Internal Marketing
To begin our discussion let us first define what internal marketing is. Internal marketing according to Gronroos (1981) aims to establish an open two-way communication and effective coordination of tasks between front line and support staff with a view to getting more motivated and customer conscious staff at all levels of the firm. The focus of Gronroo’s work was on the importance of the internal work effort in meeting the needs of external customers. Berry (1981) on the other hand, views the employees as internal customers. Jobs are viewed as internal products. Berry’s logic is that organizations need employees who are satisfied with their job products in order to have satisfied customers. Ballantyne et al (1995) defines internal marketing as any form of marketing within an organization which focuses staff attention on the internal activities that need to be changed in order to enhance external market place performance (cited in Varey and Lewis 2000, p. 47).
Human Resource Management and Internal Marketing
Service Quality: The Focus of HRM and Internal Marekting
Delivering quality service is now an essential ingredient in the success of organizations around the world. Effective delivery of quality service according to Kundu and Vora (2004) involves finding customers, identifying their needs and meeting or exceeding their expectations. Employees are viewed as the facilitator of effective service. The human resources of the firm are the key to the delivery of quality service. Both Human Resource Management (HRM) and Internal Marketing (IM) consider the employees as the most essential source of competitive advantage. Quality has become one of the top priorities of organizations around the world. Quality is essential to the maintenance of competitiveness and growth (Sureshchandar, et al 2002). Wright and Snell (2002) found that customer-focused organizational culture with aligned HR strategies and practices, is the key to successful strategy implementation.
Achieving Service Quality through HRM
Human resources are considered as the most valuable assets that a firm posses. Employees are the ones who deliver service to customers. Therefore, satisfied employees are crucial to the success of the firm (Rosenbluth 1991). Attracting and retaining the right employees are important. There are different HRM practices and strategies that an organization can employ in order to build a customer-oriented, service minded work force. These are:
1. Attracting the Right People
Customers are becoming more aware, more sophisticated, and more demanding. Organizations need to attract people who will assume ownership for productivity, quality, profits, and adding value to customers. The recruitment and selection practices of an organization affect its culture, service standards and reputation. An organization that values its people and that depends on the human qualities of its employees need to attract and hire the right candidates (Lovelock 2000). Attracting and hiring the right people needs effective planning. The organization must first identify the best people and then create plans on recruitment and selection. Most of the time, an organization will find itself competing with other firms.
Internal Marketing can be applied in the recruitment and selection process. Firms are now acting like marketers in their pursuit of the best employees, just as firms use their marketing expertise to compete for customers. Firms now approach job candidates like customers. The company’s promotions, advertising, and other marketing efforts affect both the customers and the prospective employees. More and more companies are using their marketing tools and strategies such its reputation, product image, and online technology to attract job seekers.
2. Human Resource Development
Training and development are important aspects of HRM. Human resource development means competence building, commitment building, and culture building.
The provision of quality service requires employees that are well-trained and educated. In order to develop the technical and interactive skills of every employee, the organization must be committed to continuous learning. To ensure that the employees possess the necessary knowledge, skills and expertise continuous and extensive training is needed.
3. Employee Empowerment
Employee empowerment is one of the aims of both HRM and IM. To encourage employee commitment and involvement, successful organizations place great importance on empowering their employees. To be responsive to customer needs, service employees must accommodate customer requests and respond on the spot when things go wrong. Empowerment means giving employees the desire, skills, tools and authority to serve customers (Kundu and Vora 2004).
