Wollega University

College of Business and Economics

Department of Management
Postgraduate Programme in MBA

Group Assignment of the Course Human Resource

Management (MBA 615)
Group- 2
By:
Isubalew Daba-WU1300200
Habtamu Turuneh-WU1300204
Gemechu Jano-WU1204669
Sayite Mokonen-WU1300206

Instructor: Prof.Radha Krishna Murthy

January, 2022
Nekemte, Ethiopia
 Table of Contents
Acknowledgment..........................................................................................................................i

Group – 2 –Questions.....................................................................................................................ii

4. 1. Company, its human resources and competitive advantage?...........................................1

4.1.1. Competitive trends and globalization...................................................................................1

4.1.2. Knowledge and work of technology....................................................................................1

4.1.3. Changing Business Environment.........................................................................................2

4.2. How can HR professionals contribute to doing so?.......................................................2

4.2.1. Employment Security...........................................................................................................3

4.2.2. Selective Recruiting.............................................................................................................3

4.2.3. High and Lucrative Wages...................................................................................................3

4.2.4. Training and Development of Skills....................................................................................4

4.2.5. Treat People with Respect and Dignity................................................................................4

4.2.6. Promotion from Within........................................................................................................4

4.2.7. Don’t leave your workforce planning to chance...................................................................4

4.2.8. Use data to understand and manage employees...................................................................5

4.2.9. Give HR a seat at the table – but not before they’ve earned it.............................................5

4.2.10. Union management relations................................................................................................5

5.1. Examination of the current state of labor – management relations in Ethiopia...........6

5.1.1. Labour rights in the constitution in Ethiopia........................................................................6

5.1.2. Current state of industrial relations in Ethiopia....................................................................6

5.1.3. Current state of collective bargaining practices in Ethiopia.................................................7

5.1.4. Current state of employee participation in management process in Ethiopia.......................8

5.1.5. Current state of dispute handling procedures and approaches in Ethiopia............................8

5.1.6. Current states of the programs for quality of work life in Ethiopia......................................9

5.1.7. Current states of Trade Unions in Ethiopia..........................................................................9

5.2. Critical examination of the legal framework for industrial dispute resolution in
Ethiopia.....................................................................................................................................10

5.2.1. A new Labor Proclamation of Ethiopia..............................................................................10

5.2.2. Labor Courts in Ethiopia....................................................................................................11

5.2.3. Establishment of Labor Relations Board............................................................................11

5.2.4. Establishment of Labor Relations Board............................................................................12

5.2.5. The New Powers of the Ministry of Labor and Social Affairs...........................................12

5.3. Suggestions to improve the legal frameworks...............................................................12

5.3.1. Pre action discussions & Without Prejudice Discussions...................................................13

5.3.2. Mediation in the context of the organization’s environment..............................................13

5.3.3. Litigation in the legal frameworks.....................................................................................14

5.4. Suggestions to improve industrial relations in Ethiopia..............................................14

5.4.1. Establish open communication...........................................................................................14

5.4.2. Invest in employee development........................................................................................14

5.4.3. Improving employee recognition.......................................................................................15

5.4.4. Ask for input just to take into account for decision............................................................15

6.1. case: dealing with unwanted hands at Wollega mills company..................................15

6.1.1. Our understanding about the case......................................................................................15

6.1.1. Take no action. Continue Temesgen in the employment till he retires...............................16

6.1.2. Appoint Temesgen’s son in his place.................................................................................17

6.1.3. Pay him 25 months’ salary as compensation and get rid of him.........................................18

6.1.4. Disciplinary action on Temesgen for his irregularity and discharge him...........................18

References.................................................................................................................................20
Acknowledgment
First and foremost we would like to thank and dully acknowledge you, Prof.Radha Krishna, for
the knowledge you feed us in this course. The assignment is challenging but has been teaching
us. For instance, we sat as a group and discussed a lot of things from it. We understood that
human resource management is teamwork. We understood that unless the team acts in unity as
one the organizational objective cannot be achieved. Prof, another point that we learned is the
wisdom of preparing the assignment questions itself. See, the two questions you set enabled us to
teach three chapters (chapter 8 (integration and maintenance), chapter 9 (Promotion, transfer, and
separation), and chapter 10(contemporary issues in HRM such as sexual harassment). This is
what amazed us. This is your golden art of teaching. Thank you very much. We have no words to
appreciate you, but we promise you, professor, to take your legacy as your student. Thank you
once for inheriting our long-lasting teaching legacy. We are proud of being your student.

