Cement Industry in Ethiopia

The history of the Ethiopian cement industry is long and fascinating. The first cement factory
was built by Italians during the occupation of 1938 in Dire Dawa town with a yearly production
capacity of 30,000 tons. Prior to that, probably the first bulk cement import was made during
the construction of the Ethio-Djibouti railway between 1904 and 1917. In the 1960s the
Ethiopian government built two cement plants at Massawa (Eritrea) and Addis Ababa, with a
combined annual output of 150,000 tons. Two production lines with an installed capacity of
600,000 tons were built at Mugher between 1984 and 1991. All state-owned factories were
managed by Mugher Cement Enterprise from the mid- 1980s.

After a long, sluggish development prior to the 1990s the Ethiopian cement industry recorded
impressive growth between 2000 and 2012. According to Arkebe Oqubay (PhD), special adviser
to the prime minister, installed capacity in the industry rose from 800,000 tons in 1999 to 10
million tons in 2012. The average annual growth rate for cement production was more than
twice when compared to the rest of Africa or the globe during this period. By the end of 2012,
the number of firms had increased from a single state-owned enterprise to 16.

To address the erratic cement market the government offered attractive investment incentives
to local and foreign investors who were interested in investing in the cement sector. Long-term
subsidized loans, duty-free privileges and income tax exemption. The Development Bank of
Ethiopia (DBE) finances 70 percent of cement industry investment projects.

As a result, the existing cement factories undertook aggressive expansion projects and foreign
firmsmostly Chinesebuilt new cement factories. The number of cement factories grew to 20
and annual cement production increased from 2.7 million tons to 15 million tons. Per capita
cement consumption increased from 39 kg to 62 kg.

Though the cement production capacity of the nation was generally growing, the consumption
of cement was not increasing proportionally. Though the annual cement production capacity
grew five-fold to 15 million tons the annual cement consumption stood at only six million tons.

According to exclusive interview with the reporter news paper Gemechu Waktola (PhD),
managing director of i-Capital (Africa) Institute and associate professor at Addis Ababa
University, says the cement market has saturated. The local cement manufacturers tried to
export cement to South Sudan, Djibouti and Kenya. However, the market is limited and could
not solve the market saturation problem.

On the other hand, Haile Assegide, CEO of Derba MIDROC Cement, that the demand for
cement which was growing by 24-25 percent dropped to 15-16 percent. That is, the current
annual cement demand is 8-9 million tons.

Cement manufacturers are now complaining about the saturating market. There are now more
complaints and fears among manufacturers than the previous years. The situation is getting
tougher and tougher, production has surpassed demand and factories are scrambling for the
limited market. The industry transformed from shortage to abundance. The competition is
getting fierce. Cement factories are utilizing 50 percent of their production capacity. The
government has banned cement imports and suspended granting investment licenses.

Despite all the odds, the country cement industry has an immense potential. The mega public
infrastructure and housing projects are strong demand drivers. There are significant
opportunities in the cement sector. There is a national vision which sets to becoming a middle
income country. What does that mean in terms of construction, in terms of road construction,
infrastructure development? You need to build infrastructure and you need to consume
cement. However, the government and industry players require a coordinated effort to resolve
the problems and change the gloomy picture.

About Habesha Cement Share Comapny

Habesha Cement Share Co. was incorporated in September 2008 as per the commercial code of
1960 of the Federal Democratic Republic of Ethiopia with a business objective of entering the
fast-growing Ethiopian Cement Market and exploit the market opportunity. The project idea was
launched in October 2008 and shares were floated for public subscription.

The new plant of Habesha cement Share Company is located in Oromiya regional state in
Welmera Woreda in Holeta town, 35 km from Addis Ababa. The plant is located at proximate
distance from the raw materials deposits and the main cement market, Addis Ababa, and its
surroundings.

Currently, the plant has a capacity of producing 3,000 ton clinker and 4,500 ton Portland
Pozzolana Cement per day, which is 1.4 million ton per year at full operation.
During the project phase, the company had created a job opportunity for around 650 people on
permanent and contractual basis. At its current operational phase, the number of permanent
employees has increased to 500.

Habesha Cement is doing to improve the well-being of those it serves through its effortsto
pursue inovative industry solutions and efficiency advancement and to pursue sustainable
future.

