Internal marketing and organizational behavior: A partnership in developing customer-conscious employees at every level

J BUSN RES 1990 20 63-70

63

Internal Marketing and Organizational Behavior: A Partnership in Developing Customer-Conscious Employees at Every Level William R. George Vdlanova

Unrverslty

Internal marketing is the best approach for establishing a service orientation as the organizational imperative. Internal marketing focuses on achieving effective mternal exchanges between the organization and its employee groups as a prerequisite for successful exchanges with external markets Contributions from organizational behavior that enhance the effectiveness and efficiency of internal marketing programs are examined Ideas such as relationship marketing, all employees as “parttime marketers,” and internal customers are considered from the perspective of organizational behavior

Introductron The concept of internal marketing has been addressed by a number of authors (Berry, 1981; George, 1977, 1984, 1986, George and Compton, 1985; Gronroos, 1981,1983,1985, Pope, 1979) Implementation of internal marketing programs has gamed momentum recently. Indeed, some organizations worldwide have started viewing internal marketing as a strategic weapon to help achieve high-quality service delivery and thereby achieve greater customer satisfaction (Band, 1988, George and Gronroos, 1989) This article has several objectives The primary objective is to present the mam points underlying the internal marketing concept It will also emphasize the mterdependence of internal marketing and human resources management Fmally, to achieve more effective internal marketing, propositions focusing on additional input from organizational behavior are suggested throughout the article as guides to future research

Address Umverslty,

correspondence to W&am Vdlanova, PA 19085

Journal of Busmess Research 20, 63-70 (1990) 0 1990 Elsewer Science Pubhshmg Co , lnc 1989 655 Avenue of the Americas.. New York, NY 10010

R

George,

College

of Commerce

and Fmance,

Vdlanova

0148-2%30X$3 50

64

Internal

J BUSN RES 1990 20 63-70

W R

George

Marketing Internal marketing has been described as a phrlosophy for managing the orgaruzatron’s human resources based on a marketing perspective (George and Gronroos, 1989). It operates as an holistrc management process to integrate the multiple functions of the orgamzatron m two ways: 1) to ensure that the employees at all levels understand and expenence the business and its various activities and campaigns m the context of an environment that supports customer consciousness, and 2) to ensure that all employees be prepared and motivated to act m a serviceoriented manner The premise of this phrlosophy is that rf management wants rts employees to do a great Iob with customers, then it must be prepared to do a great Job with its employees That is, internal exchanges between the organization and Its employee groups must be operating effectively before the organization can be successful m achieving goals regarding its external markets Thus, the internal marketing concept states that the internal market of employees is best motivated for service-mindedness, and a customer-oriented behavior by an active, marketmghke approach, where marketmglike actrvrties are used mternally. Employees remam the key to success at the “moments of truth” (Carlzon, 1987; Norman, 1984), when the service provider (1 e., the so-called contact person of the firm) and the customer meet and interact Service firms cannot differentiate easily their services on the basis of mere techmcal quality of the outcome rendered to the customers. Instead, how the orgamzatron manages the buyer-seller mteractrons, the quality of the service productron and delivery process, 1s much more :iGortant to success in the marketplace (Gronroos, 1982). Heskett (1987) suggests the need for an externally oriented “strategic service visron” to direct marketing and operations as one function. More important for our purposes, he recognizes m this article the parallel need for an “inner-directed visron” with the same basrc elements as the external vision (see Exhrbrt II m the article). These basic elements mclude the followmg: targeting important employee segments, development of a service concept designed with the needs of employees m mind, codrficatron of an operating strategy to support the service concept, and desrgn of a service delivery system to support the operating strategy In this manner, management shows that rt 1s aware that the health of the enterprise depends on the degree to which core groups of employees subscribe to and share a common set of values and are served by the company’s actrvrtres. The mtegratrve elements of the inner-directed vrsron include posrtromng of a service concept, whrch rt 1s hoped will lead to low turnover, low trammg costs, and the opportunity to develop shared goals and values. Thus, Heskett’s “inner-directed vrsron” encompasses an internal marketmg approach as a part of a strategic service vrsron. Orgamzatronal behavior concepts can enhance the rmplementatron of an internal marketing phrlosophy m areas such as relationship marketing, understandmg the orgamzatron’s personahty, and the like. Orgamzatron behavrorahsts have suggested that 1) a service-or-rented culture can be enhanced by treating front-line employees as “partial customers”; and 2) managing customers as “partial employees” offers recogmtron of therr roles durmg the input, throughout, and m transformatron stages of service productron (Bowen, 1986, Bowen and Schnerder, 1985, Mrlls, 1986; Mills et al , 1983, Schnerder and Brown, 1984). These perspectives impact how service firms should manage the chmate for service. Two internal marketing examples of

