Use the Internal Labor Market Approach

During past job searches you may have observed career brochures being handed out that consisted of glossy pictures of a smiling diverse workforce. In the near future some companies will replace that kind of propaganda with clear facts about a firm’s internal labor market and the investments made in developing employees who are aligned with the business’s needs. Until that day comes, one of the tools described in this book—Internal Labor Market (ILM) analysis—can help you find a better match between your goal and potential employers. It can help you avoid the “say-do” trap described in Chapter 2. Your company may be saying things about its programs to help people like you build your capital and get ahead, but the reality—what it’s doing through its system of training, advancement, and rewards—may be very different. It’s your job to get to the truth, and ILM analysis can help you do that.

Get the Facts

The case of Toyota Motor Manufacturing North America discussed in Chapter 2 revealed how a gap between employee perceptions and the workplace realities of pay and promotions almost caused the company to spend royally on revamping its policies in those two areas. By digging out the relevant facts, Toyota found that its policies were in fact working.

This case holds a lesson: Don’t believe everything you hear about what is rewarded and how people get ahead. If your peers tell you that “those training programs are a waste of time; they won’t help you advance” or that “staying put is the best way to protect your job; the people who make lateral moves usually get canned within five years,” exercise scientific skepticism. Check the facts. Also check what the company tells you. It may also say one thing but do another. Ask the following questions:

1. What are the potential career tracks from where I sit?

2. What percentage of people who take additional training or accept new assignments actually are rewarded?

   Ask the company to add a new chapter to “open book management.” Encourage regular discussion of the movement of people within the organization.

It is unlikely that you can produce an ILM map of your current or perspective employer or implement the model we use in doing a full-blown analysis. Doing either thing requires access to HR data, access to senior executives, many hours of work, and a solid working knowledge of statistical methods. Still, you can capture some of the highlights of a company’s internal labor market through observation and by asking the right questions. This is doubly true if you are a current employee of the company. Here are some things you can do to assess the opportunities provided by your employer:

• Determine the number of people employed at your job level and the next two higher levels. This will give you a starting point for further inquiry.

• Ask, “How many people moved from my job level to the next higher level during the last year and the year before?” This information will help you determine the probability of advancement.

• Estimate the value of an upward move in money, competency-building experience, and career progress.

• Find out how many jobs at the next higher level were filled through outside recruiting. That information will help you assess whether the company tends to buy or build its senior talent and the probability of your moving up.

• Identify career bottlenecks above your level. Are upward career movements blocked at certain levels? You can answer this question by comparing the number of people leaving the organization at particular levels with the number being promoted. Will those bottlenecks affect you?

• Learn what is rewarded at your level: years of service, individual performance, team performance, technical specialization, general capabilities, education, political savvy, and so on. How strong is the match between your strengths and the things that are rewarded?

• Does the organization have a formal or informal infrastructure for developing employee skills and experience and other forms of human capital? These might be training programs, formal career development, regular mentoring, or a policy of experience-building assignments.

• Learn as much as you can about why people stay and why they leave.

Gathering and analyzing this information will help you form a clearer picture of your current or potential employer. If that picture does not match your job-related goals, you may find a greener pasture elsewhere.