Sustainability is critical to the business model of Habesha Cement. As they have worked to make
Habesha leaner, more flexible and more agile, they have also invested in making their operation
sustainable. According to their vision the two efforts are intertwined. The effort also includes
engaging with global and local partners who share thier vision and their commitments.

Mission

Habesha Cement mission is to serve the East African building needs of its customers, and buildd
values for its stakeholders by becoming East Africas most efficient and profitable cement
company.

Values

Habesha Cement strive for excellence in performance, creating long lasting customer
relationship built on trust, and the core values of collaboratinon, team work, honesty and
integrity and commited for quality.

Collaboration

Habesha Cemnt values working eith others in a collective persuit of excellence. Collaboration is
at the core of all of their relationships. Habesha Cement collaborates with customers,
colleagues, suppliers, and parteners in order to reach common goals.

Integrity

Habesha Cement appraises acting honetly, responsibily and respectfully toward others at all
times.
Leadership

Habesh Cement aims to be leaders not only in the building materials industry, but also in all of
their relationships. Habesha Cement is a company with a sound vision for the future based on
sustainability, excellence, and innovation

Companys Identity

The name Habesha is a brand name for our cement company which connotes and meant for
us:

Superior quality products

Serving customers

Striving for ensuring shareholders benefits and stakeholders interest

Caring for employees

Mass base ownership structure

Environmental friendly products

Working hard for running the company with 100% of its local experts

Due attention to social responsibility

Approach

Habesha cement is constantly evolving in order to become more flexible in their operation. They
are countinuouly improving themselves to be more creative in thier commercial offerings, more
sustainable in their use of resources, more innovative in conducting thier local business ans
more efficient in their capital allocation

Finanacial Strategy

Habesha Cement share company has fully paid up capital of 1,020,009,820 Birr from more than
16,500 share holders. The companys massive support from the locals and international
companies, PPC and IDC provides it with another competitive advantage to compete well in the
market.

Corporate Governance and Ethics

Habesha Cement is governed by Board of Directors. The Board has the responsibility for the
general conduct and its operations. It exercises all the powers delegated to it by the general
assembly of shareholders to discharge its responsibility. The company also commited to abide
by the laws and regulations of the countrys jursdiction.

Sustainable Development

Sustainable development is embeded in Habeshas core business strategy and their day to day
operation. They seek to build a simple and focused model that follows three main lines of
action:

Enhancing Value Creation: habesha seeks to increase thier operational efficiancy through
innovation and collaboration in order to develop building solutions and to meet the
needs of customers with limited resources.

Managing Foot Print: Habesha contribute to the development of low carbon economy,
helping to adress climate change, which is one of the worlds greatest challenges.

Engaging stakeholders: Habeshas long term success rests on fostering positive, long
term relationship with key stakeholders.

Innovation

Habesha recognizes the construction industrty is shifting toward more cost effective, efficient
and environmentally freindly solutions this inspires them to be more innovative in conducting
their business.

HR Practices in Habesha Cement

Human Resource Departement

Habesha is always proffered multitasked employee in its orgnization. Human resource
departement always insure right people in the right place. Moreover, HR departement
maintains communication with all other departement to make sure 100% working environment
for employee. Habesha values efficiency as the spontaneous contribution of Human Resources.
Strategic Human Resource Development Programs are the energy sources for Habesha Cement
HR for running towards zenith of success. Flow of clear and specific information and
justification of queries play the vital role to ensure the markrt reputation of Habesha Cement
as the most trusted and transparent company and it enriches the motivation level of HR who
are the real contributors and owners of his/her own job. HR departement has very effective
and efficient employee who lead their departement smoothly and ensures the strong
supporting role to develop and implement HR policy guidlines for ensuring uninterupted
operation and spontaneous participation to achive organizational objectives as well as
fulfillment of employee needs. HR is maintaining an effective way to deal with labour union
and still no unrest has been recordedas dispute personnel working here are taking care of
Habesha Cement as their own family. The major functions implemented by this departement
are as follows:
Job analysis
Employee performance evaluationRecruitment and staffingpolicies and processes
Orienation and socializing new recruits andorganizational members
Employee training and development facilitations and management
Control turnover
Succession planing
Compensation and benefit determination as per job evaluation
Maintaining contact and communication with pas, present and potential employees.

