Internal Relationships


An organization has to manage relationships across a broad spectrum of stakeholders. One of such stakeholders is the employees of the company. This is referred to as internal market. The gamut of employee is usually covered under human resource management. But internal relationship management also looks at how they impact the external consumer market. Employees represent “P” in the marketing model.

Scope of Internal Marketing

Managing relations with employees suggest covering vast areas of activities. But not all of these activities would be included as part of the internal marketing. Internal marketing is defined as a set of marketing like activities designed and executed to improve effectiveness of organization in competing with external market.

Internal marketing developed as a strategy after it was understood that if internal employee are content and motivated, they would serve external customers equally well. A happy internal employee creates happy customers. Organizations have started using internal marketing in communicating their objectives, mission and strategies. Therefore the way these internal relationships are managed directly impact overall improved performance of the organization.

The concept of internal relationship management assumes greater importance in services industry such as airlines, hotel, banks, etc. But it is equally important in the service aspect of manufacturing firms also.

Internal marketing strategy can be differentiated in two broad categories as follows:

  • Employees as internal consumer and suppliers

  • Customer oriented employee

Internal customer concept

The very thought of considering employee as customer suggests that internal market will have similar characteristics as the external market. Hence it is relevant to apply external market strategies for internal market as well. Therefore, internal customer relationship is divided into three parts

  • Employees are considered a customer of an organization

  • Employees are customer and supplier of each other

  • Functional departments are customer and supplier of each other

Organizations craft their strategies taking into the account the external market. But along the way they assume that all the employee are also aware of these strategies. However, in reality employee may be aware of the organization overall objective and mission, but may not be fully aware of specific directions in challenging times. Hence it becomes very important to treat the employee as customer of an organization.

But the concept of bringing external marketing tools upon internal market may not always work. The condition or state of the internal market is way different compared to the external market. The company is not trying differentiation techniques here but rather communicating its philosophy and strategies to prepare employee in successfully facing the external market.

Organizations encourage employees to take a view that they exist to serve each other. The focus is to ensure that employee across departments operate in smooth and efficient manner. This will help the organization deliver total quality management. Therefore, every employee performs his or her duty in such a way that it does not create any issues or affects the quality. Employees are customers of each other is very similar to assembly type manufacturing, if a person fails to do his party correctly eventually the cascading effect will bring the whole process to halt.

The final aspect of the internal market is the relationship between different functional departments. Many organizations create regulative systems to deal with functional departments. This has led to development of the concept of internal profit and cost centers. In order to have efficiency, organization split operations into separate business unit or strategic business unit. Here each unit has its own internal targets it has to achieve to drive overall business profits.

Employee-external customer relations

Organizations by providing value want to create a long term and loyal customer. This value can be created in a way of differentiating. This differentiation can be brought about by better service during employee’s interaction with consumers. Therefore, it is important for employees to speak to a customer is single language and work towards the same goal. Thus, all departments need to function with the single objective of providing customer satisfaction.

But not all the functions or departments have full engagement with customers. Employee part of sales and marketing team have full time engagement with customer whereas employee of finance department would have limited or no engagement with customer.

If the focus of the company is differentiating itself from the competition thru customer service. Then it becomes imperative to focus on employees having direct contact with customers. Organization have over-time many strategies like reward and recognition, personal training and development, employee empowerment program to achieve its differentiation goal.

Recruitment Market

With changing times employee attrition rate has also increased as more avenues open up for employment. Earlier a person was generally expected to complete a life in single job or the company, but now that is no longer the case. Therefore, organization looking to deliver customer satisfaction need to look at recruitment strategies as to attract the right talent.

The impact of employees can make on external market and consumer has led to the development of various strategies concerning internal relationships.

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