The perceived influence of the elements of internal marketing on the brand image of staffing agencies in South Africa.

The perceived influence of the elements of internal marketing on the brand image of staffing agencies in South Africa. CANDICE NATALIE BURIN 920303971 Dissertation Submitted in fulfilment of the requirements for the degree MCom in Marketing Management in the Faculty of Management at the University of Johannesburg JOHANNESBURG Supervisor: Dr HB Klopper May 2008-05-31 Co-supervisor: Prof M Roberts-Lombard

ABSTRACT Staffing agencies are known to operate in a highly competitive industry, have high employee turnover and generally have brand images that are not very prominent in the South African marketplace. Staffing agencies are highly under-researched considering the various obstacles they face. When clients choose to purchase a service product they are purchasing a bundle of intangible benefits based on the performance of people and the activities of employees to be specific. As a result, it becomes important to attract, retain and motivate the best employees in order to deliver the best service. Exceeding customer expectations, through providing exceptional service quality, results in a positive brand image of the organisation which customers are likely to share with others. This study follows a descriptive research design. Literature concerning internal marketing and brand image will be provided. The study makes use of two samples, a client and employee sample from the Kelly Group, a leading staffing group. Two questionnaires were designed based on the theoretical literature provided within the study and disseminated to the two samples. The questionnaires made use of a set of statements relating to the theory and a 5-point Likert scale that allowed respondents to select from five options ranging between strongly agree to strongly disagree. Various statistical analysis procedures were used to accomplish the objectives of the study including factor analysis, multiple and multivariate regression techniques. The primary objective of the study is to determine the influence of service quality on the perceived relationship between internal marketing and the brand image of the South African staffing brands and staffing subsidiaries of the Kelly Group. The study will further seek to determine how the different elements of internal marketing influence the brand image of employees and clients of selected staffing agencies in South Africa. The elements of internal marketing mix, namely product, price, promotion, distribution, people, processes and physical evidence will be separately observed in terms of their influence on the brand image dimensions, namely brand consistency, brand trust, brand satisfaction and brand commitment. The influence of the dimensions of service quality, namely reliability, responsiveness, assurance and empathy on the dimensions of brand image and the influence of service quality on ii

the elements of internal marketing will be explored in order to determine service quality s influence on the relationship between internal marketing and brand image. A framework to manage internal marketing, service quality and brand image in an integrated manner was determined. The conclusion and findings of the study were found to support the objectives of the study and the results of the statistical analysis were found to accept the hypotheses of the study. Various recommendations for staffing agencies were given based on the findings of the statistical analysis. These recommendations included the need for staffing agencies to monitor service quality gaps and that the internal product was highly influential to service quality and therefore staffing agencies need to provide a competitive internal product to employees. Internal distribution was found to be highly influential towards the responsiveness, assurance and empathy of a service and therefore staffing agencies need to focus on creating higher levels of internal service quality and teamwork within their organisations. Physical evidence and tangibles were found to be influential towards assurance and empathy of service quality and the importance of a modern open-plan staffing environment and a professional employee dress code were identified. Internal promotion was found to be influential to the responsiveness of a staffing agency s service and therefore the need to segment employees to determine how much information and how frequently information needs to be communicated to each group of employees was mentioned. The importance of staffing agency s considering the use of new media such as social networking websites, intranets and wikis was identified as most staffing agency employees work at the client s premises. Brand consistency was found to be critical in obtaining brand trust, satisfaction and ultimately commitment and that brand consistency is highly influenced by the service quality offered by a staffing agency. Staffing agencies could achieve consistency through attracting, hiring and training the correct type of employees to be consistent with the organisation s values. The empathy of the service provided by staffing agencies was considered highly important to all brand image dimensions of brand consistency, brand trust, brand satisfaction and brand commitment therefore staffing agencies need to have employees that show a sincere concern for their clients. Clients further perceived empathy as highly influential towards brand satisfaction, iii

