Traditional HRM is Best to Exploit the "5th P"

Towards Earning Competitive Advantage.

1

1. Introduction

In his bid to achieve customer orientation of the employees, Judd (2002) proposes

institutionalizing "people-power" as the 5th P of marketing mix. However, supporting

such proposition amounts to accommodating the proposition that HRM has so far been

able to tap the human potential only marginally, as Judd underpins internal marketing

concept as the instrument of achieving customer orientation and chooses the chief

executive officers of the organisations as the initiator of the same, thereby totally refusing

to accept any role of HRM in such process. Accordingly, three main arguments emanate

from the above situation regarding the necessity, utility value, and possible outcome of

such approach.

Firstly, it is important to check whether it is necessary for the management to treat

all employees as customers, since such an idea virtually creates a division between

management and employees, while the current trend of the organisations to create an

egalitarian workplace ambience (Greenleaf, 1977).

Secondly, it is important to check whether such approach would make all

employees customer-conscious. The employees whose job responsibilities are integrated

with production processes have nothing to do with customer conscious approach as they

work on creating the product as per specification and thus cannot add any value out of

such customer-awareness. Such state of affairs thus raises apprehensions about the utility

value of such attempt.

Thirdly, it is important to check whether such approach will enable the employees

to maximize their potential, or help them in creating new markets by inventing new

products. Though consumer influence is an important factor in product design, it is more

2

often than not new products invented by companies create new markets. Now if the

organisations only follow consumers' choice then the market would become a level-

playing field for all, since all will stick only to the products that have already earned

customers' approval.

Judd (2002) intends to find a way towards competitive advantage by converting

all employees customer-conscious, including those who seldom have any scope to come

into contact with the customers. For that matter he favours incorporating marketing-like

techniques to achieve customer-orientation in employees, and according to him, such

process would eventually make all employees aware of organisational objectives and

their respective roles in the strategies for achieving them. Clearly this approach appears

like an attempt towards shifting from current HR practice to a practice that would require

marketing professionals, though Judd does not explicitly mentions about the same. For

example, he suggests focusing on overcoming resistance to change as well as

interdepartmental and functional conflict, but abstains from suggesting whose job it

would be to facilitate a change from performance-centric employee orientation to

customer-centric orientation. Therefore, this essay evaluates Judd's proposition of

effectively managing people-power through marketing concept under the light of the

above three arguments.

2. Is it Justified to Treat Employees as Customers?

While the central point of consumer-organisation relationship is the transaction of

elements that fulfil each others' needs, the current theories of Customer Relationship

Management (CRM) suggest weaving an emotional web around the customer to generate

an in-group feeling (Deci 1975), which in turn would act as a centrifugal force to

3

influence the customer to renew the relationship with the company by using its products.

Thus in this case the nature of relationship appears like below:

Figure 1: Mechanism of Company-Customer Relationship

The above diagram shows that the company-customer relationship is essentially

dependent on the product, where the product appears to be gateway to the emotional

bondage, which enables the customer to fulfil its social and esteem needs (Maslow 1943).

According to Maslow, humans crave for a place in social groups as well as for

recognition as an individual. Thus it can be seen that consumers have one single role such

as buying the product to access both tangible and intangible value of the product.

From Maslow's point of view humans have five types of needs, such as basic,

safety, social, esteem and self-actualization needs, and thus it can be said that customers

4

at the most fulfil three needs out of customer-company relationship – such as social and

esteem needs from emotional bondage, and either basic or safety needs from the product

content.

However, in an organisational setting, employee-employer relationship extends

beyond what it exchanged between customer and the organisation, since employees

largely depend on the company for fulfilling all five needs. For example, the

compensation and reward package can fulfil basic and safety needs of the employees,

workplace association can fulfil their social needs, recognition against better performance

can fulfil their esteem needs, while training and knowledge sharing can help the

employees to pursue self-esteem needs. Thus Maslow's framework of needs clearly

highlights the difference between customer-company relationship and employee-

company relationship.

Figure 2: Mechanism of Employee-Employer Relation

5

Alderfer's (ERG 2007) ERG Theory also corroborates the above view while

explaining the desired nature of employee-employer relationship. Alderfer divides

human needs under organisational setting into three zones, such as

Existence (E) – It involves physiological and safety needs.

