Assessment on The Current Practice of Human Resource Management ACE /2020

Yom Institute of Economic Development

Department of Masters of Business Admnistration

Human Resource Management

Individual Assignment Entitled with:

Assessment on the Current Practice of Human

Resource Management in Abay Construction Enterprise

BY:
Mulate Mesfin IDNO 781/12

Submitted To: Instructor Shikur (Ph.D.)

February, 2020
Bahir Dar, Ethiopia

BY: Mulate Mesfin Page 1

 Assessment on The Current Practice of Human Resource Management ACE /2020

Table of Contents
Contents Pages

Table of Contents ........................................................................................................i

Contents.......................................................................................................................i
List of Acronyms ......................................................................................................iv
Abstract ...................................................................................................................... v
CHAPTER ONE ........................................................................................................ 1
1. INTRODUCTION ............................................................................................... 1
1.1 Background of Study .................................................................................................................. 1
1.2 Statement of the Problem ........................................................................................................... 2
1.3 Basic Research Questions ........................................................................................................... 3
1.4 General Objective ....................................................................................................................... 4
1.5 Specific objectives ....................................................................................................................... 4
1.6 Scope of the Study ....................................................................................................................... 4
1.7 Significance of the Study ............................................................................................................ 4
1.8 Limitation of the Study ............................................................................................................... 4
1.9 Operational Definition of Key Terms........................................................................................ 5
1.10 Organization of the Paper .......................................................................................................... 5
CHAPTER TWO ....................................................................................................... 6
2. REVIEW OF RELATED LITERATURE........................................................... 6
2.1 The Concept of Human Resource Management ...................................................................... 6
2.2 The Nature of Human Resource Management (HRM) ........................................................... 6
2.3 Strategic Human Resource Management (SHRM) .................................................................. 7
2.3.1 Approaches to Strategic Human Resource Management ................................................ 7
2.4 Scope of Human Resource Management .................................................................................. 9
2.4.1 Personnel Aspect ................................................................................................................. 9
2.4.2 Welfare Aspect .................................................................................................................... 9
2.4.3 Industrial Relations Aspect ................................................................................................ 9
2.5 Major Human Resource Management Functions .................................................................... 9
2.5.1 Setting Well Defined HRM Policies and Strategies........................................................ 10
2.5.2 Determine the Organizational Structure ........................................................................ 10

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 Assessment on The Current Practice of Human Resource Management ACE /2020
2.5.3 Human Resource Planning ............................................................................................... 11
2.5.4 Recruitment ....................................................................................................................... 11
2.5.5 Selection and Placement ................................................................................................... 12
2.5.6 Induction and Orientation................................................................................................ 12
2.5.7 Motivation .......................................................................................................................... 13
2.5.9 Performance management (PM)...................................................................................... 14
2.5.10 Human Resource Development........................................................................................ 15
2.6 Empirical Review of Human Resource Management ............................................................ 15
2.6.1 Significances of HRM Practice ........................................................................................ 15
2.6.2 Challenges in the Practice of HRM ................................................................................. 16
2.6.3 Mechanisms Used to Improve HRM Practice ................................................................ 16
CHAPTER THREE.................................................................................................. 18
3. RESEARCH METHODOLOGY ...................................................................... 18
3.1 Research Design and Approach ............................................................................................... 18
3.2 Types and Sources of Data ....................................................................................................... 18
3.3 Data Collection Methods .......................................................................................................... 19
3.3.1 In-depth Interview ............................................................................................................ 19
3.3.2 Field Observation .............................................................................................................. 19
3.3.3 Focus Group Discussion ................................................................................................... 19
3.3.4 Documental Analysis......................................................................................................... 19
3.4 Sampling Procedure.................................................................................................................. 19
3.4.1 Target Population ............................................................................................................. 19
3.4.2 Sampling Technique ......................................................................................................... 20
3.5 Data Analysis ............................................................................................................................. 21
3.6 Ethical Consideration ............................................................................................................... 21
CHAPTER FOUR .................................................................................................... 21
4. DATA ANALYSIS AND DISCUSIONS ON MAJOR FINDINGS ................ 21
4.1 Respondents Characteristics .................................................................................................... 21
4.2 Discussions on Current HRM Practices in ACE .................................................................... 21
4.2.1 Organizational Structure and Design.............................................................................. 21
4.2.2 The Practice of Job Analysis in ACE .............................................................................. 23
4.2.3 The Practice of HR planning............................................................................................ 24
4.2.4 Human Resource Management Policies in ACE ............................................................ 24

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 Assessment on The Current Practice of Human Resource Management ACE /2020
4.2.5 The Practice of Recruitment and Selection in ACE ....................................................... 25
4.2.6 The Practice of Induction and Orientation in ACE ....................................................... 26
4.2.7 The Practice of Motivation, Compensation and Benefit ................................................ 26
4.2.8 Performance Management and HRD practices ............................................................. 27
4.3 Major Challenges in HRM Practice of ACE .......................................................................... 28
CHAPTER FIVE...................................................................................................... 30
5. CNCLUSIONS AND RECOMMENDATION ................................................. 30
5.1 Conclusions ................................................................................................................................ 30
5.2 Recommendations ..................................................................................................................... 31
References ................................................................................................................ 33
Appendixes............................................................................................................... 35

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 Assessment on The Current Practice of Human Resource Management ACE /2020

List of Acronyms
ORDA: Organization for Rehabilitation and Development in Amhara
SHRM: Strategic Human Resource Management
HR: Human Resource
HRM: Human Resource Management
PM: Performance Management
ACE: Abay Construction Enterprise
BSC: Balanced Scored Card

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 Assessment on The Current Practice of Human Resource Management ACE /2020
Abstract
Abay Construction Enterprise is a profit oriented organization, which has been established, since the end of
2016, under the Organization for Rehabilitation and Development in Amhara (ORDA) to ensure its financial
sustainability. During its establishment, more than 120 numbers of employees were internally transferred and
placed from Organization for Rehabilitation and Development in Amhara to the Enterprise; and in the same
thing large numbers of workers were employed. However, experienced professional staffs are not retained for a
long period of time in the enterprise. Thus, this study was focused on assessment on the practice of human
resource management in Abay Construction Enterprise. To attain the objective of this study descriptive and
explanatory research designs were employed. Respondents were selected through applying non random sampling
techniques. Concerning this, three managers, six process owners and four supervisors were taken and in-depth
interview was conducted with them. On the other hand, from twenty one project managers eight were selected
based on their long period of experience they delivered in the enterprise and one group was formed and Focus
group discussion was conducted. In addition, one group which consisted from twelve senior experts was formed
and in the same thing focus group discussion was conducted and qualitative information was collected.
Furthermore, data were also collected through field observation and documental analysis. Then, qualitative
data were analyzed through narration and clear explanation. Based on the analysis result, the practice of
HRM in Abay Construction Enterprise was found to be challenged. Besides, the policy of HRM is not
incorporate major HR functions that must be implemented in the enterprise, role conflict among the members of
the enterprise; incapable HR managers as well as experts were identified as major challenges in HRM
implementations. Based on the findings, structure and HR policy revision, carrying out job description and
specification to reduce role conflicts among managers, departments and experts, capacitate and equip HR
administration section, continuous performance evaluation, setting out the compensation and benefit packages
and implement properly to create sense of belongingness on the part of employees were among recommendations
forwarded by the researcher.
Keywords: Assessment, HRM, Practice

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 Assessment on The Current Practice of Human Resource Management ACE /2020

CHAPTER ONE
1. INTRODUCTION
1.1 Background of Study
In today’s business environment, where competition is very high, it becomes a challenge for the
businesses to get and maintain its’ distinguished position in the industry unless a considerable
attention is given to organizational employees. In line with this, Godefray (2014) revealed that
in many years’ experiences, various organizations significantly put their emphasis merely on
sales maximization and cost minimization strategies, but now, many organizations have realized
the value of their intellectual asset which is their employees.

