handling unexpected vehicle maintenance and operator absences). The
appraisal form allows the assessor to give a score anywhere between 1 and
5 (with 1 indicating unsatisfactory performance and 5 indicating
outstanding performance) for each of the four items. Each employee has a
personal performance appraisal interview with their supervisor and signs a
form acknowledging that the interview took place (but not that the
employee necessarily agrees with the assessment). On his last evaluation,
Doan received the following scores:

Job knowledge: 4.1

Ability to work with others: 4.2

Dependability/accuracy: 3.9

Handling unexpected vehicle maintenance and operator absences: 4.2

In the three years prior, Doan’s average performance appraisal scores had
ranged from 4.1 to 4.4. The average for Doan’s workgroup is around 3.9.
As Campbell observes, “All of the dispatcher-schedulers are very good
employees. However, that is not surprising—their job is important and we
could not tolerate poor performers.”

Brian Campbell Background

Brian Campbell is considered by most employees to be a good supervisor.

Employees stated that he is fair, conducts performance evaluations in an
impartial and timely manner, and gives feedback to employees on a regular
basis. However, Campbell has a bad temper and on rare occasions he has
“lost it” and been verbally abusive to employees. While these outbursts tend
to be quite rare (occurring maybe two or three times a year), employees fear
that they will be Campbell’s next victim. As one employee stated
anonymously, “Brian is a very good supervisor most of the time. However,
he takes on a different personality when he is angry, and I just hope that I
will not be the one that he verbally attacks. Once you’ve witnessed one of
these outbursts, you can never totally relax around him. This inconsistent
behaviour really frightens me.”

The Incident

The Friday before last, Carl Doan went to the break room for his afternoon
coffee break. During the day shift, employees are entitled to a 15-minute
break at 10:30 a.m. and 3:00 p.m. There were about 25 employees in the
break room, and Doan went to his usual table. Five other colleagues were
also sitting at Doan’s table (each table accommodates six people). Don
placed his sandwich and water bottle at his spot at the table and then
noticed that he had a small cut on his arm. He took a quick sip of his water
and then left the break room for about five minutes to wash his arm and put
a small bandage on the cut.

Brian Campbell frequently skipped the afternoon break if he had a backlog

of work, but when he did take a break, he usually sat at the same table as
Carl. Their table was positioned so that Carl and Brian typically took the
two seats at the back of the room so that they could sit with their backs to
the wall and observe what was going on in the room. Campbell preferred to
sit there so that he could see what was happening among the other
employees.

When Doan returned from the washroom, he observed that Campbell was
sitting at his place as one of the other employees was sitting in the spot
Campbell usually occupied. Doan also noticed that his sandwich and water
had been pushed to one side.

Doan stated, “Excuse me, Brian, but you are in my spot.”

Campbell turned to Doan, gave him a slight smile, and replied, “I don’t see
your name anywhere on the table. Find a spot somewhere else. And that is
an order from your supervisor.”

Doan refused to back down. “My drink and sandwich are right in front of
you,” he declared. “I’m not kidding, Brian. Get out of my spot.”

Brian became angry, smashed his fist on Doan’s sandwich, and dropped his
pen into Doan’s water bottle. “Take your sandwich and drink and go
somewhere else,” he ordered. “I’m not letting you run the garage.”

At this point, Doan moved behind Campbell, grabbed the chair Campbell
was sitting on, and jerked it backward. Campbell fell on the floor. The
water he had in his hand also fell down, and some of it splashed on his body
and face. While some of the other employees witnessing the incident
laughed, a hush fell over the room when it became evident that Campbell
was hurt. He went to the emergency room at the local hospital and was
diagnosed with a bruised tailbone. While not serious, the injury required
Campbell to miss eight days of work. Doan was sent home and told not to
report for work the next day.

On the Monday following the incident, the human resource manager, Alex
Morrisette, met with a number of the employees (including Pat Carson)
who had been present at the table. After reviewing all of the evidence and
meeting with Campbell and Doan, the City of New Halidart decided to
terminate Doan, who was notified of the termination on Thursday (three
days after the investigation).

Eight days after the incident, Carl Doan wrote a formal letter apologizing
for his conduct. In the letter, Doan stated that “I didn’t mean to hurt Brian,
and I am sorry for my actions.”

DISCUSSION QUESTIONS

1. Make arguments for both the employer and employee. Does the
employer (City of New Halidart) have just cause to terminate Carl
Doan?
2. How would you recommend communicating information about the
termination with the employees who had observed this incident, and
about respectful work practices expected in the future?
Chapter 12

Ensuring Health and Safety at the

Workplace
Even as organizations of all kinds regularly permit, if not encourage,
management practices that literally sicken and kill their employees, these
same workplaces also suffer because toxic management practices and
unhealthy workplaces do not improve organizational profitability or
performance.

JEFFREY PFEFFER1

Page 317

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. LO1 Describe the major Canadian laws relating to occupational health

and safety.

1. LO2 Assess the traditional thinking with respect to occupational

health and safety issues.

1. LO3 Explain the new thinking with respect to employee rights

relating to occupational health and safety issues.

1. LO4 Outline the implications for human resource management of

safety and health responsibilities.
 1. LO5 Discuss the impact of stress on employees and the workplace.

1. LO6 Summarize the relationship between health and safety issues and
human resource management.

Even today, too many employees are injured at the workplace. Employers,
supervisors, and employees must work together to reduce on-the-job
injuries and illness:

Vernon Theriault was a miner at the Westray coal mine. On May 9,

1992, he was getting ready to go to work and begin his shift when an
explosion at the mine led to the death of 26 miners. As he reflects on
what happened at Westray, he believes that politicians have not done
enough to make workplaces safer. As Theriault notes, “The bottom
line is, the reason I went there is they said it was going to be 20, 25
years of work and you could work all the overtime you want and
(make) $60,000 to $80,000 a year. I was looking after my family and
that was No. 1 for me.”2

At the turn of the twentieth century, the thinking and attitudes of employers
and employees toward accident prevention were quite different from today.
Comments made during this period by employers illustrate this:

“I don’t have money for frills like safety.”

“Some people are just accident prone, and no matter what you do
they’ll hurt themselves some way.”

Page 318

“Ninety percent of all accidents are caused by just plain carelessness.”

“We are not in business for safety.”3

During this period, the courts used a legal expression, assumption of risk,
meaning that the worker accepted all the customary risks associated with
the occupation. Workers were instructed to protect themselves from special
hazards such as extreme heat or molten and sharp metal. Furthermore, the
attitudes of employees paralleled those of the employers. Scars and stumps
on fingers and hands were often proudly referred to as badges of honour.
The thought that safety was a matter of “luck” was frequently reflected in
such statements as “I never thought he’d get it; he was always one of the
lucky ones,” or “When your number’s up, there’s not much you can do.”

Over a four-year period in the early 1900s, records of one steel company
show that 1,600 of its 2,200 employees lost time from work because of
injury. In other words, 75 percent of this plant’s entire workforce lost time
from work because of accidents on the job.4

The early approach to safety at work used the careless worker model. It
assumed that most accidents were due to workers’ failure to be careful or to
protect themselves. Even if training was provided to make workers more
aware of the dangers in the workplace, this approach still assumed that it
was mainly the worker’s fault if an accident happened. A new approach, the
shared responsibility model, assumes that the best way to reduce accident
rates relies on the cooperation of the two main partners: the employer and
the employees (who may be represented by a union).5 Accident rates are
reduced when the following occurs:

Management is committed to safety in the workplace.

Employees are informed about accident prevention.

Consultation between the employer and employees takes place on a

regular basis (for example, by a health and safety committee).

There is a trusting relationship between the employer and staff.

Employees have actual input into the decision-making process.

In Chapter 10, one of the topics was workers’ compensation, which has as
its aim the compensation of an employee for injuries suffered on the job.
These programs have a serious defect: They are after-the-fact efforts that
attempt to compensate employees for accidents and illnesses that have
already occurred. Many early supporters of these laws had hoped that costs
would force employees to become more safety-conscious. Yet, even with
greater efforts by employers, accident rates continue to remain high. In
addition, toxins and unhealthy work environments continue to create new
health hazards.

A home building company and contractor were charged in Alberta

after a workplace accident left a father of two paralyzed from the waist
down. The employee severed his spinal cord after falling six metres
through an open stairwell at a construction site. According to a
spokesperson for Occupational Health (Alberta), “The prime employer
is always on the hook. If there’s another company directing work, they
can also be accountable.” The contractor who hired the employee (a
personal friend for several years) said that the charges were an insult.
“It was a tragic accident. If it could have been avoided, it would have
been. That is why they’re called accidents.”6
Workplace Injuries and Health
Hazards
It is estimated that about three Canadian workers die every working day from an
occupational injury or disease. However, the number of work-related injuries has
dropped dramatically since the 1980s, from about 50 per 1,000 employed workers
in 1986 to about 15 per 1,000 workers today. Every minute worked costs the
Canadian economy more than $60,000 in compensation payments to injured
workers. Workplace accidents and occupation-related illnesses cost more than $8
billion annually in compensation payments alone. The total cost is more than $19
billion a year when indirect expenses are taken into account, and this does not
include the incalculable social toll associated with workplace-related accidents.7
Parachute’s Cost of Injury Report (2015) estimates the cost of preventable
injuries to be $27 billion each year, with more than 3.5 million visits to
emergency rooms and over 60,000 disabilities. Injuries cost Canadians more than
heart disease and stroke do, and injury is the number one cause of death of
Canadians aged 1–44.8 Employers interested in calculating the direct and indirect
costs of workplace accidents and injuries can use an injury cost calculator
available from different provincial websites (see, for instance, the one at
WorkSafeBC).

Page 319

Accidents at work are caused by a complex combination of unsafe employee

behaviour and unsafe working conditions. Several factors contribute to the
complexity of managing safety in the workplace: The effects of some industrial
diseases do not show up for years; employers may “clean up” a health or safety
problem before an inspector arrives; companies may fail to monitor or disclose
health risks; or employees may fail to follow safe practices at the workplace or
engage in dangerous behaviour (such as drinking alcohol or taking drugs while on
the job).

It is also critical that organizations consider the safety of members of the public
who enter onto company property.

In November 2000, two 14-year-old children were killed during the Take
Our Kids to Work Day at the John Deere plant in Welland, Ontario. The fatal
 accident occurred when they crashed the small vehicle they were driving. An
inquest into the accident resulted in several recommendations, including the
use of an informed consent form containing health and safety messages and
requiring the signature of both the student and a parent or guardian, a
requirement that children be under adult supervision at all times, a
prohibition against student operation of a motorized vehicle, and a
mandatory orientation program for student participants that addresses health
and safety issues.9

Workplace Injuries
Data from the Association of Workers’ Compensation Boards of Canada provide
some perspective on the extent of workplace injury and illness in Canada. While
the number of workplace injuries has declined and then levelled off in recent
years, the direct cost of injuries (such as lost wages, first aid and medical
treatment, rehabilitation, and disability compensation) has not. Moreover,
workplace injuries result in several indirect costs (including lost production;
recruitment, selection, and training of new employees; and damage to facilities
and equipment) that are incurred by the employer.

Research on the number of time-loss injuries is provided in Figure 12-1, and

information on the number of workplace fatalities is contained in Figure 12-2.
There are approximately 775,000 occupational injury claims each year, and more
than one-third of these claims are accepted time-loss injuries warranting
compensation. In Canada in 2019, there were 160,801 lost time claims for men
and 110,948 for women; 925 workers died as a result of a workplace injury (an
average of about 2.5 workers each day of the year). In terms of workplace
fatalities, the most dangerous occupations were construction and manufacturing.
Of the 925 fatalities in 2019, most (580) involved exposure to harmful substances
or environments, followed by transportation accidents (133), contact with objects
or equipment (78), and falls (73). In terms of gender, 882 of the fatalities involved
men compared to 43 women. April 28 is the National Day of Mourning to
commemorate employees killed or injured on the job.

Page 320

Although close to 1,000 employees die annually due to their employment (based
on data from the Association of Workers’ Compensation Boards of Canada), a
new study suggests that the true number may be much higher. Bittle, Chen, and
Hebert argue that the true number of deaths may be 10–13 times higher when one
considers other factors such as employees not covered by workers’ compensation,
deaths as a result of commuting to work, stress-induced suicides, and
occupational diseases such as cancer.10

FIGURE
12-1

Number
of
Accepted
Time-
Loss
Injuries
(2000–
2019)

Table
Summary
:
Summary

Source: Based on data from Number of Accepted Time-Loss Injuries:

Association of Workers’ Compensation Boards of Canada, “National
Work Injuries Statistics Program,” Association of Workers’
Compensation Boards of Canada (AWCBC), National Work
Injury/Disease Statistics Program (NWISP).
FIGURE
12-2

Number
of
Fatalities
(2000–
2019)

Table
Summary
:
Summary

Source: Based on data from Number of Fatalities: Association of

Workers’ Compensation Boards of Canada, “National Work Injuries
Statistics Program,” Association of Workers’ Compensation Boards of
Canada (AWCBC), National Work Injury/Disease Statistics Program
(NWISP).
 Exposure to asbestos has been responsible for about one in three workplace
deaths each year since 1996. These deaths represent more fatalities than
from highway accidents, fires, and chemical exposures combined. Health
professionals believe that the long latency period associated with asbestos
(often 20–40 years) will lead to higher death rates. According to Health
Canada, “Asbestos poses potential health risks only when fibres are present
in the air people breathe. The problem is there’s no way of ensuring that all
products are always bound or enclosed. Brake pads wear down, renos stir up
dust, while pipes and tiles get sawed.”11

Fishing, construction, manufacturing, and transportation are among the most

dangerous industries when considering time-loss injury rates. Evidence from the
Association of Workers’ Compensation Boards of Canada revealed that the most
common type of injury involves traumatic injuries to muscles, tendons, ligaments,
and joints (almost 48 percent of injuries), followed by open wounds, surface
wounds, and bruises (18 percent). The most common body part injured was the
back (about 22 percent of cases), followed by hands and fingers (12 percent), legs
(9 percent), and shoulders (7 percent).

Reynold Hert, now CEO of the BC Forest Safety Council, remembers being
a sawmill manager about two decades ago and watching an operator of a
lumber-trimming machine stick his hands into the equipment to straighten
out a board. Fortunately, the man was not injured but could easily have lost
fingers, a hand, or an arm. The man said that taking risks was necessary to
avoid costly work disruptions. Hert told him to follow safety procedures and
the man had to shut down his machine 90 times during his next shift to
straighten out boards, reducing his productivity by about 33 percent. When
Hert asked an engineer and maintenance employee to examine the issue,
they found that the machine had a timing flaw, and they were able to fix the
problem. The previous year, there were 21 fatalities and approximately 7,000
injuries in the BC forest industry. Hert recognizes that some of the 4,000
employers in the industry may cut corners in order to keep bids as low as
possible. According to Hert, investing in safety training may increase short-
term costs but the contractors that don’t pay attention to safety will find it
hard to get work. “When you are staring at the spot where a person died, you
realize it is preventable.”12

Page 321
The International Labour Organization estimates that more than 2.3 million
workers die every year due to workplace accidents or work-related disease. In
addition, approximately 313 million accidents at work require employees to take
extended absences from the job, and the annual cost to the global economy is
about $3 trillion.13

Health Hazards
It is possible to combine the various health hazards into three categories:14

1. Physical agents. Exposure to physical elements such as noise, temperature,

lighting, vibrations, and radiation.

2. Biological agents/biohazards and chemicals. Exposure to such natural

organisms as parasites, bacteria, insects, viruses, and so on; exposure to
chemical compounds or other harmful toxic substances.

In Fernie, B.C., three men working at a hockey rink died due to an ammonia
leak. Ammonia, a colourless gas that is toxic if inhaled, is often used in
mechanical refrigeration systems such as those in arenas. Industry experts
reported that more inspections and stricter staffing standards are needed.
Other recommendations included training related to keeping the rink safe
and ensuring that maintenance is kept up.15

3. Ergonomically related injuries. Caused by the work environment and

including repetitive strain, stress, overexertion/fatigue, and back injuries. In
simple terms, ergonomics involves the “study of the relationship between
people and their jobs.” More specifically, ergonomics uses scientific
principles to examine the nature of the task that the employee is doing, the
equipment or machinery needed to carry out the task, and the environment in
which the task is carried out. Some ways in which ergonomics has been
applied include preventing back injuries, developing proper work positions,
organizing the work space, and managing the light at work.16

A recent study of about 7,300 employees revealed that people whose job
primarily involves standing are about twice as likely to have a heart attack or
congestive heart failure compared to those whose job largely involves
sitting. Moreover, the risk of heart disease (6.6 percent) is actually higher
than for daily smokers (5.8 percent).17
Awareness of health hazards and preparing for emerging health hazards are very
important. Consider the following example involving a letter carrier:

A letter carrier near Victoria, British Columbia, was seriously injured when
bitten by a dog. The carrier was making a delivery that required a signature
so she rang the doorbell and was bitten on her hand and arm when the dog
escaped as the homeowner opened the door.

Injuries among Canada Post employees are not uncommon, with a total
injury frequency of 10.06 percent for 2019 and a lost time injury frequency
of 4.60 percent. Both measures were improvements from the previous year.
As well, there was a reduction in injuries resulting from slips, trips, and falls
and manual material handling (the two most common injuries). More than
120,000 hours of training was provided to employees.18

In addition, some rather dangerous workplaces may not be subject to the same
scrutiny as others. For example, one observer argues that NHL rinks are unsafe
workplaces. He asks, “When will authorities responsible for occupational health
and safety turn their attention to the professional hockey rink which, after all, is a
workplace and subject to regulation?” He argues that British Columbia’s health
authorities have investigated several cases of workplace violence in recent years
but have largely ignored professional sports. He asserts that while hockey
involves some inherent risks, injury resulting from fighting, illegal use of the
stick, and head shots renders the hockey rink an unsafe workplace.19

Younger Workers and Workplace Safety

Page 322

There is growing emphasis on the health and safety of young workers. About one
in seven young workers is injured on the job, and approximately one-fourth of all
workplace injuries involve employees in the 15–29 age group. Among injured
workers who are under 25 years of age, more than 50 percent were injured during
the first six months of employment, and nearly 20 percent of the injuries and
fatalities occurred during the first month on the job. The most common injuries
affecting young workers include electrocution and machine injuries. According to
the Canadian Centre for Occupational Health and Safety (CCOHS), a number of
younger workers are not aware of their health and safety rights and
responsibilities at the workplace.

Across the country, governments are trying to make young workers aware of
workplace safety. For instance, Alberta has followed the lead of other
provinces and introduced the Work Safe Alberta Video Contest in which
high school students submit videos addressing issues relating to safe work.
The first place prize is $2,000, with $1,500 for second place and $1,000 for
third place. The winning videos are available online
(youtube.com/user/AlbertaWorkSafe).

Many employees fail to appreciate the wide range of health and safety hazards
while performing a job. Consider, for example, a student working part-time as a
cook at a small restaurant or fast-food outlet. Potential hazards include exposure
to biological and chemical elements, ergonomic issues, and a wide variety of
safety risks, including electrical shock, cuts, burns, collisions with co-workers,
getting a limb or hair caught in a piece of equipment, and so on. For example, a
Tim Hortons employee was injured when a car passing through the drive-through
lane hit the worker, who was leaning out the window.20 The CCOHS documents
the risks associated with several jobs often performed by younger workers.

Patrick Desjardins was 17 when he was electrocuted while using a buffer to

clean the floor at Walmart in Grand Falls, New Brunswick. The buffer had
been purchased at a garage sale. Walmart was fined $120,000 after pleading
guilty to health and safety violations, including a failure to ensure that the
buffer was suitable, inspected, and well maintained and failure to take
reasonable precautions to ensure the health and safety of its employees.
According to Patrick’s father, “Walmart can earn $120,000 in 15 seconds.
It’s not enough but what is enough. As far as I’m concerned, if these
workplaces get caught … those fines should be increased big time.”21
LO1 Federal and Provincial Safety
Regulations
Each province as well as the federal jurisdiction has detailed legislation
addressing health and safety, and most employers and employees are governed by
provincial legislation. Although this chapter examines safety legislation at the
federal level, students interested in learning about the specific legislation in their
province can obtain such information by contacting the relevant provincial
government department. Provincial government websites typically contain both
the legislative provisions and detailed guides to understanding health and safety
law.

At the federal level, the Canada Labour Code (Part II) details the elements of an
industrial safety program and provides for regulations to deal with various types
of occupational safety problems. All provinces and the territories have similar
legislation. Part II of the Code establishes three fundamental employee rights:

1. The right to know about hazards in the workplace

2. The right to participate in correcting those hazards

3. The right to refuse dangerous work

As employees return to work during the COVID-19 pandemic, a number of safety

questions emerge. Employment lawyer Sari Springer notes that employers have
the right to take a worker’s temperature (but should try to do it in a respectful and
dignified way). A key issue involves return to work refusals by employees.
Springer asserts that employers will need to consider return to work refusals on a
case-by-case, site-by-site basis.22

A key element of health and safety laws is the workplace health and safety
committee, which is usually required in every workplace with 20 or more
employees. These committees have a broad range of responsibilities. Some of the
major powers and duties of committees under federal jurisdiction include the
following:
 Meeting at least nine times a year, at regular intervals and during regular
working hours

Considering and expeditiously disposing of health and safety complaints

Participating in all of the inquiries, investigations, studies, and inspections

pertaining to employee health and safety

Page 323

Ensuring that adequate records are kept on workplace accidents, injuries, and
health hazards

Participating in the implementation of changes that might affect

occupational health and safety

Inspecting, each month, all or part of the workplace, so that every part of the
workplace is inspected at least once a year23

Some other relevant federal laws are the Hazardous Products Act, the
Transportation of Dangerous Goods Act, and the Canadian Centre for
Occupational Health and Safety Act.

Part of the Hazardous Products Act and associated regulations concern hazard
classification and communication. The primary objectives of Canada’s national
hazard communication standard, the Workplace Hazardous Materials Information
System (WHMIS), include hazard classification, cautionary labelling of
containers, the provision of (material) safety data sheets [(M)SDSs], and worker
education and training.24

Although WHMIS provides information on the use of hazardous materials, other

countries have different requirements, and this is problematic with global trade.
In an effort to standardize hazardous materials requirements and communications
around the globe, the Globally Harmonized System of Classification and
Labelling of Chemicals (GHS) was introduced. Consequently, in February 2015,
the Hazardous Products Regulations were amended to incorporate the GHS for
workplace chemicals (known as WHMIS 2015, see Figure 12-3). This has
resulted in harmonized criteria for hazard classification and safety data sheets.

FIGURE
12-3
WHMIS
Class and
Division
Hazard
Symbols

Table
Summary
:
Summary

© All rights reserved. Classes of WHMIS Controlled Products. Health

Canada, 2009. Adapted and reproduced with permission from the
 Minister of Health, 2021.

The Transportation of Dangerous Goods Act makes Transport Canada, a federal

government agency, responsible for handling and transporting dangerous
materials by federally regulated shipping and transportation companies. It
requires that such goods be identified, that a carrier be informed of them, and that
they be classified according to a coding system.

The Canadian Centre for Occupational Health and Safety Act established a
public corporation with the following objectives:

1. to promote health and safety in the workplace in Canada and the

physical and mental health of working people in Canada;

2. to facilitate

1. consultation and cooperation among federal, provincial, and

territorial jurisdictions, and

2. participation by labour and management in the establishment and

maintenance of high standards of occupational health and safety
appropriate to the Canadian situation;

3. to assist in the development and maintenance of policies and programs

aimed at the reduction or elimination of occupational hazards; and

4. to serve as a national centre for statistics and other information relating

to occupational health and safety.25

The CCOHS is supervised by a board of governors made up of representatives of

the federal government, labour, and employers. Several hundred organizations are
now connected electronically with the centre and have access to information
relating to health and safety generally and to hazardous materials specifically.