Combining IM and HRM
The Human Resource department is the unit in the organization that manages the recruitment, selection and retention of employees. HRM is the unit that ensures that the employees are prepared. HRM also facilitates the assimilation of employees into the firm. It is the HRM’s role to ensure that the employees can adapt to the culture and environment within the organization. The employees must also be educated about the mission, vision and goals of the firm. Internal marketing on the other hand is based on marketing principles and models wherein the employees are viewed as internal customers. Internal marketing can be integrated into the Human Resource function or the two departments can form a partnership in order to achieve long-lasting positive results. Ulrich (1998) proposes that in order for an organization to achieve excellence, Human Resource l must become:
- A partner in Strategy execution, helping to move planning into the marketplace
- An expert in how work is organized
- A champion for employees, representing their concerns while working to increase employee contribution and commitment
- An agent of continuous transformation, shaping processes and a culture that improves the organization’s capacity for change
Initially, IM was proposed as a means to improve service through the recruitment, training, development, retention and motivation of employees (Sasser and Arbeit 1976). This view recognizes the importance of Internal marketing and how it can contribute to the HR function. MacStravic (1985) views IM as surrounding the efforts of an organization to recruit, train, motivate and reward its members toward more satisfying marketing behavior. This view is essentially external in focus. However, the importance of internal initiative is important in the enhancement of the potential for success. The internal marketing approach views the employee as the internal customer that has needs and requirements that must be met. Gronroos (1990) proposed that the purpose of IM is to motivate employees toward service-mindedness and customer-oriented performance by an active marketing-like approach, where a variety of activities are used internally in an active and coordinated way. According to Compton et al (1987) the objectives of internal marketing initiatives are:
- To help employees understand and accept their responsibility for the total quality and the interactive marketing performance of the firm
- To help employees understand and accept the mission, strategies, goals, services, understand and accept the mission, strategies, goals, services, systems and external campaigns of the firm
- To continually motivate the employees and inform them about new concepts, goods, services and external campaigns as well as economic results
- To attract and keep good employees
In general, internal marketing serves two main purposes. First, it is designed to complement external marketing efforts through the facilitation of personal interactions between staff and clients. These interactions are seen to be instrumental in encouraging customer attraction and satisfaction. The second and more fundamental purpose of internal marketing is it serves to develop and maintain a motivated and satisfied workforce that contributes to the organization’s external and strategic marketing objectives, as well as to quality, productivity and efficiency (MacStravic 1985, cited in Varey and Lewis 2000, p. 196).
Relationship Marketing: The Role of Internal Marketing
Relationship marketing is considered as a source of lasting financial benefits to an organization. An organization that is able to build a strong tie with its customers is likely to gain customer loyalty. The aim of relationship marketing according to Proctor (2000) is to find ways of enhancing the mutual benefits derived from the relationship. Successful relationship marketing involves the targeting of customers of sufficient value to justify the investment in creating relationship with them.
The success if relationship marketing lies primarily to those who facilitate customer relationship. It is of great import that the employees are committed to the relationship-building activities and the relationship-building process in maintained. The success of the relationship marketing lies in the hands of those who implement it. Every member of the organization needs to understand his or her role in the relationship building, be committed to it and be motivated to ensure that it succeeds. The role of internal marketing is primarily motivating and educating the employees.
Relationship Building with Customers
Relationship marketing as has been said can be a source of lasting financial profitability for an organization. Building strong relationship with customers requires an active and creative approach. Relationship marketing is about healthy relationships which are typified by concern, trust, commitment and service. Relationship marketing requires an organization-wide commitment to provide high-quality service, which is reliable, emphatic and responsive.
Internal Marketing as a Requirement for Relationship Marketing
There are different considerations in order to relationship marketing to flourish. One requirement is a supportive culture. The organization must also understand the expectations of the customers. A sophisticated customer database is also required. An effective customer database is important as it provides information in actionable format for the development and monitoring of relationship marketing strategy and tactics. Another requirement is a new organizational and compensation or reward schemes.
Perhaps the most important requirement for relationship marketing is internal marketing. The aim of internal marketing according to Proctor (2000) is to convert employees to the new ideology of relationship marketing, to promote the development of the new culture, to persuade them that it is a reasonable approach to business, and to motivate them to develop and implement relationship-marketing strategies. The internal market’s expectations and needs have to be met. If the organization is unable to meet its employees’ needs, it is likely that they will defect to other jobs before being able to build long-lasting relationships with customers (p. 272).
Internal marketing is a management approach which enables and motivates all members of the organization to examine their own role and communication competence and to adopt a customer consciousness and service orientation. Customer Orientation and internal marketing are complementary. Internal marketing appears to be a philosophy of emphasizing the importance of employees in the organization’s efforts to satisfy its external customers.
