ACC Concrete - Getting nimble today to grow big tomorrow
The Company had high aspirations which had to fit in with the changing environment full of uncertainty and doubt
After taking a hard look at key roles that needed to be retained, it found that approximately 30% people would be affected
There are perhaps few companies in this genre who have been able to achieve so much in so little time in an environment which could not have been worse. Is there a lesson out there? Yes there is. While big budgets, strategies and all matter, it is people who make it happen.Selling Concrete, like selling pizza in the real estate market
Concrete, as per common understanding is made by mixing cement, small pieces of crushed rocks or stones and sand called aggregate and water by home builders or other construction agencies. But that is the traditional way of making concrete. The world has moved to making Ready Mix Concrete (RMX- some also call it RMC) under controlled conditions in RMX Plants and moving it to construction sites in specially designed vehicles called Transit Mixers. The mantra is the speed of delivery as the trucks must get to the site in less than two hours before the concrete becomes useless, more like Pizza! In the developed countries, 60% of the cement is sold through the ready mix route whereas in India, this is nascent, and this percentage is just 6%. However this trend is gradually changing towards world-standard practices. ACC Concrete, a subsidiary of ACC Cement (and Holcim), is one of the largest RMX concrete businesses in India and would be the biggest beneficiary of the changing trend. This article follows the story of ACC Concrete Limited and examines how it is coping, as an organization, with the demand destruction accompanying the credit crunch.The birth of ACC Concrete Limited
ACC Concrete Limited was created in 2008 as a result of a partnership between Holcim, ACC Cement and Ambuja Cement. Holcim, Switzerland – a Fortune 500 Company is acknowledged as World’s Number 1 in Cement and Aggregates business, with strong presence in 70+ countries and having a human capital worth of over 90,000 people. Holcim’s introduction to India a couple of years ago was through its acquisition over ACC Cement and Ambuja Cement in which it has a controlling stake. While Cement business in India has been and continues to be the flagship for Holcim giving it 24% market share, the ready mix story has been muted. Therefore, to understand the nuances behind the birth of ACC Concrete, it is important to understand the interesting value chain of Holcim.
For Holcim or for that matter any cement major, it is very important to have this channel of selling cement under its control as this is futuristic business. It is not that ACC did not have RMX before ACCCL was born. In fact ACCCL was carved out of the RMX division of ACC. The reason to have a separate company was the nature of business, which was different and which required a different capability. By creating a separate RMX Company, Holcim aligned its value chain to the future of this business. ACCCL is a strategic masterpiece, offering a strong value chain partnership to the Group Companies who will not have to depend on other ready mix players outside the group for cement sale, thus securing the expanding ready mix market.
While the strategic design of ACCCL was ingenuous, nobody could foresee the worst business downturn in 60 years. When the storm became apparent, the company put on hold its expansion plans to add 150 plants in three years. It paused, pondered over and reworked its strategy. It realized that it needed to re-organize and make the organization structure leaner than it already was, make step changes in its business model and look inwards to strengthen itself. This was necessary for survival of the company and for the sake of larger stakeholders.
With the market shrinking by over 20%, ACCCL managed to forge ahead despite challenges such as credit realizations from prized customers, price competitiveness within the market while simultaneously ensuring company’s liquidity. Additional challenges faced were to become the most cost effective concrete supplier, generate volumes with resource optimization and control operational costs … almost everything hinted at managing within tighter budgets and control.
Tectonic shifts, smart and frugal innovations and creative thinking, that’s what it took to turn ACCCL around. The Company had high aspirations which had to fit in with the changing environment full of uncertainty and doubt. Under these circumstances, the company chartered a course to be “tomorrow’s company”. In a short span of time, this young enterprise came up with many breakthroughs and some “Nano” innovative practices that came in small capsules:
Right-sizing the organization: The Company looked to remove the flab that had been created in the run up to the expansion that was put on hold.
Communication became the key. To ensure that the grapevine did not run amok, Business Heads and Functional Heads were given detailed handouts of organization charts, numbers as well as coached on how to handle the situation as the Company was aware that these employees were brand ambassadors and needed to be handled with care and respect. All employees on a Pan India level were individually met with to communicate the message. Town hall meetings were conducted where the Managing Director openly addressed all employees in every Plant across the whole of India. Outplacements were arranged by the HR department through Consultants and by talking to HR departments in various Companies. Help lines were set up to answer any queries that employees might have as well as provide key contact numbers for placements
Severance pay was made available to employees quickly.
