Download Being an `Employer of Choice` in Competitive Labour Markets:

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-tobusiness/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
& Cohen, 1999; Paauwe & Boselie, 2003; Whitaker & Wilson, 2007). Management
academics and practitioners alike have acknowledged that an integrated set of effective
SHRM policies and practices has a significant positive impact on organizational development
and firms’ ability to generate a sustainable competitive advantage (see Afiouni, 2007; Becker
& Huselid, 2006; Dunn, 2006; Endres & Mancheno-Smoak, 2008). A consequence of
attempts by many organizations to develop their human capital in line with SHRM principles
has been an intensification of competition for high-quality human resources – especially for
those organizations that compete in competitive labor markets where skill shortages are
prevalent (Bennett & Brush, 2007; Knox & Freeman, 2006; Shah & Burke, 2005).
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One strategy employed by organizations facing direct competition for high-quality employees
has been to develop themselves as an ‘Employer of Choice’ (EOC) in their respective industry
(Herman & Gioia, 2001; Lenaghan & Eisner, 2006; Mackes, 2005). Organizational efforts to
achieve EOC status have entailed the use of ‘employer branding strategies’ that draw on
marketing concepts and principles for the express purpose of effectively marketing
themselves to their target labor market(s) (Backhaus & Tikoo, 2004; Berthon, Ewing & Hah,
2005; Knox & Freeman, 2006). Simply put, EOC strategies represent attempts to construct a
unique ‘employer brand identity’ based on an ‘employment value proposition’ (EVP) that is
deliberately constructed to set an organization apart from competitors in some meaningful
way (Hegar, 2007; Herman & Gioia, 2001; Vogel, 2006).
The adoption of ‘employer branding strategies’ has specific implications not only for the
marketing and human resource (HR) management functions, but also more broadly for all
managers and supervisors in an organization. The system-wide approach inherent to the
effective implementation of an employer branding strategy requires a shared understanding of
an organization’s EVP across functional boundaries and levels within the firm (Hegar, 2007;
Johnson & Roberts, 2006; Lawler, 2005). Despite the level of consensus about the role
marketing concepts play in the development of an organization’s EVP, implementation issues
surrounding the adoption of employer branding strategies have not as yet been the focus of
major attention within the EOC debate (Berthon, Ewing & Hah, 2005). At the same time, the
HR literature has attempted to address the growing ‘war for talent’ issue through the use of a
quite different set of psychological theories – for example using the tenets of ‘Equity’,
‘Expectancy’, ‘Motivation’ and ‘Institutional’ theories to gauge levels of employee job
satisfaction and commitment to their employer (see Curran, 2003; Kelliher & Anderson,
2008; Lenaghan & Eisner, 2006). Here too, however, the debate about how best to implement
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and manage effective employment relationships remains ongoing. While the notion of an
effective employment relationship has been predicated upon the organization’s use of a
balanced package of SHRM policy offerings that provide value to both the firm and its
current and potential employees (Backhaus & Tikoo, 2004), consensus is lacking on how its
strategic benefits might be realized.
Indeed, within the SHRM literature, many issues pertaining to the conceptualisation of the
employment relationship remain unresolved (Conway & Briner, 2005; Friedman, 2006;
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 Mix
Extended Marketing Mix
Element
Product
Price
Place
Promotion
Process
People
Physical Evidence
Marketing Function
(for Goods and Services)
Goods/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.
Mechanism 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.
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.
Effective 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.
Provision 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.
Provision of a human interface, where necessary, between the target
customers and the Product offered by an organization.
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.
Source: Adapted from Booms & Bitner, 1981; McCarthy, 1964; Rafiq & Ahmed, 1995.
By using the Extended MM framework, an organization is better able to conceptualize and
develop a ‘value proposition’ for its target customers and, when managed effectively, develop
and allocate resources to position itself as a ‘vendor of choice’ in the marketplace (Bennett,
1997; Hakansson & Waluszewski, 2005).
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From Extended Marketing Mix to ‘Employment Marketing Mix’
The process of becoming an EOC requires an organization to develop and present an EVP
with features designed to attract, retain and motivate its target employees (Elias &
Scarbrough, 2004; Lenaghan & Eisner, 2006; Mackes, 2005). As in the case of a customeroriented value proposition, the EVP too must represent a coherent effort to manage the set of
interrelated and controllable variables that an organization is able to utilise to satisfy the needs
and/or wants of its target employees. Analogous with the Extended MM concept, there must
be a cohesive alignment of what we will call the ‘Employment MM’. The following
discussion describes the Employment MM and its constituent elements.
