Recruitment in a Changing Internal Labor Market

Mitchell Shipping Lines is a distributor of goods on the Great Lakes in the United States. Not only does it distribute goods but it also manufactures shipping containers used to store the goods while in transit. The name of the subsidiary that manufactures those containers is Mitchell- Cole Manufacturing, and the president and CEO is Zoe Brausch.

Brausch is in the middle of converting the manufacturing system from an assembly line to autonomous work teams. Each team will be responsible for producing a separate type of container, and each team will have different tools, machinery, and manufacturing routines for its particular type of container. Members of each team will have the job title “assembler,” and each team will be headed by a permanent “leader.” Brausch would like all leaders to come from the ranks of current employees, in terms of both the initial set of leaders and the leaders in the future as vacancies arise. In addition, she wants employee movement across teams to be discouraged in order to build team identity and cohesion. The current internal labor market, however, presents a formidable potential obstacle to her internal staffing goals.

Based on a long history in the container manufacturing facility, employees are treated like union employees even though the facility is nonunion. Such treatment was desired many years ago as a strategy to remain nonunion. It was management’s belief that if employees were treated like union employees, there should be no need for employees to vote for a union. A cornerstone of the strategy is use of what everyone in the facility calls the “blue book.” The blue book looks like a typical labor contract, and it spells out all terms and conditions of employment. Many of those terms apply to internal staffing and are very typical of traditional mobility systems found in unionized work settings. Specifically, internal transfers and promotions are governed by a facility- wide job posting system. A vacancy is posted throughout the facility and remains open for 30 days; an exception to this is identified entry- level jobs that are filled only externally. Any employee with two or more years of seniority is eligible to bid for any posted vacancy; employees with less seniority may also bid, but they are considered for positions only if no two-year-plus employees apply or are chosen. Internal applicants are assessed by the hiring manager and a representative from the HR department. They review applicants’ seniority, relevant experience, past performance appraisals, and other special KSAOs. The blue book requires that the most senior employee who meets the desired qualifications receive the transfer or promotion. Thus, seniority is weighted heavily in the decision.

Brausch is worried about this current internal labor market, especially for recruiting and choosing team leaders. These leaders will likely be required to have many KSAOs that are more important than seniority, and KSAOs likely to not even be positively related to seniority. For example, team leaders will need to have advanced computer, communication, and interpersonal skills. Brausch thinks these skills will be critical for team leaders to have, and that they will more likely be found among junior rather than senior employees. Brausch is in a quandary. She asks for your responses to the following questions:

1. Should seniority be eliminated as an eligibility standard for bidding on jobs—meaning no longer giving the two- year-plus employees priority?

2. Should the job posting system simply be eliminated? If so, what should it be replaced with?

3. Should a strict promotion- from-within policy be maintained? Why or why not?

4. How could career mobility paths be developed that would allow across- team movement without threatening team identity and cohesion?

5. If a new internal labor market system is to be put in place, how should it be communicated to employees?

Please provide references. Please be very thorough and lengthy.