HR promlems facesd by Habesha Cement

There are somenHR probems which are faced by Habesha Cement are given below:
There are several problems in HR departement for example this departement ia under staff.
One employee is working two or three employees work which is very dificult to manage and
control. Habesha knows how to utilize an employee properly but some times employee gets
more work than his/her capability like of employee workingas a GS and HR executive. He/She
has to control all GS employees and has to maintain HR work as well.
Lack of communication with others departement which can craet problem to achieve
organizational goal.
Employees of HR departement are not pro-active and enthusiasm. Most of the HR
departement employees are not not that much concern about thier job so
 departemental clash arises
Employees has to prepare commitement for every month. There is target for each
employee which should be fieled up monthly.
HR Approaches to ensure ongoing strategic competitive advantage
According to Garavan (2007) competitive advantage of an organizationis assured as it has the
uniqueness in which its competitors are difficult to duplicate and and reproduce. In a
high-technology organization, the uniquness is related to the capabilities and skills of its
employees. Since the employees of Habesha Cement are mostly high-skilled worker, integration
of its business strategy with strategic Human resource Management (SHRM) would enhance its
competitive advantage. However the key problem of Habesha Cement has been identified as
the lack of comperhensive SHRM. Further to the key problems, it inndicatd the following
immediate issues such as work place culture, unplaned transformational leadership, adoption
of hard approach HRM and employees dissatisfaction. In order to resolve the plight of Habesh
Cement, the listed problems must be well-managed. After all, the other problems are likely to
recede. It is obviously known that the center of traditional HRM were on recruiting, selection,
training, pay and industrial relation.

Work Place Culture Psychological success

Organizations culture is influetial to its financial success. However, organizations culture change
is very difficult to do and, so, should be avoided if possible. Hence, a software approach such as
motivate employees learning is neccessary to mantain the competitive advantage of Habesha
Cement. In an atempt to ensure ongoing compttitive advantage, Habesha Cement is advised to
focus on the employee learning and career management at their planing of SHRM. Reward and
performance appraisal are crucial in motivating individuals interinsically to achive career success
by realizing self-abilities, needs, values. As a result, career success will lead to ones
psychological success. Hence, Habesha Cement shall desin and list out a clear and consistant
guidance to its employees on the rewards and performance appraisal. On the other hand, by
facilitating the motivation and improvement programs, Habesha Cement is able to assist
individual employee to develop abilities such as behaviours, knowledge and skill aquisitions for
future job requierments. Adding to this the development can assist the organization to achive
competitive advantage. Accordingly, an effective career development program is able to grant
employees to discover their prospect career based on ones capability and hence lead to job
satisfaction. Through an effective career development program, Habesha Cements employees
will have the opportunity andare able to fully perform their talentsat work place. Sbsquently,
with the employees job satisfaction, Habesha cement can reduce the turn over cost and
improve the firms underperformance.

Succession plan

Succession plan is equaly important to career developmen for an organization to achive

competitive advantage. Considerable that majority of the Habesha Cement employees are high-
skilld workers; it has the advantage in humancapital resources. Therefore, Habesha Cement is
advised to utilize its competency and cabability advantages to source and plan for its succession
development for a sustainable future grwoth. Succession levels shall not solely focus on key
executives but best to be extended to low levels in the organization. Subquently, Habesha
Cement shall identifiy and locate the talent at right place. Although experianced employees
appeared to have mature abilitise to solve problems in a shorter time, oppurtunities should be
given to younger enployees in order to cultivate and develop thier abilities. The experianced
employees should be played a role in mentoring and consulting.

Mixed and Match of Soft and Hard Approach

Both soft and hard approach management system are beneficial and significant to business
enironment. In view of the nature of Habesha Cement business, a product quality policy and
best practices are neccessary to ensure the business safety and customer satisfaction. The
products of Habesha Cement represented its social responsibility and commitement to the
society. Hence, the adoption of hard approach on the products quality assurance and
measurement are essential. There shall no be any compromise to misjudge or carelessness of
employees to the quality of products, the misbehaviour shall be treated with the hard approach
management system. However, soft approach played key role as hard factors are inferior
(Fotopoulos et al., 2009). Since Habesha Cement is newly established organization, it lacks
culture. Subsquently, soft approach is advised at the initial and trasformation period. Through a
soft approach , sustainable culture at Habesha Cement such as employees learning and career
managementis able to develop and foster.