The administration of safety programs comes mainly under provincial

jurisdiction. Each province has legislated specific programs for the various
industries and occupations within it. Across the country, provinces are following
a trend of consolidating health and safety legislation, streamlining the
enforcement of the relevant statutes by combining different agencies into one
body, and updating safety laws.26

Safety Enforcement
In the federal jurisdiction, significant changes to the Canada Labour Code as it
relates to health and safety included the removal of references to “health and
safety officers,” replaced by “the Minister.” This change made the Minister
responsible for exercising the duties historically performed by health and safety
inspectors or delegating the duties to another party. Section 141 of the Canada
Labour Code (Part II) details these powers:

Page 324

1. The Minister may, in carrying out the Minister’s duties and at any
reasonable time, enter any work place controlled by an employer and,
in respect of any work place, may:

1. conduct examinations, tests, inquiries, investigations and

inspections or direct the employer to conduct them;

2. take or remove for analysis, samples of any material or substance

or any biological, chemical or physical agent;

3. be accompanied or assisted by any person and bring any

equipment that the officer deems necessary to carry out the
Minister’s duties;

4. take or remove, for testing, material or equipment if there is no

reasonable alternative to doing so;

5. take photographs and make sketches;

6. direct the employer to ensure that any place or thing specified by

the Minister not be disturbed for a reasonable period of time
pending an examination, test, inquiry, investigation or inspection
in relation to the place or thing;

7. direct any person not to disturb any place or thing specified by the
Minister for a reasonable period pending an examination, test,
 inquiry, investigation, or inspection in relation to the place or
thing;

8. direct the employer to produce documents and information relating

to the health and safety of the employer’s employees or the safety
of the workplace and to permit the Minister to examine and make
copies or take extracts from those documents and that information;

9. direct the employer or an employee to make or provide statements,

in the form and manner that the Minister may specify, respecting
working conditions and material and equipment that affect the
health or safety of employees;

10. direct the employer or an employee or a person designated by

either of them to accompany the Minister while the Minister is in
the workplace; and

11. meet with any person in private or, at the request of the person, in
the presence of the person’s legal counsel or union
representative.27

Page 325

Provincial laws provide similar powers to safety officers under their jurisdiction
but there are often concerns about enforcement:

By July 2020, WorkSafeBC had conducted more than 12,000 work-site

inspections and issued more than 300 orders for safety violations associated
with COVID-19. The most violations were in the service, manufacturing,
trade, and construction sectors. WorkSafeBC is trying to help employers
develop and implement a COVID-19 safety plan but can fine employers for
flagrant violations or issue stop-work orders if the risk of serious illness is
present.28

Although prosecutions are often the main approach to enforcing safety violations,
there is a growing use of administrative money penalties (AMPs) in a number of
jurisdictions including Alberta, British Columbia, Nova Scotia, Manitoba, and
Yukon. In Alberta, the introduction of administrative penalties and tickets is
leading to the levying of fines on employers and employees. Penalties can include
a fine of up to $10,000 a day for each safety violation. On-the-spot tickets to
employers, contractors, employees, and suppliers can range from $100 to $500.
Mark Hill of the Yukon Workers’ Compensation Health and Safety Board reports
that, in Yukon, “Fines have had a dramatic effect on workplace behaviour, with
the vast majority of workplaces now ensuring appropriate personal protective
equipment is worn (not long ago, this was the exception rather than the rule).”
However, safety consultant Alan Quilley disagrees when he asserts that “From
my perspective, there is nothing in human history that says we can fine ourselves
into excellence.”29

In late 2017, Ontario increased the maximum fine for companies violating
provincial safety legislation from $500,000 to $1.5 million (the first increase in
17 years). Similarly, the maximum fine for an individual or unincorporated
business was increased from $25,000 to $100,000 (the first change since 1979).
Fines generally fall short of the maximum amount but experts speculate that the
changes should result in higher fines for serious or repeat violations. Similarly,
Nova Scotia announced increases in fines (from a maximum of $5,000 to $10,000
for a first offence and from $10,000 to $50,000 for a second) and more rigorously
enforced safety measures in the construction trades. The changes are aimed at the
use of cheaper labourers rather than skilled tradespersons on some construction
projects. Duncan Williams, president of the Construction Association of Nova
Scotia, stated, “The black market is costing companies that do invest heavily in
safety, training, apprenticeship, and equipment.”30

A Nova Scotia employee fell to his death from the sixth floor of an
apartment building under construction a few years ago. The Nova Scotia
Occupational Health and Safety division laid charges against the employer,
Parkland Construction, for failing to provide adequate fall protection, fall
protection training, and a safe work plan. A company supervisor was also
charged with failing to provide fall protection and failing to take every
precaution to protect an employee’s health. While initial reports suggested
that the company could be fined up to $500,000 and the supervisor could
receive a jail term of up to two years, a provincial court judge ultimately
fined the company $70,000 but dismissed charges against the supervisor.
Included in the fine was $37,000 to the Nova Scotia Community College to
provided bursaries for students entering a program for safety officers and
professionals.31

As a general principle, an occupational health and safety inspector may enter a

business to carry out duties without notice or a warrant. When an OHS
(Occupational Health and Safety) inspector arrives at the workplace, the
employer should do the following:
 1. Be diligent—take notes on everything the inspector says and answer
questions directly without a lot of narrative.

2. Be prepared—have the documentation for due diligence in order and follow

safety procedures to the letter (as the inspector may be testing the employer
to see if the rules are actually followed).

3. Stay covered—post the safety policy inside the front door and easily visible
to the safety inspector, and choose an employee who will be designated to
deal with the inspector.32

On the other hand, there are examples where safety standards may not be
rigorously enforced:

A Manitoba construction worker died when a trench wall collapsed on him,

trapping him underground. It took rescue workers almost 20 hours to find
the employee. Blaine Duncan, a workplace safety specialist with the
Manitoba General Employees Union, expressed dissatisfaction with
workplace safety conditions relating to COVID-19, reopening of businesses,
and the reduction of field inspections by safety health officers. According to
the union, “only a handful of workplace safety officers were sent into the
field since the pandemic began, and they have been restricted to ‘drive-by’
inspections only, instead of in-person meetings.”33

Page 326

Safety enforcement issues are not restricted to Canada. By early September 2020,
more than 42,000 meat packing workers in the United States had tested positive
for COVID-19, over 200 had died, and almost 500 plants had employees with
COVID-19. However, only two plants had been charged with a total of three
safety violations and fined $29,000 (although both companies had revenues in the
billions of dollars). Workers, unions, and safety experts were outraged at the slow
pace of federal regulation and poor enforcement. According to Kim Cordova,
president of the United Food and Commercial Workers Local 7, “these tiny fines
are nothing to meat plant owners. They give an incentive to make these workers
work faster and harder in the most unsafe working conditions imaginable.”34

In an examination of 251 cases involving convictions connected to workplace

fatalities from 2007 to 2017, a CBC analysis revealed that the median fine was
$97,500. However, the median fines differed noticeably among the provinces (the
lowest was $26,563 for British Columbia and the highest was $275,000 for
Alberta). Although every jurisdiction except Quebec permits a jail sentence, only
four provinces have put an employer representative in jail (and almost all jail
terms were for 60 days or less). Irene Lanzinger, president of the B.C. Federation
of Labour, stated, “The fines need to be greater, they need to be a significant
deterrent, but we also need to pursue these cases through the criminal justice
system.”35
Responsibility for Health and Safety
LO2 Historical Views on Responsibility for Health
and Safety
So far, the focus in this chapter has been on the legal requirements for
maintaining a safe and healthy work environment. It should be emphasized,
however, that these must be seen as the minimum requirements for employers. A
major purpose of occupational health and safety laws is to prevent injuries from
happening.

The 2019 Canada’s Safest Employers list revealed that leading organizations
pay considerable attention to safety. GE Healthcare, based in Mississauga,
Ontario, has about 500 employees and is in the business of selling and
servicing equipment for hospitals. About 40 percent of its employees are
involved in equipment installation and servicing and thus face chemical,
radiation, and electrical hazards. Since employees are scattered across the
country, local managers are responsible for conducting safety inspections
with field representatives. In addition, GE workers are encouraged to
identify safety issues and concerns and the company acknowledges those
who report safety omissions. Also, the company has completed a major
update of its safety intranet, which is now easily accessible using
smartphones.36

Historically, it was believed that the responsibility for health and safety rested
primarily with the employer. However, this view is changing. A number of
jurisdictions have legislation requiring the establishment of joint health and safety
committees or health and safety representatives, as mentioned above. The
requirement of establishing a joint committee varies among the provinces; for
example, a committee may be required if a workplace has a minimum number of
employees (typically 10 or 20 workers). The relevant legislation will outline the
duties of the committee (such as maintaining records, conducting meetings,
inspecting the workplace, and so on) and the makeup of the committee (number
of members, employee representation on the committee, and so on).

No law, by itself, can make a workplace safe. It is far more effective—and less
costly in the long run—if the responsibility for safety becomes a concern for
everyone: top management, supervisors, and employees.

Great Lakes Greenhouse in Leamington, Ontario, is a grower of cucumbers.

A group of workers was expanding a greenhouse and one employee was
rearranging wiring and connecting wires to an electrical panel. The worker
died after receiving a shock from a wire containing 600 volts of power. Upon
inspection it was found that the company was in violation of safety
regulations for failing to lock out the power to the wires. The company
pleaded guilty and was fined $120,000 and a 25 percent victim fine
surcharge.37

Page 327

Many organizations neglect safety issues when designing orientation programs. A

comprehensive safety orientation program will address several issues, such as fire
safety, smoking at the workplace, accident procedures, personal clothing,
protective equipment, material and chemical hazards, waste disposal, safety
representatives and the safety committee, occupational health, and the safety
policy or policies in existence. It is important that employees understand the
various issues and know how to respond in a crisis situation.

Similarly, employers often fail to consider the safety issues related to shift work.
According to the Institute for Work and Health, about 30 percent of Canadians
work shift work or are on call. Shift workers may experience higher stress and
may be prone to an increase in accidents and mistakes due to such factors as
sleepiness and fatigue. One study indicated that individuals working outside of
regular daytime hours are 1.5 times more likely to be injured at work, and this
rate increases around 2.5 times if a person alternates working between day and
night shifts. In addition, shift workers may not eat properly, and those on longer
shifts may be at a greater risk of exposure to health hazards. Of particular note is
that shift workers are most at risk when they are driving home from work.38

Research from a University of Pennsylvania study revealed that chronic

disruptions in a person’s sleep cycle, often experienced by shift workers, could
lead to damaged neurons in the brain and permanent brain damage. There is also
evidence that shift workers are more likely to have a higher risk of injury at work,
and preliminary studies suggest a link with heart disease, mental health issues,
and certain types of cancer.39 A Global Corporate Challenge Insights study
reported that about one in five employees are sleep deprived. Also, 93 percent of
poor sleepers were more likely to show signs of workplace fatigue, which is a
common symptom of “excessive daytime sleepiness” (EDS). EDS, in turn, is
associated with higher rates of absenteeism and greater accident and injury rates
at work.40

A report by the CSA Group addressed the issue of workplace fatigue. The study
found that there is very little research on workplace fatigue as many organizations
fail to share details of their fatigue management strategies. In addition, there was
a recognition that the concept of fatigue is complex, there is no consistently
accepted definition of fatigue, standards and policies vary noticeably across
industries and employers, and there is a need for legislative reform designed to
protect employees.41

LO3 Recent Views on Responsibility for Health and

Safety
In today’s workplaces, health and safety are joint responsibilities by top
management, supervisors, and employees, and often have dedicated people or
groups responsible for health and safety of all employees.

Top Management

Top management must set policies and make concern for health and safety part of
the organization’s culture and strategy. This ensures that health and safety aspects
will be considered whenever business decisions are made and training programs
developed. A failure on the part of managers to pay attention to health and safety
issues is being considered seriously by the courts in Canada. Consider the
following case:

A Sudbury company, Rainbow Concrete, its owner Boris Naneff, and two
supervisors were charged with criminal negligence causing death when an
employee died at work. The employee was driving under an archway on
company property when the archway collapsed, trapping the employee
inside. Almost two years after the employee’s death, the company pled
guilty to criminal negligence causing death. The plea agreement included
dropping all 12 of the charges in return for a fine of $1,000 to the company
and $200,000 to the victim’s family over an extended period of time.
According to Ken Neumann, Canadian director of the United Steelworkers
union, “abandoning the criminal prosecution of a company’s owner in
 exchange for a $1,000 fine against the company and a gradual, $200,000
payment to the grieving family, does not provide justice to the family.”42

Some organizations, recognizing that they lack the internal expertise to address
safety issues, are now outsourcing some health and safety needs. Options for such
firms include hiring a health and safety expert on a part-time or contract basis or
seeking the assistance of a firm that specializes in health and safety. While the
cost of a health and safety consultant generally ranges from about $75 to $200 or
more per hour, companies often save three to five times the cost of the consulting
bill by reducing the number of safety incidents at the workplace.

Page 328

The City of Edmonton was fined $325,000 for the workplace death of a
tunnel foreman. During the construction of a drainage tunnel using a tunnel-
boring machine, the employee’s head became pinned between the machine
and a wall. Evidence revealed that employees did not have any formal
training on how to align or adjust the machine, and they were unaware of
hazards associated with operating the machine. The employees assisting the
foreman were not trained on hoisting or rigging procedures and the city did
not have the proper manual for the machine at the time of the incident. The
fine included a $240,000 creative sentence involving the provision of
additional training for underground municipal employees in the province and
the creation of materials for safety courses addressing hazard assessments
for tunnelling operations.43
© Image Source, all rights reserved.
 Safety gear, such as that worn by construction workers, is essential to
reducing work injuries. Should penalties be imposed for not wearing it?

The Bill C-45 amendments to the Criminal Code imposed a new duty on
individuals and organizations. Section 217.1 of the Criminal Code states this:

“Everyone who undertakes, or has the authority, to direct how another

person does or performs work or performs a task is under a legal duty to take
reasonable steps to prevent bodily harm to that person, or any other person,
arising from that work or task.”

The first Bill C-45 conviction involved the death of an employee in Quebec:

Transpavé, a Quebec stone-paving manufacturer, was fined $110,000 for

criminal negligence causing death after a 23-year-old employee was crushed
by a machine being used with an unplugged safety device. The employee’s
mother was disappointed with the amount of the fine, saying that she
expected the fine to be millions of dollars.44

There has been a lot of criticism about Bill C-45 (also known as the Westray
Bill) which celebrated its fifteenth anniversary in 2019, and many safety experts
believe that the level of enforcement has been dismal. According to Steven Hunt,
western director of the United Steelworkers union, “I don’t want to see a whole
bunch of CEOs go to jail, but one or two would be good and that is the paradigm
shift we need.” While Occupational Health and Safety only has the authority to
fine violators, police investigators and the OHS may lack the expertise to build a
proper criminal case. However, this is changing in Calgary where 28 detectives
have been trained in the investigation of serious workplace accidents and
fatalities. and relatively few cases have resulted from the legislation.45

In the R. v. Metron Construction case, six employees got on a swing stage to go

down 14 storeys. The swing, which had only two lifelines, collapsed and four of
the workers died in the fall. Subsequent investigation revealed that the swing
stage was defective and failed to meet Ontario safety standards. In addition, three
employees, including the site supervisor, had marijuana in their system. Metron
pleaded guilty to criminal negligence charges and the judge imposed a $200,000
fine. However, the Court of Appeal felt that the fine did not reflect the moral
blameworthiness and gravity of Metron’s conduct and substituted a fine of
$750,000. In addition, Metron construction project manager Vadim Kazenelson
was sentenced to 3.5 years in prison in early 2016 but appealed his conviction.
However, in early 2018, the Ontario Court of Appeal upheld the decision of the
trial judge.46

However, for the first time in Canada, an employer has been convicted of
manslaughter resulting from a workplace accident. In 2018, Sylvain Fournier, the
owner of an excavation company, was found responsible for the death of an
employee—Fournier was at the job site when the walls of a trench collapsed,
burying the employee. The court held that there was a significant lack of
judgment resulting from the failure to the employer to take steps to ensure that the
trench walls were properly stanched.47

Page 329

One CEO, Robert Watson of SaskPower, tendered his resignation after a report
indicated that workplace safety was not enough of a priority. SaskPower was
ordered to remove more than 100,000 smart meters that had been installed in
homes after it was found that at least eight of the meters had caught fire. The
province’s economy minister stated that “Watson took responsibility for the
problems experienced with this project. He felt it was time that there was new
leadership.” A review revealed that the meter project was rushed, no one was
responsible for the overall program, and there was insufficient attention to
customer safety.48

Supervisors

As part of their management training, supervisors must become proficient in

managing safety, which means knowing about health and safety laws and safety
regulations, training in observing safety violations, and learning communication
skills to convey the necessary information to their employees.

On her second day on the job at a British Columbia quarry, Kelsey Anne
Kristian died after a 30-ton truck she had parked began rolling and crushed
her. In 2015, about eight years after the incident, charges of criminal
negligence causing death were filed against two supervisors and the
company, Slave Lake Quarries. Kristian had never driven such a large truck
and her training only involved an oral review by her supervisor on using air
brakes. Charges against the two supervisors were stayed while the company
pleaded guilty and was fined $115,000. Kristian’s mother felt that the fine
was a slap on the wrist: “I would have loved to see someone go to jail, even
 if it was just for a year, house arrest. I would have loved to see someone
pay.”49

The ingredients of an effective safety training program include the following:

Accident investigation and analysis

Communication skills and report writing

Overview of legislative requirements

Meeting with management and objective setting

Organization and responsibility of joint health and safety committee

Team problem-solving/problem-solving techniques

Audits and inspections

Principles of occupational health and safety

Ergonomics

An issue that supervisors may have to deal with, but feel uncomfortable about,
involves an employee’s right to refuse unsafe work. It is important for the
supervisor to know the provincial legislation relating to work refusals and
recognize the importance of taking every work refusal seriously (even if the
supervisor believes that the work is safe).

Almost 90 percent of safety professionals report seeing workers not wearing

personal protective equipment (PPE) when they should have, with 29 percent
reporting that this has happened on numerous occasions. The most common
compliance challenges involving PPE relate to eye protection, hearing guards,
and respiratory protection or masks. The two most pressing workplace issues
relating to safety involve worker compliance and managing safety with fewer
workers.50

There are also examples where supervisors do not assume proper responsibility
for safety. A British Columbia mine run by Imperial Metals Corp. spilled millions
of cubic metres of waste into nearby waterways. According to a local United
Steelworkers executive, workers had warned company officials of safety issues
months before the spill. In his words, “Not everybody’s saying it, but you get
guys coming in who are saying that it’s looking dangerous.” It was not known
whether the warnings stayed with supervisors or went higher up the
organization.51

Employees

While employers are responsible for providing a safe work environment, and
supervisors are responsible for the safety of their people in the workplace,
employees are responsible for working safely. Employees must be trained to
understand safety rules and how to operate equipment safely.

Teenager Sarah Wheelan began working part-time at a deli counter of a

supermarket. Standard practice was to clean the machines after each use.
Rather than taking the machine apart and washing the blade, the practice was
to hold one’s hand to a spinning blade and clean the blade. While Wheelan
did not lose any fingers or suffer any injuries, it took her about two months
to get up the courage to confront her supervisor, concerned that she would
look stupid or unable to handle the pressure and responsibility of the job.
Her supervisor, a butcher, told her that new butchers would frequently nick
themselves or lose a finger—that was just the nature of the job. One week
later, Wheelan quit.52

It is also important that a system of enforcement be in place, understood, and

followed. If necessary, progressive discipline has to be applied for violation of
safety rules in the same way as for other rule violations.

Page 330

There is a growing, but fairly recent, recognition that employers need to consider
the needs of female employees when it comes to health and safety. For example,
safety protection gear and equipment such as tools and harnesses may not be
suitable for female employees. In addition, training programs need to be
examined—how to carry equipment, for instance, may differ depending on a
person’s height, weight, and strength.53

A 2017 study by the Trades Union Congress on personal protective equipment

revealed that 57 percent of women reported that their PPE sometimes or
significantly hampered their work and that it is extremely hard to get proper PPE
during pregnancy. Moreover, the concerns are not limited to PPE, with work
equipment (such as desks, tools, workstation heights, etc.) often designed for the
average-sized man. Examples range from improperly fitting uniforms, gloves, and
boots to police body armour.54

The Institute for Work and Health found that approximately 60 percent of health
care workers reporting higher levels of anxiety also indicated that PPE needs
were not being met. Similarly, 56 percent of respondents who stated that none of
their PPE needs were being met also reported higher levels of depression.55

Good safety performance should be recognized and rewarded by managers. On

the other side, unsatisfactory practices should be documented and corrected.
Rewarding good performance is preferable. The objective of safety incentives
should be to promote safety awareness and therefore benefit as many workers as
possible. Group awards may help to reinforce safety-consciousness through peer
pressure. In addition, the importance of safety training cannot be overemphasized:

Thirty-two miners in Esterhazy, Saskatchewan, were trapped one kilometre

below ground while a fire burned at the Mosaic potash mine. The miners
stayed in “refuge stations” (chambers that can be sealed off and are equipped
with food, water, and beds) and waited to be rescued. The situation ended
with the rescue of the miners, and it was acknowledged that their safety
training had been invaluable. As one miner said, “Follow every rule you
were taught, even if they don’t make sense, and it all works out in the
end.”56

A typical Occupational Health and Safety (OHS) training session may involve a
day or more of in-class training and more than 500 slides that are communicated
to the participants. Recognizing that traditional programs were not meeting their
objectives in terms of keeping employees safe at work, some organizations are
using blended training with interactive components such as role-play simulations,
conducting a task-and-hazard analysis, and modifying training for employees
with low levels of literacy or understanding of English.

Organizations operating in foreign countries may need to provide specialized

training to workers going to such locations. To meet this requirement, progressive
employers are recognizing the importance of employee training in global hot
spots (areas of political, social, or civil unrest that are potentially dangerous).57

LO4 Implications for Human Resource Management

Human resource professionals should ensure consistent enforcement of all safety
and health rules. If one worker is allowed to violate safety rules, other workers
may follow—and if an accident results, the employer may be subject to penalties.

In the United States, Walmart was fined $2 million after a temporary

maintenance employee was trampled to death by bargain-hungry shoppers.
Although the company was not charged criminally, it implemented a new
crowd-management plan.58

Health and safety law permits an employee to refuse to work when working
conditions are perceived to be unsafe. In such instances, the employee should
report the circumstances of the matter to the supervisor or to the supervisor’s
manager and to the safety committee in the firm. In most jurisdictions, an
employee with reasonable cause to believe that the work is unsafe will not receive
any loss in pay for refusing to work.

During a pandemic, an employee may exercise the right to refuse unsafe work for
a variety of reasons, such as a case of COVID-19 at the workplace, if the
employee is in a “high risk category” such as having a pre-existing condition, or
if an employee believes that co-workers or customers are not obeying proper
safety standards. In deciding a work refusal, the employer must consider a host of
factors such as the nature of the work, employee characteristics,
recommendations from public health, and government orders. If possible, an
employer should allow an employee who is refusing to work because of a
COVID-19 concern to work from home. If this is not possible, the employee is
required to return to work if the workplace is deemed safe after an
investigation.59

Page 331

From March to June 2020, there were 278 work refusals in Ontario related to
COVID-19 and all but one were refused as health inspectors held that employee
health and safety were not at risk. According to employment lawyer Stephen
Wolpert, “one of the challenges is that employees are operating on their own
subjective fears that aren’t always supported by science.” Lawyer Stuart Rudner
makes it clear that the employee doesn’t get to decide if the workplace is safe and
an employee whose right to refuse claim is denied has very little recourse. If the
parties cannot work out an alternative solution, the employee must go to work or
risk dismissal.60
In Ontario, safety training is mandatory. All supervisors and employees covered
by the OHSA are required to complete a one-hour training program that is
designed to inform the parties of their rights and responsibilities in creating a
culture of safety. As noted by Rob Ellis of MySafeWork, “Most Canadians still
don’t understand that they have the right to say no to unsafe work, and I find it
shocking that most Canadians still fear putting up their hand and reporting unsafe
work.”61

When charged with a health and safety offence, a company’s best defence is “due
diligence,” which means that the company took all reasonable steps to avoid the
particular event. In examining the organization’s behaviour, the court considers
several factors, including the magnitude of the risks involved and the nature of
the potential harm, with a focus on the part of the safety program designed to
prevent the accident in question. An effective safety program only helps establish
due diligence—preparing a defence based on due diligence begins well before an
accident ever happens.62

Health and Safety Audit

With increased attention on health and safety, more and more organizations are
having a health and safety audit conducted. Some of these audits are voluntary
and others are as a result of being targeted by government health and safety
officials. While health and safety audits vary, they may include a review of the
employer’s occupational health and safety documentation (such as training
records, manuals, etc.), a tour of the workplace, and interviews (and/or surveys)
of front-line employees, supervisors, and senior management. Of course, some
employers may decide to take the risk and not comply with health and safety
standards.

