CHAPTER ONE

1. INTRODUCTION
1.1 Background of the study

An important side of an organization is people management; organization with good

management would consider its employee as an asset, and the primary source and portal to
productivity and financial gains. These organizations give more importance to employee as they
give capital. To make sure that their goals are achieved these companies foster an environment of
commitment and cooperation with the help of strong policies and practices. If the human
resource is satisfied, then employee will be motivated and work with better loyalty and pay back
the company with a good productivity and low turnover rates (Alakoç, 2014). Human resources
are one of the most valuable assets owned by an organization, because humans are the only
resource that can drive other resources. Thus, the element of human resources is a key factor that
must be maintained by an organization in line with the demands that are always faced by the
organization to answer every challenge that exists. Therefore, efforts to maintain quality human
resources are the main steps of the organization. (Hendra Wiryawan, Sofiyan, Rosita, Elly Romy
2023)

In the life of a company, what is meant by promotion is a change of job or employee

status/position from a lower level to a higher level. This change is usually followed by changes
in responsibilities, authority, compensation, social status and facilities that can be obtained by the
employee. (Sihabudin, S. 2018).

Promotion is the progress of moving an employee from his/her current position to another higher
position in the organization hierarchy level. Employees get promoted not only because of their
experience, but also because of their skills and performance. . By contrast, bad attendance,
exceeding vacation balance, absenteeism and poor performance are the main limiters against
promoting employees. When the employees move to a new position as they get promoted they
will have new responsibilities. In some cases, the organisation sends employees to training to
obtain the new skills needed for new position. In addition, promotion varies from one
organisation to another with regards to benefits and privileges. Moreover, the work tasks and
responsibilities carried with promotion are different from one organisation to another. For
instance, in some organisations the promoted employees will maintain the same job and
responsibilities, whilst in other organisations new responsibilities and new tasks will be involved
with promotion. Furthermore, some employees prefer promotion to a managerial position more
than getting a salary increment, whereas expatriates tend to prefer to get promotion benefits
while working in technical positions. In addition, promotion procedures and requirements are
different from one organisation to another. For instance , in some organisations people need to
go through an interview, a technical appraisal, take an exam and find a free slot within the
organisation structure. By contrast, other organisations promote employees without going
through many procedures. If the employees complete a specific number of years of service in
certain positions with good performance they will be promoted to the next level. As a result, job
promotion will lead to job satisfaction and when employees are satisfied about their new
position, they will be more proactive and have a higher performance. (Dr .Kalaa Chenji, Dr. S.V
Satyanarayana. 2019)

According to kenyan researcher Lornah Stella Omanyo Ong'amo (2012) as far as a worker is
concerned, a promotion is not only an expression of gratitude and reward for effort, but also a
chance for self-fulfillment and career advancement, satisfying an individual's need for
achievement and success. On the other hand, for an organization promotion is both an expression
of gratitude and a motivational tool. Employee promotion no doubt brings the additional benefit
of "binding" the worker to the organization and preventing "brain drain"

1.2 Statement of the problem

Promotion may be defined as the advancement of an employee to a higher job carrying higher
salary, greater status and more responsibilities. It involves a change from a lower level job to a
better job. Promotion normally involves increase in pay, prestige and responsibilities of an
employee. Promotion should be differentiated from upgrading which involves increase in pay for
a job without increase in status and responsibility. It implies moving to a higher scale without
changing the job. It is called 'dry promotion." Thus, a promotion is an upward advancement of an
employee in an organisation to another job which commands better pay/scale higher status, more
opportunity for future along with more challenges, and greater responsibility along with greater
authority. (Dr.C.B.Gupta. 2023)
The organisation which follows the policy of filling up higher level positions through promotion
from within becomes popular with its employees. Possibility of promotion serves as a powerful
incentive for employees. Ambitious and hard-working employees are stimulated to move ahead.
Promotion serves as a reward to better work performance. People work harder and try to learn
new skills and gain promotion. In this way promotion helps to improve the motivation of
employees. Also promotion keeps the job satisfaction and morale of employees high. By
providing opportunity for career advancement it promotes positive attitudes among employees.
They remain loyal and dedicated to the organisation in the hope of promotion. This will lead to
reduction in labor turnover. Insiders are intimately familiar with the structure, policies, rules and
regulations of the organisation. Therefore, the costs of orientation and training on them are low.
The organisation can develop a reservoir of potential managers to fill up higher positions. Thus,
promotion helps to serve the needs of both the organisation and the employees. If all senior
positions are filled up from outside, there will be no inducement for the existing personnel to
work hard and improve efficiency. They are likely to become dissatisfied, frustrated and
demoralised. This will in turn lead to poor performance, absenteeism, labor turnover and
indiscipline. The policy of filling up all senior vacancies through promotion of insiders is not
free from limitations. Firstly, persons promoted from inside may not possess the required
knowledge and skills. Secondly, more talented outsiders may not be employed. Thirdly, mobility
of labor is stopped as a person will stick to the organisation which he joins. Fourthly, promotion
decision may involve favouritism in the absence of clear cut criteria. Fifthly, the expansion and
growth of the enterprise is restricted by the limited talents of existing staff. (Dr.C.B.Gupta. 2023)

