Building Talent From Within: Training and Development in Internal Labor Markets

Organizations often face a critical decision: should they hire externally or invest in developing internal talent? Organizations that prioritize internal talent development are classified as adopting internal labor market (ILM), where training and development (TD) become essential. However, the relationship between labor market structures and TD practices remains underexplored. This paper addresses this gap by examining how ILM strategies influence TD practices and identifying unique TD needs associated with internal talent development. Utilizing an integrative literature review, we identified four themes: adaptation to the job and organization, upskilling and reskilling, career development, and distinctions from external labor market (ELM) practices. Our findings reveal how labor market contexts create meaningful disparities in TD practices, offering practical insights into ILM organization-specific training needs. This paper advances ILM and human capital theories while providing HRD practitioners guidance for designing strategic TD initiatives aligned with internal career development and organizational goals.