Companies that empower their marketing departments through staff development and other incentive programs save money in the long run and help the bottom line, new research shows.
Thunderbird School of Global Management Professor Seigyoung Auh, Ph.D., and a co-author from Brock University in Canada will present the research today at the Academy of Marketing Science Annual Conference in Portland, Oregon.
“Our study, using a sample of 260 Australian manufacturing firms, examines how high-involvement human resource management practices — those practices aimed at enhancing the skills, knowledge and assets of marketing employees through selective staffing, training, reward structures and performance appraisals — contribute to the employees’ satisfaction, retention and morale,” Auh said.
The findings reveal that high-involvement practices contribute to the well-being of marketing employees and improve retention. Auh said this is important because the cost of employee turnover is financially and operationally debilitating for organizations.
“Studies show that the cost of hiring and training a new employee can vary from 25 percent to 200 percent of annual compensation,” he said. “Research also indicates that the worst sectors for turnover are in retail and sales, where 45 percent of responding companies indicate that turnover costs can exceed $10,000 per employee.”
Auh said the correlation between high-involvement human resource management practices and the well-being of marketing employees is stronger when companies structure their marketing departments in ways that encourage interaction with other functional areas.
The correlation is weaker when companies structure their marketing departments in more formalized ways that discourage task interdependence.
“Marketing department structure plays an important role in marketing employees’ well-being,” Auh said. “This has an effect on an organization’s overall financial performance.”
The study highlights the importance of the debate between “make” versus “buy” of marketing employees at a time when many organizations outsource their marketing activities.
“The results reiterate the legitimacy of marketing by confirming that marketing employees do contribute to superior firm financial performance,” Auh said.
Study co-author Bulent Menguc, Ph.D., from Brock University will assist in the presentation of the paper, titled “Managing Marketing Employees for Superior Business Performance through High-Involvement HRM Practices: Does Marketing Department Structure Matter?”