Internal Marketing is important to the success of the service-centered firms. It has been suggested that effective service depend on the success of internal marketing. A firm that values its customers and aims to establish a long-lasting and profitable with them needs to satisfy the needs of the internal customers first. The needs of employees are what internal marketing aim to fulfill. According to the research conducted by Bateson (1995), the creation of two related but different climates is important for service-oriented organizations. These climates are: a climate for service and a climate for employee well-being. The climate for employee well-being serves as the foundation for a climate for service. Employees need to be assured that their needs have been met before they can show interest and concern for meeting the needs of customers. Satisfied employees are motivated to deliver high service value, which then creates satisfied customers (Proctor 2000). The role of internal marketing is to ensure that the needs and expectations of the employees, as internal customers, are met or even exceeded. The success of the internal marketing program depends on the ability of the management to align corporate goals with personal needs and interests. The employees must view themselves as important contributors to the success of the organization. Internal service quality is connected with the external service quality, customer satisfaction, customer loyalty and profitability. Heskell et al (1994) proposed that high-quality internal services lead to increased service value, leading to increased external customer satisfaction.
Facilitating Internal Marketing
There are different strategies that an organization can employ in order to facilitate internal marketing. Some of these are:
1. Inform the internal market about the organization’s mission and its role within it.
2. Ensure that the internal information and communication channels work effectively in order to sell ideas and services internally.
3. Implement special motivation programmes directed at front line service providers that recognize that the front-line personnel form a critical means of meeting competition.
4. Apply mechanisms that measure the gap between internal customer expectation and perceptions
5. Recognize a greater desire on the part of employees to play an active role in all aspects of work life that affects them.
6. Use marketing tools and concepts internally with employees.
7. Get managers to accept the need for understanding employee capabilities – their attitudes, know-how and skills and to allow employees to participate in Internal marketing strategy.
8. Continually strive to create an internal environment which enhances employee-customer satisfaction.
9. Establish an open information climate in order to improve interpersonal interactive communication channels and to apply an Internal marketing program.
10. Initiate a programme to educate employees on important industry issues.
11. View the development of knowledge and skills in employees as an investment rather than a cost.
12. Motivate employees through reward incentives to provide excellent service.
13. Demonstrate how the work of every employee fits the broader scheme of business operations and how their work contributes to the firm.
14. Keep employees informed of new developments within the organization (Proctor 2000).
Internal Marketing: Focus on Internal Customers
Internal marketing is about developing employees who are service-oriented and customer-conscious. Internal marketing helps the employees get familiar with the firm’s products and services before they are marketed externally. Exposing the employees to the firm’s marketing campaigns ensures education, understanding and preparedness of the employee. Increasingly, it is important to stress marketing in roles that are traditionally considered non-marketing roles such as in areas of production, inventory management, technical support and so on. This represents an attempt to improve quality, performance and efficiency. The premise of IM is that the internal exchanges between employees must be operating effectively before the firm can successfully achieve superior performance in its external markets.
Marketing to the Internal Customers
Employees as Customers
An organization that seeks to create an organizational culture that is service-oriented and customers focused must view its employees as its internal customers. Organizations offer value for the end customers. As internal customers, the employees must also be offered with value. There are two paths for value-creation. One is the accumulation of value for the customer and the other for employees through their experience of work. Service encounters does not only take place externally, it also happens within the firm, with employees interacting with one another. Employees provide services or information to other employees and units within the firm. Within the organization, an individual with a need interacts with someone that can meet that need. These transactions can be viewed as a chain of events that ultimately produces a service to a client at the end of the line. In order to enhance employee satisfaction and to ensure the quality of the external service, the organization must take the initial step, and that is satisfying the employees. Employees must learn to treat each other as customers or clients.
Customer Value
Organizations are investing in people, worker support, improved recruiting and training practices, and compensation systems linked to individual employee performance. The service-profit chain establishes the relationships between profitability, customer loyalty, and employee satisfaction, loyalty and productivity. The ultimate goal of every marketing strategy is to encourage customer loyalty. Customer loyalty propels an organization’s growth and profitability. Loyalty according to Varey and Lewis (2000) is derived from satisfaction, which is affected by the value of the products and services offered by the organization. The employees are primarily responsible for ensuring that the full-value potential is realized and delivered to the customers. Satisfied, loyal and productive employees essentially generate customer value. Satisfaction and loyalty must not only be stimulated in the customer but in the employee level as well.
