Table of Contents

Economic Review & Forecast
Management Minute
Feature Article
Legal Corner

Scotia Bank Group, Global Economic Research

Inflation Picks Up

Consumer prices picked up pace in April, advancing 1.8 y/y. As
has been the case in recent months, energy prices fueled a good
portion of the advance, increasing 9.8% y/y. Other significant
factors adding to the increase were shelter and transportation costs.
CPI advanced 0.3% m/m, with clothing, health and shelter costs
setting the pace.

While mortgage financing costs still remain well below a year ago, rising utilities and natural gas prices drove up shelter costs 0.8% y/y — the first increase since last March. Rising insurance costs and auto prices drove the transportation segment up 6.2% y/y, with discounts being drawn back in the midst of an improving consumer climate.

The underlying forces of the recovery seem to be taking hold, as evidenced by a 2.8% y/y increase in the service segment, pushing core inflation up 1.9% y/y. Core CPI has, for the most part, moved in lock step with the headline rate, indicating that the pickup in inflation can be attributed to forces in the broad economy, not just large increases in volatile components of the headline figure.

Strong early-year performance by the Canadian economy and
stimulative financing conditions have driven Canadian consumers
out from hiding — as is evidenced by the 7.1% year-to-date increase
in retail sales — boosting pricing power and lending further
momentum to inflation. While the volatility in European markets
will have an effect on the Canadian economy, growth is still
expected to remain strong throughout the year, with retail sales
continuing to post positive results. Taken together, this falls in line
with Scotia Economics’ call for the Bank of Canada to administer a
measured increase in interest rates at the June 1st meeting

Scotia Capital Economics
From the Global Economic Research Market Trends Newsletter
Printed with Permission
http://www.scotiacapital.com/English/bns_econ/bnsmt.pdf

Negotiating: Win-Win Tactics

by Cy Charney, President, Charney & Associates Inc.

Don’t ever slam a door; you might want to go back.
~ Don Herold

No power is strong enough to be long lasting if it labours under the weight of fear.
~ Cicero

The outcome of a negotiation can be win-win, win-lose, or lose-lose. Sometimes you strive for a win-lose, such as when you buy a car or a home (it is hoped that you win and the seller loses). But at work, a win-lost attitude with your boss or peers will come back to haunt you. You might win the first round, but sooner or later the loser will get even!

Here’s how to produce a mutually beneficial result:

1. Before you begin formal negotiations

Develop a list of alternative outcomes. Evaluate them all. Select the best plus some acceptable fall-back positions that could still meet your needs.

Prepare yourself thoroughly. This will reduce your stress level and give you an ability to display confidence.

2. At the start of your negotiations

Establish a joint goal. Even if the parameters are broad, you and your colleague will both focus on the objective instead of beating each other up.

Establish ground rules for the negotiations. This is particularly useful if the negotiation has typically created conflict and emotional outbursts. You might both agree to:

• listen to each other without interruption;

• respect each other, even though you may disagree on issues;

• be flexible on the less important issues.

State your needs clearly and firmly. Make sure that the other party understands them by getting verbal confirmation.

Determine the other person’s needs. If you can meet his needs, chances are he will meet yours. If you frustrate him, he will do the same to you. Find out what his needs are by listening. Focus on what he is telling you instead of on formulating rebuttals. If you are not sure, ask him to repeat himself, or paraphrase his words to confirm understanding.

3. During the negotiations

Find common ground and build on it to solve other problems.

Prioritise issues. Determine what is negotiable and what is not.

Try to understand what people think and feel. Read their non-verbal language. What are their facial expressions telling you? What are their eyes doing when you ask for commitment? What are their postures and hand gestures telling you?

Avoid arguing, especially on minor issues. Train yourself to agree to the small things so that you establish a collaborative environment focused on solving the more important items.

Avoid aggressive behaviour. Such behaviour will result in a win-lost outcome. The behaviour is typified by:

• Talking louder that the other person;

• Dominating the discussion;

• Using sarcasm;

• Using authority (if you have it) to force the other party into acquiescence.

Avoid passive behaviour. This behaviour is characterized by:

• An unwillingness to deal with the issues;

• Failing to make others aware of your concerns.

Behave assertively. Be hard on the issues, but soft on people.

Avoid blaming others. Otherwise you poison the atmosphere and cloud the focus.