J BUSN RES 1990 20 63-70

Internal Marketing/Organizational Behavior resultmg strategic issues for service managers approach for employee acceptance of customers opmg mechanisms for translating mformatton tomers) concerning the environment mto changed and Schneider, 1988; Schneider, 1986).

Relationship

65

include determining the optimal as partial employees, and develfrom employees (as partial cusoperations (Bowen, 1986; Bowen

Marketing

The concepts of relationship marketing (Berry, 1983; Crosby et al ,198s; Gummesson, 1987, Jackson, 1985, Levitt, 1983; Rosenberg and Czepiel, 1984) and mteractive marketing (Gronroos, 1978, 1982) have received increasing attention as marketers focus more on keeping customers and cross-selling to existmg customers than on lust customer getting Both of these concepts recognize the vital role employees play m services marketing Since employees are the key to effective services marketing, then wherever employees work, a services marketing onentatron is required (Bowen and Schneider, 1988) Thus, it is not the marketing specialists of the marketing department who are the most important human resources (Gummesson, 1987) During customer contact, these specialists are frequently outnumbered by a vartety of employees whose mam duties are productron, deliveries, technical service, claims handling, and other tasks that traditionally are considered nonmarketmg. However, the skills, customer ortentatron, and service mindedness of these employees are of critical importance to customers’ perception of the firm and to their future patronage behavior Gummesson has coined the term part-tzme marketer to describe the status of such employees. Systematic mternal marketmg is a mechanism for developing and mamtammg these part-time marketers as service-minded and customer-conscious employees (George and Gronroos, 1989). Several of these ideas can be enriched with mput from orgamzational behavior and organizational development theory. Proposition 1 Formal leadership should view marketing as relationship management (1 e , creating, developing, and mamtammg a network in which the firm thrives) m order to serve the customers and employees better Proposltlon 2 Formal leadership should view nonmarketmg employees as “part-time marketers” m order to satisfy both employees and customers better

Schneider’s (1986) question “Toward what end are orgamzational structures motivated?” is particularly relevant to the ideas suggested m the above propositions. What kmds of organizational structures optimize a relationship marketing perspective with its focus on long-term, interactive exchanges? How can the firm ensure its relationship with the customer rather than having the relationship extend only to the customer contact employee(s)? How are the selection, training, and compensation issues impacted when all nonmarketmg employees are viewed as “parttime marketers”7 What 1s the impact on these employees of bemg expected to function as “part-time marketers” in additron to then mam duties? The Organizational

Personality

of Service

Firms

Schneider (1986) suggests that to create a quality service experience for consumers, organizations must create a quahty service experience for then employees. Man-