There are many researches that focus on employee promotion but, those all are the researches
that focus on service giving companies. Since the researchers study will focus on manufacturing
company’s employee promotion and there are so rare researches conduct on that area, one of
those researchers is LORNAH STELLA OMANYO ONG’AMO study of 2012 held at
MUMIAS SUGAR COMPANY. According to Lornah Stella Omanyo Ong'amo This research
established that there are many factors influencing employee promotion in Mumias Sugar
Company the most important factor influencing promotion is work experience followed closely
by academic qualifications, performance, length of service, merit, success in projects and multi-
disciplinary professional knowledge. The study showed that factors perceived among
confidential staff influencing employee promotion were not necessarily those perceived by
supervisors and managers. Therefore the screening of the whole organization should be a
continuous process so that in case a factor influencing employee promotion could not be
identified at managerial level, it is identified at the other levels. Finally the study recommend
that Promotions are a sensitive, emotionally loaded subject and the use of non-rational decisions
regarding promotions can cause wide negative outcomes to organizations. To make promotion
policies even more effective, the management needs to review carefully the performance
appraisal systems as a tool for measuring performance and refining promotion policies already in
existence by highlighting their adequacy or inadequacy.

Hence, the purpose of this will to assess promotion policy , bases of promotion , perception of
employee on promotion and how promotion affect employee retention and turnover at ADAMA
DEVELOPMENT P.L.C

1.2.1 Research question

The researcher’s intention to assess the following questions

• What does the promotion policy looks like in Adama development p.l.c?

• What are the bases of promotion practice in Adama development p.l.c?

• How do employees perceive promotion practice in Adama development p.l.c?

• How employee promotion practice affect employee retention and turnover rate in
Adama development p.l.c?

1.3 Objective of the study

1.3.1 General objective

The main objective of the proposed study will be assessing the employee promotion practice of ADAMA
DEVELOPMENT P.L.C

1.3.2 Specific objective

The specific objective of the proposed study will be

• To assess the promotion policy of ADAMA DEVELOPMENT P.L.C

• To assess the bases of promotion practice in the organization

• To assess the perception of employee towards the promotion practice of the organization

• To assess the how employee promotion practice affect employee retention and turnover rate

1.4 Significant of the study

The significance of the proposed study will be to assess the employee promotion practices of
ADAMA DEVELOPMENT P.L.C and also have the following significance

• It will help the researchers as Partial fulfillment of degree in management and also to get more
knowledge and experience about promotion practice

• The proposed study will be helpful for HR department of ADAMA DEVELOPMENT P.L.C to
reduce the problem related to employees’ promotion and it will help the organization to improve
the way it conducts employees’ promotion practice.

• The Proposed study result will serve as a basis for policy formulation towards the organization
human resource management practice.

• The proposed study will provide direction and serve as reference for future researcher and
stepping stone for those researchers who want to make further study on the area.

1.5 Scope and delimitation of the study

Human resource management is crucial for an organization .employee promotion practice is one
of its activities. The scope of the proposed study will be assessing promotion practice of
ADAMA DEVELOPMENT P.L.C. The company geographical location is Oromia regional state,
Adama (Nazreth) town, around Dallol International Hotel. The factory has two plants Nazmed
textile plant and Adama spinning plant. Since the departments like management, finances and
some others departments of both plants are single. The researchers will use both plants
employee. Because of the researchers time and cost limitation the study will use sample size to
collect primary data.
 1.6 Organization of the study

The proposed study will be organized in to five chapters

The first chapter will be introduction and contains background of the study, statement of the
problem, major research question, objective of the study, significant of the study and scope and
delimitation of the study. The second chapter will review both theoretical and empirical literature
on employee promotion practice. Chapter three will be describes study area , research approach ,
research design , target population, sample design , sampling size and sampling techniques
sources of data and data collection tool and methods of data analysis and presentation . The
fourth chapter will be presentation, analysis and interpretation of data collected from respondents
and documents will be incorporated. The fifth chapter will provide major finding, summary,
conclusion and it will give recommendation based on findings.