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”. | | Student: | 11/1/2008| Word Count: 1825| Introduction: 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 ? 000, 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 candidates, which is less necessary for companies such as Royal Mail or Kwik-Fit.

Kwik-Fit does not invest in its staff, as their aim is to make profit, unfortunately they do not believe investing in staff would increase their bottom line. Kwik-Fit believes that their workforce are not committed to the organisational goals which have been set by the management which suggests that Kwik-Fit operates the Hard Model Approach, and the staff are treated as any other resources and are deployed as management dictates. Whereas in the pharmaceutical industry, they use theSoft Model Approach because the employees talent is vital to the industry, and in order to get commitment, motivation, and excellent performance, employee satisfaction is required. This sector sees employees as valued humans and believes they are key to success and will create competitive advantages, therefore looking after the employees is pivotal and this industry definitely recruits from internal employees as they need to retain the best staff.

As Price (2004) states, “Individuals determine how much time they will devote to paid work for variety of reasons” (P160).Companies have looked at these issues and have tried to accommodate employees with flexible time/contract/location for decades. These workers come from certain groups, such as female parents with children, retired or the semi-retired and students. These type of workers are often over-looked by the managers as they are perceived as not committed to their work, since they spend a lot of their time at home with their kids or studying – they rarely get on the job training and are less likely to be considered for promotion.Management does not seem to believe in them as being committed to the businesses agenda and evidently this does depend on the line managers and the philosophy of the company. There are high costs involved in recruiting employees and especially making them redundant.

Scrutinizing the external factors – Legal mainly; according to www. direct. gov. uk (24/10/10) part-timers have the same rights as full-timers when it come to benefits and holiday pay and they should not be treated less favourably when workers are considered for promotion, training or redundancies.

According to Forde, C. Slater, G. 2006) this is a rhetoric view because in reality part-time employees are discriminated against and treated as if they are not committed to the companies corporate objectives and they are only working part-time to pay their bills. Based on CIPD research this was the most common view held amongst line managers and the majority of the companies.

Then again, according to CIPD, companies are changing their views as they have realised that employees competence and the degree of congruence between employees own goals and those of the organisation can lead to the overall cost effectiveness.There are other factors that play in this equation, which HRM practitioners have tried to implement such as cost efficiency and that is why some employees are now being classified HR Business partners and companies are now encouraging flexible working options. Companies are effectively manipulating by brainwashing some employees, classifying them as partners verbally, rather than through dividend, and encouraging flexible working to employees for their own means. According to Manpower inc. they place 2 million people a year in temporary work – there are two types of temporary working that have been identified.Contingent employees have been rated highly when it comes to areas such as Human Resources, Finance, and Marketing.

Seasonal employment has rated highly in places like Royal Mail who employ more staff during Christmas to meet demand which fits the business objectives as they only give job related training and that’s how far they would go in investing in temporary workers. Observing the Atkinson Model (1984) and Legge 2005 Royal Mail is using numerical, functional and financial flexibility; this basically divides the workers to core and periphery.The core workforce is made up of highly skilled employees who are employed by the company with a high salary, they are involved in business decision making and always are considered for training. The periphery workforce are the temporary workers with lower wages and less job security.

The hideous thing is that, even in the twenty-first century, implicitly two classes of workers are created; one class has employment rights, whereas the other is (comparably) disposable. How come unions and EU directives have allowed this inexcusable fact to carry on for so long.According to the new government legislation http://www. legislation.

gov. uk and http://www. personneltoday. com (accessed on 26/10/10) there will be equal treatments for agency workers from October 2011? This is rhetoric and it will take years to implement, especially in UK with its high multi-cultural society where there often is a mutual cultural understanding rather than abiding by the UK employment laws, and that’s why you see different clusters of ethnic minorities sticking together – because they can ignore most of employment laws and unfortunately this is the reality. L.

Gratton (The Future Of Work 2010) concluded that “Flexibility is a growing competence for companies such as BT – with its follow the sun project business model” which is a 24-hour operation and has a twice-daily transatlantic handover which has brought high levels of continuity and customer satisfaction. According to Legger 2005, it is derisive for companies to consider full flexibility as it does not work, in view of the fact that there needs to be full time employees so that the flexible workers can work beside full-timers. BT is claiming that it has made a success because they have used 24-hour operation and flexible working.CIPD research on BT flexibility working report supports BT’s initiative. Whereas Legger (2005) states otherwise – these findings do not seem conclusive as BT has had direct links with the CIPD research and there might be some conflict of interest, unlike K. Legger (2005).

BT has increased its bottom line through retaining its staff due to its flexible working facilities. BT can probably class this as a win-win solution because they are actually going according to the internal and external drivers which have caused these social changes.BT has realised that it has a potential to make profit from it and at the same time employee such us mothers, students and other talented employees across the globe can be employed by BT to carry out a specific job. Conclusion: This essay in essence has attempted to answer that Internal Labour Markets are more than a device that permits managers to promote their friends. ILM is a tool that has been used by firms to promote current employees to different jobs, either within the same or different department.ILM does get used differently by different companies, according to Doeringer and Piore (1971:2) but one thing they all have in common is they always use it for their benefit rather than the employees.

ILM is used to maintain real hard working honest candidates within the firm for a variety of reasons. Before a company invests in an employee they would consider if he/she is worthy of being promoted to higher levels or have they got that unique talent to bring to the boardroom. ELM is never underestimated due to the fact that it is the only source to fill gaps when candidates are lacking internally – being core or periphery workers.Overall, ILM is vital and it will always be used in one way or the other, because the firm can develop and shape the candidates skills in a way they prefer, and when promoted they are not often given the market rate, as market pressures does not affect firms when recruiting internally. Bibliography:| Category| Forde, C. Slater, G.

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Strategic Human Resource Management: A Guide to Action. nd Ed. London: Kogan Page Limited| Book| Legge, K. (2005). Human Resource Management: Rhetorics and Realities. Basingstoke: PALGRAVE MCMILLAN| Book| Legge, K.

(1995). Human Resource Management: Rhetorics and Realities. Basingstoke: PALGRAVE MCMILLAN| Book| http://postandparcel. info/34977/human-resources/royal-mail-announces-four-major-appointments/ Accessed on 16/10/2010| Webpage| Internal Labour Market: Current Debate and theoretical framework.

Dr. Carol Royal , School of Industrial Relation and organisation Behaviour, The New Univeristy of Wales, Sydney, Australia. PhD Thesis| http://bsr. london.

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