However, failing to comply may be a risky proposition:

The Transportation Safety Board of Canada (TSB) found that 254 incidents
involving Canadian National Railway, Canadian Pacific Railway, and
Montreal, Maine and Atlantic Railway (MMA—the railway company
involved in the Lac-Mégantic, Quebec, derailment that killed 47 people)
were not reported over a seven-year period. The TSB has made it clear that
the railroads are expected to comply with the regulations, and a
spokesperson for Canadian National stated that “CN will continue to focus
on every safety incident as a leading indicator of potentially more serious
accidents.”
 Following up on the case, in January 2018, three rank-and-file MMA
employees were acquitted of charges of criminal negligence causing death.
However, six former employees pleaded guilty to failing to test the train’s
handbrakes. One employee was sentenced to six months of community
service and the others were fined $50,000 (the maximum fine permitted).63

Consequently, a growing number of employers are being more proactive; rather

than waiting for a provincial audit, they are either conducting internal audits or
hiring consultants to assess the health and safety system. A number of provinces,
such as Nova Scotia, provide detailed information on how to establish and
evaluate a health and safety system.64

Safety Climate

According to an HR manager for a Calgary road-building company, “Safety

is all about the way you run your business. Wherever you see poor safety
there is always a poor-run company. The unfortunate aspect is that the
ownership isn’t even aware that it is poorly run. If a company has a poor
attitude toward safety, it makes us wonder if that attitude is indicative of
other aspects of their business.”65

Why should employers and human resource professionals be concerned with

safety climate? There is growing evidence that safety climate is an important
factor affecting safety knowledge and motivation. Neal and Griffin, two leading
scholars specializing in workplace safety, have developed a framework for
conceptualizing safety climate (perceptions about the value of safety in an
organization) and safety behaviour.66 They assert that safety climate is an
important factor affecting safety knowledge and motivation, which in turn
impacts safety behaviour (see Figure 12-4).

FIGURE 12-4

A Framework
for
Conceptualizin
g Safety
Climate and
Safety
Behaviour
 Table
Summary:
Summary

SOURCE: Andrew Neal and Mark Griffin (2004), “Safety Climate and
Safety at Work,” in Julian Barling and Michael Frone (Eds.), The
Psychology of Workplace Safety, Washington, DC: American
Psychological Association, p. 17.

More than a decade ago, and faced with one of the worst injury rates in the
country, Saskatchewan introduced a new educational campaign called
“Mission Zero” in an effort to reduce workplace deaths and injuries. The
chair of the Saskatchewan Workers’ Compensation Board (WCB) noted that
safety requires that employers and employees work together with the same
goal of a safe work environment and asserted that safety is “an attitude
thing” with a culture where safety is out front. The program is still going
strong—according to Donna Kane, former VP of HR and team support at
WCB, “We believe every injury is preventable and that’s why Mission Zero
is core to everything we do.” 67

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Neal and Griffin outline eight dimensions of a safety climate. Organizational

level dimensions include the following:
 Management commitment to safety. Does management place a high priority
on safety and communicate and act on safety issues effectively?

Human resource management practices. To what extent are the HRM

practices of the organization perceived to enhance safety?

Safety systems. To what extent are hazard management systems, incident

investigation, and safety policies and procedures perceived to be effective
and of high quality?

Local work group dimensions include the following:

Supervisor support for safety. Do supervisors place a high priority on safety

and responding to safety issues?

Internal group processes. Is there communication and support for safety

issues within the group?

Boundary management. What is the quality of communication between the

group and other stakeholders?

Risk. Are the work tasks perceived to be hazardous, dangerous, or unsafe?

Work pressure. Is workload perceived to exceed the employee’s capacity to

perform the work safely?

The importance of top management commitment is critical:

A report to the House of Commons described the “culture of fear” at

Canadian National Railway (CN). CN received a score of 1 out of 5 when
evaluated on its efforts to implement the safety management standards
introduced as an update to the Railway Safety Act. Railway workers
described how difficult it was to develop a safety culture when they were
working in a culture of fear in which they feared reprisals and disciplinary
action if they voiced concerns relating to safety. There was evidence that
safety management systems were getting little more than lip service, thus
increasing the risk of train derailments and other accidents. According to one
former employee, “We had it drummed into our heads [that] if trains aren’t
running on time, somebody would want to know why and it could mean our
jobs.”68
Downsizing and Safety

Page 333

Another issue that is beginning to attract attention is the relationship between

downsizing and employee safety. This is particularly relevant in light of the
number of downsizings announced in recent years. The research evidence
suggests that downsizing creates job insecurity, which is strongly associated with
low levels of job satisfaction. Low job satisfaction, in turn, is related to safety
motivation (the motivation to perform a job in a safe manner) and safety
knowledge (an understanding of safe operating procedures). When safety
motivation is low, employees are less likely to comply with safety procedures and
carry out their work in a safe manner (what is known as safety compliance).
Finally, lower levels of safety compliance are associated with more workplace
accidents. It is suggested that during a downsizing, employees concerned with
keeping their jobs view productivity as more important than safety. However, in
downsizings in which employees perceived that the safety climate was positive
and the organization viewed safety as very important, the negative outcomes
associated with job insecurity were not seen.69

Spotlight on ETHICS

A Question of Safety

Consider the following situation and make a note of your answer on a separate
sheet of paper.

You are a supervisor at a local dairy. Your job involves supervising employees
who work in the dairy, while another individual is responsible for supervising the
employees who deliver milk to various stores. In the past six months, the labour
market has been fairly tight and your company has been having problems
attracting and retaining good delivery people.

Two weeks ago, the human resource management department hired a new milk
delivery employee named Lucy Lynn. Lucy’s job involves driving a milk van and
making deliveries to grocery stores. By all accounts, Lucy is a very competent
and reliable employee, and the human resource professional who hired her did so
without any hesitation. Lucy is also the mother of one of your best friends. Lucy,
who is 54 years of age, was recently downsized from her job as a delivery person
at a large courier company.
Two days ago, you were invited to dinner at Lucy’s house. Lucy commented on
how much she was enjoying her new job and how grateful she was to obtain
employment so quickly. Lucy had recently gone through a messy divorce, and
you were aware that she was having some financial problems.

Just after dinner, you went out to the kitchen and found Lucy sitting on a chair
with her head resting on the kitchen table. When you asked whether she was
okay, she replied that “Everything is fine. It’s just that over the last few months, I
have been getting really bad headaches and have had three or four dizzy spells.
When my head starts whirling, I just need to sit down and put my head between
my knees. It’s no big deal—the dizziness passes in a few minutes. I’m telling you
this in confidence. Please don’t tell anyone at work. I can’t afford to lose my job.”

What are you going to do? Complicating the decision is that you know the
company asks individuals who will be driving company vehicles to provide a
detailed medical history. The questions include whether the individual has
experienced dizzy spells and severe headaches. After completing the form,
individuals are required to sign that they have answered the questions honestly
and to the best of their ability.
LO5 Workplace Stress
The term stress management is now part of the regular vocabulary of managers
and employees, but what is “workplace stress”? Workplace stress is “the harmful
physical and emotional responses that can happen when there is a conflict between
job demands of the employee and the amount of control the employee has over
meeting those demands.”70 Although high levels of stress are usually associated
with poorer job performance, not all stress is harmful. Moderate levels of stress
may actually increase workplace performance.

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A ComPsych survey indicated that 61 percent of employees have high levels of

stress, with extreme fatigue/feeling out of control; 34 percent report having
constant but manageable stress; and 5 percent indicate having low stress levels. In
terms of the impact of stress, 37 percent of employees report losing one hour or
more a day in productivity due to stress. Also, 53 percent miss one to two days a
year due to stress, 27 percent miss three to six days, and 20 percent miss more
than six days. About 47 percent of employees come to work one to four days a
year when they are too stressed to be effective and 28 percent do this five or more
days annually. When asked the primary cause of workplace stress, the most
common responses were workload (39 percent), people issues (36 percent),
juggling work with personal life (21 percent), and lack of job security (7
percent).71

Similarly, a study of more than 7,300 employees by Globe Careers/Howatt HR

Consulting revealed that about six out of 10 people felt stressed and on edge.
Respondents were placed in one of five categories (Calm to Losing It) based on
their scores on a Quality of Life scale. In the Calm group, 26 percent were senior
managers or executives, and 96 percent said they put 80 percent or more effort
into their job each day, 2 percent indicated suffering from a mental health issue,
and 16 percent reported calling in sick more than four days a year. For the Losing
It group, only 9 percent were senior managers or executives, 52 percent said they
put 80 percent or more effort into their job every day, 4 percent responded that
they suffered from a mental health issue, and 48 percent stated that they called in
sick more than four days a year. The Losing It group were more likely to report
not being a good fit for their job, that the work culture was not positive, that they
had trouble sleeping, that they suffered from headaches, that they did not receive
adequate performance feedback, and that they would leave the organization if they
could.72

It is estimated that stress-related absences cost the Canadian economy more than
$4.5 billion a year, have increased more than threefold since 1995, and average
about 20 days in length. Health Canada suggests that each dollar invested in the
prevention of stress is worth about $3.40 in future savings.73

What are the costs of stress at the workplace? In Dying for a Paycheck, Pfeffer
(2018) observes that job stress costs employers in the United States in excess of
$300 billion a year and is responsible for about 120,000 deaths. In China,
estimates are that a million employees a year may be dying due to overwork.74

Is stress associated with quitting a job? A recent Monster Canada report reveals
that about 25 percent of Canadians have quit a job, while a further 17 percent
considered it because of stress. Women were more likely than men to quit for
stress-related reasons (28 percent compared to 22 percent). Employees earning
less than $40,000 a year were most likely to leave a job due to stress (38 percent),
while 27 percent of workers earning between $40,000 and $59,000 reported
quitting due to stress. The two most important stress factors were workload and
office politics.75

COVID-19 is also having an impact on employee quit behaviour. A 2020 Hays

Canada report revealed that almost one in two employees (49 percent) are ready to
quit their jobs with COVID-19 stress, isolation from working at home, and heavier
workloads as a result of job cuts playing an important part in the decision. This
rate is 25 percent higher than from the 2019 survey. Also, 43 percent of workers
perceived that their organization has taken no measures to support employee well-
being during COVID-19.76

The actual experience or the perceived threat of a corporate takeover, merger,

downsizing, or plant closing, all of which could put large numbers of employees
out of jobs, can lead to a variety of symptoms of stress that can harm employees’
job performance. These symptoms involve both mental health and physical health.
Persons who are stressed may become nervous, easily provoked to anger, and
chronically worried about things.

There is a growing body of research indicating that stress may be associated with
cardiovascular disease (in particular, among employees in psychologically
demanding jobs that allow workers little control over the work process),
musculoskeletal disorders (such as back injuries), psychological disorders (for
example, depression and burnout), workplace injuries, suicide, cancer, ulcers, and
impaired immune functions.77 In addition, employer immunity from lawsuits as a
result of contributing to the workers’ compensation system is being eroded as
more courts allow employees to sue their employers for stress resulting from a
poisoned work environment.

Although there has been a lot of effort aimed at protecting employees from
physical harm at work, experts are now calling for greater attention to
psychological safety at work. According to Lorne Zon, former CEO of the
Canadian Mental Health Association (Ontario Division), “We expect
psychological safety in our schools and communities, and we should be able to
count on it in the workplace. If employees don’t feel safe speaking to their
managers or co-workers, because they are afraid of recrimination, the workplace is
not psychologically safe and productivity will be affected.”78

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In 2013, the National Standard on Psychological Health and Safety in the

Workplace was published. The purposes of the National Standard are to identify
and eliminate hazards in the workplace that pose a risk of psychological harm to a
worker and assess and control the risks associated with hazards that cannot be
eliminated, implement structures and practices that support and promote
psychological health and safety in the workplace, and foster a culture that
promotes psychological health and safety in the workplace.79

Causes of Stress at Work

A model of job stress has been developed by the National Institute for
Occupational Safety and Health in the United States.80 According to the model,
exposure to stressful working conditions (called “job stressors”) can directly
influence the health and safety of employees. However, the model also recognizes
that individual and situational factors can intervene to strengthen or weaken the
relationship between stressful job conditions and the risk of injury or illness.
Examples of individual and situational factors include one’s outlook or attitude,
the presence of a support network of co-workers or friends, and the balance
between work and family life. Although major distress can occur from only one
stressor, usually stressors combine to affect an employee in a variety of ways until
distress develops.
While almost any job condition may cause stress (depending upon an employee’s
reaction to it), there are, however, a number of job conditions that frequently cause
stress for employees. Some of the major causes of workplace stress are outlined in
Figure 12-5. If you are interested in measuring workplace stress, the Occupational
Health Clinics for Ontario Workers has an app based on the Copenhagen
Psychosocial Questionnaire (see ohcow.on.ca/measure-workplace-stress.html to
download the app).

FIGURE 12-5

Causes of Workplace Stress

Table Summary: Summary

Working Conditions Management Practices

Workload Unrealistic
demands/pressure
Understaffing Conflicting roles
Effort–reward
Hours of work/shift work/travel imbalance
Lack of
Physical environment (noise, air support/appreciation
quality, etc.) Lack of autonomy
Poor communication
Unfair treatment
Type/Nature of Job
Threatening work
Dealing with others (i.e., clients/co- environment
workers)

Level of responsibility/job demands Financial/Compensation

Issues
Unpredictability/unexpected
challenges and issues Pay/benefits

Life Events Job insecurity

Work–life balance

Family/personal issues

Unexpected life events/illness

 SOURCE: Adapted from K. Bhui, S. Dinos, M. Galant-
Miecznikowska,B. de Jongh, and S. Stansfeld, (2016), “Perceptions of
Work Stress Causes and Effective Interventions in Employees Working
in Public, Private, and Non-governmental Organisations: A Qualitative
Study,” BJPsych Bulletin, Vol. 40, pp. 318–325.

It is also possible to distinguish between acute stressors, which occur infrequently

but are extremely stressful events (such as a major organizational change), and
chronic stressors, which are the ongoing, daily problems and hassles that occur at
work. While many wellness programs are aimed at chronic stress, organizations
regularly ignore the impacts on employees associated with major organizational
changes.

With many employers cutting back on staff, employees are being told to work
smarter, but there is evidence that many are not able to face the added
pressure. One study found that as people work longer hours, their risk of
injury and illness goes up. This includes workplace accidents, depression,
hypertension, stress, cardiovascular disease, and chronic infections.81

Page 336

Evidence from Statistics Canada revealed that more than one in four workers
(about 3.7 million working adults) reported life as being “highly stressed.” For
highly stressed individuals, the main source of stress was, in fact, work (63
percent), followed by finances (12 percent), time (12 percent), and family issues (8
percent). Respondents with poorer physical and mental health were more likely to
be highly stressed. Workers who were mainly stressed about work tended to be
well educated and have white-collar jobs; workers anxious about finances had
lower incomes and less skilled jobs; and women were more likely to be stressed
about family matters.82

A survey of Canadian employers and employees by Morneau Shepell found that

35 percent of employees reported being more stressed from work and 36 percent
due to personal issues compared to five years ago. Two-thirds of employees with
mental health issues believed that their career options would be limited if the
organization was aware of their mental health issue (which was down from 77
percent from five years ago).83
What are the most stressful jobs? A 2019 CareerCast study revealed that the most
stressful jobs are enlisted military personnel, firefighter, airline pilot, police
officer, and event coordinator. The least stressful jobs included diagnostic medical
sonographer, compliance officer, hair stylist, audiologist, and university
professor.84

Poor supervision can cause stress. For example, the following stressful conditions
are mostly created by poor supervision: an insecure workplace climate, lack of
performance feedback, and inadequate authority to match one’s responsibilities.
Workers frequently complain in private about “bad bosses.”

A study of workers in Finland revealed that a bad boss may be hazardous to

employee health. Employees who perceived that they were being treated
fairly at work by their supervisors had a 30 percent lower risk of coronary
heart disease compared with co-workers who did not believe that their
supervisors treated them fairly. Research from Sweden also revealed that
employees working for a toxic boss were 60 percent more likely to have a
heart attack, stroke, or other life-threatening cardiac condition.85

A general and widely recognized cause of stress is change of any type because it
requires adaptation by employees. Change tends to be especially stressful when it
is major, unusual, or frequent. One particular type of change that dominated the
1990s and is becoming more common since the global financial crisis is
organizational downsizing. In many organizations, the “survivors” of workplace
change are being asked to work longer hours and do more with limited resources.
Working in such an environment may increase both employee stress and the
probability of having an accident.

Evidence from the Global Business and Economic Roundtable on Addiction and
Mental Health indicates that about 18–25 percent of American and Canadian
workers suffer from depression, and employers are losing billions of dollars due to
lost productivity and a lower capacity to compete. In order to build a healthy
workplace, CEOs must value a psychologically healthy and safe workplace and be
willing to walk the talk.86

Burnout
Burnout is a condition of mental, emotional, and sometimes physical exhaustion
that results from substantial and prolonged stress. It can occur for any type of
employee, whether one is a professional employee, secretary, or labourer. There is
growing concern over what has become known as presenteeism, which describes
an employee who is able to come to work but is inhibited from achieving optimal
levels of productivity due to ongoing health issues.87 One employee described a
burned-out associate in the following way: “His body is here today, but his mind
stayed home.”
Tom Grill/Photographer's Choice RF/Getty images
 Too much stress on the job can lead to employee burnout. What
measures can an employer take to reduce stress? Can stress be avoided?

Page 337

With respect to burnout, the human resource department’s role is a proactive one
to help employees prevent burnout before it occurs. For example, the human
resource department can train supervisors to recognize stress and rearrange work
assignments to reduce it. Jobs may be redesigned, staff conflicts resolved,
counselling provided, and temporary leaves arranged. Weeks or months of rest,
reassignment, or treatment may be required before recovery occurs. Some
emotional or health damage can be permanent. International evidence suggests
that health issues are a global concern:

The Global Wellness Institute notes that many of the world’s 3.2 billion
workers are unwell, with 45 percent employed in low-skill or manual jobs
and 77 percent in part-time, temporary, vulnerable, or unpaid jobs. Moreover,
38 percent suffer from excessive pressure on the job, and 24 percent are
actively disengaged from work. It is estimated that the economic burden of
unwell workers is in the range of 10–15 percent of global economic output.
For the United States alone, the costs of unwellness are estimated at $2.2
trillion a year (about 12 percent of GDP), with the cost breakdown arising
from chronic disease ($1,100 billion), work-related injuries and illnesses
($250 billion), work-related stress ($300 billion), and disengagement at work
($550 billion).88

Stress and Job Performance

Stress can be either helpful or harmful to job performance. When there is no
stress, job challenges are absent and performance tends to be low. As stress
increases, performance tends to increase because stress helps a person call up
resources to meet job requirements. It is a healthy stimulus to encourage
employees to respond to challenges. Eventually it reaches a plateau
that approximately represents a person’s top day-to-day performance capability. At
this point, additional stress tends to produce no more improvement. Finally, if
stress becomes too great, performance begins to decline because stress interferes
with it. An employee loses the ability to cope, becomes unable to make decisions,
and is erratic in behaviour.
There are several solutions to the problem of workplace stress. Curative solutions
try to correct the outcome of stress, while preventive solutions attempt to change
the cause of stress. In terms of curative measures, some employers give employees
the opportunity to relax through such activities as aerobic exercises, yoga, and
meditation. Some companies have counselling professionals on staff, employ an
external consulting service that provides assistance in diagnosing the causes of
stress and developing ways to cope with it, and are looking at or using video
counselling as a means of helping employees. While video counselling is at times
the only option for employees in remote locations, it also gives employees more
flexibility in scheduling counselling sessions. However, it is important for the
counselling platform to meet privacy requirements (such as PIPEDA), have
appropriate technology support, and allow for multiple participants.89

With regard to preventive measures, there are different approaches to dealing with
stress at the workplace. First, organizations can establish stress management
training sessions and EAP assistance to help workers deal with stress. Second,
some organizations are looking at improving working conditions in order to
reduce stress at work—the employer needs to identify stressful situations and
design strategies to reduce or eliminate the stressors. In managing stress, it may be
necessary to bring in outside experts.

Management should look at the structure of the organization and the design of
jobs. Several Canadian organizations have developed programs that provide
workers with more diversified tasks, greater control over decisions that affect their
work, and a chance for wider participation in the overall production process.
Figure 12-6 shows some of the specific actions that the human resource
department should take to reduce employee stress and burnout.

FIGURE 12-6

Actions to Reduce Stress

Table Summary: Summary

Ensure that an employee’s workload is compatible with the

individual’s capabilities and resources.

Design jobs to provide meaningful opportunities for employees to

use their skills.

Clearly define employee roles and responsibilities.

 Provide workers with the opportunity to participate in decision
making.

Improve the communications process.

Increase opportunities for social interaction among employees.

Develop appropriate work schedules.

Train managers and employees to be sensitive to the symptoms of

stress.

Establish a stress management policy.

SOURCE: National Institute for Occupational Health and Safety, Stress

at Work.

Spotlight on HRM

Safety Issues in Planning for a Pandemic or Emergency

What are some of the key safety issues in preparing for a pandemic? While some
organizations may have a pandemic policy, others will need to develop one.
Human resource professionals have an important role to play in pandemic
planning and workplace safety. While the suggestions outlined below reference
COVID-19, the principles can be applied to other pandemics and other
catastrophic events (such as severe weather conditions). Some of the major
considerations include the following.

1. Rely on Credible and Trusted Information

During an emergency, rumours, misinformation, and unsubstantiated claims can

increase fear and uncertainty. Although our understanding of the pandemic is
ongoing, relying on the latest credible information is critical. For example, the
World Health Organization has “myth-busting infographics” that can be made
available to employees.

2. Take Action to Prepare for a Pandemic

Ideally, an employer already has a pandemic plan but some organizations may lack
such a plan or the plan is in need of revision. Here are some of the key
considerations:

Have a plan addressing employee absences.

Establish flexible attendance and sick leave policies.

Identify key job functions and positions and cross-train staff to fill in if
necessary.

Monitor and track COVID-19 worker absences to aid in predicting daily

absenteeism rates.
Have a designated space for people who get sick at work and can’t leave right
away.
Have social distance plans to keep employees a safe distance apart.
Have clear direction on such issues as screening, physical distancing and
barriers, good ventilation, frequent cleaning and disinfection of surfaces, and
PPE (personal protective equipment).
Ensure that employee support services (such as EAPs) are available by video
conferencing or telephone.
Examine the impact of local pandemic restrictions (such as school closures or
reduced business hours) on your employees and workplace.
Provide guidelines on employee travel.

3. Establish Communications Guidelines

Clarify how the organization will communicate with employees concerning
workplace issues, closures, and other important information. Also be aware that
employees working from home may not have proper contact information for co-
workers.

4. Develop or Review Your Telework Policy

Be sure to update or develop a telework policy. Key issues include IT system

capacity, availability of equipment, secure connections, and accommodation of
employees.

5. Educate Employees on Hazard Protection

Beyond communicating the facts from trusted sources, safety professionals can
help educate employees about effective prevention measures. It is also useful to
explain standard practices that apply during COVID-19 as well as during the flu
season. It is critical that employers have a sufficient supply of PPE and inform
employees of safety procedures and protocols. Employees should also be aware of
the right to refuse unsafe work and the process to follow if they feel unsafe.

6. Understand the Hierarchy of Controls

The hierarchy of controls (see Figure 12-7) applies to all workplace hazards (not
just COVID-19). Start by considering the most effective controls (such as
elimination), but recognize that elimination may be impossible and thus there will
be a need to use other controls.

FIGURE 12-7

Hierarchy of Controls

Table Summary: Summary

7. Consider Global Operations and Travel

Employers with international operations have to be aware of different national

government laws and regulations as well as local restrictions and practices. Also
make sure that employees who are travelling are aware of the various safety
protocols (such as what to do if feeling sick and needing to self-isolate).

8. Regularly Evaluate and Update the Plan

Ongoing evaluation and updating of the plan is essential as conditions and our
understanding of the pandemic change.

SOURCE: Adapted from the American Society of Safety Professionals, The

Safety Professional’s Role in Planning for a Pandemic, asp.org, March 2, 2020 and
Ontario Ministry of Labour, Training and Skills Development, Develop Your
COVID-19 Workplace Safety Plan, November 19, 2020.

The Stress Audit

Human resource managers must be sensitive to the many possible sources and
causes of stress at the workplace. It is possible to evaluate the extent of
dysfunctional stress by performing a stress audit, which assists in identifying the
causes of stress.90 The stress audit asks the following questions:

Do any individuals demonstrate physiological symptoms?

Is job satisfaction low, or are job tension, turnover, absenteeism, strikes, or

accident proneness high?

Does the organization’s design contribute to the symptoms described?

Do interpersonal relations contribute to the symptoms described?

Do career-development variables contribute to the symptoms described?

What effects do personality, sociocultural influences, and the nonwork

environment have on the relationship between the stressors—individual
careers, interpersonal relations, and organizational design—and stress?