Relatedness (R) – It contains social and external esteem needs.

Growth (G) - Self-actualization and internal esteem needs (ERG 2007).

Alderfer's (ERG 2007) model too shows that the elements required to effectively

managing employees are different from the elements needed in efficiently treating

customers. For example, the management requires consistently supplying safety, security,

social, esteem and self-actualization needs at workplace, but it does not require providing

this package to the customers. Alongside, this model also highlights another gross

difference between customer-company and employee-company relationships through its

"frustration-regression principle," that enables the company to placate an employee by

fulfilling one need in place of the need that employee primarily looks to fulfil. For

example, an employee may need a car as his/her immediate transport solution and the

company may not be in a position to provide the same to the employee, yet the company

can placate the employee by providing increased transport allowance. Company cannot

adapt such an approach with customers, since customers are not supposed to compromise

with the quality of the product and thus the management cannot placate them by

providing another product in place of what the customers want to have. Thus from the

perspective of Alderfer's framework it clearly looks impractical to treat employees as

customers. Now it is to be seen whether Herzberg's (1968) Two-Factor Theory can

accommodate the above proposition of treating employees as customers.

6

Herzberg (1968) simplifies the human need structure under organisational setting

by classifying human under two factors like Hygiene Factors and Motivator Factors.

According to Herzberg, employees gain satisfaction and psychological growth from

motivation factors, while their dissatisfaction emanates from unfulfilled needs placed

under hygiene factor. This model thus aims to trace the existing the level of employee

motivation by incorporating all possible elements in all possible permutation and

combinations, under the title of Hygiene Factors and Motivation Factors.

1. Hygiene Factors: Herzberg (1968) identifies the following factors as the

constituents of hygiene factors:

Job Salary Company Safety StatusInterpersonal relations ~ Working conditions ~ Good Company policies and administration ~ Quality of supervision

2. Motivation Factors: The motivation factors include the following factors:

Achievement Recognition Responsibility for task

Job Interest

Advancement to higher-level tasks

Figure 3: Two-factor Theory

7

Herzberg's (1968) theory too highlights the impracticality of treating the

employees like customers, since the essential factors of employee management such as

working conditions, quality of supervision, company administration, job factors,

responsibility for task, advancement to higher-level of tasks, etc. have no bearing on

customer relationship management.

Thus all three major theories involving employee management do not equate

employee-company relationship with customer-company relationship and instead, they

highlight several important factors that are integrated with traditional employee

management which are going to be left out if the employees are treated like customers.

Now it is to be seen whether the employees under multicultural workplace setting could

be treated like customers.

Culture influences human perception, belief, and value, and certain rigid acts of

humans are considered as prejudice, since it induces certain values in attitudes that may

be away from reality, or at best their objective reality remain unexamined (Gilbert &

Ivancevich 2001). Thus it does not take any reference to assume that a multicultural

workplace contains people with culture-induced prejudices of different dimensions and

such situation requires a serious management approach towards aligning all employees'

general attitudes with the framed norms of organisational behaviour. Thus it shows that

the employee prejudice control is an important task under employee management.

On the other hand, the organisations have no scope to control the prejudices of the

customers, and all they can do is to conform to the customer prejudice to win customer

loyalty. Thus going by the proposition of Judd (2002), the organisations would have to

conform to the employee prejudice, while prejudices are strong enough to negatively

8

impact the organisational affairs (Bhawuk and Brislin, 1992). This clearly shows how the

idea of treating employees like customer directly opposes the basic philosophy of an

organisation, such as to align individual vision and mission of the employees with the

vision and mission of the organisation. Therefore, the emerging thoughts from the above

review and discussion are that the employees and the customers are two different

resources of organisational performance, and thus they require different treatment for

their sustenance and development. This thought in turn questions the necessity of making

all employees customer-centric.