which is important in order to gain brand commitment which ultimately leads to improved economic performance of the staffing agency. Staffing agency s need to care about their employees and their professional development in order for employees to care about the staffing agency s clients. Clients also perceived that brand trust and brand commitment were highly influenced by the responsiveness of the service. It was identified that staffing agencies need to attract, satisfy and communicate with their employees to deliver on client expectations. Assurance was the most influential service quality dimension influencing brand image but due to it having a kurtosis value over 1, this recommendation should be considered within caution. Staffing agencies need to consider an internal marketing approach as a means of curbing employee churn which will lead to higher levels of assurance. Staffing agencies need to ensure there is continuous knowledge renewal amongst employees. In order to create enthusiastic employee behaviour staffing agency managers need to recognise the supremacy of training as a marketing instrument. Middle managers should be used as trainers and motivators who build their employees capabilities and confidence. Staffing agencies should consider the internal price their employees need to pay to work for the organisation and avoid psychological contract violation. Staffing agencies could offer with flexible working options for their employees to increase their satisfaction. In order for employees to know what to do, how to do it and how to do it on a consistent basis requires the staffing agency to ensure that the internal marketing mix elements of internal processes and internal promotion are used effectively. The management of a staffing agencies need to provide basic scripted processes and technological processes to increase employee empowerment and service quality and reduce costs. Staffing agencies need to consider the importance of internal marketing in attracting and maintaining talented and knowledgeable employees. Internal marketing influences the superiority and consistency of the service quality provided by employees and experienced by clients and ultimately leads to the staffing agency having a stronger brand image, which ensures future economic performance and the sustainability of the staffing brand over the long-term. iv

DECLARATION I, Candice Natalie Burin, declare that this dissertation is my own, unaided work. Any assistance that I have received has been duly acknowledged in the dissertation. It is submitted in fulfilment of the requirements for the degree of Master of Commerce at the University of Johannesburg. It has not been submitted before for any degree or examination at this or at any other university....... Candice Burin 01 September 2010 v

ACKNOWLEDGEMENTS The love and continuous support of many facilitated me to complete this study successfully. I would like to acknowledge the contribution of the following people: My two mentors Dr HB Klopper and Prof M Roberts-Lombard from the Department of Marketing Management at the University of Johannesburg for guiding me, being patient with me, supporting me and mentoring me. Various business leaders for taking the time to see me and for assisting with their valued contributions. I would like to pay special thanks to: Denise Thomas (Previous Executive of Strategic Solutions at Kelly) Kim Meszaros (Marketing Manager at Kelly) Mike Stopforth (CEO of social networking company: Cerebra) Tracy Czakan (Group Marketing Director of the Kelly Group) My collegues and leadership at work for providing me the time and support to complete my study effectively. My mother, father and loving boyfriend for their support and sacrifices in allowing me to spend time on this study. Finally, I would like to thank God for making all this possible. vi

AFFIDAVIT vii

TABLE OF CONTENTS ABSTRACT DECLARATION ACKNOWLEDGEMENTS AFFIDAVIT LIST OF TABLES LIST OF FIGURES LIST OF APPENDICES Page ii v vi vii xvi xvii xviii CHAPTER 1 PROBLEM STATEMENT, OBJECTIVES AND METHOD OF STUDY 1 1.1. INTRODUCTION 2 1.2. BACKGROUND 4 1.3. PROBLEM STATEMENT 5 1.4. OBJECTIVES 7 1.4.1. Primary objective 7 1.4.2. Secondary objectives 7 1.5. HYPOTHESES 9 1.6. THE SIGNIFICANCE OF THE STUDY 10 1.7. LITERATURE REVIEW 11 1.8. RESEARCH METHODOLOGY 14 1.8.1. Research design 14 1.8.1.1. Secondary research 14 1.8.1.2. Primary and quantitative research 15 1.8.1.3. Descriptive research design 15 1.8.1.4. Population and sampling 16 1.8.1.5. Questionnaire and survey design 18 1.9. DATA ANALYSIS 19 viii

1.10. LIMITATIONS OF THE STUDY 20 1.11. DISCUSSION OF CONCEPTS 21 1.12. ORIENTATION OF THE STUDY 23 CHAPTER 2 THE STAFFING INDUSTRY IN SOUTH AFRICA 25 2.1. INTRODUCTION 26 2.2. THE STAFFING INDUSTRY: AN INTERNATIONAL PERSPECTIVE 27 2.2.1 The economic landscape and employment 27 2.2.2 The skills shortage conundrum 28 2.2.3 Age discrepancies in developed economies 29 2.2.4 Employee mobility 30 2.2.5 Candidate empowerment 32 2.2.6 Flexibility and security 32 2.3. THE SOUTH AFRICAN STAFFING INDUSTRY 33 2.3.1. The National Economic Development and Labour Council (NEDLAC) 38 2.3.2. Business Unity South Africa 40 2.3.3. The Confederation of Associations in the Private Employment Sector (CAPES) 40 2.3.4. The Association of Personnel Service Organisations 42 2.3.5. Staffing agencies 44 2.4. THE KELLY GROUP IN SOUTH AFRICA 48 2.4.1. Background of the Kelly Group 48 2.4.2. The services of the Kelly Group 50 2.4.3. The staffing brands of the Kelly Group 52 2.4.4. The competitive advantage of the Kelly Group 56 2.5. CONCLUSION 57 ix

