Published by: Northwestern University

• Overview
• Companies Studied
• The Six Characteristics of Highly Effective Internal Marketing Programs
• Best Practice #1: Senior Management Participation
• Best Practice #2: Integrated Organizational Structure
• Best Practice #3: Strategic Marketing Approach
• Best Practice #4: Human Resources Partnership
• Best Practice #5: Focus on Employee Engagement
• Best Practice #6: Internal Brand Communication
• Conclusion
  

Overview

A growing body of research amply demonstrates there is a link between internal marketing and profitability.* The 2006 Internal Marketing Best Practices study identified the six key characteristics that drive successful internal marketing programs. Conducted by graduate students of the Integrated Marketing Communications department at Northwestern University, the study shed light on strategies and tactics that align, motivate and empower employees — at all functions and levels — to consistently deliver a company’s “brand promise,” which, in turn, helps businesses reach their goals.

The six common characteristics of highly effective internal marketing programs are: (1) senior management participation, (2) integrated organizational structure, (3) strategic marketing approach, (4) human resources partnership, (5) focus on employee engagement and (6) internal brand communication.

This white paper explores specific internal tactics deployed by the companies studied in these six categories. The results of the “case study” provide valuable insights for other companies so that they too are able to achieve internal marketing success.

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Companies Studied

The chosen companies were Chipotle Mexican Grill, Cisco Systems Inc., The Container Store, 3M, Hospira, Kellogg’s, McDonald’s, Oppenheimer Funds, The Ritz-Carlton; Staples, Union Pacific, Wm. Wrigley Jr. Co. a canned- and frozen-foods company, a globally diversified information-technology company, a motorcycle manufacturer, a successful biotechnology company, a global consultancy and a fast-growing investment bank. (Not all companies agreed to have their names released.)

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The Six Characteristics of Highly Effective Internal Marketing Programs

Best Practice #1: Senior Management Participation

Visible support from internal marketing leaders and frequent and direct communication from c-suite executives is necessary for effective internal marketing.

• Senior management-initiated internal marketing
  
  
• The Container Store’s CEO believes that the company has a moral obligation to ensure that employees are provided with a stimulating and secure work environment on a daily basis.
  
  
• The Ritz-Carlton’s long-held belief that employee engagement is linked to customer satisfaction and enhanced profitability goes back as far as the hotel’s very first president.
  
  
• Visible senior management support for IM (or equivalent) leaders
  
  
• Because the company is known to hire external talent and acquire complementary product lines, the CEO of Wrigley knows all too well the need for internal marketing. With the old culture clashing with the way, employee engagement and internal communications are seen as critical.
  
  
• A canned- and frozen-food company’s new CEO demanded critical communications support for internal audiences. At this company, communication consistency and effectiveness is ensured by leveraging management buy-in to drive a trickle-down effect.
  
  
• Face-to-face/direct communication
  
  
• Hospira employs mini employee meetings led by senior management at each of its sites that usually focus on a quarterly earnings release, company milestones or bad news. It empowers each site to choose topics discussed.
  
  
• At The Container Store, the chairman and CEO are famous for visiting stores and interacting with employees.
  
  
• Once a month, a group of Cisco employees are invited to join CEO John Chambers at an informal breakfast session where no topic is off-limits.

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Best Practice #2: Integrated Organizational Structure

Most of the companies interviewed utilize horizontal integration to achieve internal marketing, believing that it should encompass all communications with all employees to maximize employee involvement and commitment. To encourage employee commitment, most of the companies have a minimized hierarchical management process and empower employees with many key business decisions.

• Virtual Internal Marketing Team
  
  
• At Kellogg’s, marketing, brand management, and employee communications have internal marketing roles. They work individually and together in order to ensure employee buy-in.
  
  
• Internal communications, branding, public relations, organizational development, HR, and training teams work together at Staples to implement effective internal marketing.
  
  
• At The Ritz-Carlton, internal marketing is implemented by a broad-based steering committee of department representatives from human resources, operations, product/brand management, and sales and marketing, among others.
  
  
• Employee Empowerment
  
  
• Internal marketing is initiated primarily by employees at The Container Store.
  
  
• At Kellogg’s, biweekly and bimonthly cross-functional team meetings are held. These meetings, which are used to align the brand priorities in a team environment across the organization, include employees at all levels of the organization.
  
  
• Corporate Culture
  
  
• A globally diversified information-technology company describes the driving force behind the company’s internal marketing efforts as “embracing and understanding internally before people can project it externally.”
  
  
• Cisco describes its culture as “all about giving back.” It is about changing the world for the better, in whatever ways one can. Customer advocacy is rooted within company culture as is employee engagement.
  
