Organisations and the Transformation of the Internal Labour Market

This paper explores changes in employment policies and practices that are typically associated with the classical 'model' of the internal labour market. Drawing on documentary information and interviews with managers in four large organisations in the UK, the evidence suggests that many of the 'traditional' pillars of the internal labour market have been dismantled. New policies around training, recruitment, pay, job security and career progression have been introduced in response to pressures and opportunities for change, both internal and external to the organisation. Changes in the external labour market involve a shift in the balance of power between labour and capital, coupled with a weakening of the mechanisms which coordinate and regulate labour market exchange. Within the organisation, there are a range of pressures to transform production, or service delivery, including the restructuring of traditional forms of work organisation, the extension of working-time and changes in organisational structure. This paper analyses evidence of new employer-led 'market solutions' to this range of conflicting pressures. The aim is to highlight the tendency for contradictory outcomes as new policies capitalise on changing external conditions, but at the expense of meeting organisational demands. Also, new policies implemented by individual employers may be unsustainable where, on aggregate, they fail to develop workforce skills or to fulfil career expectations.