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 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 Marketing Function
Element (for Goods and Services)
Goods/services offerings that seek to satisfy the ‘core need’ or
Product ‘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
Price 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
Place 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
Promotion 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
Process 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
People
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
Physical Evidence
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 customer-

oriented 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

5
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 above-

average 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

6
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

7
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 ‘socio-

emotional’ 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

8
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 socio-

emotional 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

9
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 dollar-

cost itself. This can be done, for example, at the ‘augmented product’ level by offering non-

material 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

10
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

11
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

13
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

14
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

16
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 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

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 HR Management Function
Element
The range of explicit and implicit inducements offered by the
organization to target employees. The extent to which these
Product
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
Price
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
Place
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
Promotion
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
Process
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
People
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
Physical Evidence organization’s goals and personal goals. Physical evidence
considerations may include the management of organizational
culture.

21
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