EMPLOYEE S MOTIVATION AS A CRITICAL ELEMENT OF INTERNAL MARKETING. CASE STUDY: THE USE OF NON- FINANCIAL MOTIVATION THROUGH SPORT ACTIVITIES

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1 EMPLOYEE S MOTIVATION AS A CRITICAL ELEMENT OF INTERNAL MARKETING. CASE STUDY: THE USE OF NON- FINANCIAL MOTIVATION THROUGH SPORT ACTIVITIES Onete Bogdan Academia de Studii Economice din Bucure ti, Facutatea de Comer, Pia a Roman 6, sector 1, Bucure ti, onete@ase.ro, Constantinescu Mihaela Bucure ti, mihaela.co@gmail.com, Filip Alina Bucure ti, filip.alina@gmail.com, Georgescu Bogdan Bucure ti, georgescubogdanmk@yahoo.com, Internal marketing is a much debated subject in international economic literature, being the topic of many books, journals and conference proceedings; therefore it has become a strategic objective in the relationship marketing theory and practice. The term received in the last twenty years a vast number of definitions and this is the reason why our paper will present both a conceptual approach and a specific way in which internal marketing is applied in Romanian companies. The originality of the present research results from a non-financial approach of employees motivation by implementing sport activities in their daily work schedule. The main results of the research highlight the need of integrating sports in the company s internal marketing programs with the aim of achieving employees satisfaction, trust and loyalty. Key words: internal marketing, non-financial motivation, sport activities, relationship marketing The literature on internal marketing is considerable and growing rapidly (see for example; Berry 1981; Collins and Payne 1991; George 1977, 1990; Grönroos 1981, 1985; and Piercy 1995, 2000), yet there is little systematic work on how internal marketing actually works in practice. 211 Internal marketing is a much debated subject in international economic literature, being the topic of many books, journals and conference proceedings; therefore it has become a strategic objective in the relationship marketing theory and practice. The term received in the last twenty years a vast number of definitions and this is the reason why the present paper will present both a conceptual approach and a specific way in which internal marketing is applied in Romanian companies. Internal marketing has been defined (Berry and Parasuraman 1991) as the attraction, improvement and maintenance of company s employees in positions that ensure the maximum and efficient usage of their work capabilities and a motivation system that allows the satisfaction both of the material needs and the professional aspirations of the employee. 212 This concept has evolved from the original conceptualization of employee satisfaction/motivation by treating employees as customers and jobs as products (Sasser and Arbeit 1976; Berry 1981) for improving service quality, to customer orientation/market orientation and the use of marketing like approach and marketing like tools internally to motivate employees (Grönroos 1985), to the use of internal marketing for 211 Pervaiz K Ahmed, Mohammed Rafiq, Noorizan Mat Saad, Internal marketing, organizational competencies, and business performance, American Marketing Association, Conference Proceedings, Chicago: 2002, Vol. 13, pg Cetina, I., Brandabur, R., Constantinescu, M., Marketingul serviciilor teorie si aplicatii, Ed. Uranus, 2006, pg