  
• Staples touts what it calls its “Me 3rd Culture.” Employees are told that to succeed at Staples they must think Staples first, their team second, and themselves third.

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Best Practice #3: Strategic Marketing Approach

When it comes to marketing internally, best-practice companies market to internal constituents in a manner that parallels how it reaches out to acquire and retain customers.

• A formal approach to the internal marketing function
  
  
• At 3M, one group takes the lead on strategic communications planning and organizes cross-functional teams for specific internal marketing initiatives. 3M’s centralized strategic-planning resource serves as a consultant to other “client” groups within the organization.
  
  
• At Union Pacific, an internal “agency” for all business units works exclusively on the company’s employee communication needs by consulting across the organization and assisting with creative planning and designing.
  
  
• Derives insight from employee research
  
  
• A fast-growing investment bank has measurement and feedback mechanisms to uncover insights into employees’ wants and needs as they change over time. It also accumulates critical research in the form of employee focus groups.
  
  
• Segments internal audiences in order to improve relevancy
  
  
• In the case of Union Pacific, the communication medium is designed to meet each employee segment’s needs and accessibility. For example, off-site employees are communicated to via traditional mail while on-site employees can access an employee Intranet.
  
  
• A globally diversified information-technology company has a standing segmentation scheme for its internal marketing targets: company to all employees; business unit to business unit employees; region to local employees.
  
  
• Measures effectiveness of IM programs to support further investment of resources
  
  
• Before implementing any new IM program, a participating company conducts a pre-measurement study to provide a baseline of employee attitudes and behaviors. Ongoing measurement throughout the change process helps ensure that shifts in attitudes and behaviors are taking place. Post-measurement studies help management better understand whether the change was effective and if it impacted business performance.
  
  
• In another best practice firm, every department has to identify its own internal clients and their performance metrics. One manager said, “Once you measure the service provided, you can have the goal to improve it. Continuous improvements in processes and outputs directly correlate to customer satisfaction.”

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Best Practice #4: Human Resources Partnership

For successful internal marketing, human resources staff must consistently seek to integrate innovative methodology to train, communicate and foster feedback.

• Recruitment
  
  
• The Ritz-Carlton employs 28,000 “ladies and gentlemen” worldwide, and each individual property is empowered to recruit its own staff. It uses predictors such as ethics, self-esteem, teamwork and empathy to help select successful future "ladies and gentlemen.”
  
  
• Employee Training and Acculturation
  
  
• With more than 11,000 employees in over 450 locations, inventive quick-service restaurant chain Chipotle places pioneered internal-marketing efforts targeting employees across all departments and all business functions. Because two-thirds of its workforce is Spanish-speaking, Chipotle established language classes to enable workers to better connect with employees.
  
  
• In order to expand its workforce rapidly, a technology company’s internal communications team partnered with HR to overhaul the new employee orientation program to ensure all pertinent messages were incorporated into a one-day initial session. A tool kit was created that required follow-up throughout the first 90 days of a new hire. This constituted a big shift from the previous oversimplified new hire orientation process, which focused mainly on distributing I.D. cards and setting up workstations.
  
  
• Retention
  
  
• Compared with the industry average of 100 percent, The Container Store’s exceptionally low turnover rate of 14 percent clearly demonstrates the success of employee-retention initiatives. Employees are consistently recognized as the company’s greatest asset. They receive more than 241 hours of training in the first year followed by 262 hours thereafter and are entitled to a number of unique incentive programs, such as family-friendly shifts for parents.
  
  
• The Ritz-Carlton strongly believes that “while many in the U.S. consider service to be subservient, we consider it an honor.” Its vigorous 21-day training session begins the retention process, and 100 hours of training every year after maintains it.
  
  
• Employee Feedback
  
  
• With 123,000 employees worldwide, a global consultancy placed a strong emphasis on internal communications during a period of time when workforce reductions occurred. Once that period of time had passed, the company continued the internal communications efforts. An important key learning from a series of internal communication focus groups revealed that employees wanted to hear only what they needed to know in order to do their jobs.
  
  
• At Wrigley, The Wrigley People Survey is administered to every employee (14,800 total) to measure attitudes about individual job responsibilities, managers‚ performance, and company programs and initiatives. Last year, there was more than a 98 percent response rate.

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Best Practice #5: Focus on Employee Engagement

Employee engagement is a result of an efficient and collaborative work environment where employees feel involved and motivated. The organizations use simple, effective tactics to focus on employee well-being through fundamental work appreciation tactics.