CHAPTER 3 LITERATURE REVIEW: A PERSPECTIVE ON INTERNAL MARKETING 59 3.1. INTRODUCTION 60 3.2. INTERNAL MARKETS AND INTERNAL MARKETING 61 3.2.1. The internal market 61 3.2.2. Internal marketing 64 3.2.2.1. Defining internal marketing 65 3.3. THE MANAGEMENT OF INTERNAL MARKET RELATIONSHIPS 68 3.3.1. Internal environmental analysis 69 3.3.1.1. The purpose of internal marketing 70 3.3.1.2. The creation of an internal marketing environment 72 3.3.1.3. Knowledge renewal in an internal marketing environment 73 3.3.1.4. Organisational structure and internal marketing 74 3.3.2. Internal market segmentation 75 3.3.2.1. Defining internal market segmentation 76 3.3.2.2. Reversing organisational hierarchy 76 3.3.2.3. Types of internal customer segments 78 3.3.3. Organisational structure 81 3.3.4. Organisational culture 84 3.3.4.1. A description of organisational culture 85 3.3.4.2. A management perspective on organisational culture 85 3.3.4.3. An employee perspective on organisational culture 86 3.3.4.4. The different components of organisational culture 87 3.3.4.5. An internal marketing view of organisational culture 87 3.4. THE INTERNAL MARKETING MIX 89 3.4.1. Internal products 89 3.4.1.1. Training opportunities 91 3.4.1.2. Providing careers not jobs 91 3.4.1.3. The disadvantages of job-products 93 3.4.2. Internal price 94 3.4.2.1. Opportunity cost 94 3.4.2.2. Psychological cost 96 x

3.4.2.3. Emotional cost 97 3.4.3. Internal promotion 98 3.4.3.1. Describing the term internal promotion 98 3.4.3.2. The importance of internal promotion as a communication tool 99 3.4.3.3. Advertising 100 3.4.3.4. Personal selling 102 3.4.3.5. Sales promotion 102 3.4.3.6. Public relations 103 3.4.3.7. New media 104 3.4.4. Internal distribution 107 3.4.4.1. Internal client service 107 3.4.4.2. The working environment 108 3.4.5. People 111 3.4.5.1. Employee empowerment 112 3.4.5.2. Human resource rewarding 116 3.4.6. Internal processes 119 3.4.6.1. Management s role in internal processes 120 3.4.6.2. The role of technology in internal processes 121 3.4.7. Physical evidence 124 3.4.7.1. The physical work environment 124 3.4.7.2. Physical evidence during the client interaction 126 3.4.7.3. Physical evidence s influence on internal interactions 127 3.5. SERVICE QUALITY AS A COMPONENT OF THE INTERNAL MARKETING PROCESS 129 3.5.1. Service quality standards 129 3.5.1.1. A description of service quality 130 3.5.1.2. Service quality perspectives 130 3.5.1.3. The different dimensions of service quality 131 3.5.2. Service quality monitoring 133 3.5.2.1. Describing service quality monitoring 133 3.5.2.2. The process of service quality monitoring 134 3.5.2.3. The importance of internal service quality 135 3.5.2.4. The service-profit-chain and the virtuous circle model 135 3.5.3. The linkage between the elements of the internal marketing mix and xi

the dimensions of service quality 140 3.5.3.1. The link between the internal product and the dimensions of service quality 140 3.5.3.2. The link between internal price and the dimensions of service quality 140 3.5.3.3. The link between internal promotion and the dimensions of service quality 141 3.5.3.4. The link between internal distribution and the dimensions of service quality 142 3.5.3.5. The link between people and the dimensions of service quality 142 3.5.3.6. The link between internal processes and the dimensions of service quality 143 3.5.3.7. The link between physical evidence and tangibles and the dimensions of service quality 143 3.5. CONCLUSION 144 CHAPTER 4 LITERATURE REVIEW: A PERSPECTIVE ON BRAND IMAGE 146 4.1. INTRODUCTION TO SERVICE BRAND MANAGEMENT 147 4.2. DEFINING THE CONCEPTS BRAND AND BRAND MANAGEMENT 148 4.3. THE EVOLUTION OF MODERN BRAND IMAGE 152 4.4. CORPORATE IDENTITY, CORPORATE IMAGE AND CORPORATE REPUTATION 158 4.5. BRAND IDENTITY AND BRAND IMAGE 164 4.5.1. Brand identity 164 4.5.2. The factors composing brand identity 165 4.5.3. Brand image 168 4.6. KEY BRAND IMAGE BUILDING CONSTRUCTS 170 4.6.1. Brand consistency 170 4.6.2. Brand trust 173 4.6.3. Brand satisfaction 174 xii

