Abstract
M.Com. (Marketing Management)
Despite the extensive research undertaken in the subject area of services marketing, not much research has been conducted in the internal marketing area, specifically in the South African context. This study attempted to address this subject and focused on seven internal marketing mix elements (internal product, internal price, internal promotion, internal distribution, internal people, internal process and internal physical evidence) and their influence on the satisfaction of graduate development employees within retail banks in South Africa. Further to this, the link between employee satisfaction and affective commitment was explored due to its impact on employee productivity.
The growth of the service sector worldwide has led to services being considered as one of the most important sectors in the world. The contribution of the South African service sector to GDP was 68.1% in 2012, where the financial services sector in South Africa has already overtaken the manufacturing sector as the largest contributor to GDP. The financial service sector contributed 22% in 2008. Given the homogeneity within the retail banking industry, there is very little differentiating the banks, and imitation of any innovation is inevitable. For this reason a market-driven strategy that enables retail banks to deliver superior quality is essential as service quality is the only real differentiator and key to building a competitive advantage. Given its employees who create the service experience, the employee as the internal customer becomes the organisation’s most valuable asset. For this reason, retail banks in South Africa have been placing an increased focus on recruiting at the graduate level leading to the establishment of Graduate Development Programmes (GDPs). These banking GDPs are specifically designed to help graduates succeed in complex environments and to build the talent pipeline by providing an in-depth training programme. However one of the biggest challenges faced by banks is the satisfaction and retention of their GDP employees. Banks generally experience high attrition rates amongst this group of employees mainly due to job dissatisfaction which impacts service quality provided to external customers, and which increases the organisation’s costs. An internal marketing programme aimed at employees could enhance employee satisfaction which in turn could enhance employee levels of affective commitment resulting in higher retention rates. Satisfied employees will go the extra mile to serve external customers and in this manner service quality can be improved.
In order to investigate the influence of the internal marketing mix on employee satisfaction and test the relationship between employee satisfaction and affective commitment, an empirical investigation was conducted. The primary research objective of the study was to investigate the influence of the internal marketing mix on employee satisfaction from GDP employees’ perspective in order to enhance their satisfaction at retail banks with graduate development programmes in South Africa. In addition to this, the relationship between satisfaction and affective commitment was explored.
A census approach was applied to the study using a person administered and an electronic survey method. All retail banks with graduate development programmes were invited to participate in the study of which three agreed to participate. Of the 360 graduates, 64 employees agreed to participate in the study. Regression analysis was used to test the relationships proposed in the study. The internal promotion and internal physical evidence scales were discarded due to poor construct validity, internal distribution emerged as a two-factor solution and was split into collaborative culture and organisational structure, and the internal price element was not regarded as statistically significant. From the study, the internal marketing mix elements that influenced employee satisfaction to come to fore included internal product, collaborative culture, organisational structure, internal people and internal process.
The outcome of the regression analysis showed that employee satisfaction is influenced by internal product, collaborative culture, organisational structure, internal people and internal process. In addition to this, it was concluded that employee satisfaction influences affective commitment. Based on these outcomes, recommendations were made to retail banks for the implementation of a formal internal marketing mix through for example the implementation of the internal people element. Retail banks would be able to ensure that supervisors are easily accessible and providing constant ongoing feedback, a benefit which was identified as the most important contributor to GDP job satisfaction.