Similarly, former researcher on the area, Lease (1998) said that employees who have higher job
satisfaction are usually less absent, less likely to leave, more productive, more likely to display
organizational commitment and more likely to be satisfied with their lives. From the notion of
this author, one can understand that among all the resources of the organization, human is the
most significant and precious asset which is essential for healthy operation of all other resources
of the organization. In general, human resource is satisfied in terms of their jobs, consequently;
productivity level of the organization goes up. Concerning this, Mahmood et al. (2011) explained
that people spend most of their waking hours at work then employee job satisfaction gains; and
that would be more importance to organizational success as well as their lives.

Besides, Muhammad and Wajidi (2013) elaborated that a well-managed business organization
normally considers the average employees as the primary source of product gains. Thus,
companies have to create favorable atmosphere for its worker through HRM policies that
facilitate the successful attainment of companies’ objectives and wellbeing of people who
engaged in the firm. They also noted that the productivity and efficiency of human resource
depend upon firms’ strategic focus towards human resource management.

A business may invest a lot of resources on its core operations and activities, but without a
highly effective human resource, success in the long run cannot be achieved Shyamala (2014). In
fact, well managed human capital encourages innovation, and what deployment of human
resource management practices inside the firm can produce desired levels of performance (Ibid).
In addition, Strategic approach to human resource management refers to the relationship between
human resource practices and the strategic objectives of the organization. Human resource

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 Assessment on The Current Practice of Human Resource Management ACE /2020
management is concerned with a holistic approach towards the management of people working
in an organization to effectively and efficiently utilize their talent for accomplishing the goals of
an organization (Stephen, 2011). To successfully utilize and manage the human resource of an
organization and to achieve the pre intended objectives, each organization needs to develop a
well-defined human resource strategies and policies that clearly exhibit a psychological contract
which expresses the combination of beliefs held by an individual and his or her employer about
what they expect of one another or the perceptions of both parties to the employment relationship
organization and individual, of the reciprocal promises and obligations implied in that
relationship.

However, different literature showed that in developing world, the issue of human resource
management in both public as well as private organization has not been given due attention. As
belonging to developing countries, in Ethiopia both in private and public organization there are
different problems that provoked at phase of human resource management policy preparation and
actual implementation. This is true in Abay Construction Enterprise which has been established,
since the end of 2016, under the Organization for Rehabilitation and Development in Amhara
(ORDA) to ensure its financial sustainability.

During its establishment, more than 120 numbers of employees were internally transferred and
placed from Organization for Rehabilitation and Development in Amhara to the Enterprise; and
in the same thing large numbers of workers were employed. However, experienced professional
staffs are not retained for a long period of time in the enterprise.

1.2 Statement of the Problem

In both developed and under developed countries including Ethiopia, public as well as private
organizations have made so many attempts in setting a number of strategies to motivate their
employees that enables them to exert their full effort in achieving organizational objectives
(Mehari and Premanandam, 2017). They also further elaborated that some organizations have
established policies on compensation, remuneration, salary payment, and special recognition
awards, medical insurances, housing allowance and others and changing these human resource
management schemes strategically to develop employees’ self-belongingness towards
organizational success which they engaged in.

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 Assessment on The Current Practice of Human Resource Management ACE /2020
As a private and profit oriented organization of Ethiopia, Abay Construction Enterprise is the
one which has been established under the Organization for Rehabilitation and Development in
Amhara (ORDA) to strength and ensures its financial sustainability based on the Proclamation of
Civic Association No 621/2017 Article 103 since, August, 2016. Abay Construction Enterprise
(ACE) is profitable enterprise with its clear business objectives of strengthening the financial
sustainability of ORDA through developing business strategies as a private sector. The enterprise
has been taking many contractual agreements with Water Resource Development Bureau of the
region with regard to irrigation and water supply construction projects.

Currently, the enterprise has been constructing more than twenty water supply and thirty small
scale irrigation development projects. Moreover, the enterprise has created a job opportunity for
more than two hundred permanent and one thousand daily labors respectively (ACE, 2019).
However, the three consecutive years Financial Audit Report of the enterprise showed that the
Enterprise still has been placed in a position stagnant. Regarding this, the 2017, 2018 and 2019
consecutive years’ annual report of the enterprise clearly indicated that 12.5 percent, 12.8 percent
and 13.09 percent of employees had been left the enterprise respectively.

Due to this and other related problems the enterprise took a remedy of employees’ salary
improvement. Despite all these efforts, still it is witnessed that a number of its senior employees
have left the organization. Despite of these gaps, as far as researcher reviewed there is no
research conducted in the enterprise on the thematic area. Therefore, this study intends to assess
human resource management practice in the enterprise and propose possible solutions that can be
useful for its future improvement.

1.3 Basic Research Questions

This assessment research was expected to answer the following fundamental research questions.
1. What is the practice of human resource management in Abay Construction Enterprise looks
like?
2. What are the major factors that affect the implementation of human resource management in
the enterprise?
3. What possible resolution should be suggested to improve the practice of human resource
management in the enterprise?

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 Assessment on The Current Practice of Human Resource Management ACE /2020
1.4 General Objective
The general objective of this study was to assess human resource management practice in Abay
Construction Enterprise; and suggest possible resolution that can be valuable for future
improvement.
1.5 Specific objectives
The specific objectives of this study were:
1. To examine the real practice of human resource management in Abay Construction
Enterprise,
2. To identify the major factors that affect the implementation of human resource management
in the enterprise; and
3. To suggest possible resolution that can be valued for future improvement of the enterprise.
1.6 Scope of the Study
In Abay Construction Enterprise, there are a diverse area of research attention like its’ level of
profitability, level of performance and other issues; however, due to shortage of time and other
resources this research is conceptually delimited only to assess the practice of human resource
management in the enterprise. Despite the fact that there are a number of enterprises which have
been established under Organization for Rehabilitation and Development in Amhara, this study
was geographically bounded only on Abay Construction Enterprise located in Bahir Dar city
administration.
1.7 Significance of the Study
Accurate estimation and recognition of the level of human resource management practice with
regard to its implementation challenges is very crucial for the survival and development of the
enterprise in construction industry. Therefore, the researcher strongly believes that this study will
play a significant role in identifying the extent to which human resource management is
implemented and find out some of the major challenges that hinder the effective implementation
of human resource management; and propose feasible remedies which will be useful for future
researchers, human resource managers and human resource policy designers and organizational
as well as project managers in Enterprise.

1.8 Limitation of the Study

Conducting this research was not free of limitations. One of the limitations was despite the
number of individuals who engaged in Abay Construction Enterprise were large in numbers, the
researcher was obliged to select small numbers of respondents and qualitative data were

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 Assessment on The Current Practice of Human Resource Management ACE /2020
collected from those respondents. Thus, data that were collected from small size respondents
may have its own impact on the generalization of the result.

1.9 Operational Definition of Key Terms

• Assessment: refers to an evaluation or estimation of the real practice of human resource
management in Abay Construction Enterprise.
• HRM: is a strategic, integrated and coherent approach to the employment, development and
well-being of the people working in organizations.
• Practice: refers to the actual application or implementation of human resource management
policies, strategies, plans in to operation.

1.10 Organization of the Paper

This assessment work is organized in to five chapters. The first chapter deals with background of
the theme, problem statement, basic research questions, objectives, scope, significance and
limitations of the study. The second chapter also focuses on literature review theoretical and
empirical studies in relations to the practice of human resource management in the enterprise. In
the third chapter, components of research methodology are clearly presented. The fourth chapter
also deals with the analysis and discussions on major findings. In the last chapter, conclusion of
major findings and recommendations for future improvement in the already established
enterprise are explained and suggested.

