This is described on page 17 of the Hockey Canada Player Evaluation and Selection guide.
Players are evaluated and ranked from 1 to X. Teams of players are then drafted based on the player evaluations:
Once all of the players have been drafted the teams are randomly assigned to a coach. If a coach has a son that has not ended up on the coaches team they are traded to the team for the player who was drafted in the same round.
This system puts high priority on the quality of the evaluations that are completed and no responsibility on the coach to select a team. We have great evaluations so all is perfect.
Each coach gets around five selections for assistant coaches, managers, trainers, etc. These will also be traded for the player who was drafted in the same round.