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W R George

agement attention must focus on SIXissues-membership, socralizatron, identity, structural, Interpersonal, and environmental In a drscussron of these issues, the role of personality is considered several times. (Schneider appears to consider personality a construct separate from climate and culture m this article ) First, recruitment starts the long cham that results m the kinds of personahtres m an orgamzation Thus, there 1s a need for formal procedures for assessing interpersonal competence and service orientatron to build a reservoir of service-oriented employees. It 1s the members of the organization who transmit climate and cultures through then behavior What 1s the role of personality m this regard? Second, the antecedents of identity are needed to understand why an increased sense of identity is correlated with improved lob satisfactron, improved extra-role performance (gomg beyond the lob descrrptron), and lower turnover Organizations need to reward and support contmuously the attachment of employees to the orgamzatron Again, what role does personality play as a primary antecedent of identity? Schneider (1986) also suggests that organizations need to attract, select, and retam mterpersonally oriented people, who are formally and mformally socialized to be mterpersonally sensitive and responsive Part of then orgamzational identity will be then attraction to other persons m the orgamzatton This means that the orgamzatron’s structures should facrhtate interpersonal mteraction Schneider beheves the extent to which interpersonal issues are at the forefront of management’s concerns wrll determine the extent to which the servrce orgamzatron 1s effective. What role does interpersonal issues play m forming the “personality of the organization”7 Schem (1980) suggests that the firm’s personality and public image IS a reflection of the firm’s founder. What are other determinants of the firm’s personality’ The assumption is that organizational personality as a supportmg construct 1s more theoretrcal and more stable than the currently popular notion of “culture ” In the opening session of the 1986 Services Marketmg Conference (Czeprel et al , 1987), Heskett defined internal integration m psychologrcal terms the orgamzatlon of various traits, feelings, attitudes, etc , mto one harmomous perWe m services are begmmng to learn the slgmficance of some reasonably sonality mtmtlve relatlonshlps between such factors as employee satlsfactlon, employee motlvatlon, service quaky, customer satlsfactlon, and, Indeed, Increased volume of busr-

ness or profitability According to Heskett, these interrelated factors orgamze to become the service organization’s personality Insights from orgamzattonal behavior would be very helpful m determining the usefulness of the concept of organizational personality to achreve a service orrentatron The effective tmplementatron of an mternal marketing philosophy may be enhanced if this concept 1s useful Proposltlon 3 The personahty of the orgamzatlon IS more than the sum of the personahtles represented m the orgamzatlon Proposltlon 3a The personality of the orgamzatlon IS derived from many components--type of orgamzatlon (e g , high contact, low contact, etc ), the mlsslon of the orgamzatlon, the prevalent leadership style, the external environment, and other the personalities wlthm the orgamzatlon, characterlstlcs Proposltlon 4 The effectiveness of the orgamzatlon IS hampered when zatlon’s personality IS mconwstent with the type of orgamzatlon It IS

the orgam-

Internal Marketmg/Orgamzatlonal

J BUSN RES 1990 20 63-70

Behavior

Proposltlon 5 There are stages of development parallel the orgamzatlon’s life cycle Proposltlon 6 The endurmg mstltutlons ultimate stage of personality development

67

for the orgamzatlon’s personahty that

are orgamzatlons

that have achieved the

Proposltlon 7 Orgamzatlonal personality can be conceptualized as a supporting construct m a manner similar to but different from climate and culture Proposltlon 8 The personahty mechanisms

of the orgamzatlon

can be evaluated

through testing

These seven proposltlons focus on the composttton of orgamzattonal personality and its role m understanding and changing service orgamzattons for greater effectiveness For example, what 1s the outcome for a very people-intensive, high-contact service orgamzatton whose prevailing leadership style and personality types are introverted? What are the relattonshtps among the concepts of climate, culture, and organizational personality? Orgamzattonal behavtortsts who provide “therapy” for an orgamzatton may use Myers-Brtggs’ testing to evaluate the personahttes of mdrvtdual managers Would outcomes using a Myers-Brtggs-type approach to the personality of the whole orgamzatton be helpful as a means for tmprovmg a firm’s service orientations

Internal

Customers Both Bowen and Schneider (1988) and Gummesson (1987) have addressed the question, “Who 1s the customer 3” The notton of external customers 1s well established. In addttton, Gummesson suggests that everybody should see himself as a customer of colleagues, receiving products, documents, messages, etc from them, and he should see himself as a supplier to other internal customers Only when the customers are satisfied-it is the satisfied customer that counts nrespecttve of whether he 1s external or internal-has a Job been properly executed Making everybody a customer m his relations to others mstde the orgamzatton allows one to view what happens m a firm from a true process-management perspective Bowen and Greiner (1986) also suggest that the human resources function m companies could be organized to provide quality service to internal clients Adding internal customers to a process management perspective raises orgamzatton structure issues Note that the contact employees’ abthty to function as “part-time marketers” depends to a large extent on the support they get from other employees and functions wtthm the firm (George and Gronroos, 1989). Often, there are a large number of support persons who do not come mto contact with customers themselves but who, nevertheless, mdrrectly influence the service ultimately provided to customers These supportmg personnel are, m fact, “part-time marketers” as well since they should recognize the contact employees as their internal customers The support personnel should perform marketing-like acttvtttes for the customer-contact employees (1 e , then internal customers) m order to assist the contact employees m servicing the firm’s ultimate customer. Additional mput from orgamzattonal behavior also would be helpful regarding the concept of internal customers