Page 338 Page 339

Mental Health
It is estimated that mental health problems and illnesses cost the Canadian
economy more than $50 billion a year directly and $6 billion annually for lost
productivity resulting from related absenteeism. Approximately 6.7 million
Canadians have a mental health problem or illness, about half a million Canadians
are absent in any given week as a result of mental health issues, and around 30
percent of disability claims and 70 percent of disability costs are attributable to
mental illness.91 According to the Conference Board of Canada, one in five
Canadians will have a mental health issue in their lifetime with 11 percent of men
and 16 percent of women experiencing a major depression. At any given time,
about 4 percent of Canadian workers are experiencing a depression. In addition,
more than 1.2 million Canadians with depression could be employed if given
optimal treatment and the increased productivity would add more than $32 billion
to the economy.92

Page 340

A 2018 study by Ipsos found that 35 percent of Canadians indicated that mental
health disrupted their lives in the past year. About 27 percent of Canadians (22
percent of men and 33 percent of women) reported having being diagnosed with a
mental health condition or mental illness. Based on a “mental health index,” 42
percent of Canadians are at a high risk for mental illness. Moreover, 21 percent of
respondents reported taking medication to help with their mental health and about
500,000 Canadians miss work every week because of mental health concerns.93

A 2020 Ipsos survey found that a substantial percentage of working Canadians

were fairly positive (good or excellent rating) about their overall well-being (64
percent), opinion of their employer (63 percent), mental health (62 percent), job
satisfaction (62 percent), and physical health (59 percent). Not surprisingly since
the survey was conducted during the pandemic, scores on the mental health
measure were down four points from 2019. There has been a noticeable increase
in the use of virtual care to address mental health issues, with 67 percent of
participants reporting that they would be likely to use virtual care to access a
mental health professional (up from 50 percent in 2019) or for video/phone
counselling relating to a mental health challenge (60 percent as compared to 45
percent in 2019).94

In order to get a more complete picture of mental health in the workplace, it is

important to also consider the influence of life at home. A study of almost 2,000
employees from 63 organizations reveals that mental health in an organization
does not exist in a vacuum. Fewer mental health problems were associated with
living with a partner, living in households with young children, living with higher
household incomes, living with fewer work–family conflicts, and living with
greater access to social network support away from work. In addition, work-
related factors (including support for employees, higher use of skills, job security,
and meeting expectations of job recognition) were also related with fewer mental
health issues.95

HR professionals may need to develop a greater understanding of mental illness

issues and diagnoses. The Diagnostic and Statistical Manual of Mental Disorders
(DSM), which is considered to be the authoritative source for the diagnosis of
mental illness, had its first major revision in nearly 20 years. Major changes
included new diagnostic criteria, greater attention to culture and gender, and a
developmental focus. The DSM is used by several parties, including arbitrators,
employers and HR professionals, workers’ compensation decision-makers, and
mental health professionals.96 Consider the following arbitration case:

A 38-year-old labourer at a Toronto dairy manufacturing plant was diagnosed

with severe mental health conditions. The employee’s behaviour became
quite erratic and the employer ultimately terminated the worker because of
 the safety risk. An arbitrator ruled that the employer had examined
accommodation to the point of undue hardship and concluded that the
employee should not be reinstated to active duty. However, the company was
ordered to reinstate the employee for three months without compensation
solely for the purpose of allowing the employee to apply for long-term
disability benefits.97

Some jurisdictions, such as Saskatchewan, have amended their Workers’

Compensation Act and stated that all forms of psychological injuries will be
presumed to be work-related. The change was in response to data indicating that
about half of the claims for psychological injury were being declined because the
employee was unable to establish a link to employment or establish the nature of
the injury. Employers expressed concern with the legislation because
psychological injury is not defined, because an organization having a large number
of claims could have a higher premium for workers’ compensation, and because
bogus or frivolous claims could drain employer resources.98

Fitness and Employee Wellness Programs

Fitness, wellness, and lifestyle programs have become quite popular in
organizations and have been shown to have a positive impact on reducing stress
and absenteeism and increasing productivity. However, The Personal’s wellness
survey of Canadians revealed that about one-quarter of Canadians report not being
in good physical health, 20 percent don’t eat fresh produce regularly, 30 percent
don’t watch portion sizes, 23 percent overeat to feel better, and 44 percent make
financial trade-offs to pay their grocery bill.99

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Many employees want access to health promotion programs in the workplace, and
the National Wellness Survey Report for 2013 indicates that more than 90 percent
of Canadian organizations with 50 or more employees and almost 60 percent of
smaller employers offer at least one type of wellness initiative. The most common
wellness initiatives were flexible work programs (49 percent), first aid/CPR
courses (36 percent), staff appreciation events (28 percent), time off in lieu of
overtime (27 percent), involvement of employees in work scheduling (27 percent),
and flu shot programs (24 percent). However, 87 percent of employers do not
measure the health status of employees and 75 percent are not confident that they
have the knowledge or support to effectively address employee mental health
needs. About 47 percent of employers are using incentive programs to encourage
participation in wellness initiatives. The biggest barriers to adopting wellness
initiatives were lack of budget (28 percent), lack of staffing (21 percent), lack of
ability to quantify benefits (19 percent), little knowledge of wellness (19 percent),
and lack of conviction of cost savings (18 percent).100

According to the Conference Board of Canada, only 32 percent of employers had

a formal wellness strategy, while just under one-half (48 percent) were relying on
informal strategies and 20 percent had no wellness strategy.101

Starting in 2011, the safest employers in Canada have been recognized at the
Canada’s Safest Employer Awards ceremony. In addition to awards in 10
industries, there is also a wellness and psychological safety award and, beginning
in 2015, a young worker safety and best health and safety culture award. In 2019,
Niagara Casinos won awards for wellness and psychological safety. Seven years
ago, the company (which has about 4,300 employees with an average age of about
50) overhauled its wellness program. Among the initiatives were healthy
alternatives in the cafeterias, wellness centres at each location, and resilience
training for casino dealers. The casino recently introduced a new digital wellness
app, Praktice Health, which challenged employees to watch everything they do
from diet to exercise to mindfulness. The results of the employees’ efforts went
into a social feed visible to workers. Future objectives include a focus on fatigue
and sleep hygiene, with particular attention to employees who are on shift
work.102

An Aon Hewitt survey of Canadian employers indicated that about 92 percent of

employers believe that an integrated approach to managing health is essential but
only 20 percent see their programs as in the top ranges of integration. Among the
most common wellness initiatives were employee assistance programs (93
percent), lunch and learns (59 percent), health spending accounts (55 percent),
newsletters (45 percent), and fitness memberships (42 percent). About 39 percent
had online fitness classes and 23 percent had a smoking cessation program.103

Is an employer allowed to restrict job applicants to non-smokers? Consider the

following example:

U-Haul International, as part of a plan to promote a healthier workplace

culture, has stated that in more than 20 U.S. states it will no longer interview
people who use nicotine, e-cigarettes and vaping products. According to
Toronto employment lawyer Lior Samfiru, “the reality is that an employer,
like U-Haul, can do what it wants as long as there is no law prohibiting it
from taking action.” While many Canadian employers do not have a policy
 refusing to hire smokers, Samfiru notes that a human rights challenge could
affect employer actions if a tribunal were to rule that nicotine addiction is a
disability.104

The average annual cost to an employer for each smoker is estimated by the
Conference Board of Canada to be $4,256. Part of the cost is related to
absenteeism with smokers, on average, taking more than two extra sick days a
year than non-smokers. In addition, unsanctioned smoke breaks result in a loss of
$3,842 per employee. Further, smokers and those who recently quit smoking are
2.3 times more likely to be off work for three months or more a year due to
chronic health issues.105

How effective are wellness programs? While most evaluations have come from
large American corporations with comprehensive programs, the evidence indicates
that such programs do the following:

Improve employee health

Decrease health care costs

Improve employee satisfaction

Decrease absenteeism and turnover

Improve corporate image

Reduce disability claims

A review of 73 published studies revealed an average savings-to-cost ratio of

$3.50 to $1.00 due to reduced absenteeism and health care costs. A meta-analysis
of 43 studies indicated an average reduction of 28 percent in sick leave
absenteeism and a 30 percent reduction in workers’ compensation and disability
management claims associated with health promotion.106 Specific programs also
show significant benefits:

A British Columbia initiative called UPnGO is a workplace wellness program

being tried out at five major companies. It is estimated that only 20 percent of
Canadians get the recommended 2.5 hours per week of moderate to vigorous
physical activity. Employees in the UPnGO program complete an initial
assessment and are then given an individual step goal. The goals of the
program include trying to improve on traditional participation rates in fitness
 programs and to specifically target employees who are less physically active
and sedentary.107

Shutterstock/Lee Torrens

More and more companies are promoting health by providing health

programs. Would the money be better spent by paying bonuses that
serve to motivate employees?

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Some employers are being creative in trying to help workers get healthier:

One approach involves imitating digital games and having employees track
health performance online. In many instances, employees form teams and
monitor their results. There is some concern that employees may feel
manipulated or pressured by co-workers to help the team win. In one
organization, employees posted messages criticizing co-workers who were
dragging the team down.

There is some recent evidence that positive results from employee wellness
programs are associated with the involvement of organizational leadership and the
provision of stress management initiatives. The most effective wellness programs
include wellness competitions (83 percent), counselling on nutrition (63 percent),
fitness programs (60 percent), wellness seminars and health fairs (53 percent), and
health screening (52 percent).108

However, Pfeffer argues that, rather than focusing on wellness programs,

organizations need to turn their attention to practices that have a major impact on
employee health, such as long hours, toxic workplaces, job insecurity, and layoffs.
He asserts that wellness programs rarely meet objectives because they are
designed to mediate rather than prevent harmful workplace conditions.109

Although labour unions have been strong supporters of health and safety
initiatives, organized labour has not always been an advocate of wellness
programs: Unions are often skeptical about employer motivations behind wellness
programs and there is a concern that employee information may be collected and
tracked to be used in attendance management.
Other Contemporary Safety Issues
Workplace Violence and Security
The events of September 11, 2001, increased employer and employee
awareness of workplace security issues. This has led to a reassessment of
security policies used to make workplaces safe. In addition to terror
concerns, other issues include preparations for a disaster (such as an
earthquake or flood) and access to workplace property by an intruder:

While schools are generally well prepared for a lockdown, many

employers are not. However, the attack at the National War Memorial
and subsequent firing of shots on Parliament Hill in October 2014 have
made employers more aware of the importance of having a lockdown
procedure. According to Ann Wyganowski, director of the Toronto
Disaster Recovery Information Exchange, “Employers should conduct
a proper internal and external assessment ahead of time. Training is
also important. You need to do the drills.”110

A number of organizations have developed emergency plans (such as

evacuation of buildings), implemented training programs associated with
security issues, assessed the work site for hazards and security
shortcomings, and established safety competencies for managers and
supervisors. However, not all employees feel secure at work:

Letter carriers in Montreal have been subject to more than a dozen

attacks by assailants seeking keys to mailboxes to steal credit cards,
passports, and other documents. The keys provide access to grey
boxes, community mailboxes, and apartments. While there are
allegations of thousands of thefts from community mailboxes, Canada
Post says it doesn’t have data on such thefts. According to Canadian
Union of Postal Workers president Mike Palacek, “We’ve been asking
for this information for years and Canada Post refuses to release it. We
 all realize community mailboxes are a problem and far less secure than
door-to-door delivery.”111

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Some firms have taken proactive measures to increase security for

employees:

During the global financial crisis, TD Bank became concerned about

robberies. Consequently, it trained 33,000 employees in robbery
prevention. A training needs assessment was completed and the
company also partnered with the RCMP and an armed robbery
prevention association with the goal of making the training as realistic
as possible. The training included elearning, instructor-led discussions,
role-plays, informal discussions, and ongoing coaching. The bank has
seen several benefits from the training, including a reduction in
robberies, increased safety to employees and customers, and a positive
return on investment.112

There is growing concern over workplace security and violence, and new
federal and provincial legislation is requiring the development of anti-
violence policies. About one-fifth of violent incidents occur at the
workplace and often result in workplace injuries and time away from work
for victims. In attempting to reduce workplace violence, it is necessary to
consider (1) environmental strategies (which focus on physical environment
such as lighting, bulletproof glass, security systems, and so on), (2)
behavioural interventions (which address such issues as employee training
relating to workplace violence and conflict), and (3) organizational
interventions (such as policies and work practices aimed at having a safe
workplace).113

A scan of media reports indicates that workplace violence is not a rare

event. In this era of restructuring and rapid technological change, there have
been a number of accounts of terminated employees returning to the
workplace and injuring or killing other employees. For example, Chuang
“Ray” Li, a computer programmer at Ceridian Canada in Toronto, allegedly
stabbed four of his former co-workers after being fired and faced several
charges, including attempted murder. However, although an Ontario court
ruled that Li was not criminally responsible for his actions by reason of
mental disorder, jurisdictions across the country have developed legislation
to address the issue of workplace violence.114 Consider the experiences of
health care workers:

A recent study of nurses found that over 60 percent experienced a

serious problem with violence over a one-year period and two-thirds
contemplated quitting their job as a result. Lost-time claims rose by
almost 66 percent over a nine-year period. A 2020 study revealed that
more than 36 percent of nurses screened positive for major depressive
disorder and one in three stated that they had suicidal thoughts.
Moreover, over 46 percent reported being physically assaulted 11 or
more times.115

Evidence from the United States indicates that about 9 percent of workplace
deaths were homicides, with four-fifths of the deaths resulting from
gunshots. Workplace violence is the second-highest cause of workplace
death for women (behind traffic accidents), with 22 percent of the fatal
workplace injuries to women resulting from homicide. In terms of deaths
per 100,000 workers, U.S. evidence indicates that the highest-risk jobs (in
order of risk of death) include taxi driver, law enforcement officer, hotel
clerk, gas station attendant and security guard, liquor store worker, detective
or protective service worker, and jewellery store worker. The jobs with the
greatest risk of workplace violence are police officer, security guard, taxi
driver, prison guard, bartender, mental health professional, gas station
attendant, and convenience or liquor store clerk.116 Measures aimed at
preventing or reducing the incidence of workplace violence include an anti-
violence/zero-tolerance policy, self-defence training, and safety and security
measures.

Data from the United States show that about 2 million workers are victims
of workplace violence, three-quarters of the assaults occur in health care, 44
percent of teachers have been victims of assaults at work, 43 percent of
workplace violence acts occur among co-workers, 27 percent of mass
shootings have occurred at work, and co-workers commit more than 20
percent of assaults that result in homicide at work.117
Two-thirds of workplace homicides are committed by a person not close to
the employee, and robberies make up about 85 percent of workplace
violence deaths. It is estimated that $3 or more is saved for every dollar
invested in workplace safety.118

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With the growth of the Internet and social media, one of the most recent
threats at the workplace involves “cyberstalking,” which is the use of
electronic communications to harass or threaten another individual. About
2.5 million Canadians experienced cyberstalking (8 percent of women and 6
percent of men), with higher rates for women and men in the 15–24 age
group. Women who had witnessed or experienced abuse during childhood
were more likely to report cyberstalking. Individuals who rated their mental
health as very good or excellent were less likely to report being
cyberstalked.119 Although one might expect that careful selection of new
hires might be an important step in reducing workplace violence, one study
places more attention on situational factors and poor management:

According to Julian Barling, co-author of a study entitled Supervisor-

Targeted Aggression, “In trying to understand why people behave
aggressively in the workplace, we should give primary responsibility
to situational rather than personal considerations.” Barling believes
that, in creating a healthy work environment where workers are treated
fairly, quality supervision is important in reducing workplace violence.
Moreover, when an act of workplace violence does occur, he suggests
looking inside the workplace for a potential cause rather than assuming
that the worker has a psychological problem.120

In workplace violence lawsuits, courts in the United States are placing a

much heavier onus on employers to take reasonable care in making sure
that the workplace is safe. Factors considered by the courts include the
crime rate in the neighbourhood, the security measures in place at the
business, the lighting of the buildings and grounds, the architectural design
of the buildings, and recommendations from security consultants.
It is estimated that workplace violence costs well over $8 billion a year,
with costs including medical care, disability and workers’ compensation,
higher insurance rates, negative public relations and company image,
consulting fees, greater security measures, and lower morale and
productivity. Experts point out that, under Bill C-45, employers and
executives may be criminally liable for failing to take reasonable steps to
prevent workplace violence and accidents. Proactive suggestions include
careful employee selection, development of a comprehensive policy on
workplace violence, employee training, assessment of the likelihood of
workplace violence, and rigorous security standards.

Jamie Pasieka, who worked at a Loblaw warehouse in Edmonton,

stopped at a military surplus store on his way to work, purchased two
large knives, and allegedly attacked several co-workers, leaving two
dead and four injured. According to Glenn French of the Canadian
Initiative on Workplace Violence, an incident of workplace violence is
very complex because “there is an environmental impact, there’s
witness and bystander impact, and, of course, there’s the impact on the
individual (victim) and the individual’s family.”121

Workplace bullying can cause mental health problems, yet many employers
are not aware of national standards aimed at protecting the psychological
health of employees. Consultant Valerie Cade notes that there is no well-
established definition of bullying, but her definition is this: “Workplace
bullying is deliberate, disrespectful, and repeated behaviour toward
someone or many people, for the bully’s gain.” According to Cade, envy is
at the root of all bullying, and nice, effective people are frequently targeted.
The bully’s goal is to take something away from the victim (such as praise
from somebody or relationships at work).122

Another issue that is gaining more attention is the link between domestic
violence and other facets of an employee’s life, including life at work. A
study by Western University and the Canadian Labour Congress revealed
that about one in three respondents said that they had experienced a
domestic violence incident during their lives (17 percent of men, 38 percent
of women, and 65 percent of participants in the transgender/other category).
Prevalence of domestic violence was particularly high for respondents with
disabilities, Indigenous respondents, and individuals indicating that their
sexual orientation was not heterosexual. Almost 54 percent of participants
who reported experiencing domestic violence said that at least one abusive
act occurred at or close to their workplace, 38 percent reported that
domestic violence affected their ability to get to work, and just under 9
percent reported losing a job because of domestic violence. The most
common abuse acts at or near the workplace included abusive phone calls
or text messages (41 percent), stalking or harassment near the workplace
(21 percent), and the abuser coming to the workplace (18 percent).123

Sick Building Syndrome (SBS)

Sick building syndrome is used to describe situations in which employees
experience acute health and comfort effects that appear to be linked to the
length of time spent in a building but no specific illness or cause can be
identified. However, the term building-related illness is used when
symptoms of diagnosable illness are identified and are attributable directly
to airborne contaminants in a building.124

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People spend up to 90 percent of their lives indoors, and a growing number

report becoming sick while working in a particular building. Symptoms
range from headaches to dizziness; to nausea; to eye, ear, or throat
irritation; and to allergic reactions. Sick building syndrome may be caused
by major combustion pollutants (caused, for instance, by malfunctioning
heating systems), biological air pollutants (such as mites, mould, and
dander), volatile organic compounds (including pesticides, solvents, and
cleaners), and heavy metals (such as lead). Human resource professionals
should take proactive steps to prevent sick building syndrome.125 However,
sick building syndrome is not always easy to detect:

The Alberta Court of Appeal building has been abandoned since 2001.
Following renovations to the building, there were numerous
complaints from lawyers, judges, and other workers of watery eyes,
fatigue, and irritated lungs. It took a considerable time to figure out the
problem, but eventually it was determined that air quality was the
 problem—the new, airtight building trapped moisture inside the walls,
leading to the growth of toxic mould. It is estimated that about 4
percent of the population react to mould spores and that 30–50 percent
of new or refurbished buildings cause sick building syndrome.126

Although not sick building syndrome. a key addition to many businesses

(such as restaurants, retail stores, offices, and gyms) during the pandemic is
plexiglass shields. However, there has been little research examining the
effectiveness of plexiglass. Moreover, new guidelines from the World
Health Organization state that the coronavirus can spread through aerosols
(which are tiny particles that float through the air and remain for extended
periods of time). There has been a new focus on improving ventilation
systems in an effort to make workplaces safer.127

Ergonomics
An area of health and safety that is attracting more attention is ergonomics
(also known as human factors engineering). As discussed in Chapter 2,
ergonomics focuses on the interaction between employees and their total
working environment.128 An ergonomics program seeks to ensure that the
physical and behavioural characteristics of the employee are compatible
with the work system (including methods of work, machines and
equipment, the work environment, and the workplace or work station
layout).129

While a number of organizations wait until employees complain about the

work system or sustain an injury, proactive employers aim to ensure that the
work system is compatible with employees; recent research indicates that it
is important to incorporate wellness initiatives into ergonomic and safety
programs.130 Consultants specializing in ergonomics can assist
organizations in the design and implementation of the work system.

Two common types of injuries that may be reduced by the application of

ergonomic principles are (1) overexertion and lower back injury and (2)
repetitive-strain injury (RSI), which may include cumulative trauma
disorder (CTD), overuse syndrome (OS), and musculoskeletal injury (MSI).
Repetitive-strain injuries are caused by repeated actions resulting in muscle
or skeletal strain.

According to Statistics Canada, about 15 percent of Canadians (4.5 million

individuals) are affected by RSIs, which are the most frequent type of lost-
time injury and the largest source of lost-time injury costs in the country.131

The treatment of repetitive-strain injuries is complex and varied. Some of

the approaches used include physical treatments (such as physiotherapy or
chiropractic treatments), postural treatments (often aimed at correcting bad
habits relating to posture), relaxation (such as meditation), exercise and
stretching, acupuncture, and cognitive behavioural therapy (with a focus on
coping with pain).132 A properly designed work station can play a major
role in reducing workplace injuries. The key factors in designing an
ergonomically sound work station relate to the layout of the work station,
the characteristics of control and display panels, seating arrangements at the
work station, and lighting quality and quantity.133 While a number of
organizations have moved to an open-office concept, workers complain
about such things as reduced privacy and noise spillover.
LO6 Occupational Health and
Safety Strategy
It must be continually stressed that top management’s involvement in
setting health and safety policies is essential. If top management does not
assume a leadership role, it sets an example by its inaction, and middle
managers, first-line supervisors, and employees will behave accordingly.
Part of an effective occupational health and safety strategy is to clearly
assign responsibilities for plant safety and health programs to ensure that
the company’s policies are carried out. An occupational health and safety
committee with enforcement authority is a very helpful aid to implementing
health and safety policies. Such a committee should be made up of
representatives of management and employees, ideally with balanced
representation. This increases the probability that the committee’s decisions
are accepted as fair by the employees.

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It is important to have a control process in place. Causes of accidents

should be identified and either eliminated or controlled to prevent
recurrence. The HR group should use its information system to monitor for
patterns of accidents or health problems that may be otherwise overlooked.
An effective training program is another critical part of a good occupational
health and safety program. Moreover, a number of organizations are hiring
occupational health and safety specialists to design and administer
comprehensive workplace health and safety programs. Finally, management
should continually encourage safety awareness on the part of supervisors
and employees.
SUMMARY

Occupational health and safety has become an important aspect of

organizations and will have an even higher priority for human resource
managers in the future. The federal and provincial governments have
created a variety of laws that require the attention of human resource
professionals. Most occupational health and safety acts now require the
establishment of safety committees in companies with 20 or more
employees.

The Workplace Hazardous Materials Information System (WHMIS) is a

comprehensive plan that requires suppliers to provide detailed information
about any danger their material may pose, but it also asks the user to make
sure that the information is available and that employees are trained to
understand it.

Accident prevention is a major concern, but human resource managers

should not forget to look at the psychological aspect of the work
environment. Stress-related losses—absenteeism, turnover, low
productivity, accidents, and so on—cost Canada billions of dollars each
year. Preventive programs such as employee assistance programs,
professional counselling, time management, and fitness programs can go a
long way to reducing stress-related costs.
TERMS FOR REVIEW

assumption of risk

burnout

careless worker model

shared responsibility model

stressors

Workplace Hazardous Materials Information System (WHMIS)

workplace health and safety committee

REVIEW AND DISCUSSION QUESTIONS

1. Explain the legal term assumption of risk.

2. What factors affect occupational accidents?

3. What responsibilities do joint occupational health and safety

committees have?

4. Explain the requirements of the Workplace Hazardous Materials

Information System (WHMIS).
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SHORT CASE 12-1: Safety at Petro-Plus Quick Stop

Camilla Conrad has been employed for just over four years as a server at
the Petro-Plus Quick Stop (PPQS) restaurant in Kentville, Nova Scotia.
PPQS gets extremely busy at times and is popular with local residents, work
crews, and truck drivers looking for a place to stop and get a meal. Camilla
is 23 years of age and single. She typically works 35–40 hours a week
(depending on scheduling requirements). PPQS does not have a formal
performance appraisal system but co-workers and her supervisor say that
Camilla is a “solid performer” who gets along well with both customers and
staff, is dependable, and is willing to help others.

The present case arises out of an incident that occurred just before the start
of the second wave of the COVID-19 pandemic. Camilla had been away on
vacation for two weeks and returned to work in late August. When she left
on vacation, she told people at the restaurant that she was going to be in
New Brunswick visiting her mother. It turns out she actually drove to
Quebec City to see an old friend. Camilla was stopped at the Nova Scotia
border and lied to the Nova Scotia border officials that she had only been in
New Brunswick. Since the Atlantic Canada bubble was in effect, the
officers told her there was no need to self-quarantine for 14 days (which she
would have been required to do as she had been in Quebec).

