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Much nonmanagerial work is routine, with all workers having similar output most of the time. However, failure to address occasional challenges can be very costly, and consequently easily detected, while challenges handled well pass unnoticed. We analyze job assignment and worker monitoring for such ‚Äúguardian‚Äù jobs. If monitoring costs are positive but small, monitoring is nonmonotonic in the firm‚Äôs belief about the probability that a worker is good. The model explains several empirical regularities regarding nonmanagerial internal labor markets: low use of performance pay, seniority pay, rare demotions, wage ceilings within grade, and wage jumps at promotion.The research in this paper was supported in part by National Science Foundation grant SES-1260917. We are grateful to Costas Cavounidis, Bob Gibbons, Sambuddha Ghosh, Eddie Lazear, Bart Lipman, Andy Newman, Mike Waldman, and participants at seminars, workshops, and conferences at Boston University, Massachusetts Institute of Technology, the National Bureau of Economic Research, the Society of Labor Economics, Tel Aviv University, University of California, Santa Barbara, and the University of New South Wales for helpful comments and suggestions. The usual caveat applies. Contact the corresponding author, Kevin Lang, at [email protected]; and coauthor Gautam Bose at [email protected]. (SES-1260917 - National Science Foundation