USE INTERNAL MARKETING TO IMPROVE EMPLOYEE S ORGANIZATIONAL COMMITMENT

USE INTERNAL MARKETING TO IMPROVE EMPLOYEE S ORGANIZATIONAL COMMITMENT Yafang, Tsai, Dept. of Health Service Administration, Chung-Shan Medical University, 00886-04-24730022 ext 17176, e-mail address: avon611@gmail.com & avon611@yahoo.com.tw ABSTRACT This research adopts a cross-sectional study to investigate staffs perception of internal marketing and organizational commitment of three regional teaching hospitals in Taiwan. Research samples are staffs of three hospitals including the administrative department, medical department, medical technology department, and nursing department. The survey sample includes 350 questionnaires were distributed, resulting in 288 valid questionnaires being returned. The valid return rate for the survey is 82.29%. The results of study show a positive correlation between organizational commitment and internal marketing, and the age, professional title and seniority will influence staff's perception on organizational commitment and internal marketing. Key words: Hospital Management, Internal Marketing, Organizational Commitment, Job Satisfaction, Human Resource Management 1

INTRODUCTION In 1995, Taiwan implemented its national health insurance system, thus adding a third party Bureau of National Health Insurance to the simple two-sided relationship between health service providers and users. A trilateral exchange relationship mode was thus established in Taiwan s health care system. The percentage of citizens covered by the national health insurance in Taiwan reached 96.16% in 2001. Meanwhile, the proportion of national health expenditures (NHE) to the gross domestic product (GDP) increased from 3.40% in 1980 to 5.77% in 2000 and seems to keep growing [1]. To meet daily growing medical care expenses, medical care authorities had to adjust their policies on medical coverage and insurance premiums, which in turn, influenced the operations strategies of medical institutions and their services. As an indirect consequence, they also influenced the relationship between medical institutions and their patients. The medical service system in Taiwan is controlled by a government organization, the health insurance agency, and numerous other private organizations, which can display the exchange features of a network market. In effect, they form a multilateral exchange relationship. The quality of medical care provided by medical institutions and their source of income are thus influenced not just by medical care policies adopted by government authorities but are also swayed by regulations of the medical insurance system. The costs of providing medical services are regulated by the medical insurance system, prompting medical institutions to pay importance to resource allocation efficiency and better service quality for patients. Under the dual pressure to control costs while maintaining quality of service, medical institutions often face administrative and management challenges. Owing to the changing medical environment in Taiwan, to improve and maintain hospital performance, hospital administrators recently have devoted themselves to improving the relationship between patients and service providers, and to considering methods of improving hospital service quality to satisfy patient demands and enhance patient loyalty. Greene et al.[2] proposed that service organizations should pay increased attention to internal marketing, because service processes generally maintain contact with customers via their employees[3], most service industry organizations are highly labor-intensive and internal marketing is helpful for such organizations in attracting and ensuring high involvement of high quality talent [4]. Internal marketing practices aim to attract and retain the most qualified and committed employees for organizations. In a service-providing organization, this translates into eliciting service-oriented behaviors designed to achieve high customer satisfaction and loyalty [5]. Bansal et al. posited that internal marketing can improve employee organizational loyalty and job satisfaction [10]. Previous empirical research has identified a positive correlation between employee s job satisfaction and organizational commitment [6]. Research Objectives and Importance of the investigation Significance Studies on internal marketing primarily adopt the service industry as the research object, but most researchers still view commercial organizations as the research object. However, administrators of nonprofit organizations, such as hospitals, should pay greater attention to improving internal management process, for example through downsizing, reorganization, and so on, owing to the influence of changes in medical environment and health policy. Cooper & Cronin [7] though focused on nursing home care and their focus was limited to internal marketing activity, but the main goal of internal marketing is to enhance service quality for external customers [8].According to the service-value chains [9], internal and external customer satisfaction should be included in other mediator variables. Restated, organizations can through promoting internal marketing, improve internal customer satisfaction and thus improve external customer satisfaction [10]. Internal Marketing During the early 1980s, the concept of internal marketing first appeared in the service marketing literature [4,5,11,12,13,14,15].Internal marketing is one of the methods for human resources management [16]. It proposes the use of motivation, mobilization, co-opting and management of personnel to retain their services and serve external clients in ways that are constantly improving [12]. Tansuhaj et al. [3] believe that internal marketing stresses various plans that emphasize employee 2