On her first day back on the job, Camilla was chatting with a couple of her
co-workers. She told them that she had actually been in Quebec but wanted
to get back to work rather than spending 14 days in self-quarantine because
she couldn’t afford to go without pay for the two weeks. Some customers
overhead what Camilla had said and reported this information to
management.

The owners of PPQS were very upset. In an effort to keep their business
open during COVID-19, they had taken several measures to meet and
exceed public health requirements including installing plexiglass barriers
between booths, improving the airflow inside, sanitizing surfaces, and
enforcing strict physical distancing guidelines.
DISCUSSION QUESTION

1. You are in charge of HR for the restaurant. What action (if any) would
you take in this case? Be sure to justify your response.
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CASE STUDY

Perth Metro Transit

Bonita Cousins is a 38-year-old bus driver with Perth Metro Transit (PMT).
She has been with PMT for 15 years, is a good performer (her performance
ratings have been between 4.0 and 4.2 on a five-point scale over the past
five years), and is well liked by both co-workers and her supervisor. She has
only one previous disciplinary offence—a written warning two years ago
for being 18 minutes late.

Last Friday, Bonita was driving her bus on her route on the outskirts of
Perth. There were 24 passengers on the bus, and as she drove along Kings
Park Road, she observed a woman in her early twenties being attacked by a
man in his late twenties. She immediately pulled the bus over to the side of
the road, jumped out, and ran to assist the woman. The incident occurred
about 50 metres from where the bus was parked. The assailant, upon seeing
Cousins approaching, ran away into the park. Cousins accompanied the
woman back to the bus, called the police for assistance, and contacted her
supervisor.

In discussing the incident with her supervisor, Cousins admitted that the bus
was idling and that the passenger doors were left open while she was in the
park.
According to three passengers, an eight-year-old boy sitting three rows
from the front of the bus got up and sat in the bus driver’s seat while
Cousins was away from the bus. The boy’s mother was sending a text
message when the boy went to the driver’s seat. The mother was quickly
informed of the situation by other passengers, and she got up and brought
her son back to their seat. The evidence is clear that the boy did not touch
the gear shift or gas/brake pedals but merely sat in the bus driver’s seat for a
short period of time.

Bus drivers receive yearly training on safety issues (including proper

procedures to follow in the event a driver has to leave the bus). The
employee handbook states that “a bus driver should never leave the bus
unattended. If you need to leave the bus, make sure that the engine is turned
off, you remove the key, you have passengers get off the bus, and you lock
the bus. Failure to follow such procedures constitutes a serious breach of
the employment contract, and dismissal is an appropriate remedy.”

DISCUSSION QUESTIONS

1. Is there just cause to dismiss Bonita? Explain your answer.

2. Would your response to Question 1 be different if Bonita had left the

bus unattended to rescue a cat stuck in a tree? An elderly person
crossing the road? Justify your response.

3. What can PMT do to improve its safety practices and policies?

Chapter 13

The Union–Management
Framework
HRM focuses on the shared interests of workers and managers in the
success of their enterprise. Conflict is de-emphasized in favour of “win–
win” scenarios where problems are solved or put aside to fulfill
organizational objectives. By contrast, industrial relations assumes conflict
is inherent in the employment relationship.

DAPHNE GOTTLIEB TARAS, ALLEN PONAK, AND MORLEY

GUNDERSON1

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LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. LO1 Discuss the major reasons why workers join unions.

1. LO2 Describe the structure of Canadian unions.

1. LO3 Summarize the core legal principles relating to collective

bargaining.

1. LO4 Explain how a union organizing campaign is carried out.

 1. LO5 Outline the key steps in negotiating a union contract.

1. LO6 List common techniques to resolve disputes.

1. LO7 Describe how unions affect the human resource management

environment.

1. LO8 Suggest ways to build union–management cooperation.

Workers may join together and form a union—an organization with the
legal authority to represent workers, negotiate the terms and conditions of
employment with the employer, and administer the collective agreement.

Many successful companies have one or more unions among their

employees. While unionized organizations are often lumped together, there
is growing evidence that the quality of the relationship between an
employer and a union is a major factor in predicting firm performance. Still,
the presence of a union places limits on the role of human resource
management, and many managers find these new limitations hard to accept:

CUPE Local 118 in Saint John, New Brunswick, had a clause in its
contract with the city that guaranteed a minimum number of full-time
outside employees. The clause, which was introduced in the early
1980s, had been renewed several times to avoid damaging union–
management relations and labour unrest. Terry Totten, former city
manager, believed that the clause was fundamentally wrong and
impaired the ability of the city to save money by contracting out
services. Union officials reported that the clause had been introduced
to stop corruption, poor-quality work, and kickback schemes with
outside contractors, and they believed that the clause benefited both
employees and taxpayers. In June 2020, the city ratified a new five-
year deal with the union that permitted a minimum staffing level of
235 positions but allowed for the reduction of up to 43 positions using
attrition. According to city councilor David Merrithew, “I asked staff if
 we could negotiate something like contracting out of our garbage. We
need more flexibility to do something like that. No one can tell me that
we wouldn’t be better off without a minimum manning clause.”2

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As shown in Figure 13-1, the industrial relations and human resource

perspectives on workplace conflict are somewhat different.

FIGURE 13-1

Industrial Relations and Human Resource Perspectives on

Workplace Conflict

Table Summary: Summary

Industrial Relations Perspective

1. Conflict stems from an employer–employee power

imbalance.

2. Conflict between labour and management is enduring.

3. Correcting the power imbalance between labour and

management often requires institutional intervention in the
forms of union representation and legislation.

4. Conflict can be constructive even when the conflict is

addressed in an adversarial, non–problem-solving fashion.

Human Resource Perspective

1. Conflict stems from poor management.

2. Conflict can be partially reduced by organizational and

workplace innovations that build an employer–employee
unity of interests.
 3. Conflict can further be reduced by cooperative, mutual
gains–oriented problem-solving techniques.

4. As a result of improved management, conflict will fade

from the employment relationship.

SOURCE: Adapted from D. Lewin (2001), “IR and HR

Perspectives on Workplace Conflict: What Can Each Learn From
the Other?” Human Resource Management Review, 11, pp. 453–
85.
LO1 Why Employees Seek Union
Representation
Unions do not just happen. They are frequently caused by some management
action or inaction that workers perceive as unfair. For example, in a 6:1 decision,
the Supreme Court of Canada held that the RCMP’s internal system for
negotiating workplace issues was grossly unfair and gave Mounties the right to
join a union.3 In 2019, the RCMP voted to certify the National Police Federation
(NPF) as its bargaining agent. It is expected that policing costs will rise in those
municipalities using RCMP services with the negotiation of the collective
agreement.4 Once a union is organized, it becomes the employees’ bargaining
agent and the employer is legally obligated to meet with the union and bargain a
labour contract called a collective agreement. The collective agreement, which is
known as the “rule book” by some managers and union officials, addresses a
variety of issues, such as wages and benefits, hours of work, and working
conditions, as well as related issues including grievance procedures, safety
standards, probationary periods, and work assignments. The collective agreement
is usually negotiated between the local union’s bargaining committee and the
human resource or industrial relations department.

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The collective agreement places restrictions on management’s rights in managing

the workplace. When a new collective agreement is negotiated, it is important that
supervisors and managers dealing with unionized employees be made aware of
the terms of the agreement and provided with training regarding the interpretation
and application of the new agreement. All too often, a union grievance arises
because the supervisor did not understand the terms of the collective agreement.

Causes of Unionization
Why do employees join unions? The reasons for joining a union vary from person
to person, and there is no single force that motivates people to join unions.
Instead, perceptions are shaped by a variety of reasons. The union push
explanation asserts that some employees are pushed or forced into joining a union
because of employer treatment of the workforce, peer pressure by co-workers to
join a union, or collective agreement provisions requiring an employee to join if
they want the job in question. The union pull explanation states that employees
are pulled into the union because of the benefits of union representation (such as
higher wages, greater benefits, job security, and grievance representation).
Consider the comments of one union organizer:

“Without a union an employer can fire you whenever they feel like it. If
you’re visibly queer or trans, that unemployment period is likely to be much
longer.”5

When considering union joining, it is important to distinguish between the desire

for union representation and the opportunity to join a union. Three factors—job
dissatisfaction, individual attitudes toward unions in general, and perceived union
instrumentality (beliefs about what unions can do for an employee)—appear to be
most important in an individual’s decision to join a union.6

Reasons for not joining a union are equally diverse. Workers who want to become
managers may believe union membership damages their chances for promotion.
Other employees view unions as “just another boss” that leads to extra costs, such
as union dues or lost wages from strikes. Likewise, past experiences or isolated
stories of union wrongdoing may cause some people to form a negative opinion
of collective action. Also, employer policies and supervisory treatment may be
fair, and, consequently, employees are not motivated to join a union.

As the following example shows, people within a community may have vastly
differing views concerning unionization:

In the small town of Brooks, Alberta, a strike shut down the Lakeside
Packers slaughterhouse. Management was determined to open the plant
(which employed about one-quarter of the town’s population) during the
dispute, which divided the town. While some citizens strongly supported the
employees and their union, others were concerned that the strike would hurt
other businesses in the community and leave lasting divisions among the
town’s residents. Striking workers were very upset—despite an Alberta
Labour Relations Board order that banned strikers from doing more than
delaying vehicles seeking to enter the plant, workers were committed to
restricting access to the facility. As one worker stated, “If they kill us, they
can go in. This is modern slavery for me.”7
 © Steve Russell/Toronto Star via Getty Images

Having a union means strikes and walkouts. Are unions necessary in

today’s organizational environment, with labour and pay equity laws
safeguarding workers?

Canadians’ Views Toward Unions

A survey by Leger of 1,400 Canadian adults examined their attitudes toward
unions. While the survey provides important information, the results are
aggregated and important differences may exist among workers based on
demographic characteristics. For a few of the questions, responses from a Nanos
survey are presented. Some of the major findings with regard to attitudes toward
work and employers are reported below:

Among Canadians who are not unionized, 19 percent reported that they were
very or somewhat interested in being unionized, 2 percent didn’t know or
refused to respond, and 79 percent did not want to be unionized.

Among current union members, 71 percent would prefer to be unionized.

Among formerly unionized workers, 46 percent would prefer to be
unionized.
 Among respondents, 71 percent of current union members believed that
unions are as relevant today as they have ever been. Support for this
statement dropped to 46 percent for former union members and 42 percent
for respondents who had never been in a union.

When forming a union in or removing a union from the workplace, 86

percent of current union employees and 83 percent of nonunion employees
believe that a secret ballot vote should be required.8

Page 352

A CAUT Harris-Decima poll conducted at about the same time revealed that
about 70 percent of participants agreed that unions are still needed, about 42
percent indicated that they would never join a union, 40 percent supported the
position that governments should have the right to impose contracts on public
sector unions, and about 44 percent felt that public sector unions should not have
the right to strike.9

Employer Views Toward Unions

A Canadian HR Reporter survey of human resource professionals examined their
views toward unions. The study revealed several important trends:

Of participants, 27 percent thought the union had the upper hand in

bargaining, while 52 percent did not.

52 percent believed that economic conditions had pitted unionized workers

against management.

42 percent reported that the number of grievances had increased over the
previous three years, 44 percent indicated no change, and 13 percent
believed there had been a decrease.

62 percent perceived that there was a growing trend for employers and
unions to work together to find solutions to problems.

19 percent of respondents believed that unions had had a large financial

impact on the employer, while 57 percent indicated that the financial impact
of unions had been small.
 36 percent of participants thought that the employer’s relationship with the
union would get worse over the next five years, 39 percent believed that it
would stay about the same, and 24 percent thought that it would improve.10

The bitter labour disputes of the past few years have attracted considerable media
and public attention. Some commentators argue that unions are fighting to
survive. Ken Georgetti, former president of the Canadian Labour Congress,
stated, “There used to be a time when we had great respect from the public. But
we’ve lost that. There’s this notion that unions are just out for themselves and not
for society. You get that label hung on you, and you have to work to get rid of
it.”11 It is argued that unions must engage the new workforce if they are to
survive. While strikes and threats of strikes have been common in the past, Jim
Stanford, formerly an economist with Unifor and now with the Centre for the
Future of Work, observed that “the confrontations are overwhelmingly driven by
the employers’ side. Almost all of the strikes and conflicts have been defensive
from the perspective of the union. They’re trying to hang on to what they have.”12
LO2 Labour Unions: Goals and
Structure
Labour unions alter the work environment. Their presence changes the
relationship between employees and the organization, and the human resource
department’s involvement in union-related issues is not always well received by
lower levels of management, who believe that their ability to make workplace
decisions has been eroded.

Unions have a major effect on the work environment, but in many other ways the
environment remains unchanged. Supervisors and managers retain their primary
responsibility for employee performance. Profit objectives and budgetary goals
are often not shared with the union (although this is changing in some
organizations). As well, unions do not reduce the need for effective human
resource policies and procedures. To understand how and why unions influence
human resource management, it is necessary to examine their goals and structure.
At times, the interests of the parties are clearly in conflict:

In early February 2021, the United Food and Commercial Workers called for
the shutdown of the Olymel meat processing plant in Red Deer, Alberta,
following the death of a man linked to a COVID-19 outbreak. According to
the union, with a death and large outbreak, the employer or government
needed to ensure some type of lockdown. The union was calling for
meetings with employees to find out what was happening in terms of health
and safety. Just over a week later, the plant was temporarily closed. In the
words of the local union president, “It’s been a fight in order to get Olymel
to come to their senses. The world needs to see that this disease is an
occupational disease. There’s 1,800 workers working side-by-side and it’s a
very troubling situation.”13

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Union Goals and Philosophy

A union’s objectives are influenced internally by the wishes of its members, the
aspirations of its leaders, and the financial and membership strength of the union.
Like other organizations, unions are open social systems that are also affected by
their external environment: the financial condition of the employer, the gains of
other unions, inflation and unemployment rates, and government policies all
influence the union’s objectives.

Yet among all these internal and external considerations, there exists a common
core of widely agreed-upon objectives. Writing more than 100 years ago, one
prominent labour leader stated that the mission for the labour movement was to
protect workers, increase their pay, improve their working conditions, and help
workers in general.14 This approach has become known as business unionism,
primarily because it recognizes that a union can survive only if it delivers a
needed service to its members in a businesslike manner. But some unions have
chosen to address broader social issues of politics and economics when such
concerns are in the best interests of their members. This second kind of union,
social (or reform) unionism, tries to influence the economic and social policies of
government at all levels—municipal, provincial, and federal.15 In practice, union
leaders pursue the objectives of social unionism by speaking out for or against
government programs. For example, many union leaders oppose substantial
government intervention into collective bargaining because it takes away or limits
the right of the union to engage in free collective bargaining with management.

A number of unions have developed programs to help members deal with issues
at the workplace. Consider, for example, Unifor’s Women’s Advocate program:

The program is aimed at providing trained workplace

advocates/representatives to help women (and men) deal with such issues as
partner abuse and workplace harassment by making workers aware of
community resources and workplace supports. According to Julie White,
former director of Unifor’s Women’s Department, “It’s really important we
have that management support person to go through because, ultimately, if a
woman needs time off work, it’s not the union that can authorize that, it’s the
management support system.” According to Jerry Dias, Unifor national
president, “We can make significant gains for the women in our workplaces
by making women’s issues a priority at the bargaining table. The Women’s
Advocate Program’s specially trained, easy to contact workplace
representatives have been instrumental in creating healthier workplaces and
safer communities. They work closely with management ensuring strong
cooperation to achieve this goal.”16
Human resource management is influenced by both business and social unionism
goals. The growth of benefits discussed in Chapter 10 has resulted partly from
union pressure. Even nonunionized employers have added many benefits in order
to remain competitive in the labour market or to forestall unionization among
their employees.

Union Structure and Functions

It has been argued that employees lost direct contact with business owners as
organizations grew larger, so unions emerged to help workers influence
workplace decisions.17 Through unions, workers were able to exert control over
their jobs and their work environment.18 Then, when attempts were made by
employers to cut wages or employment, the employees relied on unions to resist
these actions.19 The most important levels of union structure are local unions,
national and international unions, and labour congresses.

Local Unions

For most union members and industrial relations practitioners, the local union, or
local, is the most important part of the union structure. Locals provide the
members, the revenue, and the power of the entire union movement. Historically,
the two major types of unions were craft and industrial unions. A craft union is
composed of workers who possess the same skills or trades; for example, all the
carpenters who work in the same geographical area. An industrial union includes
the unskilled and semiskilled workers at a particular location. When an employer
has several locations that are unionized, employees at each location are usually
represented by a different local union. An example would be the United Food and
Commercial Workers.

Page 354

Figure 13-2 shows the structure of a typical local. The union steward is usually
elected by the workers and helps them present their problems to management. If
the steward of an industrial union cannot help the employee, the problem is given
to the grievance committee, which takes the issue to higher levels of management
or to the human resource department. In craft unions, the steward, who is also
called the representative, usually takes the issue directly to the business agent,
who is often a full-time employee of the union.
FIGURE
13-2

Structure
of a
Typical
Local
Union

Table
Summary
:
Summary

Based on Human Resources and Social Development Canada (2003),

“Structure of a Typical Union,” Public Works and Government Services
Canada.
National and International Unions

Many local unions are part of a larger union, which may be a national union, such
as Unifor or the Canadian Union of Public Employees, or an international union,
such as the United Steelworkers or the International Brotherhood of Teamsters.
National unions are based in Canada, while international unions have their
headquarters outside the country (typically in the United States).

National and international unions exist to organize and help local unions. They
also pursue social objectives of interest to their members and frequently maintain
a staff that assists the local unions with negotiations, grievance handling, and
expert advice. Some national and international unions leave many key decisions
(including bargaining a collective agreement) with their local unions. In other
relationships, the national or international union plays a very active role in local
union affairs. Figure 13-3 shows the membership of the largest unions in Canada.
Note that the two largest unions represent public sector employees.

FIGURE 13-3

Membership in Canada’s Largest Unions (2019)

Table Summary: Summary

Union Membership (000s)
Canadian Union of Public Employees 680
National Union of Public and General Employees 390
Unifor 315
United Food and Commercial Workers Canada 250
United Steelworkers of America 225
Public Service Alliance of Canada 180
Teamsters Canada 125
Social Affairs Federation 110

Based on R. Hebdon, T. Brown and S. Walsworth (2021). Industrial

Relations in Canada (4th ed.), Toronto, Nelson. Also see the web pages
of the unions mentioned above.

Page 355
Canadian Labour Congress

The Canadian Labour Congress (CLC) represents many unions in Canada and
has about 3.3 million members. The past president, Hassan Yussuff, was elected
in 2014 and had planned to retire in 2020 but stayed on when the CLC’s triennial
convention was cancelled due to COVID-19. At the June 2021 convention, Bea
Bruske from the United Food and Commercial Workers was elected
president. Women have held high-ranking positions within Canadian labour. For
instance, Grace Hartman was elected as the national president of CUPE in 1985,
the first woman to lead a major union in North America. Shirley Carr was the first
woman to lead the CLC, with her election win in 1986, and in 2019, Jan Simpson
became the first Black woman to lead a national union (the Canadian Union of
Postal Workers).20

The CLC has five main functions: (1) representing Canada at the International
Labour Organization, (2) influencing public policy at the federal level, (3)
enforcing the code of ethics set out in its constitution, (4) providing services (such
as research and education) for its member unions, and (5) resolving jurisdictional
disputes among its member unions.

While the Canadian Labour Congress is the largest labour federation, it is not the
only one. In addition to other federations at the national level, there are also
federations operating at the provincial and municipal or regional levels (for
instance, the Quebec Federation of Labour and the Ottawa and District Labour
Council).
Trends in Union Membership
Union Growth and Decline
In 2020, about 4.77 million workers were covered by collective agreements
(union coverage rate of 31.3 percent). In terms of industry sector, education
was the most highly unionized, at 75 percent, followed closely by public
administration (74 percent), utilities (66 percent), and health care and social
assistance (56 percent). The lowest rates of unionization were in the
agricultural (3.3 percent); scientific, professional, and technical services
(4.3 percent); and accommodation/food services sectors (4.6 percent).21

Major changes in the Canadian economy, ranging from demographic shifts

to new technology and work restructuring, are influencing the roles of
unions in the workplace and introducing new opportunities and challenges.
Democratic rights are being eroded in favour of individual needs, resulting
in a growing number of “duty of fair representation” complaints. Other
major challenges include a decline in union representation of Millennials,
robots and artificial intelligence changing many traditional jobs but
introducing opportunities in fields that didn’t exist 20 years ago, and greater
focus on work–life balance and a movement to more remote work (further
strengthened by the COVID-19 pandemic).22

However, unions are placing greater emphasis on organizing service and

essential employees:

A “Unions Are Essential” campaign by the Service Employees

International Union (SEIU) is aimed at organizing essential workers.
With COVID-19, thousands of essential workers have been laid off
without any callback guarantees and the pandemic has also led to
health and safety concerns. However, there has been some union
organizing and certification success during the pandemic and a push by
the SEIU to focus on organizing and protecting essential workers.23
 In addition, the United Food and Commercial Workers (UFCW) union
continues to focus on representing employees at large food retailers
(like Loblaws and Sobeys). During one organizing campaign, Sobeys
sent a letter to employees indicating that the union merely wanted their
dues money and emphasized the good and open relationship the
company has with employees. Loblaws executives indicated that they
would welcome greater unionization in the retail food sector to remove
the competitive disadvantage of paying 35 percent higher wage
payments to employees.24

In recent years, the number of women members in Canadian unions has

been increasing rapidly. In 1967, women made up only 20 percent of total
union membership; now, more than 50 percent of union members are
female—the unionization rate for women surpassed that for men for the
first time in 2004. While about one in six female employees belonged to a
union in 1967, that ratio has doubled over 35 years and now about one in
three women are union members. Thirty years ago, four out of ten male
employees were union members; today that proportion has fallen to under
three in ten. In terms of age, the density rate is 16 percent for workers aged
15–24, 29 percent for those aged 25–34, 31 percent for workers aged 35–
44, 35 percent for workers aged 45–54, and 34 percent for those aged 55
and older.

Page 356

Unions today are acknowledging that traditional approaches to organizing

and collective bargaining are becoming less relevant today. Many
Canadians view union workers as being in a blue-collar or government
occupation, so there is a growing recognition of the need to appeal to other
employees. For example, Unifor has decided to try to attract young workers
to the union movement. According to Anna Goldfinch, formerly with the
Canadian Federation of Students, “There is more and more
underemployment, precarious employment for youth. Unions need to start
communicating that they’re applicable in any workforce—and that unions
will reflect young people more and more as young people start to
participate in them.”25
Moreover, low wage employees may look to unions to protect their rights
and improve conditions of work:

On January 1, 2018, the Ontario government raised the minimum wage

to $14 (now $14.25). This was met with resistance by a number of
employers, including some Tim Hortons franchises, which decided to
change paid breaks to unpaid and to cut some employee benefits. It
became clear that there was a major power imbalance between
employers and low wage employees without the resources to fight
back. As noted by Martin Regg Cohn, “If employers trample on their
rights, minimum wage workers have to stand up for themselves—by
joining a union that can push back against companies. Unions can keep
a watchful eye on abuses, enable members to file grievances, and tap
into the collective resources of the larger labour movement.”26

In comparing unionization across provinces, Quebec had the highest rate

(40 percent), followed closely by Newfoundland and Labrador (39 percent),
while the lowest union density was in Alberta (26 percent). Also of note is
the lower probability that a part-time worker will be unionized (the union
density rate for full-time workers is 33 percent compared with 24 percent
for their part-time counterparts). In addition, larger workplaces are more
likely to be unionized—about 14 percent of employees in firms with fewer
than 20 employees were unionized, 32 percent in firms with 20–99
employees, 41 percent in firms with 100–500 employees, and 53 percent in
firms with more than 500 employees.27

On the global scene, a number of countries have experienced a decline in

union density (that is, union members as a percentage of the paid
nonagricultural workforce), although Iceland, Belgium, Spain, and Italy
have seen an increase since 1985. Explanations for the decline in union
representation include (1) the decline in the manufacturing sector, (2) the
constraints that the globalization of financial markets have put on
macroeconomic policies, and (3) competition from developing countries
with low labour costs, resulting in the loss of low-skilled, labour-intensive
jobs in high-wage countries.28
Back in the mid-1980s, about 30 percent of workers in OECD countries
were unionized. About 35 years later, that number has declined to about 16
percent. Similarly, the percentage of employees covered by a collective
agreement has declined from 45 percent to 33 percent over the same time
period. When considering selected OECD countries, union density varies
across countries, as shown in Figure 13-4.29

FIGURE 13-4

Union Density in Select OECD

Countries

Table Summary: Summary

Country Union Density
Iceland 91.8%
Sweden 67.9%
Italy 34.4%
Canada 25.9%
United Kingdom 23.4%
Japan 17.0%
Germany 16.5%
Australia 13.7%
United States 10.1%
South Korea 10.0%
France 8.8%

SOURCE: OECD (2018), Trade Unions and Collective

Bargaining, www.stats.oecd.org.

