The marketing side of HR

We live in a world that requires constant problem solving — ensuring proper nutrition, reaching from point A to point B as effectively as possible, making a series of different decisions during a day. A problem should not be perceived as an obstacle on your way, rather an unsatisfied need, and the best solution is satisfying the need in the most effective way (the highest outcome at the lowest price).

Organizations are unities of people gathered together to solve complex yet still common societal problems. There are different organizational structures to address these problems and achieve the corporation’s goals. According to the PMBOK Guide, organizational structures can range from functional to project-based with a variety of matrix arrangements in between.

In the case of classic functional organizations, staff members are grouped by specialty into teams (Marketing, IT, Finance, Legal, HR etc.) and each employee has one clear superior. All the departments support the same goal of the organizations while having different roles. As for project-based organizations (PBO), they create temporary systems for carrying out their work. PBOs conduct the majority of their work as projects and/or provide projects rather than functional approaches.

Children of Armenian Fund (COAF) is a bright example of a classic functional organization. In this article, I would like to talk about parallels I see between Marketing and HR.

What’s the purpose of a Marketing Department and an HR Department in an organization?

Peter F. Drucker, an Austrian-born American management consultant, educator, has a famous quote: “The purpose of business is to create and keep a customer.’’[1]

I would adapt this statement and propose that the aim of a Marketing Department is to create and keep a customer. Marketing is all about satisfying the needs of potential customers and gaining their loyalty, otherwise they will remain one-time buyers. The ultimate goal is to continuously increase revenue, a marker for the effectiveness of the marketing department of the organization.

Human resources (HR) is a term used to describe both the people who work for a company or organization and the department responsible for managing resources related to employees[2]. HR departments are variously called: Human Resources Management, Human Capital Management, Talent Management, HR and Organizational Development, People Operations (popular title among tech firms such as Google and Uber) [3]. At COAF we call it Administrative & HR Department.

No matter what term is used, HR management aims at developing and administering programs designed to increase the effectiveness of an organization. In other words, if Marketing has a goal of creating and keeping customers, HR has a goal of addressing current employee concerns to keep the personnel engaged, acquiring new employees needed to support the organization’s mission as well as increasing the productivity of the staff. Let’s say Marketing deals with external customers and HR deals with the internal customers, i.e. employees of the organization. Moreover, external customers’ loyalty is significantly dependent on internal customers’ motivation.

4 Ps of Marketing and HR

Marketing is based on its famous 4 Ps- Product, Price, Promotion, Placement. I believe, like marketing, HR also has its own 4 Ps.

The marketing process can be understood in 3 main stages: creating value, capturing value, and sustaining value. While 3 of the 4 Ps- Product, Promotion, and Place are in the stage of creating value, the 4th P- price is in the stage of capturing value. But before product creation companies go through market segmentation, targeting, and positioning.

Positioning is one more common factor for marketing and HR. From a marketing perspective, positioning refers to establishing a perception of the product or brand in the minds of the specific target group. For HR, positioning refers to a perception of the company as an employer in the minds of the employees and potential employees. Both in marketing and HR the positioning should be codified into a positioning statement, with the following elements:

• Who is your target audience
• What set of needs you fulfill
• Why is your brand/company the best option to satisfy those needs

HR teams can use positioning to define and align the organizational purpose. This will help employees clearly articulate the reason for the company’s existence.

Product

In marketing, a product is a bundle of benefits solving a problem of a potential customer. Consumers seeking to satisfy their needs search for the best products on the market. That product can be a service, an idea, or a physical & tangible item. It’s designed to satisfy unsatisfied needs.

Our two highest needs according to Maslow’s Hierarchy of Needs are esteem needs (prestige and feeling accomplished) and self-actualization (achieving our full potential, including creative activities) [4]. Very often we look for the satisfaction of those needs in the labor market, where HRs of different competing companies offer their products, just like Marketing teams do in the market of products & services. The product HR offers at the labor market is the bundle of benefits to a prospective employee. The HR department communicates job mission, professional growth, training, remuneration, social benefits package the employee will receive in exchange for their knowledge, experience, skills, and expertise. So, the product for HR is also a bundle of benefits.

Marketers use branding to properly package and differentiate their product from other similar products in the market. Brands tell us something, they convey a message, associating some specific qualities with the product.