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 Assessment on The Current Practice of Human Resource Management ACE /2020

CHAPTER TWO
2. REVIEW OF RELATED LITERATURE
2.1 The Concept of Human Resource Management
As an attempting to review different literatures, many educators provide their contextual
definition for the concept of human resource management. For instance, Armstrong (2006)
defined Human Resource Management (HRM) as a strategic and coherent approach to the
management of an organization’s most valued assets the people working there who individually
and collectively contribute to the achievement of its objectives. Human resource management
can also be defined as the belief of people management on the idea that human resources are
significant factors in maintaining the success of a business by adopting an efficient usage of its
personnel skills and knowledges (Price, 2004).

In addition, some groups of scholars in the area like Guest (2011) and Armstrong (2016) tried to
explain HRM as a responsibility for maintaining good human relations in the organization. They
also added that HRM is concerned with development of individuals and achieving integration of
goals of the organization and those of the individuals. Other educators also defined HRM in line
with the operative functions of human resource management functions such as recruitment,
selection, development, utilization, compensation and motivation of human resources by the
organization. While others also defined in the perspective of managerial function of HRM like
planning, organizing, directing and controlling and development of HR resources to accomplish
organizational and societal objectives. Although many scholars had defined human resource
management in different ways with their different words, there is commonalities that HRM deals
with how to manage people or employees in the organization to attain both individual and
company objectives.
2.2 The Nature of Human Resource Management (HRM)
The emergence of human resource management can be attributed to the writings of the human
relationists who attached great significance to the human factor. Most organizations today can
copy technology, manufacturing processes, products, and strategy. However human resource
management practices are difficult to imitate, thereby representing a unique competitive
advantage. As a result, the distinguished nature of human resource management has been
identified and explained by different researchers. For instance, Shyamala (2014) identified the

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unique features of HRM as: (1) inherent part of management, which is performed by all the
managers throughout the organization not only by the personnel department; (2) pervasiveness
which is performed by all managers at various levels in the organization; (3) people centered and
relevant to all types of organizations; (4) concerned with all categories of personnel in the
organization; (5) personnel related functions, which include management of people at work,
manpower planning, employment, placement, training, appraisal and compensation of
employees; (7) continuous process rather than a one shot deal; (6) concerned with the motivation
of human resources in the organization; and (8) it requires human relations skills to deal with the
people in the work place.

2.3 Strategic Human Resource Management (SHRM)

Strategic human resource management is the connection between a company’s human
resources and its strategies, objectives, and goals. In order for strategic human resource
management to be effective, human resources must play a vital role as a strategic partner
when company policies are created and implemented (Lepak et al.,2006). In this regard,
Wright and McMahan (1992) revealed that strategic human resource management is concerned
with the relationship between HRM and strategic management in an organization.

From the concept of the above scholars, one can understand that strategic human resource
management is an approach which relates to decisions about the nature of employment
relationship, recruitment, training, development, performance management, reward, and
employee relations. Therefore, strategic human resource management as the pattern of planned
human resource deployment and activities intended to enable the firm to achieve its goals, in a
sense that firms are continuously improving their human resource management practices which
will enable them to secure sustainable competitive advantage and increase their profitability.
2.3.1 Approaches to Strategic Human Resource Management
Strategic human resource management (SHRM) has emerged as a significant issue in tandem
with the increasing attention being given by the companies to strategy. Faced with an
accelerating turbulence in its environment, the response of the corporation has been to attempt to
build up a sound internal configuration that includes human resource management systems
(Azhar and Faruk, 2011).

As indicated in different literatures the researcher reviewed, to increase emphasis on the strategic
nature of human resource management and considering human resource as a strategic resource to

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be used to create and sustain a competitive advantage for organizations. Human resource
management system in any organization, given the constantly changing and dynamic
environment, cannot be a static and fixed phenomenon. Strategic management of the human
resources brings the necessary coordination between various activities of an organization;
moreover, it helps in creating appropriate opportunities and preventing the potential threats.
Therefore, strategic integration is an inevitable in creating consistency between human resource
strategy and organizational strategy.

Regarding to the above notion, Lepak et al. (2006) stated that the ultimate purpose of developing
the strategic integration is to generate a harmonic relationship between the goals of human
resource management and the organizational objectives. They also noted that when firm
internally coherent human resource practices associated with organizational strategies, rather
than separate human resource plans being prepared in isolation, may boost organizational
performance and productivity. Regarding this, Hamel and Prahalad (1989) explained that
strategic HRM can be seen either in strategy-focused, decision-focused, content-focused, or
implementation focused. On the other hand, Walton (1985) and others identified four different
types’ strategic human resource management approaches which are clearly elaborated herein
below.

(1) A resource-based approach to strategic HRM focuses on satisfying the human capital
requirements of the organization. In line with human capital theory, resource-based theory
emphasizes that investment in people adds to their value to the firm. (2) High performance
management approach involves the development of a number of interrelated processes which
together make an impact on the performance of the firm through its people. (3) A high-
commitment management which has been described by Wood (1996) and aimed at provoking a
commitment so that behavior is primarily self-regulated rather than controlled by sanctions and
pressures external to the individual, and relations within the organization there will be high
levels of trust. (4) High involvement approach which involves treating employees as partners in
the enterprise whose interests are respected and who have a voice on matters that concern them.
The aim is to create a climate in which a continuing dialogue between managers and the
members of their teams take place to define expectations and share information on the
organization’s mission, values and objectives.

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 Assessment on The Current Practice of Human Resource Management ACE /2020
2.4 Scope of Human Resource Management
Different scholars in the area disclosed that the scope of human resource management as an
extensive and far-reaching concept. Therefore, it is very difficult to define it concisely. However,
many educators, for instance, Shyamala (2014) put the scope of human resource management
under following three heads.
2.4.1 Personnel Aspect
According to Shyamala, this is typically concerned with a direct manpower management that
involves manpower planning, hiring, training and development, induction and orientation,
transfer, promotion, compensation, layoff and retrenchment, employee productivity.
2.4.2 Welfare Aspect
This particular aspect of human resource management also deals with working conditions and
amenities at workplace. This includes a wide array of responsibilities and services such as safety
services, health services, welfare funds, social security, medical services and other related
benefits. Employee welfare is about determining employees’ real needs and fulfilling them with
active participation of both management and employees. In addition, human resource
management takes care of housing, transport, medical assistance.
2.4.3 Industrial Relations Aspect
Human resource management needs careful interactions with labor or employees’ union in
addressing their grievances and settling the disputes effectively in order to maintain peace and
harmony in the organization. HRM policies, strategies and directives should be designed in the
way that helps to understand the employment relations, joint consultation, disciplinary
procedures, solving problems with mutual efforts, understand human behavior and maintain
work relationships, collective bargaining and settlement of disputes to safeguard both the interest
of employees and organizations.

2.5 Major Human Resource Management Functions

Attempts have been made by different researchers in identifying the basic functional areas of
human resource management (HRM) which requires the efforts of HR managers as well as
experts. For instance, Shyamala (2014) classified HRM functions in to three broad categories as
managerial, operative and advisory functions. Other groups of scholars like, Biswajeet (2001)
and Aswathappa (2008) stated HRM activities as acquisition, development, motivation,

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as well as maintenance of human resources. Furthermore, Armstrong (2006) and Shyamala
(2014) have specified human resource management functions in the following manners.

2.5.1 Setting Well Defined HRM Policies and Strategies

According to Armstrong (2006) while one organization is established it is indeed, expected that
HR managers as well as experts should develop a well-defined human resource management
policies, strategies and directive which used to change the company plans in to operation to
attain the company objectives. Similarly, Lepak et al. (2006) elaborated that well-articulated
company policies and strategies provide a sense of direction and help to determine the scope of
the organization in the long run. They also noted that policies and strategies of a certain company
can match its resources to everchanging environment, markets, customers and allowed to make
an adjustment to meet stakeholder expectations, which has not actually realized in developing
counties both in public and private organizations.

2.5.2 Determine the Organizational Structure

This particular human resource management activity also highly concerned with
laying down of organization structure, authority, relationship and
responsibilities in organizational chart (Shyamala, 2014). When organizational
structure is determined, HR managers as well as experts are expected to carry
out both job analysis and job design simultaneously (Ibid).

