Internal Marketing Practices For Sustainable Development of The RMG Industry of Bangladesh

Abstract

Beginning with less standard workplace, under trained and less skilled employees for poor compensation, etc., to the gradual improvement into customer-centric business growth, social and environmental compliance through internally motivated skilled employees altogether indicate a great progress towards the sustainable development of the RMG industry in Bangladesh. However, the industry is yet to reach its full potentials. From this perspective, the current study is an attempt to examine the relationship between ‘Internal Marketing’ practices and ‘Sustainable Development’ of the RMG industry of Bangladesh. The current paper is the result of both primary and secondary data collection which internationally published prominent findings. While primary data have been collected from the sample size of 140 respondents including staffs and officials of RMG factories. Inferential statistical tools have been used for the analysis of the collected primary data. The findings of the current study indicate a good number of ‘Internal Marketing’ practices including employee survey to listen to their grievances, consultation with employees or their representatives, inclusive culture of encouraging diversity and equal employment opportunity, women empowerment, treating employees fairly and with respect, training and development programs for employees, rewarding the excellent performers, compliance with local legislation, etc., so that sustainable development of the RMG industry of Bangladesh can be ensured.

Keywords: Internal marketingsustainable developmentRMG industry

Introduction

Commencing the journey in the 1980s, today the ‘Ready-Made Garments (RMG)’ is the leading industry of Bangladesh. From 384 factories with 0.12 million of workers and USD 31.57 million export i.e., 3.89 percent of total export of the country in the year 1984-85, this industry has reached to 4560 factories having 4.00 million of workers, USD 30614.76 million export i.e., 83.49 percent of total export of the country in the year 2017-18 (“Bangladesh Garment Manufacturers …”, 2018). But this journey got its maturity after acute struggling with child, untrained and unskilled labor issues, vulnerable situations of unsafe workplace, etc. However, even though the phase out of MFA quota in 2004 this industry moved towards visible progress to ensure sustainable development through multifarious restructuring initiatives from the owners, regulators, Government and the other concerned policy makers. Such endeavors include assuring i) safety and wellbeing of the workers as a shared responsibility of the governments, brands, buyers, suppliers and entrepreneurs, ii) workers’ rights by a) increasing their minimum wages by 219% during the past 5 years, b) amending the Labor Law through noticeable improvements in workers' rights and welfare and c) implementing training programs on worker-management relations, occupational safety and health, and labor laws for both factory management and workers within the guidelines of the BGMEA along with ILO and ITC; iii) environmental compliance using green technologies such as certified by LEED from US Green Building Council (USGBC), iv) reformation of the national and international platforms such as National Action Plan (NAP), Accord and Alliance, etc. (“Bangladesh Garment Manufacturers …”, 2018). The said initiatives of ‘Internal Marketing’ practices have already proved their success by ‘building and maintaining sustainable relationships with customers, the social environment and the natural environment’ (Belz, 2008; Belz & Peattie, 2009; Landrum & Edwards, 2009). Since employees act as the driving force behind this through their active participation in the organizational business and customer-orientation, internal marketing is aimed at the attraction, retention, and motivation of “service-minded”, “customer-conscious” employees to aid the perceived service quality and effective external marketing of the enterprise as a way to competitive advantage (Kotler, 2003; Székele & Knirsch, 2005; Varey & Lewis, 2000). Hence, HRM based internal marketing practices can be a good choice in exerting profound influence on the sustainable development of the respective industry with improved productivity, reduced absenteeism, increased levels of innovation and higher quality of services and products and reduced costs (Argenti, 2007). From this perspective the current study is an attempt to examine the relationship between internal marketing practices and sustainable development through a study on the RMG industry of Bangladesh.

Literature Review

Dalton and Croft (2003) explain internal marketing activities as responsibilities of planning and executing effective internal communications, protecting and championing the desired corporate culture, ensuring a continuing supportive role by the HR department, empowering employees and enhancing internal relationships and learning, encouraging employees to talk to managers, recognizing examples of successful practice, etc. For the growth of business and industry Dalton and Croft (2003) explain internal marketing activities as responsibilities of planning and executing effective internal communications, protecting and championing the desired corporate culture, ensuring a continuing supportive role by the HR department, empowering employees and enhancing internal relationships and learning, encouraging employees to talk to managers, recognizing examples of successful practice, etc. In this regard, Grönroos (2004) emphasizes internal marketing as important activities including management support, staff welfare, training, information support and technical assistance. Bansal et al. (2001) advocate for internal marketing practice with the suggestion of: (1) employment assurance; (2) broad training; (3) abundant salary determined according to organizational performance; (4) information sharing; (5) employee empowerment, and (6) reducing differences in rank.

