Developing ‘Employer of Choice’ Status: Exploring an Employment Marketing Mix Dr Mark Wickham University of Tasmania & Dr Wayne O’Donohue University of Tasmania Locked Bag 16 School of Management Australia 7001 Phone: +61 3 6226 2159 Fax: +61 3 6226 2808 Email: [email protected]Profiles: Mark Wickham is a Lecturer in Marketing at the School of Management, Faculty of Business, University of Tasmania. His primary teaching interests are in the field of strategic marketing and business ethics. Mark’s PhD examined the role of a regional government in the development of an internationally competitive industry cluster. Aside from marketing and business ethics, Mark’s other research interests include business-to-business/network marketing communications, computer-aided qualitative data analysis and the work-life balance. Wayne O'Donohue is a Lecturer in Management at the School of Management, Faculty of Business, University of Tasmania. His primary teaching interests are in the fields of Organizational
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Developing ‘Employer of Choice’ Status: Exploring an Employment Marketing Mix
Profiles: Mark Wickham is a Lecturer in Marketing at the School of Management, Faculty of Business, University of Tasmania. His primary teaching interests are in the field of strategic marketing and business ethics. Mark’s PhD examined the role of a regional government in the development of an internationally competitive industry cluster. Aside from marketing and business ethics, Mark’s other research interests include business-to-business/network marketing communications, computer-aided qualitative data analysis and the work-life balance.
Wayne O'Donohue is a Lecturer in Management at the School of Management, Faculty of Business, University of Tasmania. His primary teaching interests are in the fields of Organizational Behavior and Human Resource Management. His PhD examined the psychological contract of nursing, scientific and teaching professionals employed in public sector organizations. Aside from human resource management issues, his other research interests include the history and philosophy of science, and the management of research in universities and research and development organizations.
Developing ‘Employer of Choice’ Status: Exploring an Employment Marketing Mix
Abstract
In recent times, the important role that marketing theory can play in the conceptualisation and development of an organization’s Employer of Choice status has been recognized and debated by both academics and practitioners alike. In order to contribute to that ongoing debate, this paper explores the application of a key element in marketing theory – the ‘extended marketing-mix’ concept – to the strategic management of human resources.
Introduction
Factors such as the globalisation of competition, the ‘tightening’ of skilled labor markets,
advancements in technology, the growth of the knowledge economy, and the need for
flexibility and expertise in the workplace have each presented strategic challenges to which
organizations have had to respond (Barnett & McKendrick, 2004; Catteeuw, Flynn &
Vonderhorst, 2007; Greenwood, Prakash, & Deephouse, 2005). The subsequent recognition
of the key role of human capital in the pursuit of increased responsiveness, productivity,
flexibility, and innovative capacity has been a defining characteristic of the ‘strategic human
resource management’ (SHRM) movement that has emerged over the past 20 years (Forman
Sheehan, 2005; Tekleab & Taylor, 2003), with consequent calls for an expansion of the
theoretical perspectives that inform our understanding of the employment relationship and
how organizations might better manage it to increase employee engagement and business
outcomes (Cullinane & Dundon, 2006; Hegar, 2007). This paper aims to address the literary
gaps identified above by proposing the Extended Marketing Mix (see Booms & Bitner, 1981)
as a way to strategically frame the employment relationship as an EVP. We believe adapting
this marketing framework to the human resource management context offers the potential for
extending our understanding of the employment relationship as an EVP and the strategic role
it can play as the basis of an organization’s development of an EOC position.