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Group – 2 –Questions
4. Why is it important for a company to make its human resources into a competitive
advantage? How can HR professionals contribute to doing so?

5. Examine the current state of labour – Management relations in Ethiopia. Critically

examine the legal framework for industrial dispute resolution in Ethiopia. What
measures would you suggest to make these more cooperative?

6. Case: Dealing with Unwanted Hands at Wollega Mills Company

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4. 1. Company, its human resources and competitive
advantage?
In order to answer this question, we would like to split it into two. First, the question is why is it
important for a company to make its HR into a competitive advantage? Secondly, the question
how can HR professionals contribute to doing so? Before answering the first question let us define
what competitive advantage in the context of HR. Competitive advantage in HR refers to the quality of
the employees who cannot be copied, unlike company's systems and processes. It comes down to the fact
that companies with better employees have the competitive advantage.

It is obvious that human resource helps in creating strong competitive advantage through their personnel

management policies. It follows that the better the human resource management, the stronger will be the
competitive advantage. Productivity and employee happiness is an advantage that often results in
superior customer service, which helps drive sales. The specific answer to the question lies here.
Human resource can provide insight into the going market rates for talent and what it might take
to get high-quality hires on board. Similarly, human resource can also review the
competitive talent landscape and determine what compensation strategy will be best aligned
with company goals. In addition, it is important for companies today to make their human
resources into a competitive advantage due to reasons as mentioned below.

4.1.1. Competitive trends and globalization

Today, the global environment is becoming more and more competitive. At the same time the
workforce is becoming more diverse. Globalization in human resource sector terms involves the
overall movement of people, goods, human capital, as well as, ideas around the world. This is
due to the increasing economic integration, which leads to an increase in trade and investments
in human capital.

4.1.2. Knowledge and work of technology

According to some theories, human resource is one of the very important human resources in the
world. There is more emphasis on “knowledge work” due to changes in technology. So

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developing human resource and their knowledge, education, expertise and skills is necessary.
The better the recognitions and respect for human being for the organizations, the better will be
the competitive advantage of the organization. As such, the high technology has also increased
the speed at which things take place globally, hence, leading to a great deal of competition in
many institutions of different countries. Due to this high competition, firms in some countries
may find themselves being out thrown from the business world. This mostly happens to those
firms that have decided to venture into common business opportunities

4.1.3. Changing Business Environment

Overall the business scenario has become very critical. So the success of organization is more
linked up to the human resource performance. The business environment is changing very
rapidly, and the industry is getting affected by changing market conditions. Turbulent market
environment, less brand loyalty, divisions of markets, and changes in fashions, more demanding
customers, and global competition are some examples of changing the business environment.

4.2. How can HR professionals contribute to doing so?

Unquestionable, people provide an organization with a source of competitive advantage. Various
studies have concluded that an organization’s human resources can be a significant source of
competitive advantage. As a result, Porter argues that people are becoming a great differentiating
factor. Managers should select those people who are smarter, better trained, more motivated, and
more committed.

Here are some of the many ways the HR team can help create and maintain a competitive
advantage for the organization: HR can use data to analyze turnover rates and determine where
problems may lie, thus allowing the company to more quickly find issues and get them resolved.

Further, achieving competitive success through people requires a basic change in how managers
think about their employees and how they view the working relationship. Professor Pfeffer of
Harvard University suggested, the following ways HR team or professionals can utilize to gain
or create competitive advantage through people. These are:

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4.2.1. Employment Security
HR professionals can maintain competitive advantage by ensuring employee security. It follows
that employment security is a critical element of a high-performance work arrangement. The
security of employment signals a longstanding commitment by the organization to its
workforces. It enhances employee involvement because employees are more willing to
contribute to the work process when they need not fear losing their own or co-workers’ jobs. The
security of employment contributes to training as both employer and employee have greater
incentives to invest in training because there is some assurance that the employment relationship
will be of sufficient duration to earn a return on the time and resources expended in skill
development.

The employee will come up with new ideas when their jobs are secured because they know that
the introduction of the new system will not affect their employment stability. They will welcome
the change.

4.2.2. Selective Recruiting

HR professionals can be selective in recruiting. It follows that organizations serious about
making a profit through people will expend the efforts needed to ensure that they recruit the right
people in the first place. HR professionals need to have a large applicant pool from which to
select the right person.

