PROJECT REPORT

ON
UNDERSTANDING EMPLOYEE ENGAGEMENT IN THE
WORKPLACE THROUGH INTERNAL MARKETING

Name of Faculty: Dr. Surya Prakash Pati

Professor, Human Resource Management

Name of Students:
Mohit Mishra (PGP/21/156)
Vaibhav Agrawal (PGP/21/183)
VinothKumar G (PGP/21/185)
Yugandhar Vullakula (PGP/21/186)
Swati Gautam (PGP/21/366)
Shirley Joshua (PGP/21/368)

Submitted in partial fulfilment of the degree of

Post-Graduate Diploma in Management (PGDM)

INDIAN INSTITUTE OF MANAGEMENT

KOZHIKODE-673570
March 2018
1. MOTIVATION AND RELEVANCE

The Merriam-Webster dictionary describes the state of being engaged as “emotional

involvement or commitment” and as “being in gear”. It happens to be the prerequisite for the
smooth and efficient working of any establishment because it is seen that higher the level of
engagement, higher is the feeling of ownership and dedication among the employees which
consequently leads to improved productivity.
Any manager’s worst nightmare is being assigned an unmotivated and disengaged team but
unfortunately the recent figures on employee engagement (at a global level) confirm that this
nightmare is being lived by many employers. A disengaged employee is not only detrimental
to the organisation’s productivity but also to himself. Not only is his growth as a person stalled,
but monotony sets in gradually and brings along frustration and disappointment.

As per Gallup’s latest report, based on a survey conducted in 142 countries, on workplace
engagement, only 13% of the surveyed employees were engaged at work. And these alarming
figures reinstate the need of our research which helps us find a solution to this problem, in the
concept of internal marketing by recognising its impacts on employee engagement.

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2. RESEARCH QUESTION
What is the nature and degree of relation of internal marketing on employee engagement in
both manufacturing and service industry?

3. OBJECTIVES OF THE STUDY

 To study and understand various aspects of internal marketing, employee engagement.

 To determine the impact of internal marketing on employee engagement in

manufacturing and service industry.
 To understand the effect of individual factors of internal marketing on employee
engagement.
 To provide suggestions and recommendations based on the study.

4. LITERATURE REVIEW
4.1 Eddy Balemba Kanyurhi, Déogratias Bugandwa Mungu Akonkwa, (2016) "Internal
marketing, employee job satisfaction, and perceived organizational performance in
microfinance institutions", International Journal of Bank Marketing, Vol. 34 Issue: 5,
pp.773-796, https://doi.org/10.1108/IJBM-06-2015-0083
The paper discusses about three issues. First is testing relationships between employee
satisfaction and internal marketing; second being investigation of the links that exist between
perceived organizational performance and employee satisfaction; and lastly testing the
relationships between perceived organizational performance and internal marketing. The
practical implications of the paper say that MFIs managers should change their mind and give
more attention to their employees. It is a fact that in general, employees generate the major
chunk of the cost but they can significantly contribute to sustenance of growth and profitability.
And this is possible if they are better rewarded for the efforts that the employees put in.

4.2 Wilmar B. Schaufeli, Arnold B. Bakker, Marisa Salanova, (2006) “The Measurement of
Work Engagement with a Short Questionnaire”, Educational and Psychological
Measurement, Volume 66 Number 4, pp. 701-716
4.3 Mohammed Rafiq, Pervaiz K. Ahmed, (2000) "Advances in the internal marketing
concept: definition, synthesis and extension", Journal of Services Marketing, Vol. 14
Issue: 6, pp.449-462, https://doi.org/10.1108/08876040010347589

There are some studies that explain the link between behaviours of engaged employees and
internal marketing practices, and these studies claim that internal marketing is an important
tool for the creation of powerful employee engagement (Shahzad & Naeem, 2013). But we also
know that internal marketing is a neglected issue in companies (Ahmed & Rafiq, 2000) as there
is lack of proper definition of internal marketing and measurement of its practices. Also, there
are less number of tools available for measurement and this creates problems in the evaluation
of the relationship between behaviours of engaged employees and internal marketing practices.