For organization’s long-term success, the studies by Arnett et al. (2002), Cooper and Cronin (2006), Danish and Usman (2010), Dunne and Barnes (2000), Harrison (2005), Little and Little (2009), Manjunath & Rajesh (2012) and Alam et al. (2013) advocate to train and encourage employees to provide better services by creating a sense in the employees as well as recognize employees’ performance to appreciate to enhance their pride in the job so that they are treated by the organization as resource.

The other research studies by Bamford and Xystouri (2005), Lawler (2003) and Lytle et al. (1998) found that rewarding employees based on their performance enhances firm’s performance and recommended to tie pay to performance so that they can produce a higher quality and quantity of service or work for the development of the organization. Hermansson (2003) advises recreational events to motivate employees, form a binding spirit between new employees, find new arenas for all employees in which they can validate themselves, present a new boss or manager, or simply to have great fun.

Roberts-Lombard (2010) advise organizations to give a serious consideration to improve the level of communication with employees to communicate its vision and missions and provide effective strategies to transfer knowledge and information, by using different methods such as team work, discussion sessions and internal newsletters. It is because such effective internal communication acts as an influential factor in business success (Cees et al., 2005; Holtz, 2004; Quirke, 2000) by promoting internal relationships, supportting effective communication and feedback within the company (Gronroos, 2007; Kotler & Keller, 2009; Palmer, 2005).

Few studies exhibit that the logistic support assists employees to achieve their work goals and stimulate their personal growth (Bakker et al, 2004; Halbesleben & Buckley, 2004) while other studies find that participative management encourages the employees to act more positively about their jobs (Chow et al, 2006; Yoon & Suh, 2003). To lead to higher employees’ engagement in terms of job satisfaction and job commitment, ‘Equal employment opportunities’ recommends the removal of discrimination in all aspects of employment (including pay, leave and other conditions, and opportunities for progression and promotion) on such grounds as gender, race, age, sexual orientation and religious or political belief (Deeks & Rasmussen, 2002; Macky & Johnson, 2003).

Sandrick (2003) finds high quality of work life as essential for the organizations to continue, to attract and retain employees. Earle (2003) finds a productive, flexible and lively work environment as an asset in attracting and retaining valuable employees. According to Kirchmeyer (2000) research study, a ‘positively balanced life’ is achieved through two components namely i) personal resources (i.e., inputs) that are applied to each role — work and family — with an equally high level of attention, time, involvement, or commitment and ii) equally high level of satisfaction with work and family roles (i.e., outcomes). In addition, Kirchmeyer further associated balanced satisfaction across work and family roles with a high quality of life.

Theoretical Framework

Firms have increasingly recognized the potential for their people to be a source of competitive advantage (Pfeffer, 1994). It is because employees who are well-paid, well-motivated, working in an atmosphere of mutuality and trust, generate higher productivity gains and lower unit costs act as competitive advantages for the respective organization (Pfeffer, 1994). Since competitive advantages of an organization in particular and industry in general act as the strong foundation of sustainable development, the seven specific practices namely i) employment security, ii) selective hiring, iii) self-managed teams/team working and decentralization, iv) high compensation contingent on organizational performance, v) extensive training, vi) reduction in status difference and vii) business information sharing with employees advocated by Pfeffer and Viega (1999) and Pfeffer (1998) may be considered as the theoretical framework of the current study. The research findings on them are as follows:

Employment security advocated by Pfeffer (1998) in relation to costs and competitors: laying people off too readily ‘constitutes a cost for firms that have done a good job selecting, training and developing their workforce and thus layoffs put important strategic assets on the street for the competition to employ’(p.66). Pfeffer (1998) draws a parallel between companies that offer ‘employability’ and expect loyalty and a mythical ‘temporary appointment’. Pfeffer (1998) found that in Japanese companies employees are offered some degree of security in return for agreeing to mobility and exibility in their employment.

Selective hiring is seen as an effective source of sustained competitive advantage (Pfeffer, 1998). Wood and Albanese (1995) indicate, technical ability is not the only, or even the most important, attribute that employers seek in new recruits; indeed, two of the major facets which are sought are trainability and commitment.

Self-managed teams/team-working advocated is typically seen as a route to better decision making and the achievement of more creative solutions (Pfeffer, 1998).

High compensation contingent on organizational performance send a signal to employees that they deserve to be rewarded for superior contributions (Pfeffer, 1998).

Extensive training acts as a source of sustained competitive advantage as employers introduce more skills-specific forms of training and experience continuing skills shortages in some areas (Pfeffer, 1998). Pfeffer (1998) sees this in terms of both the amount of training provided and the budget devoted to training, especially in lean times.