Secession
Page 357

In 1960, about two-thirds of union members belonged to an international

union. Over the past half-century, that percentage has declined noticeably so
that now only about 25 percent of union members belong to international
unions.30 This trend, referred to as secession, has been motivated, in part,
by a desire for more autonomy on the part of Canadian locals and the
development of policies aimed at specifically addressing the needs of
Canadian workers. The most dramatic breakaway occurred in 1985 when
the Canadian Auto Workers union (now part of Unifor), led by former
president Bob White, severed ties with the United Auto Workers and held
its founding convention in Toronto. Canadian members of international
unions have often complained that they receive a disproportionately small
share of union benefits.
The Impact of Union
Representation
Strikes
Members of the public frequently associate unions with strikes. However,
the reality is that most collective agreements are settled without the union’s
resorting to strike action or the employer’s locking out the workers. Still,
there are exceptions:

In 2009, approximately 1,800 City of Windsor (Ontario) inside and

outside workers went on strike. By the six-week mark of the strike,
frustration was setting in. A bar owner reported that her employees
were harassed by city workers for removing the bar’s garbage during
the strike, and a newspaper columnist said his car was vandalized after
he wrote an article about taking garbage to a private firm. There were
allegations of individuals putting clothes hangers in tall grass to prevent
it from being mowed and spreading nails on the road leading to a
private waste disposal site. The local CUPE president insisted that there
were no reports of union picketers doing any of that. Rather, one CUPE
member stated that he suffered a broken ankle and cuts to his face after
a confrontation with a private contractor cutting grass, and other
picketers revealed that they had been nudged by automobiles operated
by people seeking to drive past the picket line. One picketer was the
victim of a hit-and-run and another was put in a headlock by an irate
driver.31

In studying why strikes occur, it is possible to classify strikes into one of two
categories:

1. Strikes as Mistakes/Misjudgment. At least some strikes occur because

the parties have uncertain and imperfect information when trying to
negotiate an agreement or because one or both negotiation teams are
inexperienced negotiators. For example, some negotiators easily
 become frustrated when bargaining and make their “final offer” too
early or without carefully considering the implications of shutting down
bargaining.

2. Strikes as Collective Voice. In a number of instances, the decision to go

out on strike is not because of a mistake or misjudgment but because of
a perception on the part of workers that they are not being treated fairly.
A strike is considered a mechanism by which to voice discontent to
management:32

Alberta health care workers, including those in food services,

maintenance, cleaning, and clerical services, engaged in an illegal
wildcat strike in late 2020 to protest the planned outsourcing of their
jobs to private employers. The employer, Alberta Health Services,
asserted that while the large majority of positions would remain, they
could be moved from the public sector to the private sector. The dispute
was settled when the workers’ union, the Alberta Union of Provincial
Employees, told employees to return to work.33

In a strike environment, there are several issues to consider. An extended

strike puts considerable financial pressure on employees. As well, the family
is at risk for more than just financial reasons: Normal family patterns and
routines are seriously disrupted. Physical and emotional harm may also be an
issue:

During a recent strike, a Canadian National Railway worker was

injured after being struck by a pickup truck and ending up on the hood.
According to a union spokesperson, “It’s unacceptable that our
members are being hit by pickup trucks on the picket line …We
encourage all Canadians to show the same respect for striking workers
as they would for anybody else.”34

Once the dispute is settled, employees have to return to a workplace and to

work teams that just a few days before were divided by a fundamental
conflict. While companies need to get on with business, the human issues do
not go away by themselves. It can take four to six weeks to return to normal
working conditions, and some workplaces are never really the same.35
Page 358

What factors distinguish firms with lower strike activity? Strikes were less
common in smaller firms and in organizations where

workers had more autonomy in the workplace;

the employer introduced progressive human resource management

practices;

the union was in a strategically weak position; and

employers had a large share of the market.36

How common are strikes and lockouts? Data on the number of strikes and
lockouts, the number of workers involved, and the person-days not worked
are provided in Figure 13-5. Over the 2016–2020 period, 2020 (when the
COVID-19 pandemic started) saw a noticeable decline in the number of
strikes and lockouts but high numbers for workers involved and person-days
not worked. Obviously, a small number of large strikes in a given year can
markedly affect the number of workers involved and the person-days not
worked.

FIGURE 13-5

Strikes and Lockouts in Canada

Table Summary: Summary

Number of Strikes Workers Person-Days Not
Year
and Lockouts Involved (000) Worked (000)
2006 151 42 793
2007 206 66 1,771
2008 188 41 875
2009 157 67 2,162
2010 174 58 1,202
2011 149 91 1,351
2012 281 137 904
 2013 165 205 205
2014 153 80 1,711
2015 237 429 1,846
2016 189 44 632
2017 192 207 1,201
2018 173 86 1,134
2019 129 46 1,214
2020 61 624 1,447

SOURCE: Based on Work Stoppages by Jurisdiction and Year,

ESDC, 2021.

Quebec and British Columbia prohibit the use of replacement workers if

there is a strike or lockout. However, some employer groups are arguing that
the ban on replacement workers does not reduce the number of strikes or
lockouts or days lost due to work stoppages. In addition, employers argue
that the legislation discourages investment by employers in Quebec.37

A recent University of Saskatchewan survey of 400 citizens revealed

that about 50 percent approved of unions, 21 percent were neutral, and
about 26 percent disapproved (3 percent didn’t respond). When asked
about whether they would support legislation banning replacement
workers, about 34 percent supported such legislation, 36 percent
opposed, 28 percent were neutral, and the remainder did not provide a
usable answer.38

Sometimes workers do not go out on strike but come up with other

approaches to put pressure on the employer:

After about 200 Air Berlin pilots called in sick one day, approximately
100 flights had to be cancelled. The pilots’ union indicated that it was
surprised by the absences and stated that it had not encouraged pilots to
call in sick.39

Page 359
Recent Supreme Court of Canada decisions addressed important issues
relating to strikes. First, the court struck down Saskatchewan legislation that
prevented public sector workers from going on strike. According to Lori
Johb of the Saskatchewan Federation of Labour, “Workers aren’t generally
keen to strike. Without that right, we really had no power, we had no ability
to achieve fair, collective bargaining for all the members.”40 The court also
ruled that a part of Alberta’s privacy legislation violated the right of a union
to free speech by prohibiting the union from videotaping employees crossing
a picket line. The court recognized the importance of freedom of expression
in labour disputes with picketing representing a particularly critical form of
expression.41

In commenting on these decisions, union labour lawyer Chris Paliare stated

the following:

“The very notion of collective bargaining implies that there is an

imbalance between workers and employers. So unless you have an
inherently anti-union bent, you have to accept that workers need the
fundamental right to bargain collectively, to be protected from unfair
labour practices, and to take strike action in order to address that
imbalance.”42

In most jurisdictions, employers have the right to operate during a strike but
some choose not to:

According to one labour relations expert, “The employer has to

calculate very carefully if bringing in replacement workers is going to
exacerbate the bitterness of the dispute. After a strike it takes a while to
put the relationship back together. There’s a lot of bitterness left over.
The employer takes some chance of exacerbating that when they bring
in replacement workers—at a substantial cost to the labour–
management relationship over the long term.”43

As noted above, employers also have the right to lock out employees. In the
winter of 2021, Hickman Chrysler Jeep in St. John’s, Newfoundland and
Labrador, locked out nine sales employees who are represented by the
Teamsters Union. Four weeks into the dispute, it had not been settled.
According to the business agent for the Teamsters, the employer was seeking
a change in the commission pay structure on wholesale transactions which
could reduce income by 15–20 percent. The union also noted that the
lockout might work to the employer’s advantage as the winter tends to be a
slower time for sales and the pandemic (and a shortage of computer chips)
had limited the availability of vehicles for sale.44

One issue that frequently comes up after a strike is settled concerns the
rebuilding of the labour–management relationship. A strike changes the
relationship, often leads to workplace conflict, and typically destroys the
trust between the parties:

When a seven-week strike at CBC ended, management announced

plans to hire consultants to “reintegrate” the workers with their
managers. The reaction from most employees was “They’ve got to be
[expletive] kidding.” According to one consultant, “There is always a
dramatic erosion in trust of management after a strike, which creates
lingering resentment, and lack of productivity unless it is addressed
properly.” While each strike is different, some companies ask outside
consultants with expertise in psychology and social work to conduct
confidential debriefing sessions for employees. As well, some
organizations have “return to work” training programs (again run by
consultants) for managers; the programs focus on role plays, dealing
with employees, and getting the team back and running. In addition,
employees should be made aware of the EAP program and other
assistance available to them.45

Wages and Benefits

What are the effects of unions on wages and benefits? The average hourly
wage for full-time unionized employees for 2020 was $33.47 an hour
(compared with $27.10 for nonunion workers) and $30.16 an hour for part-
time unionized employees (compared with $18.17 for part-time nonunion
workers).46 Moreover, unionized employees tend to have more
comprehensive benefit plan coverage.
Spotlight on HRM

Moving Toward Cooperation?

Background

In early January 2021, the Nova Scotia Health Authority (NSHA) announced
that work being done by 91 NSHA employees at 24 hospitals across the
province could be contracted out to a U.S. company. That’s part of NSHA’s
plan to improve the quality of record keeping in Nova Scotia. The company,
Iron Mountain, would be responsible for scanning patients’ records into a
digital format.

In late November 2020, employees first heard that their jobs would be
eliminated after having a conference call with their NSHA manager. Jason
MacLean, president of the Nova Scotia Government Employees Union
(NSGEU), said that the union was not consulted prior to November 2020,
there was no opportunity to give feedback on the NSHA plan, and specific
details of the change were not provided. Andrew Nemirovsky, chief
information officer at NSHA, agreed that there was no consultation in 2019,
but verbal and written communication was provided to employees in
September and October 2020. According to NSHA, “We’ve made an honest
effort to engage the union as much as possible and we’ve made sure we’ve
been in line with the collective agreement. We are committed to finding
comparable opportunities for the employees, whether in existing or new
roles and if there is any job loss, it’ll be very minimal. Ideally zero.

Why the need for change? NSHA alleged that there have been significant
scanning errors in the past and boxes and boxes of unscanned charts waiting
to be scanned. However, some of the problems are due in part to the quality
of the scanning equipment available. NSHA stated that it couldn’t afford to
buy the high-quality and high-capacity scanners required to do the job
properly. Iron Mountain had agreed to buy the higher-end scanners and keep
them at the company’s facilities. Moreover, NSHA also said that it lacked
sufficient funding to hire auditors to ensure quality of the scanned records.
NSHA noted that the government is not consulted in “day-to-day operational
work” within the health authority, such as contracting or eliminating jobs

The Union Position

In December 2020, the NSGEU released a report that was critical of the
NSHA position, in particular the rationale provided by the NSHA in support
of contracting out the work and the fact that there was no tendering for the
contract with Iron Mountain. NSGEU president MacLean was highly critical
of NSHA moving forward with the transition rather than finding internal
solutions. According to MacLean, “The inability of NSHA to hire auditors
or purchase proper scanners reflects the mismanagement of the NSHA.
There’s no accountability to Nova Scotians in spending their money,
especially during a pandemic. We will not stop with this just being swept
under the rug … especially for those that you call health-care heroes during
the pandemic.”

A Change of Heart

On January 22, 2021, NSHA announced that it had decided not to outsource
the storage and scanning of health records. Rather, it would, over the coming
weeks and months, examine internal alternatives to address the quality and
backlog issues. According to NSHA, the change in approach was a result of
additional business planning, as well as feedback from employees and health
care providers.
The union and employees had several meetings with the NSHA to outline
their concerns. According to the union, the proposed plan left the employees
feeling unvalued but the NSHA then decided to work with the employees to
find alternative solutions.

NSGEU president MacLean stated that “They heard all the concerns that we
raised, and they really made the proper decision. We’re very thankful for that
and very happy. For the employer to work with the employees to get this
done, we know that this will be a win for all. With the employer and
government listening to the workers that were affected here, I think that
shows a new way that things can be done in this province and hopefully we
can continue on that road.”

SOURCE: Based on: NSGEU/CUPE, A Matter of Trust: A Review of

NSHA’s Quiet Plan to Hand Control of Nova Scotians’ Health Information to
an American Company, www.nsgeu.ca, Dec. 21, 2020: N. Snan, “NSHA
Axing 90 Health-Record Keeping Jobs,” Chronicle Herald, Jan. 7, 2021;
NSH, NSH Seeks Alternative Ways to Improve Health Records Process,
www.nshealth.ca, Jan. 22, 2021; N. Snan, “NSHA Scraps Plan to Contract
U.S.-Owned Company for Health-Record Keeping,” Chronicle Herald, Jan.
27, 2021.

Unions and Productivity

One major issue of interest for human resource management and industrial
relations practitioners is the relationship between unionization and
productivity. On one hand, it can be argued that unions have a “monopoly”
face that creates economic inefficiency by introducing restrictive and
inflexible work rules, withdrawing labour in the form of a strike if an
employer fails to meet union demands, and increasing compensation costs.
On the other hand, it can also be asserted that unions have a “voice” face that
increases productivity by reducing turnover, enhancing employee morale,
improving communications with workers, and “shocking” management into
using more efficient workplace practices.47 Studies have shown that the
impacts of unions include:

Page 360
 reduced employee turnover (fewer quits);

increased tenure with the firm;

increased training opportunities;

greater access to benefits (20–45 percent) and more comprehensive

benefit plans;

higher productivity (in some situations);

reduced innovation; and

lower profits.
48

Note that the relationship between unionization and productivity is open to

considerable debate and has not been universally agreed upon. In fact,
management perceptions are opposite to some of the empirical work: While
managers from both the union and nonunion sectors tend to believe that
unions lower productivity, some studies indicate that, in a number of
industries, productivity is actually higher in unionized firms.
LO3 The Legal Environment
Page 361

Government shapes the union–management framework both through the

enactment of laws and in its role as employer. Unlike in the United States,
where employers and unions across the country are regulated by the
National Labour Relations Act, in Canada the federal government and each
province has its own labour legislation. This division of responsibilities for
trade union law is a result of the British North America Act (now the
Constitution Act, 1867), which specifies the powers of the federal
government and the provinces.

The issue of jurisdiction over labour relations is significant for human

resource practitioners. The Canadian Parliament is restricted in its
jurisdiction over labour relations matters to organizations involved in
interprovincial trade and commerce (e.g., banks, airlines, railways, and
federal government agencies). All other organizations fall under the
jurisdiction of the provinces. It has been estimated that less than 10 percent
of the Canadian labour force comes under federal jurisdiction.
Consequently, it is important that human resource practitioners be aware of
the appropriate legislation.

Although the traditional view is that the employer and union should be free
to sit down and negotiate a collective agreement, we are seeing increasing
government intervention in the bargaining process at both the provincial
and national levels. For instance, in Nova Scotia, the government
overhauled and radically altered the education system with minimal
consultation. One of the changes, the removal of new school psychologists,
speech pathologists, and social workers from the Nova Scotia Teachers
Union bargaining unit, was overturned in 2019 by arbitrator Eric Sloane.
Sloane concluded that the decision to exclude such employees was made
unilaterally and breached the collective agreement in numerous respects. He
also required the employer to remit any outstanding dues those employees
would have paid to the union.49 Buzz Hargrove, former president of the
Canadian Auto Workers union, stated, “There’s no respect left for the
collective bargaining process. It’s about government coming in on behalf of
employers and defending employers, almost guaranteeing they’re going to
win the dispute … it’s so anti-democratic, it’s so un-Canadian.”50

The Common Core of Canadian Labour

Legislation
The fact that each province and the federal jurisdiction has its own labour
relations statutes makes dealing with unions somewhat more difficult,
particularly for employers operating in more than one province. Some of
the key aspects of Canadian labour law (which will be discussed in more
detail later) include the following:

Right to Join a Union. Employees have the right to join a trade union
of their choice and participate in the union’s activities.

Good Faith Bargaining. In attempting to negotiate a collective

agreement, both labour and management have a duty to “bargain in
good faith.”

No Strikes or Lockouts During the Life of the Collective Agreement. It

is illegal for a union to strike or an employer to lock out employees
during the life of the contract.

Prohibition on Unfair Labour Practices. All jurisdictions have

legislation prohibiting unfair labour practices by employers and
unions.

Conciliation. The right of a union to strike or an employer to lock out

employees is (in most provinces) delayed until the conciliation process
has been exhausted.

While the provinces and the federal jurisdiction have some unique features
in their labour laws, there is a “common core” of provisions contained in
the various labour relations acts (refer to Figure 13-6).51
Page 362

FIGURE 13-6

Common Characteristics of Federal and Provincial Labour

Legislation

Table Summary: Summary

1. All jurisdictions create labour relations boards to decide

who has the right to participate in collective bargaining and
what bargaining unit should be permitted to represent those
who are organized.

2. Most jurisdictions prohibit strikes during the life of an

agreement.

3. Most jurisdictions contain regulations that delay strike

action until a conciliation effort has been made and has
failed.

4. All jurisdictions require that a collective agreement be in

force for at least one year.

5. All jurisdictions specify and prohibit certain “unfair labour

practices’’ by management and unions.

Labour Relations Boards

To enforce labour legislation, the federal and all provincial governments
have created labour relations boards (LRBs). These agencies investigate
violations of the law and have the power to determine (1) whether a person
is an employee for the purposes of the law; (2) whether an employee is a
member of a trade union; (3) whether an organization is an appropriate
bargaining agent for bargaining purposes; (4) whether a collective
agreement is in force; and (5) whether any given party is bound by it. The
enforcement procedures of an LRB relating to unfair labour practice
allegations are summarized in Figure 13-7.

FIGURE 13-7

LRB Procedures for Redressing Unfair Labour Practices

Table Summary: Summary

1. The aggrieved individual or organization contacts the

appropriate LRB office (federal or provincial) and explains
the alleged violation.

2. If the case appears to have merit, the LRB informs the other
party of the complaint and asks for a response.

3. The LRB gives the parties involved the opportunity to

present evidence and to make representations. If the
complaint cannot be solved informally, the LRB conducts
an official hearing with the interested parties present and
usually represented by legal counsel.

4. On the basis of the evidence, the board will either dismiss

the case or, if one party is found guilty of a violation, issue
a cease-and-desist order. In the event of noncompliance, this
order is enforceable in a court of law.

5. It is up to the courts to decide whether a verdict can be

appealed or not. In any case, an appeal can be made in
matters of jurisdiction, failure to pursue legitimate
complaints, and procedural irregularities.

In comparison to traditional courts of law, LRBs are more flexible in their

procedures for resolving a conflict. They may rely on expert evidence
instead of adhering to precedents, suggest a compromise, or even impose a
solution upon the parties. In all jurisdictions, the boards’ decisions are final
and binding and cannot be appealed except on procedural matters.
When charges have been filed against an employer, the human resource
department usually assists the organization’s lawyer in preparing the case.
For example, the HR department may be involved in compiling job
descriptions, performance appraisals, attendance records, and other
documents that help the company prove its case. Consider the following:

Patrick Veinot was an employee of Vale Canada (a nickel mining and

metals company) and vice-president of his local union. During a long
and bitter strike, Veinot was charged with criminal harassment after an
employee who crossed the picket line was assaulted. Vale investigated
the incident, concluded that Veinot had verbally harassed the employee
and encouraged another striking worker to assault the employee, and
terminated Veinot’s employment (but Veinot was subsequently
acquitted of the charges). Veinot was also prohibited from going onto
the employer’s property. After the strike ended, Veinot was appointed a
vice-president of the local union—the company would contact him by
phone to discuss grievances but refused to allow Veinot onto the
company property. The union grieved the employer’s action and the
labour board held that banning Veinot from company property was
interference with union activities. The company was ordered to stop
such interference and to allow Veinot on the property for the purpose
of union meetings.52
LO4 The Collective Bargaining
Process
Union Organizing
Page 363

It is worth remembering that a union exists only when workers create it.
While unions may use professional organizers, the outcome of the
organizing drive depends primarily upon the employees. George Meany, the
first president of the American Federation of Labor and Congress of
Industrial Organizations (AFL-CIO) in the United States, once said this:

“Despite the well-worn trade union phrase, an organizer does not

organize a plant. Now, as in the beginning, the workers must organize
themselves. The organizer can serve only as an educator; what he or
she organizes is the thinking of the workers.”53

In addition to professional organizers, employees interested in unionization

often play an important role in convincing co-workers to join the union.
During regular working hours, employees are not allowed to discuss
unionization with co-workers. However, several other techniques are used
to encourage workers to sign authorization cards, including handbills,
speeches, conversations, and even home visits. Depending on the
jurisdiction, a union is typically certified either on the basis of card
signatures or as a result of an election. Some unions are particularly creative
in the organizing process:

The United Food and Commercial Workers (UFCW) have developed a

Youth Internship Program that involves youth activists who are given
the opportunity to work with union representatives to learn negotiating
skills and experience hands-on union organizing campaigns. Travel
and accommodation expenses as well as lost wages are covered by the
union. The UFCW also has a program—Talking Union—where union
 representatives and members visit high schools, colleges, and
universities and provide students who are new to the workforce with
information on labour history and workplace rights. However, the
pandemic resulted in cancelling events in 2020.54

Union organizers educate the workers by explaining how the union can help
employees and reduce mistreatment of workers. However, professionals
only assist workers; they do not cause workers to join a union. Even
experienced organizers find it difficult to organize a well-managed and
growing company with proactive human resource practices.55 Some unions
are focusing attention on non-traditional workers:

A decision by the Ontario Labour Relations Board found that Foodora

couriers were dependent contractors and in essence work for Foodora
based on the company’s terms and conditions of employment. The case
of Uber v Heller involves a $400 million class action lawsuit arguing
that Uber drivers should be recognized as employees rather than
independent contractors. An earlier Supreme Court of Canada decision
supported the use of a class action lawsuit challenging Uber’s
arbitration system requiring workers to take employment claims to the
Netherlands and pay a $14,500 filing fee. These decisions are seen as
potentially paving the way for the unionization of gig economy
workers.56

In a 2020 Ceridian report, more than half (56 percent) of freelance and
gig workers indicated that gig workers should unionize. The main
reasons for unionizing included negotiating higher wages (69 percent),
better benefits (59 percent), greater equality such as more equality in
compensation across employers (55 percent), better workplace health
and safety (39 percent), and better job security (34 percent).57

Some experts are suggesting that unions use more technology and analytics
in an effort to recruit new members. For example, unions could use “big
data” and algorithms to identify and engage prospective members.
Similarly, having a presence on social media sites such as Facebook,
Instagram, and Twitter could be useful in informing young workers about
the advantages of belonging to a union. Online organizing may be
particularly effective in attracting Millennials. Other options range from
having live-assistance help lines to digital marketing and a digital
organizing tool.58

Page 364

Prior to many union organizing campaigns, there are signs of employee

interest in union representation. Of particular importance is the work
environment. For example, are the turnover and absenteeism rates higher
than the norms for the industry and community? Is morale poor? Are pay
and benefits below average for the industry? Does the employer have a
procedure for resolving employee complaints or issues, and, if so, is the
process used by workers? Changes in employee behaviour may also suggest
that a union drive is under way (see Figure 13-8). However, these are only
indications of a possible union drive.

FIGURE 13-8

Employee Behaviour That Suggests Union Activity

Table Summary: Summary

Obvious signs—such as finding a union flyer

Change in employee turnover
Exit interview language—comments on a negative work
environment
Employee language—such as common labour management
terms like arbitration and unfair labour practice
Employee communication behaviour change—less
cooperative behaviour by workers
New employee alliances—among those interested in
unionization
Social media language—involving unionization
Employee phone time—discussing union activities
Emotions running high—negative portrayal of working
conditions
Employee routines change—such as lunch breaks
 Based on “Are You Missing These 10 Signs of Union Organizing
Activity?” UnionProof, http://www.unionproof.com

Spotlight on ETHICS

Ethics and Refusing to Work

Can Canada Post mail carriers refuse to deliver mail having content they
oppose? Two Canada Post workers in Regina were suspended without pay
for three days after telling their supervisor that they would not deliver a
sample edition of the Epoch Times. According to the Canadian Union of
Postal Workers, the employees were escorted from the facility after their
refusal to deliver the newspaper.