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4.4 Richard J. Varey, Barbara R. Lewis, (1999) "A broadened conception of internal
marketing", European Journal of Marketing, Vol. 33 Issue: 9/10, pp.926-944,
https://doi.org/10.1108/03090569910285869

For some years, in marketing and other disciplines of management, internal marketing has been
of interest to practitioners and academics, and they have also published papers that focus on
the role of internal marketing in organisations, its definition and various empirical
investigations. The paper discusses the elements of a broadened concept on internal marketing,
which emerges from: a systematic review and examination of the existing literature; case study
material; “expert'” opinion from leading academics; and interviews with managers.

4.5 Wilmar B. Schaufeli, Marisa Salanova, Vicente Gonzalez-Roma, Arnold B. Bakker, (2002)
“The measurement of engagement and Burnout: A two sample confirmatory factor
analytic approach”, Journal of Happiness Studies, pp. 71-92
The paper examines the factorial structure of a new instrument to measure engagement, the
hypothesized ‘opposite’ of burnout in a sample of university students (N=314) and employees
(N=619). In both samples, factor analyses was conducted on burnout using a three factor
structure exhaustion, cynicism, and professional efficacy and also employee engagement using
a three factor structure vigour, dedication and absorption. The paper found that there exists a
strong negative correlation burnout and engagement, and positive inter-correlations in between
the factor of burnout and engagement. They found through the results that professional efficacy
should be considered as an element of engagement rather than burnout and there is a stronger
negative correlation between core factors of burnout (exhaustion, cynicism) and engagement.

4.6 Susan K. Foreman, Arthur H. Money, (1995) “Internal Marketing: Concepts,

Measurement and Application”, Journal of Marketing Management” Vol. 11, pp. 755-
768
The paper examines the principles that form fundamentals of internal marketing. It studies
firms as an internal markets and then provides four types of internal marketing based on who
the internal marketer is and on whom it is being aimed at. The research illustrated in this paper
investigated in identifying components of internal marketing based on this three factors were
identified development, rewards and vision.

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5. RESEARCH METHODOLOGY:
5.1 Variables for evaluation

We have identified three variables that determine the intensity of internal marketing done by a
firm- Vision, Development & Reward. Similarly, for employee engagement the three variables
that have been identified are-Vigour, Dedication & Absorption. These variables can be
accessed by evaluating the responses on some standard set of questions.
5.2 Hypothesis:
Based on the academic literature review and the conceptual model as its outcome, we are
planning to test the following hypothesis:
H1: There is statistically significant effect for the application of internal marketing on the
employees’ performance in the manufacturing and services sector.

5.3 Instrument:
The scale designed by Shaufeli et al and a scale developed by Foreman et Money were
borrowed to measure Employee engagement and Internal Marketing. Shaufeli et al’s scale has
9 items measuring three components of employee engagement – Vigour, Dedication and
Absorption. Foreman and Money’s scale has 15 items measuring three components of Internal
marketing – Vision, Development and Reward. Refer Appendix for both scales.
5.4 Data Collection and Analysis:
A google form with all 24 items (9 items + 15 items) listed was floated around with the team
member’s contacts in manufacturing and service industries. The responses are recorded in a 7-
point Likert scale. The collected data is then exported to excel file and each response in decoded
to numeric value as mentioned below.
Response Value
Never / Strongly Disagree 1
Almost Never / Disagree 2
Rarely / Disagree somewhat 3
Sometimes / Neither agree nor disagree 4
Often / Agree somewhat 5
Very often / Agree 6
Always / Strongly Agree 7
Table-1: Likert Scale

The data was analysed using SPSS for Windows and regression analysis was performed based
on – a.) No condition, b.) Industry and c.) Years of work experience

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6. DATA ANALYSIS AND INTERPRETATION
6.1 Data Analysis
Analysis 1: Explaining the relationship between Work engagement and Internal Marketing –
All Respondents

Analysis 2: Explaining the relationship between Work engagement and Internal Marketing –
Industry Specific
Section 2.1. Manufacturing Industry

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 Section 2.2. Service Industry

Analysis 3: Explaining the relationship between Work engagement and Internal Marketing –
Years of Experience
Section 3.1. Less than 2 years of experience*

* Sample size for this particular hypothesis testing is 40

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 Section 3.2. Between 2 to 5 years of experience

Section 3.3. More than 5 years of experience*

* Sample size for this particular hypothesis testing is 29.

