Private Enterprise Incentive Institutionstudy Based On Internal Labor Market Theory

Internal Labor Market (ILM) theory is totally different form traditional external labor market system, and the long-term employment is the main characteristics of the internal labor market as a kind of employment arrangement of enterprises. ILM has specific strength on labor relocation, motivation and development. As we know, enterprises competition is totally the competition of human resources in the market. With the improvement of China’s market economy and the deepening of structural adjustment of ownership system, private enterprise contribution share in the national economy has increased year by year, it has become an important economic growth point, but also become the main channel of new labor force, and it is playing an increasingly important role to alleviate the employment pressure in china. The paper analyzes the efficiency of the internal labor market incentives, then discusses the relationship between internal labor market and human resource management practice to improve dynamic efficiency and competitiveness of private enterprises, thereby has obviously enhanced the significance of national economic strength and improved the international competitiveness.First of all, the paper discusses the internal labor market and the relevant motivation theory, and studies private enterprise incentive mechanism on the basis of ILM theory summarize and analysis. Then the paper discusses non-efficiency of internal labor market performance of private enterprise, including transaction cost, wage incentive uniqueness, promotion and training motivation limitations. Focusing on the internal labor market incentive mechanism based on human capital, the paper puts forward the framework and incentive model of private enterprise including the basic and the higher level of motivation. The basic motivation includes efficiency wages and wage for seniority; higher levels of motivation mainly refers to the internal promotion, on-the-job training. Finally the paper analyzes the characteristics and composition of enterprise wage, internal promotion and on-the-job training.Secondly, the paper analyzes the incentive effect of the internal labor market of private enterprises. The analysis of the incentive effects of enterprise wage mainly includes the efficiency wages and wage for seniority. The paper anylizes the efficiency wages incentive effect based on shirking model, and anylize the seniority wage incentive effect based on the Lazear (1979) research, analysis of delayed reward model. Then the paper analyzes the incentive effect of internal promotion based on tournament theory. Finally, the paper analyzes incentive effects of on-the-job training including geneal traning and special training based on Gary Becker’s human capital market theory. In the special training, the paper analyzes the "up-or-our" and "up-or-stay" incentive effect.Thirdly, the paper designs incentive system of the private enterprise based on the internal labor market theory. In the enterprise efficiency wage incentive system design, the enterprises need to determine the total staff efficiency wage according to the operation characteristics and profit of private enterprises. Then determine the level of efficiency wages of employees within the total efficiency wage range according to certain multiple of average employee efficiency wage is more scientific and reasonable. Seniority wage can increase the human cost at the same time, so the enterprises require to produce positive influence on the organization. For internal promotion incentive system design, the enterprises need to establish the prototion ladder considering the internal labor market and the external labor market together, and combining an absolute standard and relative standard promotion mechanism for promotion. To design the on-the-job training incentive system, enterprises need to establish a training system combining general training and special training. Finally the paper discusses the incentive system of general on-the-job training and special training.Finally, the paper selects LF enterprise as the object of investigation and examines the application of incentive mechanism of internal labor market theory in private enterprise. The paper further analyzes of operational problems, performance and recommendations for improvement on the enterprise internal labor market from an empirical point of view, using the analysis method of investigation and interview. LF enterprise still has very strong seniority wage system and promotion system in the human resources practice, the company has clear wage system, wage adjustment rules, promotion rules, also has the perfect training plan, the staff is relatively stable. Finally, the paper puts forward a series of proposals in wage, promotion and training system, including the enterprises should strengthen the internal labor market beliefs; establish a combination of external equity and internal fair wage system; a internal promotion system based on the function qualification system; establish a systematic training system; construction of flexible "core-periphery" model of the internal labor market.Private enterprises incentive system research and its internal operation mechanism based on the theory of internal labor market, contributes to the promotion of labor economics and firm theory to the research of the microscopic field. Theoretical study on the incentive mechanism of private enterprises based on internal labor market theory will contribute to the widening of the labor economy from business perspective. Research on the internal labor market theory and private enterprise incentive system will improve the internal labor market efficiency of our country and provide a good theoretical framework and analytic method to solve the practical private enterprise management problem.