A Brief Account of the Extended Marketing Mix Concept
The concept of the Extended Marketing Mix (Extended MM) is one of the foundations
underpinning marketing theory and strategy development (Bennett, 1997; Constantinides,
2006; Rafiq & Ahmed, 1995). McCarthy (1964) formally defined the concept of a marketing
mix as the strategic ‘combination of all of the factors at a marketing manager’s command to
satisfy the [needs of the] target market’ (1964: 35). In his original formulation, McCarthy’s
conceptual framework comprised four ‘Ps’ – Product, Price, Place and Promotion – that
provided a basis upon which an organization could follow an internally consistent and
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integrated strategy for the provision of goods that would be perceived by the market as
valuable. After much debate about the fit of McCarthy’s four ‘Ps’ to the delivery of services
(see for example Lovelock, 1979; Mindack & Fine, 1981; Nickels & Jolson, 1976; Shostack,
1977), an additional three ‘Ps’ – Process, People and Physical Evidence – were added by
Booms and Bitner (1981). Table 1 below provides a brief summary of the seven ‘Ps’ of the
Extended MM.
Table 1: A Summary of the Extended Marketing MixExtended Marketing Mix
ElementMarketing Function
(for Goods and Services)
ProductGoods/services offerings that seek to satisfy the ‘core need’ or ‘want’ of target customers in a manner that enables them to purchase the goods/services offered by an organization.
PriceMechanism for recovery of the total cost of production plus some predetermined level of profit. Price may also may be used to strategically position a Product within a given market space.
Place
Placement of an organization’s Product in the relevant retail/wholesale outlets as expected by an organization’s target customers. Also, ensuring that an organization’s distribution channels and intermediaries are capable of representing and selling the organization’s Product effectively and efficiently.
PromotionEffective communication of the differentiated features and core benefits of an organization’s Product so that target customers are aware of its existence, features, and location(s) etc.
ProcessProvision of a structured system and set of processes through which an organization and its target customers are able to interact and perform their roles effectively in a market transaction.
People Provision of a human interface, where necessary, between the target customers and the Product offered by an organization.
Physical Evidence
In the case of goods, it is the Product itself. On the other hand, strictly speaking there are no physical attributes to services. Organizations tend to rely, therefore, on providing material cues such as packaging, websites, paperwork, brochures, furnishings, signage, uniforms, business cards, warranties, etc., to indicate the nature of the Product.
concerning the Product must be so couched as to ensure that target customers perceive its
features as offering superior value in terms of satisfying a well-defined set of core needs.
Organizations have the opportunity to use a mix of media options and message sources
strategically to espouse the value offered by their Products, including such things as paid
advertising, public relations activities and free samples. Important points to note here are that
recent research indicates that any organization activity (or inactivity) communicates a
message about the organization and/or its Product to the market, and that effective
management of the Promotion element requires a total organizational commitment (Gronroos,
2004). In this regard, an organization’s ability to promote a consistent message to the market
that is congruent with the target customers’ perceptions of the organization’s brand and brand
attributes has marked significance (Holm, 2006). Any inconsistency arising from messages
sent by an organization, either deliberate or inadvertent, serves to confuse the target customer
and may undermine perceptions of value that attach to the Product (Dewhirst & Davis, 2005;
Wickham & Hall, 2006). Understanding the power of Promotion in this way requires an
organization to be especially mindful of the entire array of activities that communicate to the
marketplace and not just those associated with advertising (Balmer & Greyser, 2006; Kitchen
& Schultz, 2003).
The need to understand the role of Promotion also extends into an Employment MM, where
the element embraces all efforts to communicate an organization’s EVP effectively, such that
target employees are aware of its differentiated features and the manner in which they can be
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accessed. While an organization can draw on a wide range of media channels through which it
might communicate with existing and prospective target employees, it must also remain
mindful that all of its activities or omissions serve to communicate a message about its EVP.
Therefore, in addition to formal communication mechanisms – such as newsletters,
noticeboards, Intranet sites, advertisements, induction kits, and the job interview itself –
Promotion in the HR context embraces any formal and/or informal interactions that occur
between employees and management. It extends to the manner in which an organization’s
policies and procedures interact or disconnect with each other, and also requires senior
management to understand the interrelationships between policy choices and the manner of
their implementation. Recall our example above, where competitive salary arrangements and
promotion opportunities are the core/actual features, and the commitment to care about
employee welfare and the provision of subsidized childcare facilities are augmented features.