The Epoch Times is a controversial newspaper that claims to have about 5.7
million readers monthly in Canada. It also, on occasion, sends out
complimentary sample copies to Canadians using Canada Post’s advertising
mail service. The Epoch Times has a variety of articles on several topics but
also has a focus on material critical of the Chinese Communist Party.

One employee objected to delivering the paper due in part to the paper’s
coverage of the coronavirus and its origins in China. A second employee,
who was born in China, refused to deliver the paper because of her fears
that the paper’s coverage could fuel anti-Chinese and anti-Asian sentiment.
Both employees stated that the Epoch Times goes against their personal
beliefs and thus they could not agree to deliver the paper.

The Canadian publisher of the Epoch Times stated that using advertising
mail to promote a paper is common industry practice. Canada supports
freedom of the press, and people who do not want to read the paper can
treat it like any other promotional mail that they don’t want. Refusing to
deliver the paper would be censoring an independent media outlet.

Canada Post, although it has discussed this issue with the Canadian Union
of Postal Workers, takes the position that mail that is properly prepared and
paid for must be delivered by mail carriers. The Epoch Times is considered
“mailable matter” (that is, it is not prohibited as being illegal, obscene or
fraudulent) and the courts have ruled that the role of Canada Post is not to
censor mail or regulate freedom of expression in Canada.

Should the two Canada Post carriers have been suspended? Does an
employee have the right to refuse performance of duties due to ethical
concerns? As a human resource professional, what advice would you give
the employer?

SOURCE: K. Nicholson and J. Ho, “2 Canada Post Workers in Regina

Suspended for Refusing to Deliver Epoch Times,” cbc.ca, January 29,
2021.

Page 365

Once a union drive begins, management’s choice of responses becomes

limited in several important ways. A labour relations board (LRB) will
protect workers from management reprisals. For example, the discipline of
union supporters is illegal, unless the employer can prove that the basis for
punishment was not involvement in a union but improper behaviour.

Employer lawyer Jamie Knight identified three stages to an employer’s

defence in the event that an employer is committed to remaining union free.
Stage 1 involves removing the incentive to unionize through effective
human resource management (such as competitive wages and benefits, fair
and reasonable policies, excellent communication with employees, and a
complaint and suggestion system that allows employees to voice their
concerns without the threat of reprisal). Stage 2, which occurs when card
signing begins, involves discussing the impacts of unionization (such as the
union becoming the exclusive bargaining agent, the requirement for
employees to pay dues, and the need to carefully assess union promises)
and the need to avoid unfair labour practice charges. In Stage 3, when an
election is about to be held, the employer is advised to encourage
employees to get out and vote because the chance of a union victory may
decline as voter turnout increases.59
When unions are organizing, labour relations boards pay particularly close
attention to the actions of employers. Unlike the United States, Canadian
labour law provides employers with relatively little freedom to counter a
union organizing drive.60 Both the context and content of statements about
unionization are carefully examined by LRBs. Consequently, employers are
well advised to obtain prudent legal advice in the wake of a union
organizing campaign.

Canadian LRBs are quite vigilant in enforcing unfair labour relations

practices. Human resource administrators should stress to every member of
management, from supervisor to chief executive officer, the following two
cautions:

1. Can management actions be judged as unfair labour practices by the

LRB?

2. Will management actions provide fuel for the organizing drive?

When an unfair labour practice is committed by any member of

management, it can lead to expensive, time-consuming lawsuits and
(in some instances) automatic certification of the union. Moreover,
union supporters can point to management violations as further
justification for a union.

Unfair Labour Practices

To prevent employers from interfering with employee rights, the law
prohibits specific unfair labour practices by management. These legal
prohibitions are summarized in Figure 13-9. They require that management
neither interfere with nor discriminate against employees who undertake
collective action.

FIGURE 13-9

Unfair Labour Practices by Management

Table Summary: Summary

 Every jurisdiction in Canada has specific provisions dealing with
unfair labour practices by management. Some of the most
common provisions addressing unfair labour practices are
provided below. Activities that management may not engage in
include the following:

1. Interfering in the formation of a union or contributing to it

financially (although there have been allowances for the
providing of an office for the union to conduct business and
for paid leave for union officials conducting union business)

2. Discriminating against an employee because the individual

is or is not a member of a trade union

3. Discriminating against an employee because that individual

chooses to exercise rights granted by labour relations
statutes

4. Intimidating or coercing an employee to become or not

become a member of a union

Unfair labour practices by unions are also prohibited. A summary of such

practices is provided in Figure 13-10.

FIGURE 13-10

Unfair Labour Practices by Unions

Table Summary: Summary

While every jurisdiction has laws regulating trade union conduct,
some of the most important unfair labour practice provisions are
presented below. Activities that a union is not permitted to
engage in include the following:

1. Seeking to compel an employer to bargain collectively with

the union if the union is not the certified bargaining agent
 2. Attempting, at the workplace and during working hours, to
persuade an employee to become or not become a union
member

3. Intimidating, coercing, or penalizing an individual because

he or she has filed a complaint or testified in any
proceedings pursuant to the relevant labour relations statute

4. Engaging in, encouraging, or threatening illegal strikes

5. Failing to represent employees fairly

Obtaining Bargaining Rights

Legal recognition or bargaining rights may be obtained in three ways: (1)
through voluntary recognition, (2) through certification by a labour
relations board, and (3) through a prehearing vote or automatic certification
resulting from unfair labour practice.

Page 366

1. Voluntary recognition occurs if a union has organized a majority of

employees and the employer is satisfied that the union did not apply
undue pressure in the organization process. The employer then accepts
the union as the legal bargaining agent without any involvement of a
third party.

2. Regular certification may take different forms (depending on the

jurisdiction):

In some provinces, if a substantial number of employees (usually

between 50 and 65 percent, depending on jurisdiction) sign union
cards, the labour relations board may certify the unit without an
election. If the union is unable to get enough employees to sign
cards to qualify for automatic certification but still gets a
significant number of card signatures (typically between 35 and
 45 percent of bargaining-unit members, again depending on the
jurisdiction), an election is mandatory. A secret ballot is taken
under the supervision of the labour relations board at the
employer’s place of business. If the union loses, another election
among the same employees cannot be held for one year. If the
union wins (that is, the majority of eligible employees who vote
cast ballots in favour of the union), then the employer must
prepare to negotiate with the union and attempt to reach a
collective agreement.

Other provinces do not automatically certify unions based on card

signatures. Rather, an election is held if there is sufficient support
for the union in the form of signed cards. Again, the union is
certified if the majority of the ballots cast are in favour of the
union. While employers generally favour a mandatory secret
ballot vote for certification, the legislative change away from
certification on the basis of card signatures was strongly opposed
by unions. A poll of Manitoba residents by the Canadian
Federation of Independent Business revealed very strong support
for the use of secret ballots in union certifications. More than 70
percent supported the use of secret ballots (51 percent strongly
agree and 20 percent agree) and 68 percent of small business
owners are supportive of the secret ballot approach (57 percent
are very supportive and 11 percent are somewhat supportive).61
Amendments to the certification process are not uncommon:

Ontario’s Fair Workplaces, Better Jobs Act, 2017, has some

interesting features that will impact union organizing in the
province. For instance, a union able to show at least 20 percent
membership support can obtain employee contact information
(such as name, phone number, and email) from the employer.
Also, the Act provides for off-site or electronic voting. However,
there have been fewer requests for employee lists than anticipated
as unions may be unwilling to seek such lists earlier in the
certification process and thus put employers on notice of a
potential organizing drive and permit more time for employer
preparation.62
3. Page 367

Prehearing votes are taken in cases when there are significant

indications that an employer has committed unfair labour practices to
prevent unionization. In such a case a union can ask an LRB to
conduct a prehearing vote. In addition, most jurisdictions provide for
automatic certification if employer actions (in the form of unfair
labour practices) are such that the true wishes of employees may not
be known.63
LO5 Negotiating a Collective
Agreement
Once a union is certified, the various labour relations statutes require both the
union and management to bargain in good faith. This means that both sides are
required to make a reasonable effort to negotiate a collective agreement. The
failure of either party to do so can lead to unfair labour practice charges.

The collective bargaining process has three overlapping phases. Preparation for
negotiations is the first and often the most critical stage. The success of the
second stage, face-to-face negotiations, largely depends on how well each side
has prepared, the skill of the management and union negotiators, and the
bargaining power of each side. The third phase involves the follow-up activities
of contract administration. An organization may establish an industrial relations
department or create a labour relations specialist position within the human
resources department to administer the collective agreement and coordinate
contract negotiations. In recent years, we have seen a trend toward longer
collective agreements:

Over the past 30 years, the average length of collective agreements has
doubled (from 20 to 40 months). Unions have generally preferred shorter
agreements while employers often sought longer deals. According to labour
lawyer Will Cascadden, “Because bargaining involves multiple meetings,
bargaining is usually a time-consuming expensive process. Employers have
to allocate significant resources figuring out what the bargaining positions
are and what positions you are going to take on those issues.”64
© CP/Sean Kilpatrick
 Postal strikes tend to have a serious impact on customers, especially
small businesses. Should postal strikes be prohibited? Could such
prohibitions be done legally?

Preparing for Negotiations

The purpose of negotiations is to achieve a collective agreement. The agreement
specifies the rights and responsibilities of management and the union. Detailed
preparations are required if each party is to achieve its objectives.

Labour relations specialists need to monitor the environment to obtain

information about likely union demands. A number of strategies can be
employed. The labour relations department must be sensitive to the rate of
inflation and the settlements made by other unions:

VIA Rail encourages regular structured discussions with the union and
opening the communication lines before meeting during contract
negotiations. This permits the parties to discuss relevant issues, share
direction, and identify emerging trends in advance of bargaining. According
to Ed Houlihan, director of labour relations at VIA Rail, “better ideas will
emerge when both sides work together early in the process to solve common
issues.”65

One set of bargaining issues revolves around management rights. These rights
provide management with the freedom to operate the business subject to any
terms in the collective agreement.66 They often include the right to reassign
employees to different jobs, to make hiring decisions, and to decide other matters
important to management.

Page 368

Under what is known as the residual rights theory of management, employers

argue that they have the authority over all issues not contained in the collective
agreement. On the other hand, union leaders assert that residual rights do not exist
and that they are free to bargain over any issue affecting workers. Most collective
agreements have a management rights clause. A typical clause might be as
follows:

The Employer retains and shall possess and exercise all rights and functions
that the Employer possessed prior to the signing of this collective agreement,
 excepting only those that are expressly relinquished or restricted in this
agreement.67

In negotiating a collective agreement, management may want to include contract

language that increases its flexibility at the workplace. For example, supervisors
may want all job descriptions to include the phrase “and other duties assigned by
management.” This clause prevents workers from refusing work because it is not
in their job description. The clause also gives supervisors greater freedom in
assigning employees. Labour relations specialists in the human resource
department may use a variety of sources (such as surveys, discussions, focus
groups, provisions in other collective agreements, and information from
grievance claims) to discover which rights are important.

Negotiating With the Union

After preparing for bargaining, the second phase of negotiations is face-to-face
bargaining with the union. Discussions often start as much as 60 to 90 days
before the end of the present contract. If the negotiations are for a first contract,
they begin after the union is recognized by the employer or wins a certification
election.

Negotiations cover a variety of issues relating to terms and conditions of

employment, including wages, hours of work, and working conditions. These
areas are interpreted broadly. Wages refer to all forms of compensation, such as
pay, insurance plans, retirement programs, and other benefits and services. Hours
of work include the length of the workday, breaks, holidays, vacations, and any
other component of the work schedule. Working conditions involve such issues as
safety, supervisory treatment, and other elements of the work environment. The
contents of a collective agreement are only limited by the ingenuity of the parties.
For instance:

Canadian Blood Services (Edmonton) permitted employees to take up to

three days off to attend their wedding. In PEI, the Labourers International
Union negotiated a clause that prohibits the use of cellphones and smart
phones during work hours, and in Quebec, CBC and Groupe TVA agreed to
a clause guaranteeing an employee salary and benefits if the individual is
incarcerated for refusing to divulge a confidential source.68
 © THE CANADIAN PRESS/Frank Gunn

Union leaders, like politicians, are elected. Are there other similarities?

Successful bargaining usually begins with easy issues in order to build a pattern
of give-and-take. Negotiations almost always take place in private, permitting
more open discussion of the issues. When deadlocks occur, several tactics can
keep negotiations moving toward a peaceful settlement. By settling easy issues
first, bargainers often point to this progress and say, “We’ve come too far to give
up on this impasse. Surely, we can find a solution.” This sense of past progress
may increase the resolve of both sides to find a compromise.

Richard Dixon, former vice-president and human resources officer at NAV

Canada, stated, “In any unionized environment, if you’re sitting at the
collective bargaining table, you’re sitting across from individuals who know
the business very well. When trying to introduce a new business process or
negotiate a more streamlined way of doing things, the HR professionals who
don’t know the business as well as the people on the other side of the table
could have their pockets picked.”69
Compromises may be achieved by offering counterproposals that take into
account the needs of the other party. For example, Air Canada and its pilots
reached an agreement without resorting to strike action or arbitration for the first
time since 1996. In addition to reopener clauses, the 10-year contract also
provided for profit sharing for union members using a formula similar to that
applied for executive bonuses.70

Page 369

Many management teams will exclude top executives. They are kept out of
negotiations because top managers are often not experienced in collective
bargaining. Also, their exclusion gives management bargainers a reason to ask for
a temporary adjournment when the union introduces demands that require a
careful review. Rather than refusing the union’s suggestion, management
bargainers may ask for a recess to confer with top management (using the adage
“My hands are tied”).

Experienced bargainers realize that the other side must achieve some of its
objectives. If the employer is powerful enough to force an unacceptable contract
on the union negotiating team, the union membership may refuse to ratify the
contract, or union officials and members may refuse to cooperate with
management once the collective agreement goes into effect. In addition, if
management does not bargain in good faith, the union may file unfair labour
practice charges.

Using Mutual Gains Bargaining

Rather than use the traditional adversarial approach to negotiating a collective
agreement, some unions and employers are employing mutual gains bargaining.
This approach moves away from the us-versus-them or win–lose attitude in
favour of a win–win approach, in which both parties work together to solve
common problems. However, labour unions are often skeptical about win–win
bargaining, as one senior union official asserts:

It has been our experience that most employers only become “less
adversarial” and talk about cooperation when they want something that will
benefit them. Many employers have approached unions wanting to extract
concessions, normally accompanied by promises of future employer
cooperation. It is also usually followed by an acute case of amnesia on the
part of the company. Any level of cooperation between the union and
 company must be accompanied by a commitment that front-line supervisors
are prepared to treat our members with dignity and respect on the shop floor.
Without that commitment, cooperation between the union and company is
meaningless.71

Note that mutual gains bargaining does not mean “soft” bargaining or one side
giving in. Rather, both parties sit down at the bargaining table as equals and
engage in joint problem-solving activities. The process is usually preceded by
training in conflict resolution for both employer and union representatives. In
addition, mutual gains bargaining requires substantial commitment, trust, and
respect, and a long-term focus on the part of both labour and management.

What does a mutual gains enterprise need to succeed? At the workplace level, it is
important to have high standards of employee selection, broad design of tasks and
a focus on teamwork, employee involvement in problem solving, and a climate
based on cooperation and trust. At the human resource policy level, key elements
include a commitment to employment stabilization, investment in training and
development, and a contingent compensation strategy that emphasizes
participation, cooperation, and contribution. Finally, at the strategic level, there
must be a strong commitment from top management to the mutual gains concept,
business strategies that support and are aligned with the mutual gains model, and
an effective voice for human resource management in strategy making:72

In a recent settlement between the CBC and Canadian Media Guild (CMG),
the union stated that the atmosphere in bargaining was respectful and
constructive with both parties looking to move the discussions forward.
“Similar to past negotiations, the parties relied on an interest-based approach
throughout the bargaining process that has worked to the benefit of both
parties. This approach encouraged cooperation, respect, transparency and
fact-based decisions to address issues.73

Research by the Conference Board of Canada revealed that 36 percent of

employers and 42 percent of unions have attempted interest-based or mutual
gains bargaining techniques.74

The Harvard Program on Negotiation has several important strategies to avoid

reaching an impasse in collective bargaining. Factors leading to impasse and a
potential strike include overconfidence by the negotiators (believing that your
position is stronger than it is and the other side is weaker), fairness concerns and a
desire to seek retribution if treated unfairly, the use of agents who may have
interests that do not align with the parties they represent, seeing negotiations as a
competition, and incrementally commit to an impasse (failing to ignore past
investments such as time, money and other resources).

Suggestions for reducing conflict during bargaining are listed in Figure 13-11.75

FIGURE 13-11

How to Reduce Conflict During Bargaining

Table Summary: Summary

1. Avoid extreme demands and drawing a line in the sand.

2. Consider the other side’s perspective and brainstorm for creative

solutions to issues on the table.

3. Get an outside opinion, such as an external expert who can

examine the demands and issues from a disinterested perspective.

4. Consider a “virtual” strike which involves the parties continuing

operations but not receiving pay or revenues—these are paid into
an escrow fund for distribution after the dispute is settled.

5. Develop contingency clauses, for instance, if there is a change in

inflation or revenue stream.

SOURCE: K. Shonk, “Collective Bargaining Negotiations and the Risk of

Strikes,” Program on Negotiation—Harvard Law School, www.pon.harvard.edu,
Jan. 18, 2021.

Page 370

Still, many labour relations experts are somewhat skeptical about interest-based
bargaining, as one labour lawyer points out:
 “If you ask seasoned negotiators (about interest-based bargaining), they’ll
give you the look of death and say, ‘Are you crazy?’ Mutual gains
bargaining requires both sides to invest so much time and energy in being
trained in things like ‘What do you need?’ ‘What are our needs?’ ‘How do
we negotiate in a collaborative fashion?’ But to go from traditional
bargaining into mutual interest takes a diametric mind-shift. You need to
invest the resources and the relationship has to be mature enough.”76

Approving the Proposed Agreement

The bargaining stage of negotiations is completed when the agreement has been
approved. Often final approval for the employer rests with top management.
Negotiations are not complete until the union also approves the proposed
agreement. Typically, the union bargaining team submits the proposal to the
membership for ratification. If a majority of the members vote for the proposal, it
replaces the previous collective agreement. If members reject it, union and
management bargainers reopen negotiations. Administration of the collective
agreement begins when both sides sign it.

LO6 Conciliation and Mediation

What happens in the event that negotiations between labour and management
break down? In their legislation, all jurisdictions provide for conciliation and
mediation services. Actually, in most provinces, no strike action is permitted
before a conciliation effort has been made and has failed.77 A 10-year review of
conciliation cases in Nova Scotia revealed that conciliation officers settled more
than 90 percent of the cases.78 However, the results vary among provinces, and
some jurisdictions have not come close to matching the 90 percent figure.

Conciliators are appointed by the federal or provincial minister of labour, at the

request of either one or both of the parties involved or at the discretion of the
ministers. A conciliator is requested to submit a report to the minister within a
specified time period. If conciliation fails, strikes or lockouts can legally
commence, usually two weeks after the submission of the conciliator’s report.
Although labour relations legislation may include an option to have a conciliation
board meet with the parties, this is used infrequently.

With reference to mediation, often a mediator will meet separately with each
bargaining team, especially when the negotiations take place in a hostile
atmosphere. Effective mediation requires a high degree of sensitivity, patience,
and expertise in the psychology of negotiation.
Administering the Collective
Agreement
Page 371

Upon ratification by union members and approval by management, the

parties begin living with the collective agreement. What happens if the
parties have a disagreement regarding the interpretation of a term of the
agreement? As discussed below, alleged violations of the agreement
typically go through the grievance procedure. A grievance is defined as a
complaint by an employee or employer that alleges that some aspect of a
collective agreement has been violated. Almost every collective agreement
in Canada contains some type of formalized procedure for resolving
disputes. Furthermore, labour legislation typically requires that a grievance
that cannot be resolved between the parties be submitted to an arbitrator or
arbitration board whose decision is final and binding. To give an example,
consider the following case:

A 46-year-old Ottawa city worker was found to have altered the water
meter at both his current and former residences. The employer met
with the worker, who admitted to tampering with the meter and agreed
to reimburse the city for almost $7,000 to cover unrecorded water
usage. The employee admitted turning off the meter on several
occasions (such as on heavy laundry days or when filling his pool).
Although the employee had 23 years of service without performance
or disciplinary issues and the misconduct was off-duty and not directly
related to his employment, an arbitrator upheld the termination of the
employee.79

Grievance Procedures
While either management or the union may file a grievance when the
collective agreement is violated, most workplace decisions are made by
management. Consequently, most grievances are filed by the union:

The Laborers’ International Union of North America recently filed a

grievance after claims that a nurse at a senior care home in Ontario
was required to give the COVID-19 vaccination to at least 10 people
(friends of a manager at the home) who were not front-line staff or
home-care residents and one member of the medical staff took home
about five doses of the vaccine for personal use. The union is arguing
that the nurse was pressured into administering the vaccine and a
number of the individuals entering the home to receive the vaccination
were in violation of current pandemic regulations and represent a
major breach of infection control measures. The employer is asserting
that the vaccines would have gone to waste if not provided to outside
people.80

The grievance procedure consists of an ordered series of steps. Figure 13-12

describes the steps that an employee’s grievance typically passes through.
An example further demonstrates how grievances may occur:

Preboarding screeners at the Edmonton International Airport, who are

members of Teamsters Local 362, filed more than 900 grievances
resulting from delayed or missed breaks. Although all workers are
entitled to two or three half-hour breaks based on shift length,
employer GardaWorld changed its interpretation of the clause so that
all required security lines could be open. Union officials reported that
at least four workers soiled themselves after being denied bathroom
breaks. Union vice-president and business agent Jordan Madarash
stated, “Morale is low, absenteeism is higher. It’s not a fun place to
work right now, wondering if you are going to get a break to get your
food if you are a diabetic.”81

FIGURE 13-12

Typical Steps in a Union–Management Grievance Procedure

Table Summary: Summary

 Preliminary discussion. The aggrieved employee discusses
the complaint with the immediate supervisor with or
without a union representative. At this stage, or at any other
step in the process, management may resolve the grievance
to the satisfaction of the union, or the union may decide to
drop the grievance. Otherwise, the grievance proceeds to
the next step in the process.

Step 1. The complaint is put in writing and formally

presented by the shop steward to the first-level supervisor.
Normally, the supervisor must respond in writing within a
contractually specified time period, usually two to five
days.

Step 2. The chief steward takes the complaint to the

department superintendent. A written response is required,
usually within a week.

Step 3. The complaint is submitted to the plant

manager/chief administrative officer by the union plant or
grievance committee. Again, a written response is typically
required.

Step 4. If Step 3 does not solve the dispute, arrangements

are made for an arbitrator or an arbitration board to settle
the matter.