2 the implementation of external marketing programs (Piercy and Morgan 1991), and the extension of internal marketing to the implementation of any functional strategy (Rafiq and Ahmed 1993). Since Berry (1981) first advocated treating employees as internal customers, this has become the central guiding principle for internal marketing in every company. 213 Later, Berry and Parasuraman emphasized (1991) the value of treating staff the way you would want them to treat customers. The assumption here is that this provides a climate for "effective marketing behavior". In one of his articles, David Ballantyne (2000) calls this "happy staff equals happy customers" logic. 214 The logic of this approach is a simple one gaining employees satisfaction will influence their loyalty and affective commitment towards companies and this is an essential condition in achieving customer satisfaction during critical episodes interaction. Having this argument we can make the scientific assumption that at the company s top management level there is a need of correlating the strategic objectives of raising customer loyalty with a greater level of employee s satisfaction. This is proved in the present paper by applying the results of a quantitative research which shows that the non-financial motivation may be considered as a favorable influence in creating a pleasant and, most of all, productive work environment. A limitation of existing internal marketing research is that there is little agreement on what mix of policies can be used to effectively influence employees so that they are motivated and act in a customer oriented fashion. The originality of the present paper results from a qualitative approach of employees motivation by implementing sport activities in their daily work schedule. The novelty results from the link which is suggest to exist between the corporate social responsibility of the company toward its employees and the economic benefits of a relationship marketing orientation. Lately, this concept of sport activities practiced together by the organization employees has known a fast development. Be it a formal activity (conducted by the company s management) or an informal one (put in practice by the company s employees), sport has the power to relax the employees and to create the team spirit that every manager wants to find in his company. Considering the recent appearance of this concept in Romania, there aren t many marketing researches to show its importance. That is why a detailed description for this concept as it is found in practice can lead to a future development of the theory. Considering the conditions presented so far, this paper highlights the conclusions of a quantitative research regarding the process of implementing the sport activities within the organization, especially to determinate if this process is seen as a non-financial motivational instrument for the employees. The research took place within 246 companies that activate on the Romanian market and which include sport within the activities for their employees. To collect the necessary information, a survey was used with a structured questionnaire. The research objectives were the following: a) Identifying the opinion regarding the financial and nonfinancial motivation of the employees; b) Determining the type of organization for the sport activities within the company (formal or informal); c) Identifying the most played sports and the reasons for choosing these sports; d) Finding out if the sport activities can be included within the non-financial motivational elements; e) Identifying the percentage of companies that participate in competitions with their representative team; f) Determining the percentage of companies that motivate their employees to participate in competition that are specially organized for firms and identifying the most used elements of motivation in this situation; g) Determining the percentage of companies that reward the employees that have won a competition where they were representing the company and identifying the most used reward elements; h) Establishing the percentage of companies that have won at least one sport competition until now. The information obtained from the research helped us realize what are the place and the role of sport activities within the company. We started with the hypothesis that, in Romania, most companies don t involve in a formal way in the sport activities practiced by their employees. This is rather the initiative of the employee, who wants to engage with his colleagues in other activities besides those work related. 213 Ballantyne, D., Internal relationship marketing: a strategy for knowledge renewal, The International Journal of Bank Marketing, Bradford: 2000, Vol. 18, Iss. 6, pg Ballantyne, D., op. cit. 1034

3 From the research we could find out that, in practice, these two types of organization are equally found in the companies - formal 54% and informal 46%. At the international level, the trend is to have the organization of the sport activities in the responsibility of the company s management, who offers to the employee a relaxing work environment. In close connection with the formalization of the sport activities organization is the percentage of companies that participate in sport competitions that are especially created for firms. Only 32% of the interviewed companies have participated at least once in such a competition. It is interesting to see if there is a statistical association between these two variables, in other words, to see if the formal/informal organization influences the percentage of companies that participate in sport competitions. As shown in Figure 1, the companies where the sport activities are formally organized are participating in a higher number to sport competitions that those companies where we find an informal organization. To verify the statistical association we used the Chi-square test and we discovered that there is a mild association (a value of on a scale from 0 to 0.707). Informal Formal Participate Doesn't participate Figure 1. The influence of formal/informal organization on the percentage of companies that participate in sport competitions Considering the fact that the participation to sport activities represents a voluntary act, some employees must be motivated in participating. This is, of course, in the company s best interest because it leads to good morale for the employees and, therefore, to efficiency in the company. The research has shown that, in Romania, there are a higher number of companies that do not motivate their employees in participating in sport activities with their colleagues (54%). Naturally, this management decision is closely linked with the type of sport activities organization (formal or informal). Therefore, the company, whose management implicates itself in the organization of sport activities, also motivates its employees in taking part in these activities. Using the Chi-square test we could see that the association between these two variables is statistically significant. The companies which took part in the research were asked the following question: what are the methods of motivation used to determine the employees to take part in sport activities? The most frequent answers were: bonuses (32.6%), product prices (25.6%), sport apparel (16.3%) and vacations (12.8%). The things change when we come across the rewards that the companies offer for those employees who have won in a sport competition representing the organization for which they work. There are a higher number of companies that reward such employees. The difference is not significant (51% as against 49%), but it can be positively interpreted with hope for the future. Same as the motivation, the rewarding part is also influenced by the type of organization for the sport activities. As you can see in Figure 2, the companies that have a formal organization for the sport activities have, also, an efficient reward system for their employees. The most frequent ways of rewarding an 1035