development and that a complete internal marketing program must necessarily include employee recruitment, training, encouragement, communication and retaining activities that lead to changes in employee attitudes and behavior. In other words, internal marketing is a company s human resources management activity for the successful hiring, training and encouraging of employees, and providing better services to clients [13]. George & Grönroos [17] more clearly point out that internal marketing is a philosophy of managing human resources from the marketing perspectives. Collins et al. [18] contrasted the 4Ps of marketing with HR management activities. They posit that products are the HR products (HR services, classes, programs, etc.). Price is converted set price, fund allocation and opportunity cost. Place (channel) is the locale for providing services or the mode of transmission used. Promotion is communication with the client (mainly through meetings and documents). Still, other scholars think that internal marketing must be viewed in terms of organizational behavior. They believe that internal marketing is a social process [19] and that it can be used to make employees acquire more positive work attitudes, such as commitment to the organization, dedication, encouragement and satisfaction [3]. Companies can take advantage of internal marketing to make organization members adjust their behavior such that they gradually become more customer- and service-oriented, thereby providing clients with products and services that better meet their needs [20]. Organizational commitment The extensive body of scientific studies on organizational commitment, largely focused on organizational behavior/psychology, has produced various definitions of the factor construct and considerable discussion of its development, consequences, and measurement [21]. At a general level, most researchers agree that organizational commitment describes a psychological state that characterizes the relationship of an employee with the organization for which they work and that has implications for their decision to remain with the organization [22]. Organizational commitment comprises employee attachment to their organization [23, 24]. Meyer and Allen [25] have identified three types of organizational commitment. Affective commitment describes individual emotional attachment, identification with, and involvement in a particular organization. Furthermore, continuance commitment reflects employee awareness of the costs of leaving an organization. Finally, normative commitment reflects individual sense of obligation to remain in an organization. The Relationship between Internal Marketing and Organizational commitment Internal marketing is based on the notion that organizations providing secure employment are committed to their workforce [26]. Additionally, the theory of reciprocity suggests that this commitment should be returned by employees by demonstrating enhanced job satisfaction and trust in management [27]. Thus, firms can use internal marketing activities to improve employee job satisfaction [10]. Beside, internal marketing emphasizes that firms can hire employees who can be eligible for the organizational mission of business management to provide employees with clear vision and goals and improve the design of human resource management [8]. Organizational commitment indicates the degree to which individuals are emotionally attached to the organization and identify with organizational goals [28]. Commitment thus involves a desire by employees to consider the interests of their organization, and to want to perform the activities necessary for quality improvement [29]. Internal marketing assume that organizations, through internal marketing activities, can improve the job satisfaction of internal customers. Previous studies have established that employee organizational commitment is positively correlated with job satisfaction [30,31, 32]. When employee job satisfaction is enhanced, employee adopts a positive attitude when serving external customers, a situation that can help to improve service quality for customers. According to the research framework (see Figure 1), the hypotheses of this study are: H1. Employee demographic variables influence the perception of internal marketing. H2. Employee demographic variables affect the perception of organizational commitment. H3. Internal marketing is positive correlated with organizational commitment. 3

Gender, Marital status, Department, Seniority, Educational level, Age, Position in hospital Internal Marketing + Organizational Commitment Figure1 Theoretical framework of internal marketing and organizational commitment Sampling METHODOLOGY This work adopts a cross-sectional study to investigate the employees of three district hospitals in Taiwan. The survey sample includes all employees of the sample hospitals, including administrative, medical, medical-technology and nursing staff. 350 questionnaires were distributed, resulting in 288 valid questionnaires being returned. The valid return rate for the survey is 82.29%. The survey period ran from February 1 to March 9, 2006. Data Collection Internal Marketing. This work is implemented by a questionnaire survey using the 7- point Likert scale. Money & Foreman [33] adopted a case research approach to develop internal marketing survey tools, took two samples as the research object, applied the same questionnaire to both samples, and set the Cronbach s values of the questionnaire to 0.942 and 0.948, a scale which has subsequently become the standard [34]. This investigation uses the questionnaire designed by Money & Foreman [33].Organizational Commitment. Organizational commitment (OC) was measured using the fifteen-item version of the Organizational Commitment Questionnaire [24]. This work uses the questionnaire developed by Mowday et al.. Demographic Questionnaire. Data were collected on respondents age, department, educational level, marital status, position in hospital, gender, and seniority. Descriptive Statistics RESULTS AND DISCUSSION This investigation presents the mean and standard deviation of hospital employee perceptions of internal marketing, and organizational commitment. The mean value of internal marketing in the hospital lies between 4.8-4.4. Moreover, the mean value for employee s organizational commitment lies between 3.02 and 4.78. Inferential Statistical Analysis This study adopts One-way ANOVA to explore the effect of demographic variables on internal marketing, and organizational commitment. Furthermore, by focusing on the analytical results produced by one-way ANOVA, this work implements a Scheffe Post-Hoc comparison by focusing on the results with significant variance. Cooper & Cronin [7] know that demographics (including age, gender, education and working experience) are influence nurses perception of internal marketing. This study finds that age affects employee perceptions of internal marketing. Within employee perceptions of internal marketing, subjects aged 30-39 years old are significantly stronger high than are group members aged below 20. Among different position in hospital, director rankers exhibit 4