Product
As noted in Table 1, the Product element of the Extended MM focuses on the presentation of
a good/service that satisfies a target customer’s ‘core need’ or ‘want’ in a manner that enables
them to purchase it (Crane, 2001). Whilst this may seem straightforward, identifying the ‘core
need’ to be addressed, and the extent to which a single Product is capable of fully satisfying
it, presents a challenge to an organization. The strategic marketing literature recognises this
challenge, and holds that there are three basic levels of Product that must be understood by an
organization: the ‘core product’, the ‘actual product’, and the ‘augmented product’ (Kotler et
al. 2006).
At the most basic level of the ‘core product’, an organization must have a clear understanding
of the basic need target customers want to satisfy? The answer to this question is often not as
straightforward as it first might appear, and a misdiagnosis can render a Product offering
irrelevant to the customer. Whatever the mix of needs might be, an organization must ensure
that its identification of target customers’ core need is accurate, as without such knowledge
the task of constructing a ‘core product’ that is perceived in the market as valuable becomes
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very difficult. Once the target customers’ core need and the core product needed to address
that need are understood, an organization is then able to develop its ‘actual product’ offering,
which manifests in the quality level, features, styling, brand name and packaging. Further to
this, in order to enhance customer perceptions of the value proposition on offer and
differentiate itself from its competitors, an organization may also augment its core/actual
product by offering features either in excess of those required to address the core need or
unrelated to the core need. For example, while the ‘augmented product’ for a motor vehicle
may include ‘back seat passenger safety features’ and/or options such as a ‘high quality
surround sound system’, and ‘24-hour driver assistance service’.
Similarly, in the Employment MM what constitutes the Product, that is to say the range of
inducements comprising the EVP, must be constructed as multi-layered in terms of
core/actual/augmented features. There is a substantial body of research literature that shows
the employment relationship comprises both explicit elements in the form of the employment
contract, and implicit elements in the form of a psychological contract (Guest & Conway,
2002; Millward & Brewerton, 2000; Rousseau, 1995). At the most basic level of the core
product, the development of an EVP is dependent on an organization having a detailed and
accurate understanding of what core needs its target employees have. Over-simplification or
an inaccurate understanding of the core need can lead, as in the case of a customer-oriented
Product, to a core product that is inadequate. For example, in competitive labor markets if an
organization was to assume that the core need for its target employees is simply ‘an aboveaverage income’, other important needs identified in the HR literature, such as job
satisfaction, work/life balance, and career development opportunities, may be overlooked
(Cartwright & Holmes, 2006; Lester & Kickul, 2001). If for illustrative purposes, we
understand the core need to be ‘an above-average income with career development
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opportunities’ then a competitive salary and the provision of regular training and
development/promotion opportunities might represent the inducements that comprise the
‘core product’ offered by an organization.
Understanding and matching the target employees’ core needs with a core set of inducements
means an organization is better able to develop its ‘actual product’ offering. For example, the
inclusion of particular non-core inducements that relate to salary and promotion, such as
salary sacrifice arrangements and training and professional development support, may be part
of the ‘actual product’ that more fully addresses the core needs. Further to this, in order to
differentiate itself from competitors, an organization may also augment its core/actual product
by offering features related to core needs, but in excess of those required to address those
needs. For example, the ‘augmented product’ may include a generalized commitment to care
about the welfare of employees and their families and specific support for an acceptable
work/life balance. Thus, similar to the motor car example above, the precision of an
organization’s determination of the combination of inducements across the three levels of
Product will reflect the degree to which it has a full and accurate understanding of the core
needs of its target employees. This highlights the importance of effective labor market
research to guide an organization’s understanding of its target employees’ core needs and
decisions about the range of inducements an organization’s EVP should have if EOC status is
to be realized.