4.2.3. High and Lucrative Wages

An organization can attract and retain qualified candidates if it pays a high and lucrative pay
package. Higher wages tend to attract more outstanding applicants, permitting the organization to
be more selective in finding people who will be committed to the organization. Higher wages
send a message that the organization values its people.

Higher wages tend to attract more outstanding applicants, permitting the organization to be more
selective in finding people who will be committed to the organization. Higher wages send a
message that the organization values its people.

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4.2.4. Training and Development of Skills
Training is an essential component of high-performance works systems because these systems
rely on front line employee’s skill and initiative to identify and resolve problems, to initiate
change in work methods, and to take responsibility for quality. All of this requires a skilled and
motivated workforce that has the knowledge and capability to perform the requisite tasks. As
time goes on employee’s skills may become obsolete.

4.2.5. Treat People with Respect and Dignity

Dignity is a term used in moral, ethical, legal, and political discussions to signify that human
being has an innate right to be valued and receive ethical treatment.

At the heart of human right, it is the belief that everybody should be treated equally and with
dignity – no matter what their circumstances. This means that nobody should be tortured or
treated as an inhuman or degrading way. It also means that nobody has the right to ‘own’ another
person or to force them to work under threat of punishment.

4.2.6. Promotion from Within

It is of vital importance to encourage employee promotion from within the organization.

This practice may boost employee morale. It encourages training and skill development because
of the availability of promotion opportunities within the firm bind workers to employers and vice
versa.

To sum up, the following are the additional four ways the health professionals can follow to
create the competitive advantage in human resource:

4.2.7. Don’t leave your workforce planning to chance

One of the ways through which you can HR for competitive advantage is by not leaving your
workforce planning to chance. You need to instill a fact in your mind that you have shifting
needs for talent over time the way you have your short, medium and long-term needs for capital
and cash. It means that if you want your organization to grow, you have to make your HR team
so effective that they know which candidate fits for your organization. You have to train your
HR in a way that he/she knows who is right for the organization and who is not. Wharton School
professor Peter Capelli, an author of the book Why Good People Can't Get Jobs said that, for this

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purpose, you have to train your HR to take a portfolio management approach to talent. This
approach will help your HR to select and hire the best candidates out there in the industry.

4.2.8. Use data to understand and manage employees

One of the other ways through which you can use HR for competitive advantage is by using data
to understand and manage your employees. You need to understand the fact that reviewing the
performance of an individual once a year is not enough as it doesn't assess the contributions of an
employee, nor it helps you set new goals for him. Then what should your HR do? Your HR team
has to keep in mind a comprehensive and extensive view of the workforce even when he or she
has to make basic decisions. Knowing the average age of your workforce is not something that
can help your organization grow. You also have to know if majority of the people in a particular
category of job are likely to retire simultaneously as it will help you hire more candidates that
can occupy the place of those who are going to retire soon. To figure this out, your HR team has
to ramp up its analytical skills.

4.2.9. Give HR a seat at the table – but not before they’ve earned it
One of the other ways through which you can use HR for competitive advantage is by giving HR
a seat at the table but not before they have earned it. You must come across many HR
professionals who do not know how their business operates and the latest trends of the markets,
and how these trends can affect their companies. It is a part of the job of the Chief Human
Resource Officer that he should understand all the macroeconomic trends and how these trends
can affect the new skills that are required. According to According to the Society for Human
Resources Management, 10 years from now, business acumen that includes the knowledge of
operations, business strategy, logistics, data and metrics will be the significant competencies for
HR professionals.

4.2.10. Union management relations

Union management relation addresses the collective dimension of the employment relationship.
The management of work and people includes both individual and collective relations. As a field
study however academics differ over the use of the terms industrial relations labor relations,
employment relation. In many companies today, companies face the possible bankruptcy due to

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the high labor costs. Helping to lower costs are wage reductions reached between unions and
management.

5.1. Examination of the current state of labor – management

relations in Ethiopia
Although the three is improvement from time to time, the general fact is that the labor-
Management relations in developing country in general and in Ethiopia is very poor.

5.1.1. Labour rights in the constitution in Ethiopia

The Constitution of Ethiopia contains a full chapter (Chapter 3) on fundamental rights and
freedoms. The fundamental rights have been grouped under the headings, “Human Rights” and
“Democratic Rights”. The Constitution guarantees rights and freedoms, inter alia equality before
the law, equal protection under the law, freedom of speech and expression, freedom of religion,
belief and opinion, freedom of assembly and association, freedom of person, freedom against
jeopardy and ex post facto laws, the right to property.