stronger perceptions of internal marketing than do ordinary employees. Director rankers generally become involved in creating strategy projects and policies of human resource management systems for hospitals. Consequently, they have stronger perceptions of internal marketing than ordinary employees. Researchers found that demographics affect organizational commitment [35, 29]. This research found the department variable affects employee responsiveness to organizational commitment. The degrees of organizational commitment within medical care departments exceed those of administrative departments. This phenomenon possibly occurs because the personnel of medical care departments are the main service providers of health care services and deal with patients directly with high emphasis on service quality commitment from hospital management departments easily. Naturally, the remuneration of doctor is much better than that of ordinary administrative staff in Taiwan. Thus, they display higher organizational commitment than administrative staff. Conducting relevant analysis with Person correlation, when α=0.01, the coefficient correlation value for organizational commitment between internal marketing is 0.478(P=0.000). CONCLUSIONS AND IMPLICATIONS The results indicate that employees believe that internal marketing activities must include establishing a clear management vision, providing a good workplace to employees, providing training and development, motivating and controlling employees, and retaining employees and so on, all of which are important to hospital administrators. We find that employee perceptions of organizational commitment are correlated with their perceptions of internal marketing. We recommend that hospital administrators can enhance their internal marketing activities to improve employee perceptions of organizational commitment. The results show us that health care service providers exhibit stronger perceptions of organizational commitment than administrative staff. This difference possibly exists because except for administrative directors, the salary and welfare of medical care givers generally exceed those of ordinary administrative staff. This salary gap exists because the said medical care givers are professional talent who has profession certificate examinations and is only available for medical care givers to provide professional medical service. We recommend hospital administrators can improve the non salary welfare of administrative staff. For example, education and training activities can be enhanced to improve the professional skills of administrative staffs and provide intrinsic motivation to the said administrative staff. REFERENCES [1]Chang, Shun Chuan 2002. Statistical Office, Department of Health, Executive Yuan, Taiwan, R.O.C. [2]Greene, W.E., Walls, G.D. & Schrest, L.J. 1994. Internal Marketing: The Key to External Marketing Success. Journal of Services Marketing 8 (4):5-13. [3]Tansuhaj, P., Randall D. & McCullough, J. 1991. Applying the Internal Marketing Concept within Large Organizations: As Applied to a Credit Union. Journal of Professional Services Marketing 6 (2):193-202. [4]Berry, L.L. 1984. Services Marketing Is Different, In: Lovelock Christopher H, editor. Services Marketing, Prentice-Hall, Englewood Cliffs, NJ. [5]Barnes, Brandley R. & D.S. Morris. 2000. Revising Quality Awareness through Internal Marketing: An Exploratory Research among French and English Medium-Sized Enterprises. Total Quality Management 11 (4): S473-S483. [6]Allen, N.J., & Meyer, J.P. 1996. Affective, Continuance, and Normative Commitment to the Organization: An Examination of Construct Validity. Journal of Vocational Behavior 49:252-276. [7]Cooper, Jack & John J. Cronin. 2000. Internal Marketing: A Competitive Strategy for the Long-Term Care Industry. Journal of Business Research 48:177-181. [8]Reynoso J.F., Moores B. 1996. Internal Relationship, in: Buttle F, editor. Relationship Marketing: Theory and Practice, London: Paul Chapman Publishing, 55-73. [9]Heskett, James L., Jones, Thomas O., Loveman, Gary W., Sasser, Earl W. & Schlesinger, Leonard A. 1994. Putting the Service-Profit Chain to Work. Harvard Business Review March-April:166. [10]Bansal, Harvir, S, Mendelson, Morris B., Sharma, Basu. 2001. The Impact of Internal Marketing Activities on External Marketing Outcomes. Journal of Quality Management 6: 61-76. 5

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