Efforts to generate external customer value should comprise equivalent development of internal functions designed to create value for the internal customer as a way to leverage all other marketing promotional and service-quality initiatives. Such efforts would address variables such as internal communications, workplace design, job design, employee selection and development, employee reward/remuneration and recognition, as well as the tools and technology utilized. According to Varey and Lewis (2000) successfully addressing both internal and external values issues will create a self-marketing environment that will perpetuate itself. As employees become more and more satisfied with their jobs, their performance improves and they start to become ‘part-time marketers’. They start to create greater customer satisfaction and they attract customers and employment candidates.
Internal Marketing Mix
The marketing mix, which traditionally included 4 Ps (Product, Price, Place, and Pormotion), in recent times, come to include a fifth element. The additional element is ‘people’ – an element that exists both within the internal and external marketing mix. The addition of people in the marketing mix has placed greater emphasis on the employees, first as internal customers that have needs and requirements and second, as a source of competitive advantage or as a value-adding component of the product and/or service. The employee embodies both a prospective important resource of the organization as well as an important element of the external value offering. In the external context, this means going beyond the traditional mix and addressing the details of service provided to the customer and attending to the elements that affect the customer experience. The organization needs to establish a strong relationship with the internal customers. This entails the enhancement of the service environment such that this group can be developed as a part of the product offering made to the external market. The employees are seen as a source of competitive advantage. The marketing mix must aim to attract and retain valuable employees. This incorporates issues of benefits, incentives, work environment and skills. It should also create a satisfied customer who believes in, supports and enhances the organization.
An acceptable product is first and foremost, the requirement of a sound marketing plan. This rule also applies to internal marketing. The product offered in the internal market must be of value to the employees. The product offering of the organization is the employee’s job and role within the organization. In order to satisfy the employees the organization must develop a variety of sources from which employees can derive personal value, and these in turn include financial, psychological and psychic variables. The internal marketing program, also requires a deep understanding of the target group (values and motives) in the same way that a marketing programme for the company’s products and services requires an understanding of prospective customers (Barnes 1989 cited in Vernes and Lewis 2000, p. 202).
Glassman and McAfee (1992) recognize the need to integrate the marketing and HR personnel function to improve coordination between their respective goals. The creation of synergy may be achieved through a focus on the development of value-based relationships in both spheres. I can say that both HRM and IM aim to build a workforce that is motivated, a workforce that contributes to the success of the firm. HRM and IM aim to build a culture that is built on trust and cooperation where every employee is satisfied and empowered. Here are some areas that need a greater integration between the HR and IM personnel:
Recruitment and Selection
Employee recruitment includes interview, screening, and selection of most qualified candidates, filling of positions through transfer or promotion, and coordinating temporary employment. The aim of recruitment is to identify a suitable pool of applicants quickly, cost efficiently, and legally. Selection or staffing involves assessing and choosing job candidates.
Training and Development
Training and development such as orientation, performance management skills training, and productivity enhancement are planned learning experiences that teach employees how to perform their current and future jobs. Training focuses on present jobs, whereas development prepares employees for possible future jobs.
Performance Management
Through the performance appraisal process, organizations measure the adequacy of their employees’ job performance and communicate these evaluations to them. Performance appraisals are a critical link in the HRM process, as they assess how well employees are performing and determine appropriate rewards or remedial actions to motivate employees to continue appropriate behaviors and correct inappropriate ones. The HRM role in performance appraisal is one of working with other managers in the organization to establish the appraisal process, the performance dimensions to be measured, the procedures to ensure accuracy, and requirements for discussion of appraisal results with employees.
Career Development
Organizations are becoming more active in developing career development programs. Many organizations are designing career programs in an attempt to increase overall organizational performance and employee productivity, and to attract, develop, and retain the most qualified employees in this increasingly competitive and global environment.
Compensation
The aim of compensation practices is to help organizations establish and maintain a competent and loyal workforce at an affordable cost.