Among these fundamental rights, a whole range of general principles of labour rights are firmly
anchored in the constitution. The constitution provides for principles such as the right of the
security of the person (Article 16 of the Constitution), the prohibition against inhuman treatment
and the abolishment of slavery and servitude (Article 18 (2)) and forced and compulsory labour
(Article 18 (3) and (4) of the Constitution). General Freedom of Association is laid down in the
Constitution (Article 31, “for any cause or purpose”), and specified in Article 42, “Rights of
Labour”, which reads: “Factory and service sector employees, peasants, agricultural workers,
other rural workers, government employees below a certain level of responsibility and the nature
of whose employment so requires, shall have the right to form associations for the purpose of
improving their economic and employment conditions. This right shall include the right to form
trade union and other associations and to negotiate with their employers and other organizations
affecting their interests”

5.1.2. Current state of industrial relations in Ethiopia

Like elsewhere, in Ethiopia, the term industrial relations explain the relationship between
employees and management which stem directly or indirectly from union-employer relationship.

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Industrial relation is the relation in the industry created by the diverse and complex attitudes and
approaches of both management and workers in connection with the management of the industry.

This question is very difficult to answer in single sentence. Thus, we are going to review some
recently published studies in Ethiopia.

Limited studies have been conducted to examine the current state of the industrial linkages in
Ethiopia. For instance, Hadush et al., (2020) investigated the status industrial relations and
working conditions of textile and garment factories in Northern Ethiopia. Using a sample of 97
employees and sample of 21 individuals from management, they found that relation between the
management/employer and workers is poor in labour intensive textile and garment industries of
Ethiopia in the Northern part. Their study collected data using face to face interviews, focus
group discussions, field visits and observations and sample survey on manufacturing plants of
the selected cases. Since the study is recent, we can conclude that the industrial relation in
Ethiopian textile industry is poor. Another similar study was conducted by Astrat (2016), who
examined the collective bargaining practices, efforts to build participative management systems,
dispute handling mechanisms, and commitments for installing quality of work life/conditions in
the Chinese construction firms in Ethiopia. The findings of study have indicated lots of problems
regarding the overall labor relation practices in the Chinese road construction firms operating in
Ethiopia. Some among which are the absence of collective bargaining practices, lack of workers'
participation in organizational affairs, and limited roles of the concerned external stakeholders in
the labor relation practices of the organizations.

5.1.3. Current state of collective bargaining practices in Ethiopia

In Ethiopia, the other aspect of the labor-management relation is collective bargaining. The
current status is poor as explained in the study of Asrat (2016). Before that let us consider the
Emergence of collective bargaining in Ethiopia as it is possible to guess where it is today from
where it was yesterday.

The proposition that the history of collective bargaining has been co-extensive with the history of
unionization since the former would not be meaningful and effective in the absence of the latter
seemed to hold good in the Ethiopian context, too. Undeniably, there was an instance where the
workers’ association at the Franco-Ethiopian Railroad Company had ever since the late 1940s

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bargained and obtained concessions from the employer prior to the issuance of the 1963 labour
law that paved the way for unionization and collective bargaining, however, this was an isolated
incident rather than a general rule (Hadush et al., 2020).

In earlier times, the long-standing master and servant mentality of understanding the relationship,
in Ethiopia, made some employers reluctant to make themselves available to bargain on an equal
footing with their ‘servants’. There existed records of various modalities of ‘feet dragging’
tactics from the employers’ side with a view to avoiding, delaying or frustrating collective
bargaining engagements. For instance, the bargaining process for the first collective agreement in
Ethiopian labour history which was signed between the Wenji-Showa Sugar Factory and the
Wenji-Showa Sugar Factory Trade union, after eight months of intense negotiation.

Although the Labour Proclamation of 1963 introduced concepts such as ‘recognizing each other
for bargaining’ and ‘bargaining in good faith’, it did not attach sanctions with a view to making
them effective. It follows that the current status is very poor (Astrat, 2016).

