Inside an Internal Labor Market: Formal rules, flexibility and career lines in a Dutch manufacturing firm (ICS)

Within internal labor markets the allocation of employees is governed by formal rule structures which subsequently affect the careers of employees. Although these rigid structures are often regarded as efficient, the situation raises a question as to how organizational flexibility can still be realized. This book argues that, from a theorectical perspective, organizaitons have two options: deviating from the formal rule structure or changing the structure itself. The stiuation in a large Dutch manufacturing company was analyzed and it was discovered that the company is confronted, over time, with a large number of changes - technological innovations, labor market fluctuations, management philosophies - which lead to production problems and/or relational difficulties. The subsequent need for flexibility is solved by changing the formal rule structure. This however creates an endogenous need for flexibility. When the new formal structure is introduced, current employees have to be transferred, which makes temporary deviations from the formal rules necessary. Finally, it was recognised that understanding change and deviation from formal rules is necessary to interpret the patterns in the observed career lines of the company's employees in the period 1977-1992.