Always give your reasons for declining a proposal.

Realize that the past can’t be undone, and dwelling on it will cause hostility and defensiveness.

Look to the future. Visualize how much better things will be if both parties are able to get satisfaction.

Probe. Ask questions. Listen carefully. In this way, you will uncover the needs of the other person. By finding those needs and then meeting them, you will set the stage for having your needs met.

Show positive body language. Don’t:

• Fold your arms or legs;

• Roll your eyes;

• Tense your body;

• Wear a scowl;

• Raise your voice.

Seek creative solutions that satisfy both parties. This happens more often when you:

Avoid “either/or” solutions. Limiting yourself to two alternatives reduces the possibility of creative new solutions.

Use the words “what if” more often

Focus on common interests rather than opinions.

The party with the shortest deadlines will tend to concede more as the deadline approaches. If you have a deadline, don’t reveal it.

Deal with issues as they arise so that they don’t accumulate and overwhelm your discussion

If your negotiations are going off on a tangent, get back on track with a comment such as “Yes, I can relate to that, but could we get back to the central issue?”

Be creative. There is more than one way to reach your goal. Have alternative ideas that will still provide benefits for all. Rigidity reduces creative problem-solving and increases conflict.

Stop negotiations from time to time to share your feelings. Find out how others are feeling. If they are negative, find ways to overcome the hostility so that you can continue to solve problems in a constructive manner.

Whenever the discussion becomes vague, clarify your understanding with a summary. For example, say “Do I understand the problem right? IN my mind, it is…”

IN a unionized environment, be aware of items affected by the collective agreement. These should not be negotiated on a one-to-one basis.

4. At the conclusion of the negotiation

Avoid making extra concessions during the euphoria of reaching an agreement with the associate.

Summarize everyone’s understanding so that everyone is absolutely clear as to what has been agreed upon. Commit it to paper so that no one will have to rely on memory for the details.

Cy Charney, President of Charney & Associates. (905-886-5606, www.askcharney.com), is a leading Canadian management consultant focusing on organizational performance improvement.

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Executive Search – Insights from the Trenches

by Bruce McAlpine

Here we are, half way through 2010.  As an industry we were REALLY looking forward to looking backward on 2009, the toughest year since the early 1990’s when 60% of the practitioners in our industry went out of business.  But now, the recovery is upon us.  Some key indicators:

1. Based on actual and projected GDP numbers, Canada has the strongest overall economy of the G8 nations.

2. Based on an international survey, Canada has the strongest banking system in the world.

3. Canada’s residential real estate market is the strongest in North America.

4. Canada’s business leader confidence is improving, ref the Conference Board of Canada.

5. A recent survey of chartered accountant executives in Canadian corporations found 61% were “optimistic” about the Canadian economy, up 13% from 3 months ago, and down just 6% from the pre-recession peak.

6. Our auto sector is rebounding, and GM is investing $235M in Ontario.

7. The $CAN is flirting with parity with $USD.

Employment growth traditionally lags a recovery as companies attempt to rebuild their balance sheets before adding “overhead”, but we are already seeing signs of an employment recovery:

• At 8.2%, Canada’s unemployment rate has already dropped half a percent from 8.7% last summer.

• Recent gains in employment have been at more senior levels (males over the age of 55) and in more value adding sectors (goods-producing sectors, and professional, scientific and technical services).

As we move back toward fuller employment, the overriding demographic trends will begin to make themselves felt again.  Specifically, we will move toward a skills shortage which will not go away without significant changes to our immigration policies, and massive investments in training and development.  According to Statscan:

• Within 5 years, more workers will be leaving the Canadian workforce than entering it.

• By 2015, 20% of Canada’s workforce will be 55+ years of age.

So what can you do about it?

• Hire well – make sure you focus on fit, not just education and experience, and consider future potential as well as current needs.

• Treat employee retention as a strategic imperative, focusing on the drivers that are important to your more junior employees (challenge, opportunities for personal development, career progression, praise/acknowledgement, more casual workplace, etc.,  in addition to financial rewards).

• Make sure your newer staff members are getting opportunities to take on leadership roles so that they will be ready when you need them to backfill your retiring managers.

Please call us if we can help in any way.

