Labour Market Context

11897 WordsSep 30, 201348 Pages
4 The Labour Market Context of HRM Chapter Objectives • To define internal and external labour markets • To outline the role of HRM as the interface between an organisation and its labour markets • To identify the changing labour market conditions under which contemporary organisations operate • To critically evaluate the implications for HRM of the ‘knowledge economy’ • To outline how labour market trends are impacting upon how organisations utilise labour and how HRM practices are driving labour market change • To outline the various ways that firms can respond to different labour market conditions • To outline the notion of organisational flexibility and how various forms of flexible working practices impact…show more content…
The latter 90 04-Wilton-4081-CH-04.indd 90 HRM IN CONTEXT 25/08/2010 7:10:18 PM refers to a strategy of recruiting required labour from outside the firm as and when needed. A ‘make’ strategy is, therefore, internally-focused whilst a ‘buy’ strategy is externally-focused. The internal labour market The internal labour market refers to that which exists within a single organisation and represents its internal supply or stock of labour. In its broadest sense, the internal labour market is the mechanism by which existing employees are attributed particular roles within a firm. The specific characteristics of an organisation’s internal labour market are reflective of a number of HR policy emphases, for example, the level of investment in employee training and development, the availability of career development opportunities and the extent to which employee retention and job security are prioritised. Contextual factors, particularly the types of skills, knowledge and attributes required, also act to shape the ‘type’ of internal labour market that exists within a firm. Depending on its characteristics, an internal labour market can fulfil a number of functions for an organisation. For example, in seeking to retain employees the internal labour market can act as a source of motivation and contribute to a
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