Communication of these features will occur via a number of mechanisms across the range of
employment-related activities, such as recruitment, induction, performance management and
an organization’s socialisation processes (Kirby and Krone, 2002). Should all of an
organization’s communications, activities and/or omissions in this regard contribute positively
to the employees’ expectations of the EVP, then an organization’s EVP can be said to have
been effectively promoted. If on the other hand, there are significant conflicts between
messages (e.g. an organization espouses employee welfare and work-life balance as a priority
yet those accessing work-life balance opportunities are openly derided by management), the
resultant confusion will serve to diminish employee perceptions of the EVP and jeopardise an
organization’s efforts to achieve EOC status.
Process
In the Extended MM, the Process element focuses on provision of a structured system through
which an organization and customer are able to interact and perform their transaction
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effectively (Hocutt, Bowers & Donavan, 2006). The Process element captures the entire
system through which commercial transactions occur in the marketplace. It includes the pre-
purchase phase during which arrangements are made by the customer to acquire an
organization’s Product, the purchase itself, and concluding with the customer’s evaluation of
the transaction. When the Process enables both parties to a transaction to enact their roles in
the expected manner, then an organization is likely to produce a positive experience for its
target customers, and enhance perceptions of value thus establishing a basis for a repeat
purchase and/or a positive word-of-mouth referral. Bougie, Pieters, and Zeelenberg (2003)
extend the Process element to include any recovery efforts an organization might implement
to correct what is known as ‘service failure’ – the situation that occurs when customers
perceive that the value obtained from the transaction falls short of their expectations. Service
failures that are not corrected in a timely manner (i.e. an organization has not foreseen the
potential failure and/or has ineffective recovery processes) can cause harm to an organization
through subsequent negative word-of-mouth referrals (Martin, 2005; Ranaweera & Prabhu,
2003).
That the HR function needs to match its processes, policies and strategies to an organization’s
mission and goals has long been recognized in the HR literature (see for example Becker &
Huselid, 2006; Legge, 1995). However, the Process element of the Employment MM requires
an organization to extend its conceptualisation of the HR function to focus on the relationship
between all of the organization’s functional areas, and the entire set of systems and
procedures that enable and support the employment relationship (Crawshaw, 2006; Foreman
& Money, 1995). Consequently, ongoing dialogue is required between an organization’s
various management functions (accounts, HR, marketing, purchasing, etc.) concerning the
establishment, affordability and delivery of the EVP.
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Understanding of Process must extend to include systems for managing not only the explicit
but also, where possible, the implicit aspects of the core/actual/augmented features of the
EVP. It is not enough for an organization to offer, for example, access to promotion and
training and development opportunities as EVP features if management processes are not in
place to facilitate such access. Similarly, an organization must be mindful of the way in which
its array of policies and systems might contradict each other and potentially damage
perceptions of value that attach to its EVP (e.g. an organization indicates that employee
welfare and work-life balance is a priority, yet promised training and development
opportunities occur only at weekends or after-hours). In the HR context, Process needs to
conceptualize and embrace the entire set of systems that support the employment relationship,
from the recruitment and selection stage, through the actual employment phase, on to the end
of the separation phase (Stalinski, 2004). Indeed, a broad understanding of Process could also
embrace the post-employment phase through the maintenance of positive relationships with
former employees who through word-of-mouth support serve as unofficial advocates for the
organization’s EVP. Understanding the Process element in such broad terms is necessary, if
an organization’s EVP is to be seen as offering superior value and therefore serve as the basis
for EOC status.
People
The People element of the Extended MM focuses on the provision of a human interface
between the customer and the Product offered by an organization (Lovelock & Wirtz, 2004).