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6.2 Findings:
Underlying Hypothesis – Our research work started with the underlying hypothesis that there
is a positive correlation between employee engagement and internal marketing. We developed
a regression model to test our hypothesis and listed below are our findings.

1. We had a total of 170 respondents with the following characteristics:

a. Male: Female – 70% : 30%
b. Services: Manufacturing – 59% : 41%
c. Work Experience –
i. < 2 years – 26%
ii. 2 – 5 years – 51%
iii. > 5 years – 24%
2. Analysing the results considering the overall respondent pool, we noticed the following
things:
a. There is a significant positive correlation between internal marketing and
employee engagement
b. We identified that “Development” was the biggest contributor towards
increasing employee engagement in organizations irrespective of the sector
3. Delving further into the analysis, we tried to identify the driving indicators by
segregating the respondent pool based on work experience:
a. < 2 years – “Vision” was identified as the driving factor for people from this
pool. We noticed that sharing the vision of the organization will result in
maximizing the work engagement for such employees
b. 2 – 5 years – “Development” will act as a motivating indicator to enhance the
work engagement for this pool of employees
c. > 5 years – Employees from this pool also show an inclination towards enhanced
work engagement by promoting “Development” in the work culture

6.3 Interpretation:
1. Irrespective of the type of industry, internal marketing is important to make employees
feel engaged in the job that they do
2. Despite the common notion that reward encourages employees to stay motivated in the
job, we found that development makes employees stay engaged in the job. We could
recall Herzberg’s Two-factor theory and relate it to this scenario
a. Hygiene – Rewards shall be considered as basic hygiene factors, the absence of
which will lead to Job dissatisfaction
b. Motivators – Development, on the other hand, directly affects Employee
engagement. So, it shall be considered as a motivator, the presence of which
will increase Job satisfaction
3. Employees with more than 2 years of experience or in the middle phase of their career
think development is very important for them to stay engaged in the job. We can
interpret that employees in middle management seek out for opportunities to grow as a
professional and develop their career.

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7. RECOMMENDATIONS
Historically companies in service domain have tried to conduct research on internal marketing
to improve their employee engagement. Through our analysis we found that manufacturing
sector also shows a good relation between internal marketing and employee engagement. Thus,
manufacturing companies should focus on internal marketing since the competitiveness is
increasing and firms need the best of their employees to crack the details.
To promote the vision among the employees, companies should conduct town hall meetings
where leaders can share their views with all employees. Office forums can be created for
discussions to involve employees in other activities other than their mundane work.
To increase the development of employees, various coaching and mentoring programs should
be introduced. Behavioural adaptation sessions by renowned psychiatrists can be initiated for
all employees.

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 APPENDIX-A
A-1: Foreman and Money’s Internal Marketing Scale
Vision
1. Our organisation offers employees a vision that they can believe in
2. We communicate our organisation’s vision well to employees

Development
3. We prepare our employees to perform well

4. Our organisation views the development of knowledge and skills in employees as an

investment rather than a cost

5. Skill and knowledge development of employees happens as an ongoing process in our

organisation

6. We teach our employees “why they should do things” and not just “how they should do
things”
7. In our organisation we go beyond training and educate employees as well
8. In this organisation, the employees are properly trained to perform their service roles
9. This organisation has the flexibility to accommodate the differing needs of employees
10. We place considerable emphasis in this organisation on communicating with our employees

Reward
11. Our performance measurement and reward systems encourage employees to work together

12. We measure and reward employee performance that contributes most to our organisation’s
vision

13. We use data we gather from employees to improve their jobs, and to develop the strategy
of the organisation
14. Our organisation communicates to employees the importance of their service roles

15. In our organisation, those employees who provide excellent service are rewarded for their
efforts

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A-2: Schaufeli et al’s Work Engagement Scale
Vigour
1. At my work, I feel bursting with energy.
2. At my job, I feel strong and vigorous.
3. When I get up in the morning, I feel like going to work.
Dedication
4. I am enthusiastic about my job.
5. My job inspires me.
6. I am proud on the work that I do.
Absorption
7. I feel happy when I am working intensely.
8. I am immersed in my work.
9. I get carried away when I’m working.

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