Training, Development and Talent Management
The Training Department of ACCCL clocked over 13,000 Man days of training in 2008. This worked out to approximately 100+ hours of training per employee, a new high in the Holcim Group. Some of the initiatives in this direction are described below:
Multi-skilling Initiative – “Indradhanush” (Rainbow):
One of the key objectives of ACCCL is to be a Focused, Empowered, Accountable and a Self Developing organization. The Indradhanush initiative aimed at multi-dimensional growth of functional competencies of its human capital at the plant level. ACCCL started charting a multi-skill roll. The whole process delivered a number of benefits for the organization and answered issues like Role Enhancement Increase in Operational Efficiency, Optimization of Manpower, Career Development, Filling Recruitment Gaps and Succession Planning.
This challenged the theory of one person to perform one role. Also it solved the issue of absence. The company prepared a skill matrix for each plant as it existed.
The aim of this development model is to train people and make them green in multiple competencies. Vision is to make all greens everywhere. In the current year, the Company has set target to make two greens horizontally and vertically. More the ratio of greens to the total cells, better the Company becomes in multitasking. This is a first in this Industry.
Innovation in Recruitment, Induction and Young Talent Development:
The HR team changed the very way it managed recruitment. Having realized that there was a near freeze on recruitments with only a handful of positions open, it changed its talent identification mechanism. It re-organized itself through re-addressing job descriptions and ensuring that stringent Job Profiling was done to get only key talent that had both a cultural fit as well as an intelligence fit.
To face the challenges of demand for manpower in new ventures ACCCL directed itself to a two-pronged approach. Firstly as a humane employer, re-hire employees with the objective of acquiring trained and culturally oriented resources. Secondly hire fresh talent from reputed colleges, thus assuring that the future leadership pipeline matched the company’s philosophy and requirements. This story is incomplete without covering some details of its unique campus program.
GET and DET Program:
The Company while going through rightsizing realized that there was a dearth of talent in the concrete industry and decided that self-help was indeed the best recipe. “Catch them young” became the new mantra. ACCCL decided to hire fresh Diploma Engineer Trainees (DET) and Graduate Engineer Trainees (GET) from campuses all over the country. ACCCL followed a regimented job enrichment and job rotation technique stretching over a year with a well-designed career path preparing them to be home grown Plant In-charges, in structured phases as under:
Phase 1: Covered Plant Familiarization, Class Room Training and On the Job Training. This spanned over a period of rigorous 40 days.
Phase 2: During placement in a Plant anywhere in the country, DETs and GETs were assigned special improvement projects to keep their young brains ticking and improve the business. Example – one bright GET built cement shed out of scrap material saving the Company a great deal of money.
Their performance was evaluated through a three-pronged approach of Key Performance Indicators, Feedback from the immediate supervisors and Grading based on Monthly Reports
Phase 3: The Trainees return for fresh inputs through Classroom Coaching and presented their learnings and projects to a jury consisting of top managers. They were then rotated and posted to different set of job roles
OJT (On-the-Job Training) Process:
This unique process was applicable to every new joinee at ACCCL including GETs and DETs. This had three stages of learning under expert coaches. First, observing coaches doing a job; second, performing under supervision and third, performing independently without supervision. It incorporated five stages of rigorous assessment leading to certification.
This was true baptism by fire. The entire scheme covered a one year period. The immense success of the first rollout of the program reinforced the Company’s decision to invest in the program. This year, the company has already identified 30 Graduate Engineers and 100 odd Diploma Engineers slated to join in batches starting sometime in June this year.
Development of Business Partners:
In ACCCL, training and development does not stop at its own people. In the true extended family concept, training is being taken by the company to the door steps of its business partners. In line with this philosophy, a massive drive was launched to screen drivers of their Transit Mixers (TM) who belonged to their service providers. This covered medical tests for examination (eyesight, hearing, blood pressure and limb mobility) and driving related knowledge. All drivers who were found to be medically fit were trained by the Driver Trainers on various aspects including Safe Driving, Short Shelf Life Product Knowledge and Customer Handling.
Potential Development Centers (PDC):
ACCCL has recently introduced PDCs. This is being projected as a means to development of a robust succession planning through a fair & transparent mechanism, to identify of internal potential leaders and to focus on development areas. This process involves simulating environments and using various tools like personal interviews, role plays etc. The aim is to find out the readiness of employees for movement upwards with the right skill sets and competencies thus having the necessary potential to move up.
Initially, this new initiative was introduced through an Assessor Training Workshop for the entire Top & Senior Management Levels. To further understand the process, the senior management underwent a PDC by external agencies. This initiative then to be cascaded throughout the organization through Internal Job Postings to ensure that all vacancies are advertised to promote a culture of transparency and capability. After the initial screening the candidates will be assessed on key competencies that have been identified for the job and candidates who make the mark will take up the positions.
Technology and Productivity
To ensure that ACCCL had an edge over its competition it invested heavily on SAP. This has been achieved through a project called Connect India. Through this, seamless and