Put simply, it refers to the human resources deployed by an organization to conduct the
various aspects of the Product delivery processes discussed above. Under the Extended MM,
implementing the Process element effectively means that the organization must ensure that its
People are knowledgeable about its Product, and have the necessary up-to-date skills to
enable an organization and its customer to interact and perform their roles effectively in a
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commercial transaction (Lovelock & Wirtz, 2004). The People element alone can, in some
instances, provide a competitive advantage for organizations operating in industries where
high-skill, reputation and the ability to forge intimate relationships with customers is
important (Friedman, 2006; Liljander & Mattsson, 2002). Given the importance of People to
the delivery of an organization’s Product, an organization’s management functions
(marketing, finance, HR, purchasing, etc.) must work together on an ongoing basis to develop
coherent strategies that align and integrate functional goals and processes to support its
Product and be responsive to changing customer expectations (Fogarty, 2000).
This concept of the People element transfers quite readily to an Employment MM where the
need for a system-wide approach must also be applied. Clearly, HR staff and supervisors are
key players in creating and sustaining high quality employment relationships that satisfy both
an organization’s goals and the personal goals of employees. However, in line with the system
perspective, an organization seeking EOC status must understand the roles that other
functional staff, line and senior management, and peers, as well as external contractors, can
play in achieving Process synergies that will enhance the value that employees derive from an
organization’s EVP. The achievement of synergies requires the management of the People
element to be co-ordinated with that of the Place, Process and Promotion elements based on a
common understanding of the differentiated and value-adding nature of the Product’s
core/actual/augmented features and the Price the organization expects to receive in the form
of contributions from its employees (Stalinski, 2004).
Physical Evidence
The Physical Evidence element of the Extended MM focuses on the provision of material
cues to the target customer so that they are able to differentiate between organizations based
on the perceived quality of their infrastructure and Product offering (Carman, 2000; Moorthi,
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2005). Service organizations such as accountants and restaurants are particularly adept at
using visual cues (e.g. official websites, paperwork, brochures, furnishings, signage,
uniforms, business cards etc.) to augment the customer’s experience, and provide evidence
that the transaction was valuable and one worth repeating. Physical Evidence cues may also
extend to include the environment within which the purchase of the Product takes place (e.g. a
restaurant’s reception/dining area or a hairdressing salon), and can be used to inform the
customer of the quality and value inherent to the Product. It is important that an organization
does not create expectations of quality and value upon which it is unable to deliver, as the
resultant dissatisfaction (or perhaps simply incongruence) can result in diminished repeat
custom rates and negative word-of-mouth testimony by the target customer to their peers
(Moorthi, 2002).
Similarly, Physical Evidence in an Employment MM must focus on the provision of a
workplace environment that is consistent with employee expectations and able to facilitate the
achievement of both organizational and personal goals. Physical Evidence, therefore, can
include such things as the way in which the office space is laid out, the manner in which
awards are presented and/or displayed, and the use of an intra-company newsletter to
disseminate information, and so on. In this sense, the Physical Evidence element would
closely align with what is recognized in the HR literature as the visible manifestation of
organizational culture through things such as rituals, artifacts and written communications
(Higgins, Mcallaster, Certo & Gilbert, 2006). For the Physical Evidence element to serve as
an effective tool in the development of a superior EVP, an organization must ensure that the
Physical Evidence element is consistent with, and supportive of the Product’s
core/actual/augmented features. For example, should ‘concern for employee welfare’ be
espoused as an augmented feature of the EVP, then explicit recognition of and awards for
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employee maintenance of occupational health and safety standards would provide systematic
and valued Physical Evidence of such concern. Similarly, the absence of any Physical
Evidence to support an organization’s espoused EVP will serve to undermine employee
perceptions and devalue the EVP, hence undermining an organization’s EOC aspirations.
Conclusion
The above discussion has illustrated how the Extended MM might be adapted to support a
mutually beneficial employment relationship and the basis upon which an organization can
develop and maintain a strategic EOC position in their industry. We feel that this adaptation
has three important implications for both theory and practice. Firstly, we feel it demonstrates
there is potential merit in conceptualising the employment relationship as a ‘product offering’
to be consumed simultaneously in the markets for labor and employee skills. From the
organization’s perspective, it is a consumer of specialised employee skills and abilities for
which it pays a price in terms of the inducements it offers to the employee and the opportunity
costs it bears in so doing. From the employees’ perspective, they must be seen as consumers
of an organization’s EVP for which they must pay a price in terms of both their direct and
indirect work and life-style contributions to the employment relationship.