[Link] Job Design

According to Armstrong (2016) Job design is the process of work arrangement or rearrangement
aimed at reducing or overcoming job dissatisfaction and employee alienation arising from
repetitive and mechanistic tasks. Through job design, organizations try to raise level of
productivity via offering non-monetary rewards such as greater satisfaction from a sense of
personal achievement in meeting the increased challenge and responsibility of one's work. As
Armstrong job design can be carried out by using the methods of job enlargement, enrichment,
rotation, and simplification.
[Link] Job Analysis
Job Analysis is the systematic process of determining information on the jobs, positions, skills
and knowledge required for performing the jobs in an organization. It provides data regarding the
existing or the proposed jobs within an organization (Stephen and Robbins (2002). They also

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noted that job analysis can be made after the job design of a certain organization conducted.
According to Azhar and Faruq (2011) in job analysis the content, requirement and context of the
job are ultimately assessed through applying job-oriented approach which concerned with tasks,
duties and responsibilities of the job; and employees-oriented approach associated with human
behavior required to perform the job.

Moreover, Shyamala (2014) revealed that job analysis is vital human resource management task
in determining job description, which is a written statement explaining why a job exists, what
the job holder actually does, how he or she does it, and under what conditions the job is
performed; and job specifications that is persons’ specification identifies the experience,
qualifications, skills, abilities and knowledge, personal qualities and special requirements needed
to successfully perform the job.
2.5.3 Human Resource Planning
Human resource planning is the process by which managers ensure that they have the right
number and kinds of people in the right places, and at the right times, who are capable of
effectively and efficiently performing assigned tasks (Stephen and Robbins, 2002). Different
literatures in the area showed that to carry out the task of, there a need to take various steps in to
consideration. Regarding this, McKenna and Beach (2008) as cited in (Azhar and Faruq, 2011)
human resource planning pass through a series of steps and begin with (1) Assessing the current
human resource status, usually through a human resource inventory. This information is derived
from forms filled out by employees, which includes items such as name, education, training,
prior employment, languages spoken, special capabilities, and specialized skills. (2) Forecast the
future human resource needs based on the goals and strategies of the organization by using
various techniques like expert forecasts, trend analysis, work load analysis, work force analysis
and other mathematical methods like budget and planning analysis, regression, new venture
analysis. (3) Determining human resource gap that exist between current human resource
availability and future demands. (4) Developing employment program, which the current
inventory is compared with future forecasts then employment programs can be framed, such as
recruitment, selection procedures and placement plans.

2.5.4 Recruitment
According to Stephen (2011) recruitment is a positive process of searching for prospective
employees and stimulating them to apply for the jobs in the organization with the intention, when

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more persons apply for jobs then there will be a scope for recruiting better persons. In other
word, the term recruitment refers to discovering the source from where potential employees may
be selected. The scientific recruitment process leads to higher productivity, better wages, high
morale, reduction in labor turnover and enhanced reputation. It is highly concerned with reaching
out, attracting, and ensuring a supply of qualified personnel and making out selection of requisite
manpower both in their quantitative and qualitative aspect.

Furthermore, Godefray (2014) indicated that despite their own merits and drawbacks,
recruitment can be carried out from two sources such as internal and external sources. The author
also noted that internal source can be served for employees who is already in pay-roll in the
organization through transfer, promotion, and in a certain case demotion. While internal sources
of employment can also be served for employees or applicants outside the organization by
applying various methods like advertisement, employment exchange, factory gate, casual callers,
central application file, labor unions, labor contractors and former employees.
2.5.5 Selection and Placement
According to Stephen (2011) and Godefray (2014) selection is a process of measurement,
decision making and evaluation. The goal of a selection system is to bring in to the organization
individuals who will perform well on the job. To have an accurate and fair selection system, an
organization must use reliable and valid measures of job applicant characteristics. They also
noted that good selection system must include a means of combining information about applicant
characteristics in a rational way and producing correct hire and no-hire decisions. Good
personnel selection system should pass in a systematic step such as application form, Preliminary
interview, written examination or test, final interview, reference check, medical examination,
line manager decision or approval, job offer then employment and placement can be done in the
way that ensure to the overall effectiveness of the organization.
2.5.6 Induction and Orientation
Induction of employee is the first step towards gaining an employees' commitment and involves
orientation and training of the employee in the organizational culture, and showing how he or she
is interconnected to everyone else in the organization (Godefray, 2014). Employee Orientation
and Induction makes the selected candidate informed about the organization’s background,
culture, values, and work ethics. The first person he or she will meet is the immediate supervisor,
who should present the corporate profile and the roles of the new comers in addition to providing
information on the organization’s background, values, clientele, services offered, staff, and
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expected behavior. According to Godefray, any neglect in the area of induction and orientation
may lead to high labor turnover, confusion, wasted time and expenditure.

2.5.7 Motivation
Human resource managers and experts should keep employees’ motivation, so that employees
put their maximum efforts in work. Regarding this, Herzberg introduced two-factor theory of
motivation since, 1959. And it was closely related with Maslow's hierarchy of human needs. In this
theory, factors are divided into two dimensions such as motivators and hygiene (Unutmaz, 2014).
According to Herzberg’s theory of motivation, factors that would directly motivate employees
and causes for satisfaction are intrinsic factors which represent the need for self-actualization and
grow called motivators.

Motivators are based internal feelings; including achievement, experience and the work itself,
responsibility, changing status through promotion and opportunity for growth and advancement.
In contrast, hygiene factors, which lead to extrinsic factors and causes for dissatisfaction which
include: supervision, inter-personal relationships, recognition, management, company policy and
administration, promotion, salaries and benefits, status, job security and physical working
conditions.
2.5.8 Compensation and Benefits
According to Shyamala (2014) compensation refers to a wide range of financial and non-
financial rewards to employees for their services rendered to the organization. It is paid in the
form of wages, salaries. While employees’ benefits include paid vacations, insurance, maternity
leave, free travel facility, retirement benefits and others which is called fringe benefit. Therefore,
human resource administrator should follow a systematic approach to ensure that employees are
paid in a logical, equitable and fair manner to their work they performing.

Pertaining to the above concept, DeCenzo and Robbins (1994) have identified three dimension of
equity such as, (a) internal equity which refers to the pay corresponding to difficulty level of the
job assigned to an employee. i.e. more difficult jobs should be paid more; (b) external equity
ensures that an employee is compensated equally in comparison to similar jobs in the labor
market; and (c) individual equity highlights equal pay for equal jobs, i.e. each individual pay is
fair in comparison to others doing the same or similar job. They also noted that human resource
management of any organization should be aware of employees in a healthy and safe
environment are more likely to be productive. Therefore, HR managers as well as experts are

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expected to protect employees from work-related accidents and injuries which in turn ensure the
physical and mental well-being organizational employees.

2.5.9 Performance management (PM)

Pertaining performance management, Armstrong (2006) stated that Performance management
processes have come to the fore in recent years as means of providing a more integrated and
continuous approach to the management of performance than was provided by previous isolated
and often inadequate merit rating or performance appraisal schemes.
According to Lawson (1995) as cited in Armstrong (2006) Performance management is based on
the principle of management by agreement or contract rather than management by command. It
emphasizes the integration of individual and corporate objectives as well as the initiation of self-
managed learning development plans. It can play a major role in providing for an integrated and
coherent range of human resource management processes that are mutually supportive and
contribute as a whole to improving organizational effectiveness.

As Lawson, performance management strategy is concerned with four areas. Firstly, it is

concerned with performance improvement to ensure achieve organizational, team and individual
effectiveness. Secondly, performance management strategy is concerned with employee
development i. e. it supposed to addresses the core competences of the organization and the
capabilities of individuals and teams. Thirdly, performance management strategy is concerned
with satisfying the needs and expectations of all the organizations’ stakeholders, owners,
management, employees, customers, suppliers and the general public. Finally, performance
management strategy is concerned with communication and involvement. It aims to create a
climate in which a continuing dialogue between managers and the members of their teams takes
place to define expectations and share information on the organizations’ mission, values and
objectives. According to Shyamala (2014) performance management is a continuous process
which pass in a series of interrelated steps. These are: (1) determining objectives; (2) establishing
performance standard or criteria; (3) communicating standards to employees, (4) measuring
performance; (5) comparison of actual performance with standards; (6) discussion on the results
with employees; and (7) corrective action like coaching, training, reward, promotion, counseling
and others can be conducted to improve the performance of employees.

