Section FiveInternal Labor Market
Researchers also have examined the performance effects of
internal labor markets that provide for promotion from within.
The Delaney and Huselid study, cited previously, found through
analysis of data from the National Organizations Survey that
promotion from within is significantly related to perceptual
measures of organizational performance. Such promotion
practices were correlated with performance for the for-profit
organizations in their sample. Interestingly, these results were
not found when nonprofit organizations were included in the
analysis. However, an alternate measure of internal labor
markets assessed the degree of vertical hierarchy as an
indicator of promotion ladders. While greater vertical hierarchy
is inconsistent with tendencies toward flatter structure and
decentralized decision making, this measure became
significantly related with performance when nonprofit
organizations were included in the analysis.^50