Executive Summary:

Introduction:

The Ethio-Djibouti Railway line is 751.7km long, including 113km double-track railway from
Sebeta to Adama and 638.7km single-track railway from Adama to Djibouti port area. The main
line in Ethiopia is 670.7km long in Ethiopia section mean while the Djibouti section is 81km
long. Station line is 60.8 km in Ethiopia and 22.5 km in Djibouti (including the port branches). In
Ethiopia there are 16 Stations. Those are three Passenger only Stations (Furi-Labu & Bishoftu,
Bike), One Freight only IStation (Endode), Six Passenger and Freight Mixed Stations (Sebeta,
Modjo, Adama, Mieso, Dire Dawa, Dewenle,) and Six Passing Loops (Feto, Metehara, Sirba
Kunkur, Harawa, Adigala, Aysha). In Djibouti there are, Holhol (passing station), Ali Sabieh
(Passenger only station), Nagad (Mixed station). A dispatching command center is provided in
LABU and a dispatching disaster recovery center in Nagad. A locomotive and rolling stock
depot and a train inspection and repair point are provided in Indode and a locomotive turnaround
depot and a train inspection and repair point will be provided in Nagad station.

According to the theory of Herbert Kitschelt [5] in Duke University, every industry has a set of
core technical features, which, in turn, leads to variety of governance structure and management
peculiarity. Industrial core technical features determine both managerial structure and
relationship of production factors in the dimension of time and space, it’s imperative to combine
those features of railway transportation to obtain prominent performance in cost saving and value
creation.

Rational for the Assignment:

The current design of Ethio-Djibouti Railway governance structure is hybrid of functional and
divisional organization of the core departments. This has resulted in siloed functioning of the
core business units of Operation and Technique. Both core departments have been organized
under the Chief officers into three divisions for operational efficiency. The operation divisions
are:

 Lebu Regional Depot incorporating station in Sebeta-Mieso section,

 Dire Dawa Regional Depot incorporating stations in Mieso Dewanle section and
 Djibouti principal branch incorporating Ali Sabie – Nagad section stations
The maintenance divisions are:

 Indode maintenance center for Sebeta-Mieso section workshops,

 Dire Dawa maintenance center for Mieso Dewanle section workshops and
 Nagad maintenance center and workshop for Djibouti principal branch.

All issues from stations which are geographically distributed in each division of the railway are
sent to the regional depot, then to the passenger of freight departments and finally to the
Operation Chief. Up on receiving the call for action the Chief takes the matter to the CEO for the
Technique department Chief to be instructed to act as one Chief can not give order to another.
This siloed functioning of the core department and extended hierarchy for this closely
intertwined business units has affected the operational efficiency hugely.

Similarly all issues from maintenance workshops which are geographically distributed in each
division of the railway are sent to the maintenance centers, then to the infrastructure or rolling
stock departments and finally to the Technique Chief. Up on receiving the call for action the
Chief take the matter to the CEO for the other Chief to be instructed to act as one Chief can not
give order to another and one director can not give instruction to another as there is no clearly
defined horizontal linkage between these intertwined core business units. This siloed functioning
of the interdependent business units and extended hierarchy has affected the maintenance
efficiency as well.

The works of the technique department are so intertwined with the operation department, the
proper design of the equipment employment on the railway tracks, conducting of transportation
by moving freight and passenger trains over the railway track as expeditiously and as frequently
as is compatible with existing demand and the conduct of the general maintenance of the railway
structures, equipment, rolling stock, tools and appliances should be brought into a closer
relationship with each other the current structure allows for yet preserve a full measure of
autonomy. The activities of these core business units should be coordinate as smoothly operating
machine with all parts adjusted one to the other.

The other aim of the structure optimization is the fact that EDR currently employing 2,996
employees and paying 65% of those staffs an overtime. The largest portion 49.97% of the
overtime payment is made to the rolling stock department. Next in rank is Infrastructure and
maintenance with 32.46% and operation held 15.5% and support staffs 2.07. As can be seen from
this figure and actual assessments, the core departments which provide the company with its
unique proposition and core competence are not staffed as per the demand of the work. The
determination of the staff size requirements of these department has not taken into consideration
the 24/7 operation of EDR. The number of crews needed to cover the 24-hour, 7-day per week
(24/7) work demand; and the employment ratio needed to cover vacations, holidays, sick time,
administrative time, training time and additional duties has not been considered. The staff size
needs to be re-adjusted to reduce the harm to workers health, job performance and attitude by
improving the shift work demand on them.

