A road‐map for creating efficient corporate internal labor markets

Abstract

In today’s hyper‐competitive markets, the most valuable asset and the primary source of competitive advantage is human capital. It is also the resource which is most difficult to maintain, for the ongoing war for talent depletes the human capital of companies that fail to meet their employee expectations. To increase employee satisfaction and retention, corporations are eliminating the restrictions on internal employee mobility. Free internal labor markets (ILMs) demonstrate to employees that they can realize their career goals within rather than outside of the company. The liberalization of internal mobility and the institutionalization of job competition cause the convergence of the ILM and the external labor market. The transition to ILM is challenging but is the only road to securing long‐term competitive advantage. The present paper offers both a conceptual analysis and a practical road map for implementing ILM. It also discusses how two global financial companies build their ILMs.