Employee Empowerment
Empowering employees is a popular approach to work organizations. It means giving employees the authority, tools, and information they need to do their jobs with greater autonomy, as well as the self-confidence required to perform the new jobs effectively. Empowering is inherently a motivational approach. It boosts employees’ feeling of self-efficacy and enables them to more fully their potential, satisfying high-level needs for achievement, recognition, and self-actualization. Empowerment results in changes in employees’ effectiveness. The result is that people take more initiative and persevere in achieving their goals and their leader’s vision even in the face of obstacles. In order to effectively empower the employees, the manager must:
- Make sure people understand their responsibilities
- Give them authority equal to the responsibilities assigned to them
- Set standards of excellence that will require employees to strive to do all work “right the first time”
- Provide them with training that will enable them to meet the standards
- Give them information that they need to do their jobs well
- Trust them
- Give them permission to fail
- Treat them with dignity and respect
- Provide them with feedback on their performance
- Recognize them for their achievements (Sims 2002)
Empowerment is a concept that should be detailed in the role and responsibilities of each employee, causing it to pervade the culture of the organization. Empowerment can be seen as a tool through which the responsibility for delivering efficient, quality, customer service in moved down through the ranks of the organization. According to Bowen and Lawler (1992), there are four potential components that may comprise empowerment within a firm. These are the sharing of information on organizations performance, rewards based upon that performance, knowledge that enables workers to understand and contribute to improved performance, and the power to make decisions that influence organizational direction and performance. Employee empowerment gives a sense of involvement. It allows the employee to gain a sense of responsibility and control.
Job Design and Redesign
Managers have long been concerned about the monotonous and boring qualities of highly specialized, short-cycle, assembly-line jobs. In an effort to respond to these concerns, many employers set up programs aimed at redesigning their workers’ job. Job design refers to the number and nature of activities in a job; the basic issue in job design is whether jobs should be more specialized or, at the other extreme, more “enriched” and no routine. Job enrichment means building motivators like opportunities for achievement into the job by making it more interesting and challenging. This is often accomplished by giving employees more autonomy and allowing them to do much of the planning and inspection normally done by their managers (Sims 2002).
Awards and Recognition
Most people like to feel appreciated. Being recognized for a job well done – and not necessarily just financially – makes a lot sense in terms of motivation theory. Immediate recognition can be a powerful reinforcer, for instance, and can provide some immediate outcomes to counterbalance the employees’ inputs and efforts. Recognition also underscores the performance-reward-expectancy link, and it helps appeal to and satisfy the need people have to achieve and be recognized for their achievement. LeBoeuf (1991) gave eleven types of employee behavior that must be recognized by organizations and individual managers. These are:
- Solid solutions instead of quick fixes
- Risk taking instead of risk avoiding
- Applied creativity instead of mindless conformity
- Decisive action instead of paralysis by analysis
- Smart work instead of busywork
- Simplification instead of needless complication
- Quietly effective behavior instead of squeaky wheels
- Quality work instead of fast work
- Loyalty instead of turnover
- Working together instead of working against
- Lack of absenteeism and tardiness (cited in Sims 2002 p. 70).
Lifelong Learning
Lifelong learning provides extensive continuing training, from basic remedial skills to advanced decision-making techniques throughout employees’ careers. Lifelong learning programs can achieve three things. First, the training, development, and education provide employees with the decision-making and other knowledge, skills, abilities, and experiences they need to competently carry out the demanding, team-based jobs in today’s organizations. Second, the opportunity for lifelong learning is inherently motivational. It enables employees to develop and to see an enhanced possibility of fulfilling their potential; it boosts employees’ sense of self-efficacy; and it provides an enhanced opportunity for the employee to self-actualize and gain the sense of achievement (Sims 2002).
An integrated programme would coordinate the efforts of marketing and HR mangers to identify and address the needs and concerns of employees. This would be aimed at improving the work environment and morale, thereby improving service (Lovelock 1992). The coordination between the marketing and HR departments must become an integral component of the basic business strategy. The HR department must develop a programme of internal relationship marketing aimed at developing the relationship between the employee and the company, thereby addressing both marketing and human resource issues (Varey and Lewis 2000, p. 213).
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