At the same time the existing structure had several management reporting levels. It was highly
structured, multilayered management systems which was inherited from the management
contractor. The extended management reporting levels have created redundancy of effort and
unacceptable work hours for some positions for the paycheck they receive. In addition to
extending the bureaucracy, it created staffing unbalance. Hence de-layering has to and staffs size
has to much the work loads of the business units to the company. In some departments the staff
size is to much for the work load.

Night work and shift work cause quality of life problem, illness and fatigue for most people. The
problems may take the form of inadequate interactions with the worker's family and with the
worker's employer. They may also take the form of medical complaints, reduced productivity,
high turnover, and high error rates. These responses are initiated by shiftwork-induced
disruptions of normal daily and weekly social and physiological cycles. The disruptions diminish
safety, productivity, and wellbeing. The basic cause of all of these problems is that humans are
not properly designed for night work. Sufficient staffing of crew and good shiftwork scheduling
practices are needed to keep worker illness and fatigue to a minimum during continuous
operations. EDR’s crew staffing and shift scheduling violate principles drawn from experimental
and industrial investigations of productivity, safety, health, and satisfaction.

Further more, there is the issue of perceived inequity with weekday-only workers, who have 104
free weekend days per year (assuming that they work Monday through Friday). Many shift
workers, express dissatisfaction with the fact that they do not have the free weekends that are
available to their peers who have weekday-only jobs. Having less number of crew to meet the
24/7 operation has increased the weekly work demand on the shift workers and very few good
quality days off. This has invoked high level of cumulative fatigue and high risks of chronic
fatigue among the shift workers. As a result elevated numbers of personal days and sick days
taken each year and poor morale and poor personnel retention and additional pressure on the rest
of the crew resulted. Correcting this would lead to:

 Fewer on-the-job errors and increased productivity

 Increased morale and reduced turnover
 Reduced shift worker medical compensation claims
 Schedule predictability
 Schedule equity across all shift workers
 Fewer consecutive nights of work
 Adequate off-duty rest periods
 Improved predictability of overtime costs
 Less management attention spent on individual workers' schedule changes

The re-structuring should ensure optimal balance between the work, health, social and safety
demands placed upon the shift worker and the personnel cost to EDR for safe and productive
railway operation.

The lack of clarity on how jobs have been placed in the job grading structure has created
discontent among the staff of EDR. There is an inconsistency in job grading in the existing
structure. The workload, complexity of work, emotional efforts required etc has not been taken
well into consideration in placing jobs of core departments in grading structure. For example
Directors in operation and maintenance were placed on Job grade 14 and support directors were
place in job grade 15. There is also the questions of job grade adjustment by Mainline Train
Drivers, Shunting locomotive drivers, Substation Duty Officer whose working condition has not
been taken in the Job grade evaluation. The re-structuring should be aimed at developing a
defensible and rational job grading and salary structure to ensure smooth operation of the
railway.

Additionally, in the job specification the educational requirement minimum qualification

requirement is not clearly stated. i.e. M.A/B.A are expected from the role which makes the B.A
holder also compete equally for the role. If it’s a preferred qualification that need to be clearly
stated. The experience requirement of the job grades has also to be adjusted in proportion to the
roles of each position.

Objectives:

Cost Efficiency: The Aim of Restructuring of the Ethio-Djibouti Railway is to improve the
financial and market performance. The structure optimization was aimed at allocating scarce
resources and optimize organization and reach the goal of cost reduction, revenue increase,
customer value improvement, and enterprise core competence establishment.

Operational Effectiveness: It is aimed at improving the railways ability to respond to its

customer’s needs. Our railway as a service provided must create value to its customer and as the
needs of our customers change, or as customers discover new ways to satisfy their needs, the
railways must redefine their services, trim their cost structure and reach customers more
effectively in order to increase the value that they are able to deliver and thereby regain their
customer’s service commitment. The assets, liabilities and workforce should be reassembled to
better match the market requirements and bring about operational efficiency.

The pressure for the restructuring has reached a point where EDR is compelled to use its assets
and workforce more productively. Railways are the most valuable assets in the state’s
infrastructure portfolio, reorganizing them so as to enhance and not dissipate their value is
important.