.I BUSN RES 1990 20 63-70

ProposItion the human

W R George

9 The concept of internal customers impacts orgamzatlonal resources function m the service firm

structure

and

One of the marketmghke acttvitres necessary to implement an internal marketing program is market research actrvrty Tradrtronal marketing research of external pubhcs regardmg the effectiveness of relationship and mteractrve marketing programs 1s needed. This research about the firm and rts malor competttors should focus on the service orientanon of “part-time marketers” as well as on the quahty of the service production and delivery process itself, physical resources and technology, etc This mformatron may be needed from former, current, and potential customers The same mformatron 1s also needed about current and potential competrtors More important, from an internal marketmg perspective, an understanding of employee capabhtres-then attitudes, knowhow, and skills to participate in an internal marketing strategy-is needed Marketmg research on then perceptions about how the orgamzatron can be more effective 1s vital input from all employee groupsg , taking the perspective of “ways for us to Improve” or “how we can better serve our customers.” Several important components for rmplementmg an internal marketing process requne attention: management support, training, internal communications, personnel admmistratron, and external actrvitres (George and Gronroos, 1989) This article will consider only management support and personnel admmistration. The single-most-important component m the internal marketing process 1s continuous management support This support must be provided by every single manager and supervisor as a normal part of the daily job Managers must continue the internal training process where formal courses and semmars stop They must demonstrate how subordinates can combme new ideas and routines concermng customer service and marketing with their everyday jobs Then challenge 1sto create an open internal climate where the marketing and customer service aspects of then subordinates’ lobs are considered important Regular feedback to subordinates is needed for an open climate This employee feedback can be used as a powerful motrvatmg tool Managers should provide encouragement and support to mdrvidual subordmates who take the risks of being more service minded. These new service-minded behaviors should be recognized, commumcated, and rewarded m a tamely fashion In a firm oriented with a service culture, marketing 1s understood to be a conglomeratron of functrons m which everyone m the employ of the company partrcipates (Compton et al , 1987) Thus, the marketing and personnel admmrstratron functions cannot be separate m a service-onented company Policies for these two functional areas must be prepared srmultaneously with each policy document contaming ideas about the other area. Tradmonal personnel admmlstratron topics may need to be reconsidered. For example, one service orgamzation now mcludes customer contact and customer relations responsibrhtres m every job description Recruitment may take a market segmentatron perspective to match more effectively the requirements of the job with all the skdls needed to succeed both m the mam duties and as a “part-time marketer ” Career planning and development, the compensatron package, and lob rotatron plans also may have to be reviewed when a service onentatron 1s the firm’s driving force

Internal Marketmg/Orgamzatlonal

J BUSN RES 1990 20 63-70

Behavior

Bowen and Schneider (1988) suggest that service firms should manage and enhance their internal climate for service m order to impact positively the attitudes and behaviors of the employees the mtanglblhty of the service

who serve the customers. offering increases, there

They recognize that as 1s greater need to pay

attention to the details of service delivery. That is, management must market the idea of “a service mentality” internally so that it becomes the orgamzatronal imperatrve Internal marketing provides an effective and efficient means of establishing such an rmperatrve Internal marketing can be used m the three followmg ways assistance m developing a service culture, maintaining a service culture, and mtroducmg new products as well as new marketing actrvrtres (George and Gronroos, 1989) Note, however, that internal marketing programs alone are not sufficient to achieve a service culture Four organizational aspects must be developed for the estabhshment of a service culture: organizational requirements, strategic requirements, managerial requirements, and attitudmal requirements. These requirements clearly mean that internal marketing programs m a vacuum cannot establish a service culture Thus, there 1s a contmumg need for a partnership between Internal marketing and organizational behavior References Band, Wllham, Customer-Satlsfactlon Studies Changing Marketing Strategies, Murkenng News 22 (September 12, 1988) 14 Berry, Leonard L , Relatlonshlp Marketing, m Emergzng Perspectzves on Servzces Marketzng Leonard L Berry, et al , eds Amencan Marketmg Asboclatlon, Chicago, 1983, pp 25-28