3. Is it Necessary to Make All Employees Customer-centric?

The job division in any organisation is based on the functional needs of any

organisation. For example, an organisation needs different set of experts for creating a

product in parts, assembling the product, pricing the product, making business strategies

to sell the product, and finally, experts for selling the product. Thus there cannot be any

denying to the fact that organisations require different set of experts to meet their specific

functional needs. Alongside, the bridge between all employees and the management is

supposed to be built by the vision and mission of the organisation, i.e., where the

organisation aims to go and why it holds such an aim (Kahn 1990).

However, from Judd's (2002) perspective, the organisations require replacing the

organisational vision and mission statement with a common phrase like XYZ Company

envisions customer satisfaction as its first responsibility and thus it aims to fulfil the same

over and above anything. Such an approach is bound to be weak since it excludes the

interests of all other important components of the organisation, like shareholders,

stakeholders, and last but not the least, the employees of the organisation, which along

9

with customers are supposed to form the chain of organisational activities (Tucker et al.

2005). Now it requires to be seen how such an approach aligns with the concept of

Responsible Business Enterprise (RBE) that suggest possessing an ethical character of

the organisation and seek guidance from it to achieve organisational outcome (The

Business Ethics 2010: 47).

According to the proponents of business ethics, an organisation's identity has at

least four levels like compliance, risk management, reputation enhancement, and value

added, where setting objectives in all those levels and achieving them should be the goal

of a business ethics programme of any organisation. Alongside the proponents of

business ethics also point to the fact that the identity of a responsible business

organisation actually spells its efficacy in meeting the responsibilities as a member of the

community, where such responsibilities involve ethics, compliance, and social

responsibility (The Business Ethics 2010: 48-49). Thus this framework does not

accommodate customer-centric orientation of an organisation.

The second issue that puts a questions mark on the concept of customer-centric

organisational approach, involves utility value of infusing customer-centric approach in

all employees including those who are neither assigned to deal with the customers, nor

have any chance to meet or influence them. This sounds impractical in the sense that

professionals in today's highly competitive business world cannot afford to invest their

time and energy on something that would not add any value to their work. The

researchers too press the fact that in this era of learning organisation, internal marketing

cannot do without managing talents, where internal marketing would seek to develop

internal and external customer awareness and remove functional barriers to organisational

10

effectiveness (Varey and Lewis 1999), and to facilitate that process the management

would focus on fostering the talents in each employee (Julia and Hughes 2008). From this

perspective, internal marketing stands to do better if it can exploit the employee potential

to get quality products, and not by diverting the employee attention from work

performance to a subject like customer-awareness. Incidentally, Kotler and Andreasen's

(1996: 41) view that "success will come to that organisation which best determines the

perceptions, needs, and wants of target markets and satisfies them through the design,

communication, pricing and delivery of appropriate and competitively viable offerings,"

also highlights the fact that organisations need to be equipped to create the design as per

demand of the target market segment and for that matter people assigned to create

designs need to fully focus on that subject only. Thus Judd's suggestion to include all

employees in customer-orientation programme appears impractical under the present

context.

The emerging thought from this part of review and discussion is that it is not at all

necessary to make all employees theoretically customer-centric, especially those who are

engaged in critical production process, but it is necessary to know the art of converting

employee talents into quality products, so that the products can reflect a customer-centric

approach by virtue of their quality. This idea brings forth the third question of this essay,

which wants to testify the appropriateness of marketing concept for maximizing the

employee potential.

4. Is Marketing Mix Appropriate to Maximize Employee Potential?

There is a plethora of definition regarding marketing mix, all of which contain a

subset of concepts beginning with the letter "p," since Borden (1964) first coined the term

11

in the late 1940s to present a marketing programme framework with 13 variables.

However, the same gradually converted into four Ps of marketing, such as product, price,

place, and promotion with McCarthy's (1960) framework, which later gained much

acceptance from the researchers. While researchers like Mindak and Fine (1981) suggest

including public relations as another P of marketing mix, Kotler (1986) finds political

power is another important P that deserves to be included in that concept. Wind (1986) on

the other hand proposes adding another 11 Ps of marketing to stretch the list of Ps to 15,

and Gronroos (1994) finds the model itself is obsolete. Amid such ambiguous states of

this concept, Judd (2002) finds it as a potential instrument for management to shift

toward relationship marketing and to gain competitive advantage, if the management

includes people-power (employees of the organisation) as the fifth P and uses it to

management the employees. Therefore, such view needs to be evaluated under the

mechanism of human mind and its correlation with job satisfaction.