Price
The Price element of the Extended MM requires an organization to focus its attention on the
amount it charges its customers for the good/services that constitute the Product offering
(Nagel & Cressman, 2002; Potter, 2000). At its most basic level, the practice of Price setting
must enable an organization to recover its costs of production as well as generate some
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predetermined level of profit. At a more advanced level, the strategic setting of Price requires
an organization to consider related issues such as product positioning, volume discounting,
product bundling, and payment options, to name but a few. The major challenge in managing
the Price element centres on the potentially disconnected relationship between an
organization’s profit motive and its customers’ desire to maximize value for money
(Gourville & Somon, 2002; Nagel & Cressman, 2002). In managing Price, therefore, an
organization must do more than just set a fee which covers production costs and is
comparable to their direct competition - it must include important strategic considerations
such as the need to build strong and ongoing customer relationships and the need to assist
customers in constructing their perceptions of value (Nagel & Cressman, 2002).
In the HR management context, an organization’s need to maximize employee productivity
and the employee’s desire to maximize remuneration and benefits has long been recognized as
an important issue in the employee relations literature (see Edwards, Bélanger & Wright,
2006; Nurse & Devonish, 2006). Similar to the commercial market, under the Employment
MM the Price an organization ‘charges’ its employees for its EVP must be such that it
facilitates a mutually beneficial labor market transaction. The contributions exchanged by
both the organization and employee are often represented as either ‘economic’ or ‘socioemotional’ in form, and represent inputs by each party to the employment relationship that
provide direct benefit to the other party (Baker, 2009; Rousseau, 2004). An important point to
consider here is the role that opportunity costs borne directly by employees, but which do not
represent contribution of a direct benefit to the organization, might play in the employee’s
assessment of the value relationship between Product and Price (O’Donohue & Wickham,
2008). For example, an employee’s perception of value will likely be influenced by the
opportunity costs entailed in the EVP, such as ‘lost family time due to weekend work
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commitments’ and/or the resulting ‘stress of having an unhappy partner at home’, and which
thus from their perspective form part of the Price. From an organization’s perspective, there
are opportunity costs too, such as foregoing lower cost labor arrangements and/or the
increased operational flexibility that might flow from such arrangements. The important point
to make here is that while an organization has direct control over its own opportunity costs, it
has no such control over the employee’s opportunity costs.
The organization’s consideration of the Price element in the Employment MM is made more
complex by the dynamic nature of the employment relationship. Firstly, research has shown
the nature of the employment relationship over time moves most often from primarily
transactional and economic in nature to one which is more complex, relational and socioemotional in nature (Rousseau, 1995; Shore et al., 2004). Hence, the uptake of the EVP is not
a ‘once-off’ transaction and the Price the employee is willing to pay, both in terms of direct
contributions and indirect opportunity costs, is the subject of ongoing review and negotiation.
Such review may be prompted by strategic or environmentally-driven changes in an
organization’s ability and willingness to continue offering EVP features, as much as by
changes in an employee’s personal circumstances. Secondly, where an organization is faced
with strong competition in the market for scarce resources, the ‘seller’ of the resource has
much greater bargaining power. In a competitive labor market where conditions are not
favorable to an organization, target employees are both a ‘seller’ of the scarce resource (that
is, their skills and abilities) and a ‘buyer’ of one of many EVPs offered by competing
organizations. From an organization’s perspective, it is only one of many ‘sellers’ of an EVP
and one of many ‘buyers’ of scarce skills and abilities. This means that the less favorable the
labor market conditions, the more value-adding features an organization must include in its
EVP in order to attract and retain its target employees. In such circumstances, an
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organization’s management of the Price and other elements in the Employment MM should
aim at offering greater benefits and/or perhaps a lower Price to target employees.
Given that in such labor market conditions the target employee is likely to be in the stronger
position, an organization seeking EOC status needs to be keenly aware of what Product
features it must offer in its EVP, and the manner in which the benefits outweigh the Price
employees perceive they have to ‘pay’ to access it. An important point here is that an
organization can increase its value proposition to target employees by effective management
of all the elements in the Employment MM and without necessarily incurring a higher dollarcost itself. This can be done, for example, at the ‘augmented product’ level by offering nonmaterial inducements (such as ‘telecommuting and workplace flexibility’, and ‘ethical
business behavior’ etc.). The task of identifying pertinent features with which to complement
the core/actual product features is made more challenging by the fact that the opportunity
costs that the target employee will take into account in considering the EVP are likely to be
individual and obscured from the perspective of the organization. However, it is imperative
that augmented product features must add value to impact on the relationship between the
EVP and Price as assessed by the employee. Hence, organizations seeking to develop a
sustainable EOC status in unfavorable competitive labor markets can face formidable
challenges in constructing an EVP that delivers greatest perceived value to the employee and
the organization at a Price that both deem acceptable.