5.1.4. Current state of employee participation in management process

in Ethiopia
Workers participation in management was another aspect of the labor relation. Currently, this is
also poor. Many of the studies show that there is lack of participative culture in the organizations
in Ethiopia. More specifically, workers are not encouraged to participate in job related decisions.
It flows that the employers does not trust workers to make decisions related to jobs. The efforts
of the organizations to train and develop workers for future involvement in to the organizations’
affairs were also found to be poor in the country (Alemayehu, 2008, Hadush et al., 2020).

5.1.5. Current state of dispute handling procedures and approaches in

Ethiopia
Dispute handling is one of the labor-management relations in Ethiopia. In a sector such as
construction, the importance of designing and implementing proper dispute handling
mechanisms is not only to the labor relation part but also to the management of the entire
organizations. In relation to labor relations, dispute handling mechanisms are used to address
employee grievances, inter-personal conflicts, and disputes between labor and management.

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The recent studies shows that only few of management handle detailed and proper investigation
before making disciplinary decisions. It follows that management lacks objectivity and shows
favoritism when making such decisions. This shows that dispute handling procedures and
process lacks clarity. Rather it is full of corruptions and others. The use of the standard dispute
handling mechanisms such as challenging management through internal organizational
hierarchies, strike, courts, and government mediation systems shows deep sense of fear and
intimidation. It is very difficult to challenge management and its decisions using various
legitimate mechanisms (Alemayehu, 2008, Hadush et al., 2020).

5.1.6. Current states of the programs for quality of work life in

Ethiopia
Programs for quality of work life are deals with the most economically appealing part of labor
relations. By addressing the basic economic needs as well as enhancing the economic security
and job satisfaction of the employees, organizations through programs for quality of work
life/conditions aim at increasing worker motivation and instilling a sense of responsibility. If
effectively integrated to the other aspects of labor relations, literature shows that they can benefit
organizations through reducing absenteeism; increasing awareness and commitment of workers
on efficiency, safety, and quality; and limiting labor turn over. Even if the conventional
assumption is that international business firms pay higher and offer more lucrative benefit
packages, this does not look to be the case in Ethiopia, at least according to the respondents
surveyed here. Generally, although there are Employee Assistance Program (EAP) brings in
Ethiopia the program includes activities and counseling in the areas of personal finance,
emotional and psychological problems, and substance abuse awareness and treatment. These
institutions are there in Ethiopia. But it is not well organized and enough.

5.1.7. Current states of Trade Unions in Ethiopia

To start with the definition of the trade union, it is an association, either of employees or
employers or of independent workers. It is a relatively permanent combination of workers and is
not temporary or casual. Further, an association of workers engaged in securing economic
benefits for its member’s Trade union formed in accordance with the law of their country shall
have the privileges given by the law of trade union.

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The nature and characteristics of labor relations practices are not determined only by the
organization and its workers. Labor relations practices in international business organizations
and operations, invite the attention and at certain occasions, the involvement of external
stakeholders. In this regard, the roles of trade union federations, labor affairs agencies, and courts
become significant in facilitating such labor relations practices as collective bargaining and
dispute resolution.

From the manager’s point of view, absence of unions or collective agreement tools is caused by
the strong resistance by the management of the firms against any efforts was observed. In
addition, the concerned government agencies for their lack of commitment to ensure workers'
rights and limited follow up/monitoring of labor relation practices in Ethiopia.

5.2. Critical examination of the legal framework for industrial

dispute resolution in Ethiopia
In Ethiopia the employment relationship between an employer and an employee is governed
by The Ethiopian Labor Proclamation 377/2003 now replaced by a new labor proclamation
1156/2019. According to this proclamation, labor disputes are either individual or collective. It
follows that there is a legal frame work which is specifically given for the collective problems or
individual problems.

5.2.1. A new Labor Proclamation of Ethiopia

A new Labor Proclamation 1156/2019 has been issued in September 2019 by the House of
People’s Representatives of Ethiopia replacing Proclamation no 377/2003, which was in force
for the last 16 years. The law has been enacted with a view to securing durable industrial peace,
sustainable productivity and competitiveness that will contribute to the overall development of
the country. The Proclamation has introduced new concepts. It has also modified some of the
existing provisions which were unclear, and therefore, prone to various interpretations. A few
other provisions of Proclamation 377/2003 have been repealed altogether. The following are
among the major shifts made by the new law

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5.2.2. Labor Courts in Ethiopia
Currently, the disputes can be handled at federal and regional as well as district courts in
Ethiopia.