Firstly, there can be no denying to the fact that all four Ps of marketing mix

involve one or the other kind of tangible transaction, and Judd (2002) identifies them as

the instruments of employee management. On the other hand, employees are humans and

they have both tangible and intangible needs and for that matter they need both tangible

(extrinsic) and intangible (intrinsic) rewards to fulfil both types of needs. Since

motivation stems from the urge to fulfil the needs, one cannot deny the significance of

motivation in maximizing the employee performance (Maslow 1943). Now under the

framework of two types of needs, the motivation too falls into two categories, such as

intrinsic and extrinsic motivation (Deci 1975), which implies that the organisations

12

require making their employees both intrinsically and extrinsically motivated to get the

best out of them.

However, the four Ps of marketing mix have only extrinsic rewards to transact

with employees, which clearly shows its inadequacy in fulfilling all needs of the

employees. Alongside, it would be pertinent to mention that Deci and Ryan (1985), the

proponent of Self-determination theory (SDT) suggest that motivation is divided by

autonomous motivation and controlled motivation, where autonomy acts with a sense of

volition and has the experience of choice. Citing the findings of Dworkin (1988) they

suggest that autonomous motivation is linked with intrinsic motivation and controlled

motivation is linked with extrinsic motivation. Going by this theory, four Ps offer only

controlled motivation.

Now the fact is, using only controlled motivation in managing employees could

be detrimental for organisational performance, observe a host of researchers. For

example, Kahn (1990) suggests that employees feel happier when they work from free

will, while Wildermuth and Chris (2008) list organisation culture, the nature of job, and

personal issues as the key drivers of employee motivation. Most of these areas are linked

with management and are out of the range of controlled motivation offered by four Ps.

Thus such state of affairs highlights four Ps' inadequacy to comprehensively cover the

factors involved in employee management.

However, one can raise the argument that extrinsic rewards have more potential

than intrinsic rewards to maximize the employee performance, which in turn commands a

review of the scientific explanation of the mechanism of human mind to testify its

validity.

13

4.1. Mechanism of human mind

Three elements like Consciousness, Inverted and Absent Qualia together form the

core of mind and cause various mental states. Out of them, six identifiable states occur

like below:

1. State of awareness: This state takes place when humans become aware of their

own presence (Rosenthal, 1986).

2. Qualitative states: This state occurs when humans sense something out of

something, like enjoying a boat ride or experiencing a pain from a sudden fall.

These states are referred to as "qualia" (plural), which are regarded as intrinsic

features of one's own experience (Dennet, 1990, 1991).

3. Phenomenal states: This state involves a broader area of activity, as it involves

spatial, temporal and conceptual organisation of individual experience

regarding the existence of the world and an individual's standpoint in it.

4. What-it-is-like states: In this state humans associate a sense of experience

with another such experience, like remembering a person immediately after

seeing another person.

5. Access consciousness: This state deals with intra-mental relations. For

example, someone may see a pink rose and then associate it with particular

shirt presented by someone, and then recalling the birthday of that person and

then deciding on presenting the person a birthday gift.

6. Narrative consciousness: In this state humans experience a "stream of

consciousness," in which a running series of thoughts emanate from real-life

or imaginary situations (Dennett, 1991).

14

Dennet (1990, 91) also explains the two types of qualia, such as absent qualia and

inverted qualia as personal packages of intrinsic and intricate experiences, which help

humans to interpret various external signals and to address them. Dennet suggests that the

nature of experience governs the nature of response.

For example, someone might prefer tea in the morning and someone might prefer

coffee in the morning, but both persons would not be able to explain why they prefer so.

According to Dennet (1990), qualia involve perceptual experience, physical sensations,

reactions, various moods, etc., and it is the difference in perception causes inverted

qualia, like one preferring tea and the other preferring coffee. Dennet suggests that in

such cases the decisions emerge from an intrinsic process of human mind, which the

individual cannot define. This type of mental process involves inverted qualia, which are

associated with intrinsic motivation and influence humans up to core conscious level.

