Solicitor Ian MacLeod will see more than 80 witnesses during his probe into the appointment of the council's chief executive and nine directors.
Mr MacLeod was told by Monklands leader Jim Brooks that there was a 'lack of morale' among Monklands staff because they did not receive North Lanarkshire posts. Monklands is one of the councils being subsumed by North Lanarkshire in April.
He said there were strong rumours that the appointments were not made on merit. But he conceded that he had no proof.
North Lanarkshire chief executive Andrew Cowe defended each of the senior appointments, saying: 'I have no knowledge of any pre-meetings or a carve-up in advance. All appointments were made on merit and I am completely satisfied with all procedures.'
Strathclyde RC depute social work director Ian Gilmour, one of the unsuccessful candidates for the post of social work director, told the inquiry he felt the presence of a junior member of his staff, who is also a councillor, on the interview panel put him at a disadvantage.
He also complained about aggressive questioning techniques.
But Mr Cowe claimed that Mr Gilmour was not selected because councillors found him 'aloof and condescending' - mannerisms unsuited to good relations between a head of service and elected members. He also pointed out there was no legal impediment to a member of staff being on the panel.
Mr Cowe defended Gavin Whitefield, who was said by critics to lack the necessary qualifications to be housing director. Mr Cowe said that in six months working with Mr Whitefield he felt the panel's decision had been 'entirely vindicated'.
The inquiry was set up after the Staff Commission investigated several complaints about North Lanarkshire appointments. The commission came to the conclusion it could not give the council a 'clean bill of health' and passed its findings on to the Scottish Office, which ordered the inquiry.
-- Tragedy struck on the first day of the inquiry when a Labour Party observer collapsed and died. Thomas Campbell from Airdrie suffered a heart attack in the public gallery. Despite swift medical attention, he was dead on arrival at hospital. One minute's silence was observed before Monday afternoon's session.