Scalability and Adaptability: The railway industry is a complex business which requires
sophisticated control systems. It entails the day-to-day management and coordination of
equipment and employees counted in the thousands and scattered over an extensive geographic
area. Along with the physical distribution of cargoes, railways include equipment maintenance,
track maintenance, and large-scale civil works engineering in their core business activities. As a
result of the diversity of their work requirements, railways have diversified the skills on which
they rely and have evolved complex management structures, typically with functional
orientations. In this optimization it was aimed for lean production has to be combined with the
characteristics of railway transportation production in order to bring its function into full play.
Restructuring typically reverses this process of skill diversification and elaborate management
structures by simplifying the work to be performed and by redirecting management toward the
customer.
Accountability and Decision Making: By bringing the core business units into close
relationship with each other, yet preserve a full measure of autonomy better accountability and
effective decision making could be achieved. Through this arrangement coordination of the work
of several departments and various separate units could be made like a smoothly operating
machine with all parts adjusted one to the other.

The activities of the operating department are based on a combination of units, commonly known
as divisions (in our case areas). The larger system which we now have are combinations of many
of this basic units, the operation of which are fundamentally the same. The main divisions of
work in divisional production department are:

 Movement of train or conducting transportation

 Maintaining the infrastructure
 Maintenance of the locomotive and wagons (rolling stocks)

In this , the Division head has the entire supervision of the maintenance of the infrastructure, the
equipment and coordinating the transportation on the division. The division head would attend to
all details of operation. As the traffic becomes more dense, the number of trains increases and the
length of the division must decrease in consequence. At terminals of considerable size, efficient
operation will require that the terminal itself be the operating division, for the reason that the
movements of trains and switching crews are so frequent that they require very close supervision
to insure safety and to prevent the blockading of traffic.

The idea of this form of organization is to divide the responsibility of operation on a territorial
basis, rather than on the character of the work; to place authority over all the core business
employees on a division in one official, delegating to him as much responsibility as possible, in
order that some official ''on the ground" may have authority and the necessary forces to act
promptly, particularly in emergencies, avoiding the delay which reference of such matters to the
heads of departments involves in the current departmental organization.

In an event of emergency the chief can gather all the transportation, maintenance and rolling
stock departments in short space of time as they are directly under his authority and are
accustomed to taking order from him. In placing responsibilities for poor performance the chief
will be free from departmental bias. The supervision by one chief from above would restrict the
competition between operation and technique departments for resource within reasonable limit.
This arrangement enables taking prompt action by the chief officer in occasions demanding
prompt action and report to this superior. Time is often the essence of the problem needing
solution.

Talent Management: The key feature of railways is that they are labor intensive. The turnover
per employee for railways is more compared with the turnover in manufacturing, it also
compares unfavorably with service industries generally. A comparison of rail turnover with
trucking shows that the trucking industry has the advantage. One of the ways in which
restructuring could improve rail competitiveness is through improved labor productivity.

The jobs of railway employees are usually dull, repetitive, uninteresting and are carried out in a
remote and isolated and harsh environment and this has created job boredom. The work has
ceased to be challenging for most of the staffs. Through the optimization it has been tried to deal
with and address workers complaint. Hence effort was made to provide challenging environment
for people to work in. The common measure taken in this kind of cases are:

 Offer the workers more money to do dull, repetitive, uninteresting job.

 Replace the workers with technology.

 Redesigned the work so that it has more meaning to the employees.

Through the Job redesign it has been strived to change the way people work with the purpose of
increasing the quality of workers job experience and productivity. The restructuring and job
redesign started with the employee in mind. Through the restructuring employees could be
moved from one job to another and this would help avoiding boredom. This gives the employee
well rounded experience of the organization. The staffs are going to see the organization for what
it is in different light. Because of that their level of engagement is going to go up.

Through Job enlargement of the structure optimization the worker will be given more to do.
Usually their skill set is expanded by training them in those added functional areas. This gives
them more challenge and opportunities for growth.

Through Job enrichment of the structure optimization a little bit more richness to the job has
been added. The employees have been made to have more authority to do some planning to
control the pace needed to do the job. Take what they are doing and give them more authority to
do even more.
In-terms of Core Job Dimensions through this optimization the following has been achieved:

Skill variety: Increase the degree to which a job requires the completion of different activities, all
of which involve varying talents and capabilities.