Communications

As the emotions in work place have become the core of management practice and
development, the emotions management in an organization must be seen as an important tool
to every manager. It is appeared that the failure of emotion management of one employee may
initiate anad provok the emotions of other employees. Hence communication is an essential
tool for a good management system. It may lead to job satisfaction, loyality and work
commitement from the employees. On the other hand, communication failure may lead to job
insecurity, perception of unfairness, depression and stress among the employees. Some
disatisfaction is seen in Habesha Cement due to scrambled communications By some HR
managers. Therefore, an effective communication within Habessha Cement must be carried out
to avoid employees further distrust to the firm.

Recruitment Process of Habesha Cement

It is the process of finding and hiring the best-qualified candidate (from within or outside) f an
organization for a job opening, in a timely and cost effective manner. The recruitment process
includes analyzing the requierments of a job, attracting employees to that job, screening and
selecting applicants, hiring, and integrating the new employee to the organization. So,
recruitment is endless and countinuous process. An employee is representative of an
organization for this reason recruitment is very important ffor hiring new employee. If HR could
not manage right people in right place then HR plans and organizational goals could not be
executedby employee. As a result HR department needs to give best effort to het best
candiadate as new employee. In this regard, though the practice of the HR departement looks
good it lacks the practice of using sub-contracting and temporary employement agency.

Recruiting Sources

Recruiting is more likely to achive its objectives if recruiting sources reflect the type of the
position to be field. Certain recruiting sources are more effective than others for filling
certaintypes of jobs. Every organization has the opttion of choosing the candidate for its
recruitment processes from two kind of sources. Those are;
 Internal sources

External sources

Internal Sources

HR post job vacancy through notice board to all Habesha Cement employee. Sometimes
external employee applies for that seat. However, if candidate fulfill all requierment of
that job the HR director directly appoint him/her as internal employee.

External Sources

Habesha Cement has account on ethiojobs.com to post job vacancy to find candidate.
Orelse, it can post a job in a print media like newspapers or in a voice media like television
or radio.

Selction Process

This is the process of choosing from a group of applicants that individual demand to be best
qualified for particular job openning. There are three stepes to selecting a new employee for
Habesha Cement. These are:

a) Screening assesment: first of all, HR departement have to screen CVs from CV pool of
ethiojobs or applications made through in person, post office or emails. After that
resumes are anlaysed and compared without job requirement, job specification and
description. Candidate can be called when his/her resume can satisfy to CV screener.

b) Evaluation assesment: HR and respective departement employees take interview, it

would be written test if candidate is fresh. After the second interview is taken by
departement director and head only those are perform best in first interview. After that
HR departement checks candiates reference. At last candidates have been invited those
are best according to director that respective departement for salary negotiation with
HR director.

c) Contingency assesment: after offering job to candidate, Habesha cement HR

departement want medical certificate of that candidate that is fix for all candidate. If
candidate does not have any problem or health issues then HR check candidate previous
organization record and criminal record. If candidate pass all of them the he/she get
 offer later and join Habesha cCemebt as employee. Moreover, candidate has to fulfill
employee information form, submitted all academic certificates, Merico profile, and last
but not least release letter from previous company.

HRM Challenges faced by Habesha Cement

Before we go further, let us look at some of the things that managers tell us make thier jobs
more difficult and that they can not directly control. Most surveys by many scholars show that
managers in any idustry, in any departement, about managing others, they bring up the
following issues are among the most important and most difficult things that they deal with:

Productivity: here its better to note that all of these issues deal with people-not
computers, not buildings, not finances. Also, the manager has no direct control over
these things. The manager only affects these items only through indirect actions. In
other words, we can not force employees to come to work in order to avoid absentisem
or to be happy with thier work. We have to creat conditions where employees are willing
to, or even want to, come to work and where they enjoy thier job. We can (and should
do) this through employement practices that the employee perceives as fair and
resonable, such as providing acceptble pay for the tasks performed by the employee.

Job satisfaction: this is the feeling of well-being that we experiance in our job- basically
wether or not we like what we do and the immediate eenvironment surrounding us and
our job, or the extent to which people like (satisfaaction) or dislike (disatisfaction) their
job. Why do managers worry about employess job satisfaction? Well, there are a
wealth of reaserches that shows that if employees are highly disatisfied with their job,
they will bw far more likely to have lower than average productivity. On the contrary, if
we have highly satisfied employees, will they neccessarily have higher productivity? Not
neccessarily, although they could have. But let us leave the discussion since it is aguable.
for right now, just understand that low job satisfaction typically leads to lower
productivity, we want to maintain high job satisfaction.