Secondly, we feel that the Employment MM notion of an interrelated set of ‘Ps’ supports the
systems approach to SHRM recently espoused as one of the most important frontiers for
strategic organizational research (Stalinski, 2004). Thirdly, the parallel between the Extended
MM and the Employment MM suggests the ability (and necessity) for organizations to define
their ‘employees of choice’ in the labor market context, and to consider strategies to de-
market their EVPs to actual/potential employees that fail to conform to this definition.
Finally, and from the practical perspective, the application of the Extended MM concept to
the employment relationship implies some interesting implications for the strategic
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recruitment, selection and development of the organization’s HR professionals. On the face of
it, it would appear that adopting an Employment MM perspective in the strategic management
of HR would require the organization to provide specialist marketing training to their existing
HR professionals so that they are able to effectively conceptualize their HR policies using a
marketing lens. Alternatively, organizations may now have a basis upon which to give
preference to HR professionals with demonstrated marketing knowledge when recruiting new
staff. Similarly, the application of the Employment MM provides a basis for the development
of a marketing-based diagnostic tool for managing HR policies and their relationship to the
achievement of organizational development, a differentiated position in a crowded
marketplace, and a sustainable EOC position within it. Further research could draw on other
well-established marketing concepts such as the ‘gap model’ framework (see for example
Parasuraman, Zeithaml & Berry, 1991) to develop a means for auditing an organization’s
EVP in an ongoing manner.
This paper has explored the application of a key framework in marketing theory – the
Extended MM concept – to the strategic management of human resources. Further detailed
consideration of each element in the proposed Employment MM is required; however, we
believe the incorporation and adaptation of a marketing perspective along the lines proposed
in this paper – the proposed Employment MM (See Table 2) – offers real potential for
broadening theoretical understanding of the EVP and its role in increasing employee
engagement and establishing a sustainable competitive advantage for an EOC. We suggest
that the use of theoretical constructs from marketing (and other related) disciplines offers a
cache of alternative concepts and language that can assist all managers (and not just human
resource professionals) ‘come to grips’ with the organization’s EVP and its management over
time.
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Table 2: A Proposed Employment Marketing MixEmployment
Marketing Mix Element
HR Management Function
Product
The range of explicit and implicit inducements offered by the organization to target employees. The extent to which these inducements are negotiable is dependent on the competitive conditions prevailing in the labor market at the time.
Price
The contributions that the organization expects an employee to make in return for the value they derive from the organization’s Product as well as the indirect opportunity costs that an employee bears in making those contributions. The extent to which Price changes over time will be contingent on strategic and/or labor market-driven changes to the organization’s Product and the effectiveness of its delivery, as much as by changes in an employee’s personal circumstances.
Place
The geographic locations where features of the organization’s Product are able to be accessed. Place may also refer to the organization’s use of intermediaries such as external agencies to which delivery of specified Product features may be contracted.
Promotion
The array of formal and informal messages communicated directly or indirectly to current and/or prospective employees regarding the value entailed in the organization’s Product. Promotion activities can extend to demonstrating and reinforcing positive aspects, or neutralising the potentially negative impact of changes to the Product.
Process
The series of workplace systems and procedures through which employees are able to access the explicit and implicit features of the Product, and enact their work and non-work roles to achieve the organization’s goals and personal goals efficiently and effectively.
People
People who have the knowledge and skills required to optimize the delivery of the organization’s Product and enable the organization and employees to derive maximum value from the employment relationship.
Physical Evidence
A workplace environment that is consistent with employee expectations and which facilitates the achievement of the organization’s goals and personal goals. Physical evidence considerations may include the management of organizational culture.
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