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2.5.10 Human Resource Development
Training and development program are one of the vital human resource management activities
that affect the value of the workforce’s knowledge, capability and skill positively. Ultimately, the
effects are higher on employees’ job performance and creating super. Different literatures
suggest that continuous training and development of organizational employees lead them to be
aligned for career growth and career potential enhances personal motivation (Unutmaz, 2014).

Training and development have been differentiated in a variety of points such as training is job
centered in nature whereas development is career centered; training Provides for employees to
improve the current job performance whereas development is offering to improve the skills,
knowledge and attitude of employees for future performance or preparing employees for higher
career path; training is focusing on a particular job whereas development is focusing on the
growth of an employee in all aspect; and raining provides to fill skill gap whereas development
provides to shape attitude (Shyamala, 2014). From the notion of the above scholars, it can be
understand that human resource managers as well as experts in any the organization should set
training and development programs and try to change in to operation so as to reduce the skills
and knowledge of their employees in the short as well as in the long run basis through on-job and
off-job training techniques.
2.6 Empirical Review of Human Resource Management
2.6.1 Significances of HRM Practice
Different researchers in the area like Armstrong (2006), Shyamala and Godefray (2014)
disclosed that human resource management has a place of great importance because the proper or
improper use of the different factors of production depend on the wishes of the human resources.
They also disclosed that HRM helps management in the preparation adoption and continuing
evolution of personnel programs and policies. It helps to bring skilled workers through scientific
selection. It helps to prepare workers according to the changing needs of industry and
environment. It contributes a lot in restoring the industrial harmony and healthy employer
employee relations. Thus, the role of human resource management is very important in an
organization and it should not be undermined especially in large scale enterprises. Similarly,
Armstrong (2016) also stated the significance of HRM activities as the attainment of
organizational objectives depends, to a great extent, on the way in which people are recruited,
developed and utilized by the management.

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2.6.2 Challenges in the Practice of HRM
As the notions and findings of different researchers above, the successful strategic human
resource implementation is complex in nature. Some researchers like Lepak et al. (2006)
elaborated that 90 percent human resource management failure can be resulted because
incapability of human resource personnel in articulating company policies and strategies in
providing direction and changing it in to operation. Other groups of scholars also reason out that
lack of growth strategy or failure to implement it is the main barrier for HRM practice. Other
groups of scholars like, Dowling and Welch (2004) clarified and categorized the major HRM
challenges in to two broad categories such as internal challenges which have been exist within
the organization; and external challenges that emanate from external environment and they are
always beyond the control of the organizations like globalization, fierce competition, political,
economical, technological, socio-cultural and legislation related to frequent policy changes.

They also denoted that lacks in major functional areas like absence of clear and strategic HMP
policies, plans, strategies and directives with incapable HR managers and experts that can
perform HRM activities; high resistance due to lack of cooperation from the bottom line;
interdepartmental conflict; low level of commitment on the side of senior management team in
supporting and equipping the HRM section with various resources; resistance from employees
and strive to maintain the statuesque; fear of incompetency on senior level managers to take up
strategic steps; improper strategic assignments and leadership conflict over authority and
resistance that comes through the legitimate labor institutions are major challenges in human
resource management practice.

2.6.3 Mechanisms Used to Improve HRM Practice

As the researcher’s reviewed different literatures in the area, for instance; Miller and Cardy
(2000) suggested that globalization has many implications for the firms that may entail the
diversity of cultures. Thus, now a day human resource management has to increase the expertise,
knowledge, capabilities and skills needed to gain competitive edge. Similarly, Shuana (2017)
also revealed that when HR processes efficiently aligned with organizational goals on broader
perspective, it has high likelihood to create strategic partners of the organization which in turn
forces HR to coordinate with all the function and provide support in various activities like
attracting, selecting, training and retaining the best talented individuals.

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Furthermore, Bach (2001) stated two models of HR practice, especially; used to demonstrate the
ways how strategic approach to HR can be translated in to a set of coherent HR policies. The
first model is Universal Model always imply that there is one best method for achieving high
performance regardless of the context or specific circumstances of the firm. The second one is
Contingency Model link HRM policies adopted by the organization to the particular aspect of
business environment. However, the choice is given to each human resource managers and
experts to decide on the significances of each model in various circumstances they confronted
within their organization.

In addition, different researchers signified that HR managers should travel an extra mile to
address the challenges of global environment in developing a bunch of strategies to compete well
in international market, with new employees and clients. In this period of transition, the HR
managers need to develop competency framework that defines the skills and expertise required
for performing job efficiently. These frameworks will help to revive the workforce that will lead
to excellence.

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CHAPTER THREE
3. RESEARCH METHODOLOGY
3.1 Research Design and Approach
To assess the actual practice of human resource management in Abay Construction Enterprise
descriptive and explanatory research designs were employed. The reason behind, descriptive
research design is more preferable to describe the existing facts concerning the real practice of
human resource management in the aforementioned enterprise.
3.2 Types and Sources of Data
To attain the aim of this study, qualitative data were collected. Besides, to collect the above-
mentioned data, the researcher used both primary and secondary data sources. Primary data were
collected from selected sample respondents. On the other hand, secondary data were also
collected from the existing literatures Especially, nationwide researches, policies and strategies
on the area, organizational level reports, structure, directives; and other documents which were
pertinent to such study.

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3.3 Data Collection Methods
Despite the fact that there are a number of techniques which used to collect relevant data from
the target respondents like questionnaire and others, the researcher was indebted to conduct only
semi structured interview, focus group discussion and observation. In addition, the researcher
also carried out documental analysis to know how the structure of the organization is arranging
hierarchically, how the compensation packages of employees; and major human resource
functions clearly articulated in the policy document.
3.3.1 In-depth Interview
In order to conduct interview with key informants’ supervisors, process owners; and
organizational managers, semi structured interview questions were developed. Despite key
informants are educated, for the purposes of convenience and instructiveness, interview
questions were developed and interview was conducted in Amharic language as a medium of
communication in the enterprise.
3.3.2 Field Observation
Field observation is necessarily important to gather primary information and one of the most
common methods for qualitative data collection. Accordingly, participant observation in the
work place was carried out in some projects that enable the researcher to knew the actual
working conditions and the ways how project workers have been treated. Thus, to gather relevant
data regarding the issue under study checklist was developed and data for the intended purpose
were collected.
3.3.3 Focus Group Discussion
To collect broaden and generalized information concerning the practice, challengers and
remedies of human resource management, focus group discussion was conducted with project
managers and senior staffs. Therefore, the group formed from project managers, was consisted
from eight individuals. While the other group organized from the senior staff was consisted from
twelve individuals. Accordingly, focus group discussion was held. During the discussion,
researcher was served as facilitator.
3.3.4 Documental Analysis
Secondary data was also collected from nationwide researches or published or unpublished
documents, policies and strategies, organizational level annual reports, organizational structure,
policies and directives through conducting documental analysis.
3.4 Sampling Procedure
3.4.1 Target Population
The total population of this study is 210 numbers of individual employees in Abay Construction
Enterprise. The target population in the enterprise is consisted from 182 male and 28 female
workers. It does not mean that the target population of this study was not only the
aforementioned numbers of permanent employees, but also large numbers of daily labors in
various irrigation and water supply construction projects despite their numbers were not

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accurately estimated to select their representative sample. However, researcher strongly believed
data related to the practice of human resource management on the daily labors were collected
through field observation. The sample units of this study were managers at the enterprise level,
process owners from each division, site supervisors, project managers; and other senior officers
in the head office.
3.4.2 Sampling Technique
To determine the sample size, non-probability sampling technique was employed. Consequently,
key informants for interview and focus group discussion were selected through applying
Purposive/or judgmental sampling technique. Each process owner, organizational mangers and
site supervisors will be taken as it is for interview. And from twenty-one numbers of project
managers, eight of them were selected purposively based on their long period of experience they
engaged in such responsibility and twelve senior staff from each functional department were
selected purposively and proportionally.