Turnover: it is a permanent loss of workers from the organization. Does turnover cost
the organization? Accordingly, what costs are associated with turnover within the
organization? Well, first we have the cost of the paper work associated with the
departing employee and-if they left invouluntarily-we may have increases in
 unemployement payments. Next, we must find someone else to do the job-we have the
job analysis cost, recruiting cost, and selection costs. Once we hire someone new , we
have orientation and other training costs, costs associated with getting the new worker
up to speed on thier job-something we call a learning curve-and costs associated with
them just not knowing companys way of doing business, since every company has a
unique culture, and not knowing how to act within that culture can cause problems. So,
we have many costs associated with the process of turnover in the organization, and as a
rsult, we want to minimize turnover.

Absentism: absentisem is the failure of an employee to report to the workplace as

scheduled. What is the big deal here? If employees do not come to work, we do not
have to pay them, right? Well, this is true for some of them, but not when we give sick
pay. Why do managers worry about absentisem? Well, for one thing, it does cost the
organization money- not neccessarily directly, but indirectly. Even if we do not have to
pay employees when they are absent from work, we still have to maintain all of their
benefits like health insurance; that costs the organization, doesnt it? We also likely lose
productivity in other employees because they are there to do companys work and
others depend on them; that cost us money. In additon, if some of the workwers are
frequently absent, it causes laower job satisfaction in others whho have to take up the
slack for thier absent coworkers. And there are other issues as well. So, we can quickly
see that even though we do not have to pay some of workers if they do not come to
work, absentisem still costs the organization money. So, that is why managers are
concerned with absenteeism.

Recommendations:

Monitor office workers properly:

Humar resource departement is a blood supplier of an organization. Therefore,

directors and departement heads must insure that employees are getting proper
work balance and freindly environment. One employee will be multi-tasked but that
should be balanced. So, for this these important personnel can monitor the office
workers and thier works by moving around the office.
 Increase communication between departements:

Human resource must be updated with all information and data. There is lack of
communications so that is why HR departement is not updated with all data so
internal communication between departements should be be increased.

Organize programs for the employees and thier family:

Human resource departement should organize get together where employees can
bring his/her family member. Habesha Cement organize annual program every year
for thier dealers and wholesalers. So, Habesha Cement should do the same thing for
thier employees and thier families too.

Recruit proper person for the job:

Recruitment is very important for every organization. However, Habesha Cementis

giving less emphassis to its job analysis. For example, the current job discription of
Habesha Cement was last prepared three years ago, while the company was in
establishement process, and no further review or update has been made. It should
have changed according to current reqierments. Moreover, the job spesification is
not clear and understandable enough. It is true that one employee works as a multi-
tasked but everyone shoul know what is his/her job responsibility. To make sure that
their activities and duties are in-line with thier origional job responsibility. Therefore,
effectivness and efficiency of employees might affect adversely as a result. They
always try to give specific job description and job specification of candidates. Job
analysis helps to find out the right people for the right place in right time.

Conclusion

In conclusion, an effective HRM system allows organizations to address human resource issues
strategically. This helps the workforce deliver high quality performance, despite internal and
external challenges to the organization. HRM helps attract and retain competent employees,
assists employees and managers in adapting to organizational change, and facilitates the use of
technology to determine how and where work is done.
Human resource management always act to bring out effectivness, to develop and to also meet
all the demand of the work force. In doing this recruitment and selection is one of the pillars of
human resource management, performs both of the company and for the employee.

All aspects of human resources management including how organization manages the human
resource environment, acquiring and preparing, assessment and development, compensating
human resources, new role of human resources management and its competencies can help
organization meeting their competitive challenges and create value. Meeting organization
challenges is necessary to create value and to gain a competitive advantage.

Human resources management is very crucial for organization without it they can not reach their goal
and objective. Human resources management helps organization to design employees work, recruit and
select right person for right job, training and develop employees to be a knowledge worker and
empowerment for working environment. So if organizations that have not considered effective of human
resources management they will not manage their staff at work effective and can not examine what they
will do to make working people more productive and effective.

In this regard, Habesha Cement has gone far in doing all aspects of HRM practice except what we
mentioned earler as a problem. And it was a great experiance for us to grasp practical knowledge of our
HRM course.