4.6.4. Brand commitment and loyalty 175 4.6.5. Linking key constructs 176 4.7. THE ROLE OF EMPLOYEES IN BRAND IMAGE MANAGEMENT 178 4.8. INTERNALISING THE BRAND 179 4.9. BRAND VALUES INFLUENCE ON BRAND IMAGE 180 4.9.1. Functional versus emotional values 181 4.9.2. Brand values connection to brand identity 181 4.10. COMMUNICATION S INFLUENCE ON BRAND IMAGE 183 4.10.1. Corporate Communication 183 4.10.2. The importance of consistency in brand communications 183 4.10.3. The need for Integrated Marketing Communications (IMC) 184 4.10.4. Internal communication 185 4.10.5. The connection between communication and brand image 186 4.11. CULTURE S INFLUENCE ON BRAND IMAGE 190 4.11.1. Culture defined 190 4.11.2. Aligning employees with culture 191 4.11.3. The connection between culture, brand values and image 192 4.12. HOW INTERNAL MARKETING AFFECTS BRAND IMAGE 197 4.12.1. The difference between internal marketing and brand management 197 4.12.2. Internal marketing s impact on the brand image 198 4.13. CONCLUSION 200 CHAPTER 5 RESEARCH DESIGN AND METHODOLOGY 201 5.1. INTRODUCTION 202 5.2. THE RESEARCH PROCESS 202 5.2.1. Step 1: Identify and formulate the problem or opportunity 203 5.2.2. Step 2: Determine the research objectives 204 5.2.3. Step 3: Research design 204 5.2.3.1. Quantitative research data 204 5.2.3.2. Descriptive research design 205 xiii

5.2.4. Step 4: Conduct secondary research 206 5.2.5. Step 5: Select a primary research method 206 5.2.5.1. Data gathering technique 207 5.2.5.2. A self-administered on-line questionnaire 208 5.2.5.3. Covering letter 209 5.2.5.4. Questionnaire 212 5.2.5.5. The choice of scale 213 5.2.5.6. Pre-testing of the questionnaire 219 5.2.5.7. Validity of the questionnaire 220 5.2.5.8. Reliability of the questionnaire 222 5.2.6. Step 6: Determine the research frame 223 5.2.6.1. Target population 224 5.2.6.2. Sampling frame 225 5.2.6.3. The sampling unit 226 5.2.6.4. Sample size 227 5.2.7. Step 7: Data gathering 228 5.2.8. Step 8: Data analysis 228 5.2.8.1. Editing of data 229 5.2.8.2. Coding of data 229 5.2.8.3. Processing of data 229 5.2.8.4. Statistical analysis of data 230 5.2.8.5. Sampling errors 240 5.2.8.6. Response errors 240 5.2.8.7. Non-response errors 241 5.3. ETHICAL CONSIDERATIONS 241 5.4. CONCLUSION 242 CHAPTER 6 RESEARCH RESULTS AND INTERPRETATION 243 6.1. INTRODUCTION 244 xiv

6.2. MEASUREMENT OF RESEARCH OBJECTIVES AND HYPOTHESES 244 6.3. DISCUSSION OF THE EMPIRICAL FINDINGS 248 6.3.1. Factor analysis and the validity of the questionnaire 249 6.3.2. The reliability of the questionnaire 252 6.3.3. Respondent rate and sample descriptive 253 6.3.4. Normality and linearity of the data 265 6.3.5. Multiple regression results 271 6.3.5.1. Relationship 1: The relationship between the seven elements of Internal marketing and the four dimensions of service quality using multiple regression 271 6.3.5.2. Relationship 2: The relationship between the four dimensions of service quality and the four dimensions of brand image using multiple regression 286 6.3.5.3. Relationship 3: The relationship between the seven elements of Internal marketing and the four dimensions of brand image using multiple regression 296 6.3.6. Multivariate regression results 313 6.3.6.1. Relationship 1: The relationship between the seven elements of internal marketing and service quality using multivariate regression analysis 314 6.3.6.2. Relationship 2: The relationship between the four dimensions of service quality and brand image using multivariate regression analysis 316 6.3.6.3. Relationship 3: The relationship between the seven elements of Internal marketing and brand image using multivariate regression 317 6.4. SUMMARY CONCERNING THE STATISTICAL HYPOTHESIS 321 6.5. CONCLUSION 322 CHAPTER 7 CONCLUSIONS, IMPLICATIONS AND RECOMMENDATIONS FOR FUTURE RESEARCH 323 xv