Unlike Proclamation No. 377/2003, the new law stipulates that labor divisions may be
established both at federal and regional courts at different levels. The mandates which were
given to labor divisions of regional first instance courts under the old law are now shared with
the Federal First Instance Courts as well. In addition to the previously given mandates, the labor
divisions of the federal or regional first instance courts may entertain issues related to transfer,
promotion, training and other matters of similar nature. Similarly, the mandates of labor
divisions of regional appellate courts under the repealed law are shared /with divisions under
federal appellate courts. These divisions may additionally hear and decide on appeals against the
decisions of the Board on question of law. The provision defining the jurisdiction of labor
divisions of High courts has been deleted.

From the legal framework, we can understand that legal framework of the dispute is legally
arranged. But the system is not cooperative. For instance handling the individual disputes at the
first instance courts is tire some. This issue can be solved within the organization if the system is
corporative.

5.2.3. Establishment of Labor Relations Board

Under the repealed law, permanent or ad-hoc labor relations Board could be established in
regional states to entertain cases specified under the proclamation. Currently, federal
governments are allowed to establish permanent and ad hoc labor relations board to entertain
cases involving undertakings owned by the Federal government in Addis Ababa and Dire Dawa
city administration. These Boards will be established and be accountable to the Ministry of
Labor and Social Affairs.

With regard to appeal, in any labor disputes, a party dissatisfied by the decisions may lodge an
appeal to High court (both Federal and Regional). The repealed law stated that appeal may be
made to Federal High courts.  

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5.2.4. Establishment of Labor Relations Board
Under the repealed law, permanent or ad-hoc labor relations Board could be established in
regional states to entertain cases specified under the proclamation. Currently, federal
governments are allowed to establish permanent and ad hoc labor relations board to entertain
cases involving undertakings owned by the Federal government in Addis Ababa and Dire Dawa
city administration. These Boards will be established and be accountable to the Ministry of
Labor and Social Affairs.

With regard to appeal, in any labor disputes, a party dissatisfied by the decisions may lodge an
appeal to High court (both Federal and Regional). The repealed law stated that appeal may be
made to Federal High courts.  

5.2.5. The New Powers of the Ministry of Labor and Social Affairs
In addition to the powers that were listed in the repealed law, the Ministry has new mandate to
issue : a) directive on conditions of operation for private employment agencies; b) procedures on
the establishment of Permanent Advisory Board and the duties and responsibilities thereto; c)
conditions for private employment agency to participate in local employment service; d)
procedures on the requirements for the certification of private labor inspection service providers
and e) procedures on the establishment of occupational safety and health committee in
undertakings.

5.3. Suggestions to improve the legal frameworks

From the examination of the legal frame works of framework for industrial dispute resolution in
Ethiopia, we found that the system is not cooperative. For instance, it does not take into account
that the indigenous (traditional ways of dispute resolution). We believe that it will be better if the
employee management relation and the dispute in general are managed in the context of the
societal culture in the environment.

We recommend the following measures to make the legal frameworks more cooperative in
Ethiopia.

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5.3.1. Pre action discussions & Without Prejudice Discussions
This enables the resolution of the disputes before court with the discussion between two bodies.
Usually by the far most cost effective way of resolving disputes, and involves the parties seeking
a resolution of some or all of their issues. These are referred to as ‘pre action’ as they are
involved before any formal process is embarked upon, such as litigation, to resolve the dispute.
This will generally involve the parties meeting or having a series of meetings with or without
legal representation to discuss the issues and try and resolve the dispute.

If a party has legal representation it is always appropriate for the dispute resolution Solicitors to
be the point of contact. Not all parties need legal representation but where one party does have, it
is advisable for all parties to use the expert advice of a dispute resolution Solicitor. A dispute
resolved without expensive court fees or having to pay fees for an arbitrator/mediator is, without
question, the cheapest form of dispute resolution.

5.3.2. Mediation in the context of the organization’s environment

It is very preferable as it is less formal. Due to this it can enable the bodies to discuss more.
Mediation is a dispute resolution process but can take many forms. It is fundamentally a process
where the parties of a dispute come together in one place with an independent person present
who will work between the parties to help secure a resolution of the dispute, or to narrow the
issues between the parties. The parties will need to engage in the mediation including
preparatory work and if an agreement is reached, to be bound by that agreement. Documents can
be shared and presented both before and during the mediation.  Mediation is less formal and as
such is usually much cheaper than the alternatives.