Page 372

The number of steps in the grievance procedure and the staff involved at
each step will vary from organization to organization, but most grievance
procedures have between three and five steps. The purpose of a multistep
grievance procedure is to allow higher level managers and union
representatives to look at the issue from different perspectives and to assess
the consequences of pursing the matter further. This approach increases the
chance that the dispute gets resolved without going to arbitration.
Although an employee may prefer to bring the case to court rather than to
arbitration, this may not be permissible. For instance, former Canadian
Football League receiver Arland Bruce’s lawsuit against the CFL and
former league commissioner Mark Cohon will not be going to court. Bruce
was alleging in his lawsuit that he had sustained permanent and disabling
head trauma while playing football and has post-concussive symptoms,
including depression and paranoia. The Supreme Court of Canada refused
to hear Bruce’s appeal, following its earlier decision that unionized
employees must use labour arbitration for disputes arising from their
collective agreements.82

Handling Grievances

Once a grievance has been filed, management should seek to resolve it

fairly and quickly. Failure to do so can be seen as a disregard for employee
needs and is not conducive to building and maintaining effective labour
relations. However, in resolving grievances, management should consider
several issues. First and most important, grievances should be settled on
their merits. Complaints need to be carefully investigated and decided on
the facts. Second, the cause of each grievance should be recorded. A large
number of grievances coming from one or two departments may indicate
poor supervision or a lack of understanding of the contract. Third, the final
solution to the grievance needs to be explained to those affected:

Shahab Makholi, an immigrant from Iran, was hired as a welder by a

Mississauga company that manufactures fire doors. Makholi injured
his hand at work and had to have a splint put on it. He continued
working and was ultimately assigned alternative duties. Eventually, his
lead hand assigned Makholi to do work that he couldn’t perform and
he went to the production manager’s office to complain. After some
discussion, the employer concluded that Makholi wanted to be laid off
and documentation was prepared. Makholi was dismissed, which he
ultimately grieved. The arbitrator, in reinstating Makholi, noted that
Makholi could not read or write English, the company did not make a
substantial effort to explain the importance of the dismissal
documentation, no union representative was present at the termination
meeting although the agreement required that the union be notified of
 any layoffs, and Makholi was instructed not to tell the union what had
happened.83

Arbitration
Consider the following arbitration decision:

During the COVID-19 pandemic, a Toronto hospital employee ignored

the pleas of a screener and brought pizza into the facility for a party
with fellow union members which was in violation of the Trillium
Health Partners’ safety rules. The employee denied bringing the food
into the hospital but photographs showed otherwise. The employee
also became involved in an argument with a screener who was trying
to prevent a contractor from entering the facility without wearing a
mask. The employee’s tirade was laced with obscenities. The employer
dismissed the employee but the dismissal was overturned by an
arbitrator who found the penalty was too harsh. The employee was
reinstated but with loss of pay for the period of the dismissal. The
arbitrator also gave the employer the right to dismiss the employee if
the employee engages in misconduct that would normally result in
discipline over the next 18 months.84

All jurisdictions require that collective agreements include a provision for

final settlement by arbitration, without stoppage of work, of all differences
concerning the interpretation or administration of a contract. This means
that, as long as a collective agreement is in force, any strike or lockout is
illegal. An arbitrator may be selected from a list provided by the appropriate
ministry of labour, or the parties may agree to the selection of an arbitrator.
The arbitrator’s decision is final and cannot be changed or revised, except
in rare instances (such as corruption, fraud, or a breach of natural justice).85
There is growing concern that the arbitration process is becoming too
costly, too slow (some cases take two years or more to be resolved), and too
legalistic.86

Page 373
Arbitration holds two potential problems for labour relations practitioners:
costs and unacceptable solutions. An arbitration case can cost both the
union and employer several thousand dollars. There are also time
commitment costs in terms of preparing for arbitration, attending the actual
hearings, and following up on the case. From the perspective of
management, a potential problem occurs when an arbitrator renders a
decision that is against management’s best interests. Since the ruling is
binding, it may drastically alter management’s rights and set a precedent for
future cases. For example, if an arbitrator accepts the union’s argument of
extenuating circumstances in a disciplinary case, those extenuating
circumstances may be cited in future cases. Consider the following case and
decide if the employee should be terminated:

Mark Davis was a Toronto Transit Commission fare collector who had
been employed for 25 years. After gesturing at a customer with his
middle finger, Davis was suspended for two days and required to take
sensitivity training on dealing with difficult customers, workplace
violence, and professional conduct. One day after completing the
training, Davis commented to a co-worker, “If anything ever
happened, like losing my job, I’d have no problem coming in and
shooting them. I’d die for that cause.” Davis indicated that he would
only shoot managers (three of whom he named). The co-worker
subsequently told her shop steward and a manager about the comments
and Davis was terminated from employment. Although Davis stated
that he was only joking and had no animosity for anyone, an arbitrator
upheld the dismissal.87

This decision shows that once an employer goes to arbitration, the decision
is turned over to a third party. In dismissal cases, the union will typically
argue that discharge is an inappropriate penalty and the possibility exists
that an arbitrator may agree with the union position. Consequently, it is
important that an employee grievance be treated seriously by management
representatives and that the organization attempt to resolve grievances with
the union in a fair and timely manner. However, there may be some
instances where arbitration is unavoidable.

Contract Provisions
Every collective agreement contains specific terms and provisions. A
number of the most common ones are listed in Figure 13-13. These clauses
are important because they define the rights and obligations of the employer
and the union. For instance, union security is a very important issue from
the union’s perspective. In addition, some of the most frequent disputes
concern seniority and discipline.

FIGURE 13-13

Common Provisions in Union–Management Agreements

Table Summary: Summary

Union recognition. Normally near the beginning of a

contract, this clause states management’s acceptance of the
union as the sole representative of designated employees.

Union security. To ensure that the union maintains members

as new employees are hired and present employees quit, a
union security clause is commonly demanded by the union.
Union security provisions are discussed later in the chapter.

Wage rates. The amount of wages to be paid to workers (or

classes of workers) is specified in the wage clause.

Cost of living. Unions may negotiate automatic wage

increases for workers when price levels go up. For example,
one approach is for wages to go up in response to an
increase in the consumer price index above some specified
amount.

Insurance benefits. This section specifies which insurance

benefits the employer provides and how much the employer
contributes toward these benefits. Frequently included
benefits are life and supplemental hospitalization insurance
and dental plans.
Pension benefits. The amount of retirement income, years
of service required, penalties for early retirement, employer
and employee contributions, and vesting provisions are
described in this section if a pension plan exists.

Income maintenance. To provide workers with economic

security, some contracts give guarantees of minimum
income or minimum work. Other income maintenance
provisions include severance pay and supplements to
Employment Insurance.

Time-off benefits. Vacations, holidays, rest breaks, washup

periods, and leave-of-absence provisions typically are
specified in this clause.

Seniority clause. Unions seek contract terms that require

human resource decisions to be made on the basis of
seniority. Often, senior workers are given preferential
treatment in job assignments, promotions, layoffs, vacation
scheduling, overtime, and shift preferences.

Management rights. Management must retain certain rights

to do an effective job. These may include the ability to
require overtime work, decide on promotions, design jobs,
and select employees. This clause reserves to management
the right to make decisions that management thinks are
necessary for the organization’s success.

Discipline. Prohibited employee actions, penalties, and

disciplinary procedures are either stated in the contract or
included in the agreement by reference to those documents
that contain the information.

Dispute resolution. Disagreements between the union and

management are resolved through procedures specified in
the contract.
 Duration of agreement. Union and management agree on a
time period during which the collective agreement is in
force.

Union Security

Can an employee be required to join a union as a condition of employment?

An employer and union can negotiate clauses dealing with union security
and, in some jurisdictions, compulsory dues checkoff is required.

The highest form of union security is the closed shop (found in about 8
percent of agreements), which requires that an employee be a union
member prior to obtaining employment and pay dues to the union. The
closed shop, which is frequently operated through a hiring hall, is common
in construction and longshore industries.

Under a union shop security arrangement, the employer is free to hire an

individual, but, as a condition of employment, the new hire must join the
union within a specified period of time after being hired and must pay union
dues. If the individual refuses to join the union, the employer is required to
terminate the worker’s employment.

The Rand Formula requires an employer to deduct union dues at source

from the wages of an employee and remit the funds to the union. However,
the employee is not required to join the union. In some jurisdictions, dues
checkoff clauses must be negotiated; in other jurisdictions, compulsory dues
checkoff is enshrined in law.

While the amount of dues varies, it is typically in the range of about 1–1.5
percent of an employee’s earnings. Most workers covered by a collective
agreement are subject to a dues checkoff requirement. Some jurisdictions
allow workers who object to joining a union on the basis of religious
grounds to pay the equivalent amount to a registered charity.

In an open shop, an individual does not have to join the union and is not
required to pay dues.
Seniority

Unions typically prefer to have employee-related decisions determined by

the length of the worker’s employment, called seniority. Seniority assures
that promotions, overtime, layoffs, and other employee concerns are
handled without favouritism. As well, the influence of seniority is not
restricted to the union environment; several nonunion organizations also
place considerable weight on seniority in making human resource decisions.

Page 374

Seniority is often very important in deciding layoff rights. For example,

when a company plans a layoff, the most recently hired workers are
typically the first to go. The remaining employees probably receive higher
wages if there is a premium for service with the organization. Thus, the
higher paid employees are retained, even though the layoff may have been
implemented as a cost-reduction measure. Moreover, layoffs may
undermine a company’s employment equity plan, since employees hired
through the employment equity program may have low seniority.

A major concern for unions is job security in light of rapid technological

changes. According to the Conference Board of Canada, job security
benefits both employees and employers but the past reliance on a seniority-
based system may not be sufficient to provide employers with the requisite
mix of talent. The major suggestion is that the parties will need to work
together to develop new parameters for job security and perhaps develop
mechanisms allowing portable seniority between employers.88

Discipline

Page 375

Unions often challenge the discipline of a union member. Due to the

difficulty of trying to list employee behaviours that may warrant discipline,
many collective agreements provide the employer with the right to
discipline or discharge if “just cause” exists. In any disciplinary action,
management must abide by the terms of the collective agreement.
Arbitration cases are frequently lost because management failed to establish
grounds for disciplinary action, neglected to document past disciplinary
procedures, and failed to adhere to the provisions of the collective
agreement.

In deciding discipline and discharge cases, the starting point is the

collective agreement. However, many collective agreements have a
provision indicating that the employer must have “just cause” to discipline
or discharge an employee. In determining just cause, a number of factors
may be important:

Nature and seriousness of the offence

Due process and procedure

Past record of the grievor

Seniority and age of the grievor

Knowledge of rules

Previous warnings from management

Lax enforcement/condonation by management in the past

Unequal treatment of employees

Provocation by management

Isolated incident

Sincere apology/remorse on the part of the grievor89

Although an employer may believe that clear grounds for discipline or

dismissal exist, arbitrators consider a number of issues in making their
decisions:

A Beer Store employee in Ontario took a Toronto Maple Leafs shirt

from a case of beer being returned by a customer. Cases of beer
 containing Maple Leafs shirts were part of a special promotion, and
the employee’s daughter was a big Leafs fan. The employee put the
shirt in his coat pocket (with part of it hanging out) and went to serve a
customer. The employer terminated the employee as part of its zero-
tolerance theft policy while the employee argued that he had intended
to ask his supervisor whether he could keep the shirt. An arbitrator
ruled that the employee, who had 23 years of service with the
employer, had not intended to steal the shirt and replaced the
termination with a three-day suspension.90

Past Practice
The actions of managers and union officials sometimes change the meaning
of the agreement. A precedent is a new standard that arises from the past
practices of either party. Once a precedent results from unequal
enforcement of disciplinary rules, the new standard may affect similar cases
in the future.

The fear of past practices usually causes two changes in human resource
policies and procedures. First, employee-related decisions are often
centralized in the human resource department. Supervisors are stripped of
their authority to make decisions on layoffs, discipline, and other employee
matters. Instead, supervisors are required to make recommendations to the
human resource department to ensure uniformity and consistency of
application and to prevent precedents.

Second, employers increase the training of supervisors in the administration

of the contract. Training is needed to ensure that supervisors administer the
collective agreement in a consistent manner. For example, if each
supervisor applies a different standard to tardiness, some employees may be
disciplined while others with more lenient supervisors may not receive any
penalty. In time, the union might argue that unequal treatment makes it
unfair to discipline those who are late. Through centralization and training,
human resource departments create a more uniform enforcement of the
contract.
Public Sector Bargaining
When Parliament passed the Public Service Staff Relations Act (PSSRA) in
1967, it essentially gave federal civil servants bargaining rights similar to
those granted workers in the private sector—usually the right to bargain for
wages, hours, and certain working conditions. More important, it also gave
them the right to strike. This is in contrast to civil servants in the United
States, who since 1962 have had the right to bargain collectively but not to
withhold their services. Under the PSSRA, the methods of conflict
resolution are different from those in the private sector. Before a bargaining
agent can give notice that it wishes to bargain, a decision must be made as
to whether a conciliation-strike procedure or a binding-arbitration
procedure will be used should a deadlock occur. The union has the right to
choose different procedures for each subsequent collective agreement. If the
strike route has been chosen, conciliation procedures must be followed
before a strike can begin.

Page 376

Another difference from the private sector is that the law allows the
employer to designate certain employees as performing essential services,
thus divesting them of the right to strike. The union, however, may
challenge the list of “designated employees,” in which case the Public
Service Staff Relations Board makes the final decision.

A comparison of the federal and provincial legislation for government

employees reveals little uniformity across Canada. While municipal
government employees generally fall under the same legislation as private
sector workers, the legislation applicable to provincial civil servants varies
markedly. For instance, Saskatchewan government employees come under
the same legislation as private sector employees; in some provinces there is
specific legislation applicable only to provincial government employees;
and in other jurisdictions, there may be two or more statutes applicable to
government employees. In addition, some provinces markedly restrict or
prohibit strikes by public sector workers.91
Public sector labour disputes can present major challenges:

On October 16, 2017, about 12,000 college teachers represented by the

Ontario Public Service Employees Union went on strike, affecting
around 500,000 college students. The major issues concerned the ratio
between full and contract employees, job security, academic freedom,
and compensation. The strike ultimately came to an end when the
Ontario Liberal government passed back-to-work legislation on
November 19 and an arbitrator set a new four-year contract one month
later. However, the union initiated a court charter challenge in early
2018, alleging that the back-to-work legislation violated workers’
rights.

Even though students and faculty are back to class, repercussions from
the dispute are still being felt. A condensed schedule meant cutting and
skimming over course material. Some faculty lost external research
funding, stress and anxiety increased, and students missed employment
opportunities. For example, one student had secured full-time
employment with the federal government upon her anticipated
graduation in December, but one of her courses was delayed by the
strike and, consequently, her employment contract was changed to
temporary status.92
LO7 Human Resource Practices in the
Union Environment
Human resource issues are constantly arising in the union environment. Consider
the following example from the health care sector:

There is a growing concern relating to people using cell phones to record

nurses at work. Examples range from recording the birth of a child to a
person waking up after being anesthetized to someone upset about wait
times or inefficiencies at the hospital. According to Janet Hazelton, president
of the Nova Scotia Nurses Union, recording nurses at work can distract them
while performing their jobs and violates the privacy of patients. As Hazelton
notes, “It makes nurses uneasy. You become very self-conscious. And you
worry what are they going to do with it?” Karen Hornberger, director of
privacy for Nova Scotia’s Health Authority, says that patients have the right
to record their interactions with medical personnel but recording others in
the hospital would be treated like a privacy breach.93

A study by the Industrial Relations Centre at Queen’s University provides

insights on the labour relations profession in Canada. Among the major findings
are the following:

The four activities that labour relations professionals are most involved in
are conflict resolution management, coaching with regard to labour relations
best practices, administration of the collective agreement, and grievance
settlement.

From a knowledge perspective, the most important areas are understanding

the union–management perspective, conflict resolution, labour statutes, and
negotiation.

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In terms of skills required to perform day-to-day work, the top four skills are
communication, active listening, relationship building, and collective
agreement interpretation.
 When considering the labour relations profession, 59 percent are optimistic
about the future of the profession, 15 percent are pessimistic, and 26 percent
are unsure.

The top three perceived opportunities for the profession are talent
management, union–management collaboration and partnership, and
strategic labour relations.94

While there is a significant and growing body of information about human

resource management from the perspective of the employer, less attention has
been paid to examining which human resource management practices are found
within unionized workgroups.

A survey of Canadian union officials examined a number of human resource

issues in the unionized environment. Concerning human resource management
policies, union officials were asked to indicate whether a number of specific
HRM programs or practices applied to bargaining-unit employees. As revealed in
Figure 13-14, more than 95 percent of units had a policy addressing sexual
harassment, 86 percent had an orientation program for new hires, 86 percent had
an employee assistance plan (EAP), and 66 percent had some type of formal
performance appraisal system. About 51 percent of respondents reported that the
employer shared business information with union members.

FIGURE 13-14

HRM
Practices/Program
s Among Canadian
Unions

Table Summary:
Summary
 SOURCE: Terry H. Wagar (2009), Human Resource Management and
Workplace Safety: A Study of Canadian Union Officials, unpublished
report, Saint Mary’s University.

Union officials were also asked to indicate whether bargaining-unit employees

were involved in a number of specific team-based and incentive programs (Figure
13-14). As the figure reveals, 28 percent of the union locals reported having work
teams, 22 percent had quality circles, and 40 percent had problem-solving groups.
Unions have generally stayed away from contingency compensation plans such as
profit sharing, productivity sharing, and employee stock ownership plans; overall,
less than 20 percent of respondents reported having such plans.

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A study on the impact of a strike on a workplace team examined two groups: the
strikers and those who continued to work during the dispute. The two groups
became more cohesive during the conflict and their social network increased but
there were several challenges after the dispute was settled and the two groups
needed to work cooperatively.95
Implications of Union Avoidance
Approaches
In nonunion facilities, an implicit objective of many employers is to remain
nonunion. Employers frequently adopt either a union suppression or a union
substitution approach in order to avoid unionization. The union suppression
approach involves fighting union representation. An employer may try to
intimidate workers, threaten to close or move the plant or facility, or
discriminate against union supporters.

The union substitution approach examines what unions bring to the

employment relationship and then tries to introduce such features into the
nonunion workplace. This approach requires that human resource
specialists do the following:

Design jobs that are personally satisfying to workers.

Develop plans that maximize individual opportunities while

minimizing the possibility of layoffs.

Select workers who are well qualified.

Establish fair, meaningful, and objective standards of individual

performance.

Train workers and managers to enable them to achieve expected levels

of performance.

Evaluate and reward behaviour on the basis of actual performance.

Provide employees with a “voice” in the workplace.

Implement a compensation plan in which wages/salary and benefits

parallel those available in the union sector.
The union substitution approach is advocated by many HR practitioners,
consultants, and labour lawyers. According to one labour lawyer:

“Nonunion companies that want to remain nonunion should steal some

of their best features from their competitors’ collective agreements.
Often a collective agreement will contain provisions that do not
contradict an efficient and effective operation. Employers should have
a nonunion dispute resolution process. Dealing with complaints is the
biggest challenge in a nonunion workplace.”96

On the other hand, Canadian labour relations legislation requires that

workers need to take the initiative in establishing collective bargaining
relationships, knowing that many employers are opposed to unions.
Consequently, the beginning of the new union–management relationship is
already characterized by conflict and adversarialism. Roy Adams, professor
emeritus of industrial relations at McMaster University, argues that the
practice of union avoidance sabotages the right to bargain collectively and
contravenes the International Labour Organization’s Declaration of
Fundamental Principles and Rights at Work, which includes the effective
recognition of the right to bargain collectively. In North America, this right
is generally not available until workers go through an arduous certification
procedure, which results in an adversarial relationship.97
LO8 Managing in a Union
Environment
When unions are present, the human resource function is changed. In many
organizations, the human resource department is expanded by the addition
of specialists in labour relations, who deal with such critical areas as
negotiations and contract administration, while human resource
professionals attend to their more traditional roles. Although some
organizations establish separate industrial relations departments to deal with
labour relations issues, industrial relations is often considered a subset of
human resource management.

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Unionization may be associated with greater centralization of employee

record-keeping and discipline to ensure uniformity of application. This
change can mean that line managers lose some of their authority to the
human resource department. They may also find their jobs more difficult
because of the new rules imposed by the contract—while management has
the right to act, the union may have the right, under the contract, to react to
management’s actions.

Line managers may become dissatisfied because their authority diminishes

while their responsibility increases. These added responsibilities are likely
to result from requests of human resource professionals, who may need to
monitor the work environment more closely and need more information
from the line managers. For example, the line manager may have to
compile new reports on such issues as absenteeism, lateness, productivity,
and employee grievances. Such demands on supervisors may create friction
between line managers and human resource staff members.

The presence of a union means that management has less freedom to make
unilateral changes. No longer can an employer simply decide which
changes to implement. Instead, collective agreement provisions and labour
laws must also be considered.

Some unions have been using the media to control the debate on key issues.
Both employers and unions need to consider the effect of media relations
but there is a fear that media can be a barrier to good-faith bargaining or
result in misinterpreting or sensationalizing fundamental workplace issues.
A number of employers are increasing their focus on media relations and
making sure that they have a carefully considered response to media
queries.98

Labour–Management Cooperation
Some unions and employers are moving toward greater co-operation, and
there is increasing acceptance that labour and management must work
together if they are to survive and prosper in the highly competitive global
economy.99

Some employers and unions are using or considering “evidence-based

labour relations.” According to Cooper, Jackson, and Irish, “Both
unions and employers are expressing an interest in partnering on
initiatives to tackle challenges related to health and safety, precarious
work, and marginalized groups.” The parties also may be interested in
grievance metrics, such as grievances as a percentage of unionized
headcount, arbitrated grievances as a percentage of grievances open,
and percentage of grievances closed. A Conference Board report
revealed that both employers and unions viewed arbitration as a
“cumbersome, unpredictable process.”100

About 52 percent of respondents to a recent Conference Board of Canada

study reported that their overall union–management climate was
cooperative and a further 9 percent said it was very cooperative. The major
issues for 2020 included wages (58 percent of respondents), followed by
flexible work practices (34 percent), business competitiveness (33 percent),
productivity (31 percent) and organizational change (27 percent). Their
perception of the top issues from a union perspective included wages (81
percent), employment security (51 percent), health benefits (38 percent),
employment and pay equity (28 percent), and outsourcing and contracting
out (22 percent).101

There is growing evidence that organizational performance is enhanced

when labour and management cooperate. For example, research using data
from both employers and unions indicated that a more positive labour
climate was associated with perceptions of higher productivity, enhanced
product or service quality, and greater customer or client satisfaction.102
However, cooperation is a very challenging process:

A recent survey of the City of Edmonton’s communication branch

revealed low morale and allegations of workplace harassment,
disrespect, and bullying. The City’s engagement survey showed that
only 27 percent of respondents reported having “trust and confidence
in my branch’s leadership team’s ability to achieve the city’s goals”
while just 30 percent indicated that “the City inspires me to do my best
work.” One employee stated that she would be criticized at large
meetings, get yelled at, and have people go behind her back to her
supervisor. Another finally quit after seeing man after man get
promoted and stated, “It was awful. My mental health deteriorated
over the years I was there.” The branch is now under new leadership
that is committed to improving the work environment.103

Obstacles to Cooperation

Industrial relations specialists often seek union cooperation to improve the

organization’s effectiveness. However, cooperation may not be politically
attractive to union leaders, who see little gain in cooperating with
management. In fact, if leaders do cooperate, they may be accused by
workers of forgetting the union’s interests. These accusations can mean
defeat by political opponents within the union. Thus, cooperation may not
be in the union leader’s best interests.

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In addition to political obstacles, union leaders may mistrust management.

For example, bitter remarks during an organizing drive or arbitration case
may convince union officials that human resource specialists are anti-union.
Within this climate, cooperative gestures are often seen as tricks or
gimmicks aimed at hurting the union. If cooperative proposals threaten the
members or leaders, mistrust increases and cooperation usually fails.

While employers often have good reasons for seeking more cooperation
with their unionized workforce, a number of cooperative programs have the
underlying goal of increasing managerial domination in the workplace. As
well, some employers use cooperation to “stress the system” by reducing
employees or resources, giving workers more tasks, or speeding up the
assembly line; such practices may dramatically increase the stress level of
workers and dehumanize the workplace.104

Building Labour–Management Cooperation

An employer and union interested in greater labour–management

cooperation have several options to consider. Some of the most common
cooperative efforts are summarized in Figure 13-15. One of the most basic
actions is prior consultation with the union. While not every management
decision must be approved by the union, actions that affect unionized
employees may result in grievance filing unless explained in advance to the
union.

FIGURE 13-15

Methods of Building Labour–Management Cooperation

Table Summary: Summary

Managers and human resource specialists can build cooperation

between the employer and the union through the following:

Prior consultation with union leaders to defuse problems

before they become formal grievances

Sincere concern for employee problems and welfare even

when management is not obligated by the collective
 agreement

Training programs that objectively communicate the intent

of union and management bargainers and reduce biases and
misunderstandings

Joint study committees that allow management and union

officials to find solutions to common problems

Third parties who can provide guidance and programs that

bring union leaders and managers closer together to pursue
common objectives

Human resource specialists can also build cooperation through a sincere

concern for employees. This concern may be shown through the prompt
settlement of grievances. As well, employers can establish programs (such
as employee assistance programs and job counselling) that assist employees
who are experiencing personal difficulties.

Training programs are another way to build cooperation. After a new

contract is signed, the human resource department often trains only
managers. The union does the same for its leaders. The result is that both
sides continue their biases and misunderstandings. If human resource
management sponsors training for both the union and management, a
common understanding of the contract is more likely to be brought about.
The training can be as simple as taking turns paraphrasing the contract, or
outside neutral parties can be hired to do the training. Either way,
supervisors and union officials end the training with a common
understanding of the contract and a new basis for cooperation.

When a complex problem confronts the union and employer, joint study
committees are sometimes formed. For example, one organization recently
set up a joint committee with its union to establish a policy on sexual
harassment. Other employers use joint study committees to address such
issues as workplace rules, quality of work life, technological change, budget
reduction strategies, and safety. However, union participation and support is
absolutely essential.

A final method of building cooperation is through the use of third parties,

such as consultants or government agencies, who may act as change agents
or catalysts to cooperation. For example, in Nova Scotia, the provincial
government has established and delivers a variety of joint union–
management programs (including grievance mediation, joint supervisor–
steward training, and labour–management committees) with the goal of
increasing cooperation in the workplace.

Page 381

There is no single best approach to building cooperation. Since each

relationship is unique, the methods used will depend upon the situation.
Improving union–management relations is an important function that can be
addressed by human resource professionals in unionized organizations.