Berry, Leonard L , The Employee as Consumer, Journal of Retazl Bankzng 3 (March 1981) 33-40 Bowen, David E , Managing Customers as Human Resources m Service Orgamzatlons, Human Resource Management

25 (1986)

371-384

Bowen, David E , and Gremer, L E , Moving from Production to Service m Human Resources Management, Organzzatzonal Dynamzcs 15 (Summer 1986) 34-45 Bowen, David E , and Schneider, Benjamin, Services Marketing and Management Imphcatlons for Orgamzatlonal Behavior, Research zn Organzzatzonal Behavzor JAI Press Inc , Greenwich, CT, 1988, pp 43-80 Bowen, David E , and Schneider, Benjamin, Boundary Spanmng Role Employees and the Service Encounter Some Guidelines for Management and Research, m The Servzce Encounter J A Czeplel, et al , eds , D C Heath, Lexington, MA, 1985 Carlzon, J , Moments of Truth, Belhnger, New York, 1987 Crosby, Lawrence A , Evans, Kenneth R , and Cowles, Deborah, RelatIonshIp Qkdlty m Services Selhng An Interpersonal Influence Perspective, Working Paper No 5, the First Interstate Center for Services Marketing, Arizona State Umverslty, 1988 Czeplel, John, Carole Congram and James Shanahan, eds , The Servzces Challenge Integrate for Competztzve Advantage, American Marketing Assoclatlon, Chlcago, 1987 George, Wdham R , Internal Commumcatlons Programs As A Mechamsm for Domg Internal Marketing, m Creatzvzty zrz Servzces Marketzng M Venkatesan et al , eds , Amencan Marketing Assoaatlon, Chicago, 1986, pp 83-84 George, W&am R , Internal Marketing for Retaders The Junior Executive Employee, m Developments m Marketing Science, Academy of Marketmg Sczence VII (1984) 322325

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George, Wdham R , and Gronroos, Christian, Developmg Customer-Conscious Employees At Every Level-Internal Marketing, m Handbook of Services Marketing Carole A Congram and Margaret L Friedman, eds , AMACOM, New York, (1989) George, William R , and Compton, Fran, How To Initiate A Marketmg Perspective m a Health Services Orgamzatlon, Journal of Health Care Marketing 5 (Winter 1985) 2937 Gronroos, Christian, Internal Marketing Theory and Practice, m Services Marketing m a Changmg Environment Thomas M Bloch et al , eds , American Marketing Assoclatlon, Chicago, 1985, pp 41-47 Gronroos, ChrIstian, Strategic Management and Marketing In The Service Sector, report 83-104, Marketing Science Institute, Cambndge, MA, 1983 Gronroos, Christian, An Apphed 16 (1982) 30-41

Service Marketmg

Theory,

#

European Journal of Marketmg

Gronroos, Christian, Internal Marketing-An Integral Part of Marketing Theory, m Marketmg of Services James H Donnelly and Wllham R George, eds , American Marketing Assoclatlon, Chlcago, 1981, pp 236-238 Gronroos, Christian, A Service-Oriented Approach Journal of Marketing 12 (1978) 588-601

to Marketmg

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m the Service

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Sector,

of Servxes, Interactive

European

Relationships,

Harvard Business Review 65 (March-

Relatlonshlps 120-128

that

Last,

Harvard Business

” Harvard Busmess Review, 61 (September-

Mills, P K , Managing Service Industnes Organizational Practices m a Post-Industrial Economy, Balhnger, Cambridge, MA, 1986 Mills, P K , Chase, R B , and Marguhes, N , Motivating the Client/Employee System a service production strategy, Academy of Management Review 8 (1983) 301-310 Norman, Pope,

R , Service Management,

N W , Mickey Mouse

Wiley, New York,

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Amencan

as

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for Customer

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Englewood

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NJ,

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