On the other side, absent qualia influence humans to act as functional duplicates

of other humans, suggests Dennet (1990). For example, if Mr. A takes tea in the morning

at the instance of Mr. B, then Mr. A can be called as the functional duplicate of Mr. B, as

he is only emulating Mr. B and is not using the intrinsic mechanism of mind. Same

situation occurs in an organisational setting too. For example, if Mr. A prefers cash

reward, and Mr. B being his colleague also declares his preference for cash reward just to

follow Mr. A, then Mr. B performs the role of functional duplicate of Mr. A. Absent

qualia are associated with extrinsic motivation and influence humans only up to

perception level.

Thus the mechanism of human mind can somewhat be like below:

15

Figure 4: Mechanism of Human mind

The above mechanism of human mind shows that humans resort to actions in two

ways – one with clear thought, influenced by inverted qualia and guided by

consciousness, and two, with no clear thought, influenced by absent qualia, and guided

external influence that reach up to perception level. Therefore, under the context, four Ps

(extrinsic rewards) stand to influence the employees only up to perception level, and fails

to activate inverted qualia to help humans in taking decisions.

Yet to resolve the argument regarding which type of motivation has more power,

it is necessary to review some evidence-based inferences. Though the common belief is

that extrinsic rewards (money and incentives) are the main drivers of employee

motivation, one research and survey-based finding clearly defies the same, where it

shows that only 43 per cent of organisations viewed their performance-related reward

schemes as being successful (Tucker et al. 2005). From this perspective, one cannot

ignore the views of Kohn (Flipczak 1993) that extrinsic rewards are potential killers of

16

intrinsic motivation, because they try to control the employees within the specific

parameters of a task, besides hampering human relationship under competitive extrinsic

reward system and finally dampening employee interest in the task.

Kohn's (Flipczak 1993) view corroborates Deci's (1971) findings on the efficacy

of intrinsic motivation in 1971,where he gave the two groups of subjects challenging

puzzles to work on, and promised the first group to pay for it. After the first session was

over, he took both the groups to another room where he asked all members of two groups

to freely choose from a variety of activities, which also included the puzzle challenge. In

the process the groups paid earlier to do puzzle challenges showed considerably less

interest in the puzzles than the earlier unpaid group. This finding prompted Deci to infer

that extrinsic motivator (money) applied in the first group actually decreased the intrinsic

motivation of its members, as they did not regard puzzle challenge as something fun to

do.

The review and discussion of this part clearly points to the huge shortcoming of

the 4Ps as the potential management instrument in managing people, which in turn

disapproves Judd's (2002) proposition that people-power (employees) can be effectively

managed by applying the concept of marketing mix.

5. Conclusion

While no one can deny the fact that organisations require interpreting customer's

needs into products and for that matter every part of that process should be aligned to

fulfil one single goal, the review and discussion shows that it is also undeniable that

humans perform better when they act from free will (Deci 1975), and money or gifts

cannot be the main driver of employee job satisfaction. This finding altogether nullifies

17

Judd's (2002) three propositions like treating employees like customers, infusing

customer-centric approach to all employees irrespective of their job responsibilities, and

using 4Ps to manage the employees.

In the first case the motivation and need theories clearly point to the fact that there

is a gulf of difference between effective employee management and effective customer

management.

In the second case, the experts' explanations of talent management and internal

marketing show that there is no need to make all employees customer-centric, since that

would rob the energy and time from the employees who are totally distanced from the

employees due to their natures of job.

In the third case, the mechanism of human mind clearly shows that four Ps fall

terribly short to intrinsically motivate the employees, which is the major factor in

maximizing the employee performance.

Altogether the final emerging thought of this study is that an alignment between

organisational visions with employee visions would enable the organisations to achieve

their desired outcome, rather than imbibing fractured concept like customer-centric

approach. The study also makes it clear that the traditional human resource management

technique is far more equipped to create such an alignment, since it applies both types of

rewards to forge the employee-institution bond. Alongside, the traditional approach

appears to be more in conformity with what is regarded as the real goal of an

organisation, i.e., to rise in ranks as a responsible business enterprise by adding value to

the society.