Table1: Sample Distribution in Each Section of the Enterprise

Finance Dep’ t
Employees in
Employees in

Employees in

Employees in

Employees in

Employees in
Adm/Dep’ t

Population
Tran/Adm/

Purchasing

Supervisor
Managers

Managers
HR/Adm/

Contract

[Link]

Owners
Process
Project
Dep’ t

Dep’ t

Dep’ t

Dep’ t

Categories Total

Target 54 18 8 18 10 69 21 4 6 3 210
Population
Sample Size 4 1 1 1 1 4 8 4 6 3 33

Twelve senior staff were selected from six departments or functional areas based on their proportion
for focus group discussion that was held at the head office. In the same manner, eight project managers
were selected and focus group discussion was conducted. Semi structured interview was also conducted
with site supervisors, process owners and deputy and general managers at the enterprise level. Data
related to the practice of human resource management on the daily labors were collected through field
observation.

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Source: Researcher’s own calculation and compilation from Human Resource Administration Section November,
2019 payroll sheet.
3.5 Data Analysis
Despite different kinds of data analysis techniques depending on the nature of data the
researchers gathered, for the seek of this work qualitative data were collected; as a result, these
were analyzed and interpreted through narration. The researcher was made an attempt to
supplement, substantiate and triangulate the factual data which were collected from different
respondents or sources differently.
3.6 Ethical Consideration
The issue of ethics in research requires the researchers’ great attention during collection,
presentation, analysis and interpretation of data. Especially, it is indispensable to make the target
respondents be felt free and agree to be involved. Therefore, steps were taken to ensure that they
know exactly what they are agreeing to. In doing so, the researcher was guided by ethical norms
such as, data were collected from key informants with their consent and willingness; and it was
kept confidential. Secondly, limitations and failures the study faced were honestly explained.
Lastly, different assumptions and theories that have been taken from different books, journals
and researches were properly cited and acknowledged.

CHAPTER FOUR
4. DATA ANALYSIS AND DISCUSIONS ON MAJOR FINDINGS
4.1 Respondents Characteristics
In order collect necessary information from key informants, one group whose member is
composed of twelve senior staff out of these three of them were female and the rest were male
senior experts and focus group discussion was conducted. Another group was also formed from
eight project manager and all the members were male because there were no females that took
the responsibility of project manager in the enterprise. In addition, all key informants taken to
conduct interview were males due to the reason that there were no females with the
responsibility of managers as well as process owner.

4.2 Discussions on Current HRM Practices in ACE

4.2.1 Organizational Structure and Design
Based on the document analyzed and indicated in its organizational chart, Abay Construction
Enterprise is accountable to ORDA’s enterprises’ development deputy director. The enterprise has

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its own general manager who is supposed to manage the overall operation of the enterprise. In
addition, there is a position of technical deputy manager primarily aimed to provide
administrative and technical support for both contract administration; and construction
monitoring process owners which have line authorities to the enterprise.

On the other hand, there is a position of resource administration deputy manager on the
enterprise’s hierarchical structure and intends to offer how organizational resources are
effectively and efficiently managed and utilized for the operation of the enterprise. Under the
resource administration deputy manager, there are four supportive departments/or process
owners such as human resource development administration, property and machinery
administration, finance administration; and procurement administration sections. There are also
sub divisions and case teams under each process owners whether they have line or staff
authority. These subsections and case teams were formed and organized based on their functions,
which in turn reduce the duplication of work at one place, and helps to ensure clear
accountability or chain of command that would result in the smooth running of the enterprise.

However, as indicated in the organizational chart of ACE herein below, various case teams and
sub divisions were are not clearly incorporated under each functional areas.

Fig.1 Organizational Chart of Abay Construction Enterprise

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Source: (ACE, 2016)
As indicated in the above organizational chart of ACE, it was developed and approved by
ORDA’s senior management board, the hierarchical authority and the relationship with the owner
of the enterprise i.e. with ORDA was not clearly defined; the minimum requirements of each job
positions with their irrespective duties and responsibilities were not incorporated. Therefore, the
researcher has been indebted to say that job design and analysis were not conducted, as a result,
during employment management members always discuss on the vacant positions supposed to
fill by job seeker and they tried to articulate the minimum requirements unscientifically.

As the researcher reviewed, various position incorporated in each section was not well matched.
For instance, the job position of auto electrician is expected to be incorporated in under
machinery and vehicle administration section; however, it is designed and unified under
construction monitoring and evaluation section. To sum up, the organizational structures and
experiences of other organization which performing similar activities were also not take in to
consideration during its job design.
4.2.2 The Practice of Job Analysis in ACE
Based on the insights and impression gain from different literatures and researches, job analysis
is used to systematically determine information concerning the jobs, positions, skills and
knowledge required for performing the jobs in an organization. For instance, Shyamala (2014)
noted that job analysis is always used to determine job description to aware the job holder with
the information why a job exists, what he or she actually does, how he or she perform it, and
under what conditions the job is performed. The educator also elaborated that job specification is
the second immediate result of job analysis that identifies the experience, qualifications, skills,
abilities and knowledge, personal qualities and special requirements needed to successfully
perform the job.

Having this in mind, the researcher tried to conduct an interview with managers and process
owners and site supervisors to know the extent to which how many individual workers and
process owners, site supervisors as well as managers at different level of administrative position
have been given their job description in a sense to avoid role conflicts, reduce fear of failure; and
provide direction. Thus, information obtained through interview with key informants indicated
that still, job description of each job positions in the organizational structure is not well
articulated and individual employees have not been given their own job description, rather they
have been given some sort of oral information by their own immediate supervisor while the

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employed in. Similarly, during focus group discussion with selected senior staff and project
managers, it was understood that due to unavailability of job description, it is always visualized
that many individual workers are not performing the task by their own rather they always require
assistance and close supervision. Indeed, it was also ensured through field observation in the
project area and documental analysis.

4.2.3 The Practice of HR planning

As per its organizational and other variety of responsibility to ensure the financial sustainability
of ORDA and to be competent enough in construction industry in east Africa, the enterprise has
expected to develop long term strategic plan with high level of engagement. Then, it is expected
that developing various policies and strategies that can be used to change the already developed
plan in to operation is significantly important.

However, information with key informants indicated that the enterprise didn’t have long term
strategic plan and intermediate plan in general and each functional area in particular. It is also
ensured that each department simply prepare their own physical or annual plan. Human
resource development administration section is the one which is expected to perform strategic
human resource management through developing long term strategic human resource planning.
Despite the fact that different literatures in the area like Azhar and Faruq (2011) showed that to
carry out the task of strategic human resource planning there a need to take various steps in to
consideration such as assess the current HR status, forecast the future HR needs, determine HR
gap; and develop employment program, through conducting documental analysis it was ensured
human resource planning has not been procedurally enacted. Even new employees have been
employed when the existing labors left the organization.