4 employee for winning a sport competition are: vacations (23.6%), bonuses (20.8%), product prices (17.9%) or diploma, trophies and medals (16%). One of the frequently used indicators in evaluating the efficiency for the process of implementing the sport activities within the company is the number of sport competitions won. From the research emerges the fact that only 13% of the companies that have participated to sport competitions have won at least once. The companies must show interest in winning such competitions because of the free publicity that emerges from the media coverage of the sport event. Informal Formal The employees are rewarded The employees aren't rewarded Figure 2. The type of sport activities organization influence on the decision to reward the employees that have won a sport competition After determining which is the position of sport activities within the company, we shall see now what is the role of these activities. Generally, there a lot of reason for considering very important the role of sport activities practiced by the company s employees: when taking part in sport activities, the employee is much more relaxed and his work will be more efficient; team sports can substitute the investment that the company must make in other types of teambuilding; the employee s participation to sport event represents a promotional instrument for which the company doesn t have to pay any money. Through this research, we wanted to find out if the company sees the implementation of sport activities as a non-financial instrument of motivation. Our hypothesis was confirmed by 83% of the respondents. Another research objective is concerning the most played sport by the employees. We can see from Figure 3 that soccer leads at a considerable distance, followed by tennis, basketball, fitness and ping-pong. The main motivation for putting soccer first is because this sport is a tradition in our country. This supremacy can also be explained by the numerous facilities for playing soccer: a growing number of sport courts, common sport apparel (doesn t require major investments), and the fact that soccer is a sport that doesn t require a long term training. soccer 64.9 tennis 31.1 basketball fitness ping-pong swimming paintball aerobic chess billiards bowling athletics voleyball others Figure. 3. The most played sports by the employees 1036

5 We notice the fact that the three most played sports in a company are all team sports. This is because one of the management s objectives for implementing sport activities within the company is to create team spirit (as shown in Figure 4, which indicates the reasons for choosing a certain type of sport for the employees) employees' personal opition team spirit 17.4 relationship development between the employees recreation kipping in shape others Figure 4. The reasons for choosing a certain sport for the employees A closer analysis of these reasons will show us that for the team sports the main reason is the development of team spirit and for individual sport is keeping in shape (body and mind) a healthier employee is more efficient. As a logical conclusion, the changing business environment of our days requires a dynamic adaptation of the Romanian organizations and a change in their corporate governance by making efforts to retain the most efficient employees with the aim of gaining their loyalty and devotion. This may be possible by establishing a set of integrated non-financial instruments of motivation, such as sport activities, which assures the health of company-employee relationship. Selective references 1. Ballantyne, D., Internal relationship marketing: a strategy for knowledge renewal, The International Journal of Bank Marketing, Bradford: 2000, Vol. 18, Iss Berry, L.L, The employee as a customer, Journal of Retail Banking, 1981, Vol Cetin, I., Brandabur, R., Constantinescu, M., Marketingul serviciilor teorie i aplica ii, Ed. Uranus, Constantinescu Mihaela, Filip Alina, Implementarea strategiilor de marketing sportiv abordare rela ional, Revista Român de Marketing, nr. 2/2007, Ed. Rosetti Educa ional, Bucure ti, Pervaiz K Ahmed, Mohammed Rafiq, Noorizan Mat Saad, Internal marketing, organizational competencies, and business performance, American Marketing Association, Conference Proceedings, Chicago: 2002, Vol