Place
The Place element of the Extended MM focuses on the location of the Product with a strategic
selection of intermediaries that will most effectively enable an organization’s target customers
to purchase it (Assael, Reed & Patton, 1995; Wyner, 2002). Whilst it may appear sound
strategy for an organization to locate its Product with a number of intermediaries in an
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extensive array of locations to maximize its exposure, the cost of doing so can be prohibitive,
and depending on the nature of the Product may actually be counterproductive. Research has
shown that inadequate understanding of the Place element in the Extended MM can serve to
undermine the Product in three main ways. Firstly, the reputation of an intermediary may be
incongruent with the quality or reputation of an organization, and that this incongruence
adversely impacts the target customers’ perception of the organization’s Product (Guibert,
2006). Secondly, intermediaries charged with selling an organization’s Product may be in
competition with each other, and this competition can undermine an organization’s ability to
carry out its business strategy for the Product (Choong, 2008). Lastly, an intermediary may
prove incapable or lacking in the required expertise for properly representing and selling the
Product to the target customer (Dube & Renaghan, 2000). Organizations must therefore be
mindful of the reputation, capabilities and willingness of the intermediaries they employ to
deliver their Product to target customers.
Similarly, within an Employment MM framework, the construction of Place can be seen as an
important aspect of a distinctive and superior EVP. Place may be interpreted to include not
only the geographic locations where features of the EVP can be accessed or work tasks
performed, but also the mechanism through which specific aspects of the EVP will be
delivered to the employee. The element of Place, therefore, requires management to take
decisions about the agents responsible for the delivery of specified features of the EVP, as
well as the physical locations (‘in-house’ or ‘off-site') at which the EVP features are to be
accessed. The HR literature includes a long-standing debate about the extent to which HR
functions can be effectively outsourced to specialist organizations (see Grugulis, Vincent, &
Hebson, 2003; Ordanini & Silvestri, 2008). Central to this debate has been discussion
concerning the observed failures of outsourcing practices, most of which have been attributed
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to an overemphasis on increasing profit at the expense of employee needs and expectations
(Grauman & Paul, 2005; Laabs, 1998).
To maximize their use of Place in an Employment MM, therefore, an organization must go
beyond mere cost-minimisation as a goal and take a strategic approach to the control and
delivery of its EVP features. In developing a strategic approach to Place, an organization’s
decision process must focus on either retaining direct control and delivery of all EVP features
‘in-house’ to using a combination of ‘in-house’ and ‘off-site’ delivery locations. For example,
where the core/actual features offered by an organization are a competitive salary supported
with salary sacrifice arrangements and regular promotion opportunities supported with
training and development, the organization may decide to retain direct control over the
negotiation of all salary-related matters but allow for the administration of payroll and salary
sacrifice matters to be outsourced. In regards to training and development related matters, an
organization may opt to retain direct control over core on-the-job training and development
activities, managed through an in-house HRD function, but to use external providers to
deliver non-core, off-the-job training. For the delivery of augmented product features, such as
the provision of subsidized childcare facilities, an organization might choose to contract an
external provider to manage and deliver the feature fully off-site. Here too, an organization
must be careful in its choice of ‘off-site’ partners as an inadequate choice of partner can serve
only to diminish the value of the EVP in the medium-to-long term. As with all the seven
elements of the Employment MM, decisions about Place remain the subject of on-going
review in the light of ongoing change in an organization’s external and internal environments.
Hence, decisions to outsource or provide features in-house must remain flexible to cope with
environmental changes that render current arrangements less than optimal in terms of the
perception of value (Kessler, Coyle-Shapiro & Purcell, 1999).
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Promotion
The Promotion element of the Extended MM focuses on effective communication of an
organization’s Product such that the target customers are aware of its existence, features, and
location(s) for purchase (Garber & Dotson, 2002; Kitchen & Schultz, 2003). Messages
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 prepurchase 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,
17
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
18
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 demarket 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
19
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.
20
Table 2: A Proposed Employment Marketing Mix
Employment
Marketing Mix
Element
Product
Price
Place
Promotion
Process
People
Physical Evidence
HR Management Function
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.
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.
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.
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.
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 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.
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.
21
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