Internal Labour Market Essay
Human Resource Management In Context
“Internal labour markets are more than a device that permits managers to promote their friends. Analyse critically this statement and provide case examples”.
Word Count: 1825
The focus of this essay and the central thrust is to determine how significant internal labour market (ILM) is and to justify that ILM is not there for dishonourable managers to misuse it, but it has a fundamental role in the organisations performance. If companies can comprehend the beauty of ILM they will increase their bottom line significantly by retaining staff, and implementing a range of working styles and employment practices, such as flexible working. ILM does need to be considered carefully for the reason that companies can eventually suffer from stagnation, especially if the organisation changes its aims and objectives. Human beings sometimes find it hard to adapt to new agenda if they do not believe in the objectives set by their superiors, therefore to overcome these issues the external labour market (ELM) does need to be considered. Discussion
The concept of ILM, originally developed by Doering and Piore (1971) focuses its attention on an organisation’s existing workforce and the extent to which this represents an alternative or complimentary source of labour supply. (P.Banfield and R.Kay 2008) This varies from one organisation to another as it depends on their internal rules and procedures governing internal movement and transfer and the extent to which the organisations offer employees career paths (P.Banfield and R.Kay 2008). Many organisations have a deliberate policy of looking first within the organisation for candidates, preferring to recruit within if at all possible, but much depends on managerial philosophy which shapes the managerial recruitment. Kwik-Fit, for example, is a company within which all of its managers have been promoted internally (P.Banfield and R.Kay; 2008, P72.). Kwik-Fit also rewards employees for recommending their friends to a particular job with up to £1000, this shows ILM is vital to this organisation - as they are still using insider links to recruit because it is cheaper and can result in getting the right people compared to searching the external market, via employment agencies, national news papers and other sources. This automatically endorses the statement above that ILM is more than a device, but on the other hand this is only one side of the coin. ILM is not by all means conclusive as we know, companies do not hesitate to bring in outsiders if they believe s/he is the person for the job, as we saw with Royal Mail when they brought in a finance director from Canada to run Royal Mail financial affairs (www.postandparcel.info , accessed: 16/10/2010) and also they promoted two of the most talented junior workers to managing director roles. Royal Mail has used as recruitment sources both the internal and external (international) labour market as they saw fit to meet their corporate objective. Companies relying only on the internal labour market will eventually have a problem. As Burrows (2004) argues in the context of the Pharmaceutical industry, “many organizations will not survive without the injection of new talent from outside, bringing world-class skills and track records of addressing some of the challenges facing this industry” (P390). Burrows argument clearly states that by over-relying on this form of recruitment there could be real danger in adopting this conservative and complacent approach. Kwik-Fit has used ILM, only talented staff have been promoted to managerial positions, generic roles have been carried out by part-timers or temporary workers which were recruited by using the ELM. This leads me to flexibility and different working hours which, in an industry such as pharmaceuticals that needs real talented employees can be useful in attracting top...
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