4.2.4 Human Resource Management Policies in ACE

Different literatures in the area disclosed that after one organization has been established, it is
expected that HR managers as well as experts should develop a well-defined HRM policies,
strategies and directive in the context of the already established organization, which used to
change the company plans in to operation and attain the company objectives Lepak et al. (2006).
Pertaining this, the researcher tried to evaluate the policies strategies and directives of Abay
Construction Enterprise. Thus, it was ensured that even though the enterprise was established so
as to generate profit and sustain the financial sustainability of Organization for Rehabilitation
and Development in Amhara, for along period it was led by ORDA’s directive which has
distinguish objective with the enterprise.
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Although different literatures in the area showed that policies, strategies and directives related to
HRM should capable enough match the available organizational resources to everchanging
environment, customers, organization itself and stakeholder expectation, HR directives of ORDA
has not been developed inclined with Employer-Employees proclamation 377/2003 and with its
improvement proclamations 494/2006 and 1156/2019. The same is true for the recent developed,
approved and implemented human resource directives of Abay Construction Enterprise.
4.2.5 The Practice of Recruitment and Selection in ACE
Based on the notion of different scholars, for instance; Dowling and Welch (2004) recruitment
and selection is vital HR function to locate the people with needed expertise for the progression
of a company when recruitment and selection strategies are effective and criterion based to
attract capable individuals with expertise knowledge and skills. Regarding this, information with
key informants, especially, information from senior staff indicated that the practice of
recruitment and selection is found to be challenged, yet have prepared the vacancy
announcement and advertisement to the potential applicants. They also explained that despite the
pool of applicants are applying for a certain position, recruitment and selection committee
always make decision based on their perception, proximity and intimacy to wards some one
instead of conducting criteria-based recruitment and selection. Besides, key informants
elaborated that most of senior positions have been occupied by individuals in the way of
nomination rather than merit-based selection.

Pertaining to the practice of recruitment and selection, documental analysis was conducted and it
was ensured that in the HRM directives of the enterprise revealed that nomination and
recommendation are preferred methods which have been widely practiced in the enterprise from
the external sources. Similarly, based on field observation in various irrigation and water supply
construction projects, daily labors have been employed from community, whose family and
relatives of project managers have lived in.

Moreover, the real practices of the enterprise indicated that in most case, the internal sources of
recruitment from the already existed employees through transfer and promotion has been
neglected. Rather the enterprise always used external sources of recruitment, which has denied
the morale of internal employees and led to dissatisfaction. In general, there is a great failure in
the real practice of human resource management in the enterprise which resulted in policy or
directive failure at the preparation phase.

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4.2.6 The Practice of Induction and Orientation in ACE
Although different researchers like Stephen (2011) disclosed that induction is the first step
towards gaining an employees' commitment and makes the selected candidate informed about
the organization’s background, culture, values and work ethics. In other words, Dowling and
Welch (2004) explained that any neglect in the area of induction and orientation may lead to high
labor turnover, confusion, wasted time and expenditure.
In this regard, key informant interview indicated that induction and orientation have not been
given any attention by each process owner as well as the managers at different levels. Rather
new comers have been given some sort of oral information by their own immediate supervisor
while the employed in even though rare occasions took place.
4.2.7 The Practice of Motivation, Compensation and Benefit
Concerning to employees’ motivation, many researchers developed different motivation theories.
For instance, Herzberg introduced two-factor theory of motivation since, 1959. According to
Herzberg, factors that would directly motivate employees and causes for satisfaction are inherent
required for self-actualization and grow called motivators. For example, achievement,
experience, status for promotion. In contrast, factors that lead to dissatisfaction called extrinsic
factors, like supervision, interpersonal relationships, recognition, management, company policy
and administration, promotion, salaries and benefits, status, job security and physical working
conditions.

In addition, Theory X and Theory Y introduced by McGregor was conceptualized. In this theory
there are two assumptions set based on the corresponding relationship between managers and
employees (DeCenzo and Robbins, 1994). Theory X assumed that employees dislike work. This
kind of people must be continuously controlled and treated through punishment to attain the
desired objective. On the Contrary, Theory Y assumed that employees could have self-direction
and committed to perform their job; therefore, when employees have been given the opportunity
of involvement, autonomy and responsibility; then their level of motivation increase.

Having all these theoretical bases in mind, so many attempts have been made in assessing the
practices of employees’ motivation in Abay construction Enterprise. Information through field
observation at the project as well as in the head office and focus group discussion and interview
with key informants indicated that almost all members of organizational employees didn’t feel a
sense of ownership and belongingness towards the enterprise. As a result, large numbers of

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employees have left the organization in each consecutive year. Concerning this, selected
respondents who engaged in focus group discussion, reason out that the relationship between
managers and employees is super-ordinate, individual as well as group members who have better
performances have not been selected, recognized, promoted and awarded scientifically.

Relating to the practice of compensation and benefit, in order to retain the mobility of senior
expertise the enterprise took a remedy of employees’ salary improvement since the end of 2018
and promised to pay one salary scale to each employee in every year which is not still
implemented. Pertaining to employees’ benefits were not clearly explained in the policy
document the enterprise has delivered, paid vacations, medical insurance, maternity leave, free
travel facility and retirement benefits despite they have unsatisfied. Based on the information,
gained through documental analysis it is difficult to say that whether the enterprise has ensured
internal equity, external equity and individual equity rather it has been placed in the position of
dichotomy. Because as indicated earlier each job positions in the organizational structure is
determined with no depth and breadth investigation. Indeed, house, position and transport
allowance have paid for those who have been nominated at different job positions. In addition,
the enterprise also built camp that can be served as a shelter of project workers and fulfilling
different camp facilities whose cost is deducted from employees’ monthly periderm and tried to
ensure the wellbeing of employees in the work place.

4.2.8 Performance Management and HRD practices

Many educators agreed that performance management is a continuous process, but a recently
existed phenomenon that has been supposed to replace performance appraisal schemes which
was periodic base evaluation. It is the process of integrating individual and corporate objectives
or the initiation of self-managed learning development plans. Performance management provides
an integrated and coherent range of human resource management processes which mutually
support and contribute a lot in improving organizational effectiveness.

Based on the perception above, the researcher tried to evaluate the real practice of performance
management and human resource development in Abay Construction Enterprise as keys human
resource management function. In spite of the fact that performance management is continuously
carrying out to ensure organizational effectiveness, to decide upon employee development, to
improve service standards and satisfies the needs of various stakeholders; and to create effective

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communication and involvement, experiences in the enterprise showed that the practice of those
intertwin management tools found to be under questioned.

Management members of the enterprise were not committed enough towards the implementation
of performance management. Regarding this, qualitative data collected through focus group
discussion and interview with selected key informants indicated that, even though the value of
balance score card (BSC) in the process of promotion and transfer is high which accounts 40 and
30 percent in HR directives of the enterprise respectively, still supervisors, project managers,
process owners, deputy managers and general managers of the enterprise were not eager in
providing measurable activities to their employees, continuously evaluating the performance of
their employees and identifying the area of weakness to pass decision related to employees’
promotion, training and development. As a result, related to training that can be given to
employees in the short run basis to fill their skill and knowledge gaps of a particular job and
development that can be given in the long run to improve the career path of employees have not
been incorporated in the policy documents

4.3 Major Challenges in HRM Practice of ACE

Many researchers in the area like Lepak et al. (2006) and Henson (2007) found out that the
practice of HRM is complex in its nature due the existence of various challenges such as budget
constraints to operate HR function effectively. Thus, to better understand the major challenges
that influence the practice of HRM in Abay Construction Enterprise, data were collected through
focus group discussion, in-depth interview and documental analysis. Based on the data analyzed,
the major challenges in the practice of HRM in Abay Construction Enterprise have been seen at
two distinctive phases.

The first challenge was seen at the stage policy and directive preparation. In Abay Construction
Enterprise HRM functions were not effectively and efficiently changed in to operation. Human
resource management policies or directives was not responsive to address all complains and
grievances which aroused on the part of employees. Because the policy document was not
developed inline with employer-employee proclamations with the great integration of major
HRM functions. For instance, through conducting documental analysis it was insured that HRM
directive was not encompasses the issue of human resource training and development;
employees’ motivation and retention; grievances handling procedure and others which will have
strategic impact on company objectives.

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In addition, HR policies or directives of the enterprise were not developed with the engagement
or involvement of senior staff. Even it was not a chance given to the enterprise to develop its
HRM policies in its context. Rather it was developed by the individual who is the members of
ORDA’s senior management board. Most ways that have been explicitly articulated in employer-
employee’s proclamations were isolated; as a result, many individual workers lack a sense of
belongingness and ownership.