18

References

Bhawuk, D. P. S., & Brislin, R. (1992) 'The measurement of intercultural sensitivity

using the concepts of individualism and collectivism.' International Journal of

Intercultural Relations 16: 413-436.

Borden, N.H. (1964) 'The concept of the marketing mix.' Journal of Advertising Research

4: 2-7.

Deci, E. L. (1971) 'Effects of externally mediated rewards on intrinsic motivation.'

Journal of Personality and Social Psychology 18: 105–115.

Deci, E. L. (1975) Intrinsic Motivation. New York: Plenum.

Deci, E. L., and Ryan, R. M. (1985) Intrinsic motivation and self-determination in human

behaviour. New York: Plenum.

Denett, D. C. (1990) '"Quining qualia". In Mind and Cognition.' W. Lycan (Ed), Oxford:

Blackwell, 519-548.

Dennett, D. C. (1991) Consciousness Explained. Boston: Little, Brown and Company.

Dworkin, G. (1988) The theory and practice of autonomy. New York: Cambridge

University Press.

ERG Theory (2007) Internet Centre for Management and Business Administration, Inc

[online] available from http://www.netmba.com/mgmt/ob/motivation/erg/

[accessed 12 November 2010]

Flipczak, B. (1993) 'Do incentives make things worse?' Training 30 (8): 22.

George, W.R. (Eds) Marketing of Services. American Marketing Association,

Chicago, IL: 71-3.

19

Gilbert, J. A., & Ivancevich, J. M. (2001) 'Effects of Diversity Management on

Attachment.' Journal of Applied Social Psychology 31(7): 45-49.

Herzberg, F. (1968) 'One more time: How do you motivate employees?' Harvard

Business Review 81(1): 87-96.

Greenleaf, R. (1977) Servant leadership: A journey into the nature of legitimate owner

and greatness. Ramsay, NJ: Paulist Press

Gro¨nroos, C. (1994) 'From marketing mix to relationship marketing: towards a paradigm

shift in marketing.' Management Decision. 32( 2): 4-21.

Hughes, J.C., and Rog, E. (2008) 'Talent Management: A strategy for improving

employee recruitment, retention and engagement within hospitality organisations.'

International Journal of Contemporary Hospitality Management 20 (7): 744-746.

Judd, V.C. (2002) 'Achieving a customer orientation using "people-power," the "5th P".'

European Journal of Marketing 37(16): 1301-1313.

Kahn, W. A. (1990) 'Psychological conditions of personal engagement and

disengagement at work' Academy of Management Journal. 33: 692-724.

Kohn, A. (1992) No contest: The case against competition. Houghton Mifflin; 2nd

Revised edition.

Kotler, P. (1986) 'Megamarketing.' Harvard Business Review 64 (March-April): 117-24.

Kotler, P., and Andreasen, A.R. (1996) Strategic Marketing for Nonprofit Organisations

(5th ed.). Prentice-Hall: Upper Saddle River, NJ.

Maslow, A. H. (1943) 'A theory of human motivation.' Psychological Review 50: 370-

396.

McCarthy, E.J. (1960) Basic Marketing. Richard D. Irwin: Homewood, IL.

20

Mindak, W.A., and Fine, S.H. (1981) 'A fifth P: public relations.'In Donnelly, J.H. and

Rosenthal, D. (1986) Two concepts of consciousness. Philosophical Studies, 49:329-359.

The Business Ethics Programme. (2010) Responsible Business Conduct as Strategy

[online] available from

http://www.trade.gov/goodgovernance/adobe/bem_section_2/chapter_4.pdf

[accessed 9 December 2010]

Tucker, E., Kao, T., & Verma, N. (2005) 'Next-generation talent management: Insights

on how workforce trends are changing the face of talent management.' Business

Credi. 107(7): 20-27.

Varey, R.J., and Lewis, B.R. (1999) 'A broadened conception of internal marketing.'

European Journal of Marketing 33 (9/10): 926-944.

Wildermuth, M., and Cris. (2008) '10Ms of employee engagement.' T+D 62 (1): 50-53

Wind, Y. (1986) 'Models for marketing planning and decision making.' In Buell, V.P.

(Ed.) Handbook of Modern Marketing. McGraw-Hill: New York, NY.

21