New Obstacles To Conducting Criminal Background Checks On Employees

By Kelly McDermott

In November of 2009, the Royal Canadian Mounted Police ("RCMP") issued a directive that will fundamentally change the way Canadian employers conduct criminal background checks on prospective employment candidates.

CPIC Background Checks

The Canadian Police Information Centre ("CPIC") is a national criminal record database administered by the RCMP. In the past, employers could simply submit the name and date of birth of a prospective employment candidate to a designated CPIC agency or a background screening company. Within days, a CPIC check would identify whether an individual had a record of a conviction and the nature of that conviction.

RCMP Directive

In November of 2009, the RCMP issued a directive to all CPIC agencies and background screening companies outlining concerns about the way CPIC background checks were carried out. Based on these concerns, the RCMP released an Interim Policy Statement outlining a number of substantive changes to the process. The following changes are noteworthy for employers: (I) scope of information released; (2) processing time; and (3) limitations on vulnerable sector checks.

1. Scope of Information Released

Under the Interim Policy, employers will no longer receive a clear verification of whether a prospective employee has a criminal record or not. All criminal record checks will include a qualified statement with respect to the result:

• Where there is negative result, the employer will be told that: "the search did not identity any records for a person with the name(s) and date of birth of the applicant"; or Where there is a positive result, the employer will be told that: "the search could not be completed. In order to complete the request, the applicant is required to submit fingerprints to the National Criminal Record repository".

• The RCMP will no longer verify if a prospective employee has a criminal record, nor will they provide details about a potential record, without the applicant first submitting to a fingerprint comparison analysis.

2. Processing Time

There is currently no expeditious process for verifying a criminal record under the Interim Policy. The RCMP says its current fingerprint verification process can take more than 120 days to complete. This process does not commence until the applicant submits their fingerprints to a local police station or certified fingerprint agency.

3. Limitations on Vulnerable Sector Checks

The RCMP's direction on vulnerable sector checks specifies that these checks (and checks involving records protected by the Youth Criminal Justice Act) cannot be obtained using background screening companies. The RCMP also has specified that vulnerable sector checks can only be performed for positions inside Canada and can only be released to an employer once they have prior written consent from the applicant.

Impact on Employers

The RCMP's directive will affect employers in a number of significant ways. The most significant change relates to the length of time it will now take to receive a verified result. This 120-day delay raises both operational and legal concerns for employers.

From an operational standpoint, employers will have to re-think their hiring practices. For example, some employers may want to add time into its hiring process to account for the delay. This may include extending conditional offers and/or probationary periods. Furthermore, some employers may introduce a requirement whereby all job applicants must provide confirmation of a clear criminal record as part of the job application process.

From a legal perspective, employers have to consider their ongoing statutory obligations. For example, employers must consider how these changes will effect their obligations under the applicable provincial human rights legislation and occupational health and safety legislation:

• Human Rights Considerations: Some of the provincial human rights statues prohibits discrimination in employment on the basis of an employee's, or prospective employee's, criminal record e.g. British Columbia and Prince Edward Island (for criminal convictions related to employment), and Ontario (for pardoned convictions).

• Occupational Health and Safety Considerations: Some provinces have implemented workplace violence and harassment legislation that places a positive duty on employers to investigate and disclose risks of employees with a history of violent behaviour e.g. see Bill 168, the Ontario Occupational Health and Safety Amendment Act (Violence and Harassment in the Workplace) 2009.

Tips for Employers

In light of the anticipated delays associated with these changes, employers need to re-evaluate their criminal background check practices. The following tips should help employers adjust their practices to the new system:

• Where a CPIC criminal record check states that a search "could not be completed", ask the prospective employee directly about the report /e. whether or not they have a known criminal record and what the nature of that record is.

• Instruct the prospective employee to verify their response by attending their local police headquarters and submitting the report to Human Resources. While this report has a limited geographic scope, it is a relatively quick means of verifying a prospective employee's criminal record pending the more fulsome report from CPIC.

• If criminal record checks are critical, consider building in additional time into the hiring process to allow for the fingerprint verification. This may mean extending the duration of a conditional offer and/or probationary period.

For more information, please contact:

Kelly M. McDermott
Stringer Brisbin Humphrey
Management Lawyers
110 Yonge Street, Suite 1100
Toronto, Ontario  M5C 1T4  
T: 416-862-1616
E: kmcdermott@sbhlawyers.com