Reduction of status differences such as common canteens, company uniforms and similar sickness and holiday entitlements – give signal to manual workers or white-collar staff that they are valuable assets who deserve to be treated in a similar way to their more senior colleagues (Pfeffer, 1998). It is also seen as a way to encourage employees to offer ideas within a system of ‘open’ management (Pfeffer, 1998).

Sharing information conveys a symbolic and substantive message that employees are trusted as well as reducing the role of the grapevine in spreading rumors in one hand and encourages employees to offer ideas as part of ‘best practice’ or high-commitment participative management on the other hand (Pfeffer, 1998).

The studies led by Pfeffer and his associates (1999, 1998, 1994) identified the said seven specific practices as the best practices and found that these are translated into intrinsic rewards and job satisfaction in teams outperforming traditionally supervised work groups which in turn collectively lead to higher revenue, profits, market value and even organizational survival rates and thus sustainability is ensured. The said studies found that the impact of the set of seven best practices is more pronounced when HRM based internal marketing practices are integrated and used together. Pfeffer asserts that such a conclusion holds good for all companies and industries irrespective of their context such as product-market situation, industry, workforce or country. From the findings of the said studies led by Pfeffer (1999, 1998, 1994) it can be noted that the industries in which a ‘best practice’ approach has been shown to work ‘range from relatively low technology settings such as apparel manufacture to very high technology manufacturing processes. Therefore, the results advocate the said seven best practices as good fit for manufacturing and for service firms. Pfeffer (1999, 1998, 1994) found that the effects of high performance management practices are real, economically significant and general and thus should be adopted by any organization. The results from other studies also supported the best practices advocated by Pfeffer. For example, Huselid (1995) stated that ‘all else being equal, the use of High Performance Work Practices and good internal fit should lead to positive outcomes for all types of firms’. Delery and Doty (1996) suggested profit sharing, results-oriented appraisals and employment security as some practices which always have a positive effect on employees’ performance. Wood and Albanese (1995) agreed that certain HR practices have a universal effect.

Problem Statement

The situation of Bangladesh RMG industry in its initial stage was critical as there were lacking in HRM based internal marketing practices (Ahamed, 2012). Bansari (2010) found that most garments factories in Bangladesh paid little attention to labor standards and rights, labor laws and compliance, workplace safety and disallowed trade union activities and discarded fair labor practices which reduced compliance enforcement and brought limits on the role of stakeholders. In the earlier days, there was no well-defined HR and Compliance department in most of the RMG factories and most of the garments employees were not aware and familiar about IR (Industrial Relations) rules and Acts or laws which was resulted in rising fear about the declining of Bangladesh RMG sector in demand (Ahamed, 2012). The realities of RMG sector was that their people remain undervalued, under trained and underutilized (Hossan et al., 2012). Ahamed (2013) also found that the RMG factories in Bangladesh did not follow any defined recruitment and selection policies which largely affected earlier employees’ turnover and competitiveness. While the pressure of the factors like free market economy, rapid technological development and continuous changes in customer demands on the RMG industry of Bangladesh was found in the studies by Yunus and Yamagata (2012).

With respect to sustainable development, Bansari (2010) recommended to improve compliance for labor standards and rights, workplace safety, etc., in the garments factories in Bangladesh. Ahamed (2012, 2013) also advocated for improving compliance in the RMG industry to ensure labor rights, labor standards, fair labor practices and a code of conduct as it is a key requirement for most of the world’s garments buyers which. These studies emphasized on the awareness building about IR (Industrial Relations) rules and Labour laws (Ahamed, 2012) and well-defined HR plans and policies to increase competitive advantages of the RMG industry of Bangladesh. The study by Yunus and Yamagata (2012) found the necessity of higher levels of reliability of human resources, machines, equipment, material handling systems, other value adding processes and management functions throughout the manufacturing system (Yunus & Yamagata, 2012). Hossan et al. (2012) advocated for no discrimination policy for selecting, training and retaining the valued employees for proper utilization for the development of the RMG factories. The findings of the earlier research works suggest the significant role of HRM based internal marketing practices on the sustainable development in response to the identified challenges only. But dynamics in customer requirements, economic, social and environmental compliance issues over time brought major changes in many aspects which may adversely affect the sustainability of the RMG industry. This is evident from the $2.92 billion earning from RMG export which is a drop by 7.30% in September 2019 from the same month of last year (Dhaka Tribune, 2019). So, it is required to be given rethought for further study on the identified research gap. Hence, a rigorous research has to be systematically attempted to mitigate this gap.

