Key Points

• An organization’s workforce is the outcome of a dynamic process that involves the attraction, development, and retention of employees. That process takes place within the internal labor market of the organization and is influenced by both management practices and external market conditions.

• The starting point for a human capital strategy is a clear understanding of an organization’s workforce: both what it is today and what it is becoming. Internal Labor Market (ILM) analysis is the key to that understanding. It brings together the three principles of human capital management: systems thinking, facts, and value.

• The concept of the internal labor market expressed in this book encompasses the entire range of management practices that govern transactions between employer and employees inside the organization. Every organization is running a form of labor market, usually without realizing it. By managing the dynamics of their internal labor markets astutely, organizations can shape their workforces to meet the needs of the business and optimize performance.

• The internal labor market map is a foundation output of ILM analysis. It describes key dynamics related to the flow of people into, through, and out of the organization over time in graphic form.

• ILM analysis provides a fact-based platform for making decisions about human capital. It examines the flow of people into,