The objective of the mediator is to remain impartial throughout the process and to work between
the parties. In mediation it is for the parties to agree to a resolution. The mediator will simply
facilitate this and will not make the decision for the parties. It is always wise in a mediation to
draft a settlement or resolution agreement to be signed by both sides to avoid any confusion at a
later date. Mediation less formal than arbitration or litigation and is often a preferred route due to
this and the cost. 

Mediation is confidential and it gives the parties the chance to agree terms that a court or
arbitrator would not be able to do in an arbitral award or court judgment.  The parties must

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voluntarily agree to mediate and they must also agree voluntarily to any settlement agreement.
A settlement agreement is a legally binding contract meaning that if one party fails to comply
with it, legal proceedings can be taken to enforce it. However, in our experience once a
settlement is concluded at mediation the parties will typically comply with it.

5.3.3. Litigation in the legal frameworks

Litigation is a formal legal process utilizing the civil legal system available to resolve a dispute.
When a matter is litigated (the issuing of a claim form in the court) you and your dispute
resolution Solicitor will need to follow a set of rules applied by the courts and the court will
dictate the path and pace at which the litigation proceeds, applying a set of deadlines for the
parties to take action and ultimately prepare the case for a final hearing.

With the exception of most family proceedings, legal proceedings are NOT private and once
concluded are legally binding (subject to appeals) so both sides must comply with the outcome.
The UK legal system is complex and steeped in history with a set of rules and case law which
must complied with. This is a specialist area and requires expert advice and guidance.

5.4. Suggestions to improve industrial relations in Ethiopia

There are several ways to improve industrial relations and ways to improve manager-employee
relations. However, we are going to suggest the following.

5.4.1. Establish open communication

Ethiopian Business organizations should make sure this. Employees are comfortable
approaching management with questions or requests and be as transparent as possible with
answers. Practice open communication from management’s side by checking in with employees
weekly or biweekly in a casual environment to discuss their ongoing work and what they may
need from management to be successful. This also helps keep employees on track with their
projects and performance.

5.4.2. Invest in employee development

Employee development is worth the investment, both in and out of the workplace. Giving
employees on-the-job opportunities for training, classes or seminars shows that management is
interested in them not only now but for the future as well. In addition, offering benefits like gym

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memberships, volunteering opportunities and other quality of life improvements will help
employees feel like they matter to the company in ways unrelated to their output.

5.4.3. Improving employee recognition

Recognition is very important tool. Over 75 percent of employees say they are starved for
recognition. Be sure to recognize individual contributions as they happen. Making this part of a
weekly or biweekly check-in ensures that employees never have to go too long without praise.
When possible, link this appreciation with financial incentives or discuss future opportunities for
employees.

5.4.4. Ask for input just to take into account for decision
This is part of a good communication strategy, but it’s separately important to ask for feedback
on the company’s goals and management style. When employees feel like they can have an
impact on the company systems and that management is really listening to them, employee
engagement improves.

It’s important for management to interpret these concepts in a way that fits with their business
model to keep industrial relations positive. A company with clear goals and a good strategy
shouldn’t find it difficult to construct an employee relations program they can use to ensure
employees are happy, safe and productive in the workplace.

6.1. case: dealing with unwanted hands at Wollega mills

company
We start by disclosing our understanding about the article. The article has several concepts of
human resource management concept we learned in chapter 8 and chapter 9. In section 6.1.1 we
take time to discuss about the article.

6.1.1. Our understanding about the case

This case, we believe, is dealing with integration, compensation and separation, the last chapters
of our beautiful HRM course. Specifically, it teaches us how managers take into account the
situations in the company during the decision making activities. The decisions to be taken in the

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company must be considered. The major conflict between the managers and employers however
is the compensation Temesgen is demanding.

See, Temesgen is cheating the company. He is 60 years. However, he brought false certificate
from the Hospital to continue in the job for additional 3 three years or to gate the illegal benefit
(25 months’ salary as a compensation). But, why Temesgen is bringing fake birth certificates
from the hospital? It may be related to the fear that he will not get the compensation if he retires
right now.

6.1.1. Take no action. Continue Temesgen in the employment till he

retires.
Advantages

We consider the advantage from two points of view.

First, from employee (Temesgen) points of view, he will continue his work. His job will be safe.
He will continue for additional three years.