Research Questions

To mitigate the research gap, it is very significant in the present study to investigate the research question: “Is there any role of internal marketing practices on the sustainable development of the RMG industry of Bangladesh?” To find the answer to the research question the current study has been endeavored through the following hypothesis within the theoretical framework adopted by Pfeffer and Viega (1999) and Pfeffer (1998, 1994):

H0: There is no role of internal marketing practices on the sustainable development of the RMG industry of Bangladesh.

Ha: There is effective role of internal marketing practices on the sustainable development of the RMG industry of Bangladesh.

Purpose of the Study

The purpose of this study is to examine whether there is any role of internal marketing practices on the sustainable development of the RMG industry of Bangladesh or not.

Research Methods

The current study is the combination of the following details:

Sample size

140 respondents

Respondents

Staffs and officials of RMG factories.

Method of sampling

Random sampling method

Data Collection procedure

The secondary data have been collected from the recent internationally published research findings. While the primary data have been collected during the month of February 1, 2019 to May 15, 2019 on the basis of the questionnaire is/are the 7 factors of best HRM based internal marketing practices advocated by Pfeffer (1999, 1998, 1994) which have been exhibited as variables (see table 01 ).

Table 1 -
See Full Size >

Data Analysis

The reliability and sampling adequacy of the study has been undertaken using Cronbach's Alpha and KMO and Bartlett's tests respectively. While multiple regression analysis has been done on the field survey data.

Findings

Reliability

The Cronbach’s Alpha value of the study is .914 which is greater than 0.6, a value between 6.0 to 7.0 recommended as acceptable (Cooper & Schindler, 2006; Malhotra & Birks, 2007). This justifies the reliability of the study.

Sampling Adequacy

The Kaiser-Meyer-Olkin (KMO) value of the study is .868 which (Kaiser, 1974) suggests the adequacy of the sample size while the results of the Bartlett’s Test of Sphericity exhibit 21 degrees of freedom with the approximate chi-square statistics is 662.617 which is very much significant.

Multiple Regression

The results of multiple regression on the sustainable development of the RMG industry of Bangladesh as dependent variable and the 07 identified independent variables (i.e., v1 to v7) are as follows.

Model Summary

Firstly , the multiple correlation coefficients (R) of this study is 0.648 which shows 64.8% correlation.

Secondly , the Square multiple correlation coefficients (R2) is 0.420 which shows 42.0% variance in the sustainable development of the RMG industry of Bangladesh.

Thirdly , the adjusted R2value 0.389 is close to R2 value with a small difference of 0.420 – 0.389 = 0.031 which accounts for 3.1% less variance in the model.

ANOVA

The F ratio in the study 13.639 is highly significant which predicts a satisfactory level of variance of the sustainable development of the RMG industry of Bangladesh.

Coefficients

The independent variables namely v1, v2, v3, v4, v5, v6 and v7 be held constant, improvement of the sustainable development of the RMG industry of Bangladesh would increase .155, .170, .085, .199, .212, .052 and .160 respectively in the unstandardized versions. While the values in the standardized versions explain the relative importance of the 07 independent variables in contributing to the variance in the sustainable development of the RMG industry of Bangladesh are v5: .231 followed by v4: .217), v1: .199), v7:.172), v3:.097), v6:.054) and v2:.195). Again, the magnitude of the t-value on the decision rule “the smaller the significance value and the greater the t-value, the greater the contribution of the predictor”, shows that v5: 2.249) followed by v4: 2.161), v7: 1.860), v1: 1.606), v3: 0.761), v6: .530 and v2: 1.414) respectively exhibit greater impact on the sustainable development of the RMG industry of Bangladesh.

In summary of the above analysis, it can be stated that there is effective role of internal marketing practices on the sustainable development of the RMG industry of Bangladesh.

Conclusion

Internal marketing practices may ensure employee satisfaction, safety, rights which further may enhance customer satisfaction and thereby sustainable development due to various factors such as i) employment security, ii) selective hiring, iii) self-managed teams/team working and decentralization, iv) high compensation contingent on organizational performance, v) extensive training, vi) reduction in status difference and vii) business information sharing with employees. The multiple regression analysis exhibits the seven (7) factors mostly influence the sustainable development of the RMG industry of Bangladesh. So, the owners and policy makers of this industry have to emphasize on aforesaid parameters to add more value by adopting internal marketing practices to their factories. Alongside, they have to focus on the continuous improvement in environmental compliance so that workplace safety can BE provided to the workers. Such initiatives of the concerned may ensure retention of employee and therefore customer oriented growth in the RMG industry of Bangladesh.

References

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Publisher

European Publisher

First Online

12.10.2020

Doi

10.15405/epsbs.2020.10.02.32

Online ISSN

2357-1330