• Empowerment
  
  
• At Cisco employees are empowered to make changes, big and small. Ideas are sought from all employees. If there is no budget for a worthy project, a new budget is created.
  
  
• Empowerment implies that frontline employees can exercise a degree of discretion during service delivery. Progressive hotelier Ritz-Carlton allows employees to spend up to $2,000 to correct a customer's problem or handle a complaint.
  
  
• Two-Way Communication
  
  
• The Wrigley “Breakthrough” program unites management and employees to brainstorm stretch goals, discuss innovative ideas, and devise systems and tools for training. The program provides an avenue for subordinates to truly communicate to managers within the safety zone of the program, and encourages thinking beyond traditional barriers.
  
  
• Reward and Incentives
  
  
• A fast-growing investment bank, which has $1.1 billion in total assets, hosts an annual “Leaders Retreat,” a four-day resort retreat for high-level executives and top-performing employees and their spouses.
  
  
• Corporate Philanthropy
  
  
• Twelve years ago, a successful biotechnology company started a major community relations program that has blossomed into an annual tradition. The company also sponsors employee participation in fund-raising events for the American Cancer Society, the American Heart Association, the Susan G. Komen Foundation, and others.
  
  
• Alignment of Corporate Goals with Employee Goals
  
  
• The Wrigley has its GOLD (Goals Outcomes Learning Development) program, which enables employees to be active participants in the ongoing appraisal of their performance against corporate goals. The employees become more engaged because they understand their value in reaching business goals.
  
  
• Special Events
  
  
• When Hospira spun off from Abbott Laboratories, it initiated “Founder’s Day” events to celebrate the new beginning and communicate integrity, Hospira’s most important value.
  
  
• A fast-growing investment bank recently organized a Halloween party for which all employees were flown in at the company’s expense. A subsequent survey boasted the bank’s highest satisfaction rate to date: 90 percent response rate with 95 percent of the company’s employees being very satisfied.

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Best Practice #6: Internal Brand Communication

Internal branding bridges the gap between promise makers (marketers) and promise keepers (employees). Despite the varying scope and cost of the internal branding programs, all firms shared the basic principle that internal branding should inform and engage employees to consistently support brand initiatives.

• Branded Communication Material
  
  
• At Oppenheimer Funds, internal communications materials reflect the brand promise of security and partnership, a promise that is deep-rooted in the company’s history. Oppenheimer Funds executives say that the Internet, memos and speeches are cost-effective communication vehicles that can efficiently reinforce a consistent brand message.
  
  
• Brand Ambassador Team
  
  
• Kellogg’s holds brand ambassador team meetings where employees engage in open dialogue with the leadership team and share their perspectives on the financial success of the brand, current innovations and improvement ideas. Although the Kellogg’s brands function separately, the success of Kellogg’s internal marketing is due to cross-functioning teams that bridge the gap between silos to form a seamless flow of communication.
  
  
• Internal & External Brand Alignment
  
  
• After learning that confusion surrounded a technology brand’s promise and its delivery to its external customers and employees, the graphic brand initiated employee communication materials and educational opportunities, such as meetings and luncheons, for employees to learn about the brand promise. This internal marketing effort was carefully aligned with external marketing and sales activities.
  
  
• A canned- and frozen-foods company uses internal communications that mimic the look and feel of the company’s external communications. By incorporating the same visual cues in all communications, employee messaging underscores that the corporation has a uniform vision and voice.

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Conclusion

While applying metrics used for external marketing (e.g., return on investment) to internal marketing remains a work in progress even for best-practice companies, many are moving in this direction. The authors of this study anticipate an increase in the growing number of organizations that will begin to adopt best practices in attracting and retaining top talent, tapping into the technological revolution in employee communications, linking communications with bottom-line results, and engaging top management with the significance of organization-wide internal marketing efforts. Internal marketers need to step up their efforts to create hard performance measures and assessment techniques that clearly demonstrate how a program or campaign contributes to achieving corporate goals. Hard measures include communication audits, objective evaluation of employee behavior and the impact communication has on company performance. Measurements ascertain whether a change in attitudes and behaviors toward internal marketing has taken place. Though much progress remains to be made, it is no longer difficult to envision a corporate marketplace where internal marketing shares equal status with external marketing.

The Forum for People Performance Management and Measurement, which designed the study, is a research center within the Medill Integrated Marketing Communications (IMC) graduate program at Northwestern University. A central objective of the Forum is to develop and disseminate knowledge about communications, motivation and management so that businesses can better design, implement and manage people-based initiatives both inside and outside an organization.

* Research library at www.performanceforum.org.

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