HR teams use the internal branding of the company for gaining new talents and keeping the existing staff loyal. It’s about creating, marketing, and selling an accurate Employee Value Proposition (EVP) to recruit potential employees. Internal Branding is the set of strategic processes that empower employees to deliver the appropriate customer experience [5]. It plays a crucial role in the successful implementation of business strategy. Internal branding conveys a message about the organization, its attitude towards employees, such as rewarding, recognizing, and making employees feel confident and proud.

Promotion

Both for marketing and HR, promotion is a way to communicate. They both use forms of messaging about their company, their brand, their product(s). Marketers use a Marketing Communication Mix (advertising, sales promotions, PR, direct marketing, personal selling).

Internal communication, on the other hand, is an important HR role, affecting the company’s employer brand, employees’ motivation, the corporate culture, and also employee engagement overall [6]. So, marketing deals with external communication, while HR deals with internal communication.

But challenges faced by both external and internal communications are very often the same: one-way communication is no more actual. In the digital era, everyone can react and respond to any message of any organization. People not only want to be informed but involved as well.

PR (Public Relations) is one of the important components of the communication strategy for an organization. From a marketing point of view, one of the most important activities in public relations is brand publicity. It’s the use of non-paid media messages to deliver brand information designed to positively influence existent and potential consumers’ attitudes. As publicity is not generated or paid by the brand, it’s credibility in the eyes of the consumers is higher.

From an HR point of view, internal communication should be used to strengthen the connection between employer and employee. For example, whenever the company invests in staff development, professional training, engagement in important events they should ensure other staff members are aware through proper internal communication. Different companies use different tools or channels for internal communication, increasing their transparency and positive interactions with their workers.

Price

In the stage of capturing value, the companies sell their products on the market at a specific price. The price in this sense is the amount of money one pays in exchange for a product or a service.

From an HR perspective, the bundle of benefits for the employee (job mission, remuneration, working conditions, professional growth opportunities, social benefits package) is the product being sold on the market. The consumers of the labor market pay for that product, or rather the individuals looking for employment earn the position, with their set of knowledge, skills, experience, and expertise.

There are two general pricing approaches: cost-based and value-based․ When applying the cost-based approach, companies first determine all the costs related to the product, then the markup is set based on the profit the company tends to make. For HR Departments, the bundle of benefits for the employee (as mentioned in the above paragraph) is the product being sold on the market. The ‘consumers’ of the labor market pay for that product, or rather the individuals looking for employment earn the position, pay for that product with the set of their set of knowledge, skills, experience, and expertise. The HR managers determine the marked-up price for the job description or ensuring that they get a qualified candidate with the most cost-effective package.
Cost-based pricing doesn’t consider the prices of the competitors. In cases, the competitors have lower prices for the same product and you don’t take it into account, there is a risk you will become less competitive.

The value-based approach includes the consideration of competitive pricing, along with both value the customers place on the product and the costs related to it. Organizations need to take into account the required set of knowledge, skills, and expertise other players of the market demand for the particular product (job opportunity with all its attributes, i.e. remuneration, working conditions, professional growth opportunities, social benefits package) for the best practices.

Placement

In marketing, once a manufacturer produces a product, they should decide on how to deliver the product to the end customer. Some companies sell their products directly to the end customers through their salespeople. Another group of companies uses intermediaries (retailers, brokers) to sell their products to potential customers. The distribution channel structure and decision-making process in marketing is quite complicated with various strategies (PUSH Strategy, PULL strategy) and distribution channel design (channel breadth, length, levels). Keeping it simple in this article, let’s see the placement from the HR point of view, concentrating on 2 general approaches:

• Selling directly to the customer through own salespeople
• Selling through intermediaries

In HR, the “salespeople” of the “product” are HR specialists, particularly recruiters. So, the companies either have in-house recruiters to“sell” the product directly reaching out to the “consumers” i.e. prospective employees. This approach is known in HR as headhunting or to place it on the “market”, i.e. announcing about the job vacancy on digital (website, social media networks) or offline platforms (newspapers, for instance). The companies can also use recruitment intermediaries to reach the potential “consumers”. Intermediaries include the host of organizations and institutions that work with companies, and employees to broker the employment relationship, such as temp agencies [7]. COAF, for example, practices the first approach of selling directly to the “customer” through our own “salespeople”, i.e. recruiters included in the HR team.

The evidence on the existing parallels between HR and marketing is truly impressive. These two key departments in each organization have a lot in common, therefore, successful HR people have a marketing mindset, skills, and vice versa.

Written by David Manoukian

Communications Manager at COAF