7.1. INTRODUCTION 324 7.2. OVERVIEW OF THE STUDY 324 7.3. CONCLUSIONS (MAJOR FINDINGS) AND RECOMMENDATIONS FOR SECONDARY OBJECTIVES 327 7.3.1. Secondary objective (a) 327 7.3.2. Secondary objective (b) 329 7.3.3. Secondary objective (c) 331 7.3.3.1. Development of an integrated framework 331 7.3.3.2. Relationship 1 335 7.3.3.3. Relationship 2 344 7.3.3.4. Relationship 3 350 7.4. LIMITATIONS AND DIFFICULTIES OF THE STUDY 359 7.5. AREAS FOR FUTURE RESEARCH 359 7.6. FINAL CONCLUSIONS 360 REFERENCES 362 xvi

LIST OF TABLES Table 2.1: The different services offered by the Kelly Group 50 Table 2.2: The different staffing brands within the Kelly Group 52 Table 3.1: Definitions of the term Internal Market 63 Table 3.2: Definitions of the term Internal Marketing 66 Table 4.1: Definitions of the term Brand 148 Table 4.2: Definitions of the term Brand Management 150 Table 5.1: The differences between online and offline survey methods 207 Table 6.1: KMO and Bartlett statistics for the employee sample 251 Table 6.2: KMO and Bartlett statistics for the client sample 252 Table 6.3: Results of the Cronbach alpha test 253 Table 6.4: Sample realisation rate 254 Table 6.5: Various descriptive and the estimated standard error for the employee sample 258 Table 6.6: Employees perceptions of the most important considerations when selecting and remaining with a staffing agency over the long-term 259 Table 6.7: Various descriptives and the estimated standard error for the client sample 262 Table 6.8: Clients perceptions of the most important considerations when selecting and remaining with a staffing brand over the long-term 263 Table 6.9: Skewness and kurtosis summary 265 Table 6.10: Summary of Kolmogorov-Smirnov and Shapiro-Wilks p-values 267 Table 6.11: Regression of the elements of internal marketing on Service quality 272 Table 6.12: R 2 for the final regression model of the elements of internal marketing on the dimensions of service quality 284 Table 6.13: Regression of service quality on the dimensions of brand image 287 Table 6.14: R 2 for the final regression model of service quality on the dimensions of brand image 293 Table 6.15: Multiple regression of brand image on the elements of internal marketing 297 xvii

Table 6.16: R 2 for the final regression model of brand image on the elements of internal marketing 310 Table 6.17: Multivariate regression for four dependent elements of service quality and seven independent variables of internal marketing 314 Table 6.18: Multivariate regression for the four dependent elements of brand image and four independent variables of service quality 316 Table 6.19: Multivariate regression for four dependent elements of brand image and seven independent variables of internal marketing 319 Table 6.20: Summary concerning the statistical hypothesis 321 xviii

LIST OF FIGURES Figure 1.1: The three key relationships explored in the study 6 Figure 1.2: Choice of population and sample 16 Figure 2.1: Rapid growth of registered staffing agencies in South Africa 37 Figure 2.2: The structure of the staffing industry in South Africa 38 Figure 3.1: Proposed conceptualisation of internal market orientation 62 Figure 3.2: The redefined internal market domain 77 Figure 3.3: The types of internal organisational customers 78 Figure 3.4: The evolution of organisational structure 82 Figure 3.5: The Virtuous Circle 136 Figure 4.1: How brand image used to be 153 Figure 4.2: The brand image circumvented due to the Internet 155 Figure 4.3: The new brand management model 157 Figure 4.4: Clients become part of the brand culture 158 Figure 4.5: The link between corporate identity, image and reputation 159 Figure 4.6: Factors composing brand identity 165 Figure 4.7: The connection between communication and brand image 186 Figure 4.8: The connection between communication, culture and brand values to brand image 193 Figure 5.1: Steps in the research process 203 Figure 5.2: Target population, sample units, sample elements and actual sample size of the study 224 Figure 7.1: Proposed statistical model for the study based on KMO statistics 332 Figure 7.2: A summary of the relationships between the primary and secondary objectives, the questions in the questionnaire, the main and major findings, and the recommendations of the study 358 xix

ANNEXURES Annexure A: Employee questionnaire cover letter 401 Annexure B: Client questionnaire cover letter 402 Annexure C: Employee questionnaire 403 Annexure D: Client questionnaire 411 Annexure E: Histograms for employee and client data 417 Annexure F: Box and whisker plots for employee and client data 422 xx