Task identity: Increase the degree to which the job requires completion of a whole or identifiable
piece of work.

Task significance: Increase the degree to which a job has a substantial impact on the lives or
work of other people.

Autonomy: Increase the degree to which the job provides the work freedom, independence and
discretion in scheduling the work and determining how to carry it out.

Feedback: Increase the degree to which the work required by the job results in the individual’s
receiving direct, clear information about the effectiveness of their performance.

The following are the main achievements of the optimization of the structure. The number of
distinct job classifications that existed before the restructuring typically decreases, as does the
number of management reporting levels before the transformation.

The highly structured, multilayered management systems which were in place to manage the
large and complex organization of the Ethio Djibouti railway has been De-layered by enabling
each person to manage much more information. The railway Organizational restructuring has
enabled the organization to catches up with employee capabilities.
The number of reporting management level has been reduced from 213 on the existing structure
to 119 nearly 56% reduction. The Chief numbers has been reduced from 10 to 5, the directors
number from 17 to 12, managers from 58 to 27 and team leader from 128 to 75.

Through this restructuring process some positions tasks have been combined and increase in
their values has been achieved by increasing skill variety, task identity, task significance and
autonomy. Through the optimization it has been tried to bridge the gap between the supervisors
and staffs to Open enough feedback channels to let each worker monitor their performance and
know they are doing the work they are supposed to do.

The activities of the operating department are based on a combination of units, commonly known
as divisions. The larger system are combinations of many of this basic units, the operation of
which are fundamentally the same. Hence the existing structure has been optimized to bring
operational efficiency and customer value improvement through dividing the responsibility of
operation on a territorial basis, rather than on the character of the work; to place authority over
all the core business employees on a division in one official, delegating to him as much
responsibility as possible, in order that some official ''on the ground" may have authority and the
necessary forces to act promptly, particularly in emergencies, avoiding the delay which reference
of such matters to the heads of departments through extended layers of hierarchy involves in the
current hybrid departmental and divisional organization. The main divisions of work under the
area managers are:

 Movement of train or conducting transportation

 Maintaining the infrastructure

As the maintenance of the locomotive and wagons (rolling stocks) has been established centrally
at Indode Rolling stock workshop, these arrangement has been kept as it is as a department under
the Chief Operation Officer.

The Area Manager will have the entire supervision of the maintenance of the infrastructure, the
equipment and coordinating the transportation on the division under the area. The Area Manager
would attend to all details of operation. Considering the density of traffic and the limit which one
maintenance workshops have been handling efficiently the limits for Area Managers have been
set. As the traffic becomes more dense, the number of trains increases and the length of the
division which the Area Manager attend to must decrease in consequence. At terminals of
considerable size, efficient operation will require that the terminal itself be the operating
division, for the reason that the movements of trains and switching crews are so frequent that
they require very close supervision to insure safety and to prevent the blockading of traffic of the
over all line.

The proposed optimization enables in an event of emergency for the Chief Operation Officer to
gather all the operation control center, maintenance and rolling stock departments in short space
of time as they are directly under his authority and are accustomed to taking order from him. It
prohibits departmental bias in placing responsibilities for poor performance by the chief and area
managers. The supervision by one chief from above and area managers on the ground would
restrict the competition between operation and technique departments for resource within
reasonable limit. This arrangement enables taking prompt action by the chief officer and area
managers in occasions demanding prompt action and report to their superior. Time is often the
essence of the problem needing solution.

The Optimization Department wise

As can be seen from the table above, bringing the operation and maintenance departments has
helped reduce redundancies of capabilities and utilize the staff optimally and increase
productivity. The other area high optimization has been made is by bringing finance and logistics
under the same official as the works of these two units are closely intertwined.

When a plot the numbers in the "per week" column of Table below is made, it can seen that the
relationship between the average amount of time an individual works and the number of crews
used is not a straight line in regular schedules (Figure below).

Because the line is curved, changing the number of crews may change related items such as
staffing and payroll in unexpected ways. The 4-crew solution provides the optimal balance
between (1) the work, health, social, and safety demands placed upon the shift worker (in terms
of hours worked per unit time; the y axis in Figure above) and (2) the personnel cost to the
employer for safe and productive system operation (in terms of the number of crews to be
employed; the x axis in Figure above). The personnel costs for the employer differ primarily in
overhead paid per employee, not in direct pay for hours worked.