The second challenge is related with HRM policy implementation stage. Despite the fact that HR
policy or directive of the enterprise was lacking so many facts that must be incorporated to retain
expertise and capable individuals that would have significant contribution to the organization in
the long run, gigantic limitation have been also exhibited in HRM policy operation. This can be
resulted from incapable HR personnel in articulating company policies and changing it in to
operation. In addition, the existence of role conflict on the part of top-level managers, in a sense
that they always intervened to operate the task of HRM personnel from the perspective of
employing their relatives.

Information obtained through key informant interview and focus group discussion also indicated
that there are numerous challenges that hider the practice of human resource management in the
aforementioned enterprise. Among these, fierce competition is the one that has been emerged
outside of the organization. Because organizations that have been performing similar activities
with best HRM policies and its implementation now causes for high staff mobility in the
enterprise.

Furthermore, political instability in different parts of the region was also another critical
challenge in the practice of human resource management. The reason was, fear of taking full of
responsibility to operate his or her tasks in any place while he or she has been placed. Rather
there was a tendency to acquire potential areas near to the city administration. Budget shortage
was also another serious challenge to equip the practice of human resource management in the
enterprise; especially, to provide training either at the project level as well as at the head office to
reduce the skills and knowledge gaps of an employee towards a particular task.

In general, in Abay Construction Enterprise, the practice of HRM was challenged by the policy
itself, incapable HRM personnel, role conflicts between or among management members, low
level of commitment on the part of senior management members in supporting and equipping the
HRM section with various resources; resistance from employees and strive to maintain the

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 Assessment on The Current Practice of Human Resource Management ACE /2020
statuesquo; leadership conflict over authority; and resistance from legitimate labor institutions
were major challenges of human resource management practice in Abay Construction Enterprise.

CHAPTER FIVE
5. CNCLUSIONS AND RECOMMENDATION
5.1 Conclusions
Based on the analysis and discussions in the previous chapter, the researcher concluded that the
practice of HRM in Abay Construction Enterprise was found to be challenged, yet had improved
the salary of its employees, since at the end of 2018; with limitations have indicated that the
proportion of salary increment is insignificant for employees with lower job positions.

Moreover, despite human resource management practice in Abay Construction Enterprise was
expected to play a significant role in recruiting, selecting, preparing and retaining workers in
accordance with the changing needs of industry as well as the environment that lead the
attainment of organizational objectives and employees’ motivation, the research found out that
various HRM function; especially, recruitment, selectin and placement are not implemented
based on merit based criteria rather they have been enacted by managers through
recommendation based on their wishes from their relatives. Thus, HRM policy is not responsive
to address all complains aroused by employees. And HR policy of the enterprise lacks the
integration of so many HRM functions.

In addition, even if attempts and improvements have been made on HRM policy of the
enterprise, the researcher is dare full to conclude that human resource policies of the enterprise

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 Assessment on The Current Practice of Human Resource Management ACE /2020
were not developed with the involvement of senior staff. As a result, most ways that have been
explicitly articulated in employer-employee’s proclamations to secure both the benefit of
employees and organizations were isolated; due to this and other related problems many
individual workers lack a sense of belongingness and ownership which led to high staff turnover
in the enterprise.

Despite the fact that HR policy of the enterprise was lacking so many facts that must be
incorporated to retain capable individuals that would have significant contribution to the
organization, numerous limitations have also been revealed in HR policy operation due to
incapable human resource personnel during policy implementation, as a result, the task of
performance management and HR development has been overlooked in the enterprise.

The researcher also indebted to conclude, the commitment of management members to

equipping and enriching HRM section via providing training and allocating necessary resources
that enable to reduce skills and knowledge gaps of an employee towards a particular task was
deprived of tasks, the relation between managers and subordinates are super-ordinate. In
addition, role conflict that led the management team always exert their unnecessary intervention
on the tasks of individual employees were major challenges.

5.2 Recommendations
Based on the discussions and conclusions above, the researcher would like to forward the following
recommendations for further action towards the improvement of human resource management
practices in Abay Construction Enterprise.
1. To lead the enterprise strategically, the management of Abay Construction Enterprise should
revise and improve organizational structure and HRM policies with the integration of other
major function of human resource management which were neglected previously through
conducting open discussion with senior experts from different discipline, so that the HR
policy to be responsive and address various problems which have been confronting the
effective implementation of human resource management.
2. After the HRM policy and organization structure is improved and each job positions have
been associated with its’ parallel functional departments, the HR manager or experts should
carry out job analysis and determining the major duties and responsibilities expected to be
performed by an individual when he or she hold the already designed position; and the
requirements that individual should possesses towards a particular position which were not

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 Assessment on The Current Practice of Human Resource Management ACE /2020
scientifically specified before and this will used to reduce role conflicts among managers,
departments and experts.
3. In order to implement HRM polices and attain strategic objectives of the enterprise,
managers of the enterprise should capacitate and equip HR administration section with
different resources with a reasonable autonomy to perform HR planning, recruitment,
selection, placement, induction and orientation based on measurable criteria that would be
useful to avoid corrupted working procedures.
4. Indeed, Performance management provide an integrated and coherent range of HRM
processes that mutually support and contribute a lot in improving both individual and
organizational effectiveness. Therefore, it is better for management members of ACE in
general and HR administration section in particular to develop evaluation standards and
communicated such standards to all respective employees, then continuous performance
evaluation should be made at individual as well as organizational levels. Because it will
enable the management team as well as HR managers easily identifies workers who need
training or workers who are eligible for promotion.
5. Last, but not least, HR managers of the enterprise should play a significant role in setting out
the compensation and benefit packages like salary, wages, salary increment, over time
payment, position and house allowances, medical and other insurances, maternity and annual
leave and others reasonably; and implement such policy in accordance with employee-
employer proclamations, international laws and conventions that would be useful to create
harmonious relationship, sense of belongingness and ownership with in the organization
which in turn senior experts in the enterprise will exert their full effort in the long run.

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 Assessment on The Current Practice of Human Resource Management ACE /2020

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Appendixes
I. Interview Questions for Key Informants
1) How do you evaluate the current practice of HRM in your enterprise?
2) How the status of the HRM implementation in line with various major HR functions can be measured
and recognized?
3) How do you evaluate the role played by HR managers as well as experts in relation to creating
conducive working environment in the enterprise?
4) Do you believe that the existing HR policy is prepared in accordance with various proclamations,
international, agreements and conventions?
5) How much you exert your effort to equip and enrich HR administration section make it to develop
and implement best HR policies?

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 Assessment on The Current Practice of Human Resource Management ACE /2020
6) How organizational employees have perceived the overall objectives of the organization in general
and HR policy implementation in particular?
7) What is the major HRM functions such as HR policy preparation, the design of organizational
structure, HR planning, Recruitment and Selection; induction and orientation; performance
management; training and development; and compensation and benefit packages implementation look
like? Are they fairly implemented with the engagement organizational workers?
8) What are the major challenges that affect the effective implementation of the HR Policy or directive
in the enterprise?
7. What do you suggest to tackle the previously specified challenges that you raised in your institutions
for further improvement?
9) Which kind of institutional support should be necessitated to improve the practice of HRM in the
enterprise?
II. Leading questions prepared for Focus Group Discussion.
1. What is the practice of HRM in Abay Construction Enterprise looks like? Especially in the thematic
area of:
➢ HR policy or directive development ➢ Performance management,
and implementation ➢ Human resource development,
➢ Organizational structure, ➢ Compensation and benefit packages;
➢ Job design and analysis, and
➢ Human resource planning, ➢ Employees working conditions and
➢ Recruitment and selection, safety.
➢ Placement, induction and orientation,
2. What major factors are hampering the practice of HRM in Abay Construction Enterprise?
3. What do you suggest to tackle the identified challenges for future improvement of the HRM practice
of the Enterprise?

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