Secondly, from the manager’s point of view, they will get time to decide because they are
looking for several alternatives. They were looking the union labor relationship strength as the
management has agreed on avoiding any situation that might disturb union-management
relations during the decision making. Mangers know personality of Temesgen. He was terrifying
them. He is bringing fake documents from hospital. He also reduced his age to 57 from 60. He
also brought false certificate of fitness. He was active participant in the informal group and
political party leaders. His son was also participant in the political party affair. Managers are
considering all these. It helps them to decide after considering all these problems.

Disadvantages

We also consider the disadvantage of this ‘Take no action’ policy from two angles.

From Temesgen points of view, he is not motivated. He cannot be happy as company did not
take care of him during his sickness. He hasn’t get sick leave. He is discouraged by all this. He
has the expected employee benefits. He is discouraged. This is why he is informally taking to his

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friends to retire with 25 months’ salary (25x450=112,500 ETB). If he stays for three years he
will obtain more than this (36x4500=162,000 ETB). This shows that Temesgen is discouraged.
He is not willing to stay in the company because company prohibited him compensation and
other benefits.

When we observe from the managers (Wollega Mills Company) point view, they will be forced
to pay additional ETB 49,500 (162,000 ETB three years (thirty six months) payment salary
minus 112,500 ETB twenty five months’ salary). The company is prohibiting Temesgen’s
compensation and benefits. This discourages other workers. This in turn reduces the productivity
of the Wollega Mills Company. Another issue is associated to the problem of informality in the
company. Look, Temesgen is cheating. He is deceiving the company mangers. This may spread
to the other workers. The way the company treated the health problem of Temesgen may
discharge the workers.

6.1.2. Appoint Temesgen’s son in his place

Advantage

The son of Temesgen is young and energetic. This might help Wollega Mill Company to obtain
another new person for the company regardless of his behavior. Other workers may also think
that their son’s will be replaced by them. Thus, they may be motivated today to work hardly and
honestly for the company.

Disadvantage

Here, we do not even see the advantage of replacing his son instead of Temesgen. This is not the
right way of human resource management. Wollega Mills Company should follow the
appropriate way of recruitment and selection of vacant position. Even if replacing is possible his
son is the group of gangster. The implication of this will not do well for the other workers in the
company. We also do not believe that this act of replacing Temesgen’s son to his place improve
the union management relation in the Mills company. We believe hand of the son here is
unwanted.

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6.1.3. Pay him 25 months’ salary as compensation and get rid of
him
Advantages

This might enable the other workers to understand the issue of compensations and benefits that
the company provides. For Temesgen, this is good. This was what he was informally demanding.
He was interested in separating from the company after this. However, if the management
considers the fake documents he falsely brought from panel of doctors on fitness and birth
prohibit managers from doing this.

The managers might be using the better alternative now because Temesgen’s performance was
not bad when he was working in the mill processing section. Another, as this problem is for the
first time, the other workers may consider as the manager is providing compensation in the
organization. By the way, Temesgen is seeking retirement benefit. This might be why he
prepared fake birth and fitness certificates. Thus, allowing him to retire by taking 25 months’
salary (25x450=112,500 ETB) will benefit both employee and Wollega mills company. It will
improve the union- management system. This means company is paying his interest. However,
Temesgen has informally talked to his friends that he wants 25 months’ salary to retire. It
follows that he will also talk to his friends that he took this advantage. This in turn gradually
improves the union labor relationship. The company was also saying that they were interested in
avoiding the situation that deteriorated the employee union relationship.

Disadvantages

The disadvantages here are that it is for the first time. Until the management build the better
experiences. In addition the equity of the salary as a payment is also questionable. As salary is
the most important components of compensation, they can do this. However, doing this for the
person with fake documents is illegal.

6.1.4. Disciplinary action on Temesgen for his irregularity and discharge him

Advantages

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Wollega Mills Company will reduce inefficiency and irregularity from Temesgen. The
performance of the mill company may increase hoping they will employ efficient person in place
of him. Other workers may take care of the bad activities. The rest workers may be careful as
disciplinary measures by the managers. This is good for the futures of the company.

Disadvantages

Temesgen will lose his job. Managers can do this based on his deceiving activities. For instance,
Temesgen produced a birth certificate and a fitness certificate. For the last five years, he had
become sick and weak. He used to sleep quietly in one corner the knowledge of everyone. Thus,
they can discharge him. It means the involuntary separation happens. This might discourage the
rest workers.

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