Unit-1
Industrial relations
The term industrial relations comprises two words, i.e. ‘industry’ and ‘relations’. The term
‘industry’ refers to any productive activity in the organisation in which the employees are
engaged. On the other hand, the term ‘relations’ refers to the relationship, which exists within the
industry between the management and the employees. The relationship between management
and employees within the organisation within the organisational settings is defined by industrial
relations. Industrial relations emerge directly or indirectly from management-trade union
relationships.
Types of Industrial Relations
Industrial relations can be categorized based on various factors such as the relationship
dynamics, the type of interaction, and the level at which the interactions take place. Here are the
primary types of industrial relations:
Individual Industrial Relations: This type focuses on the relationship between
individual employees and employers. It deals with hiring, job responsibilities,
compensation, and grievance redressal at an individual level.
Collective Industrial Relations: In collective industrial relations, the relationship is
between employer organisations and trade unions or groups of employees. It includes
collective bargaining, where the union negotiates terms on behalf of its members
regarding wages, working conditions, and other employment terms.
Directive Industrial Relations: These relations are governed by rules and regulations set
by the government, such as labour laws and labour policies. The government plays a
significant role in ensuring that industrial disputes are resolved fairly and that workers'
rights are protected.
Why are Industrial Relations Relevant to Business?
Industrial relations play a vital role in businesses as they directly affect the work
environment, productivity, and the delivery of goods and services.
Before establishing a business in a new country, companies must carefully study and
understand the local industrial relations system.
For example, they should assess whether collective bargaining occurs across multiple
employers, whether collective agreements apply to all workers and employers (regardless
of union membership), or if multiple unions can exist within a company and have the
right to sign agreements.
Some unions may have a history of conflict, leading to collective disputes. In the context
of globalisation, businesses are adopting strategies to extend industrial relations
internationally, such as International Framework Agreements (IFAs) between global
unions and multinational companies. This helps ensure consistent labour practices across
borders and aligns with the company’s global operations.
Characteristics of Industrial Relation
Following are the significant features of industrial relations:
Industrial relations are the result of employment relationships in industrial enterprises.
Industrial relations introduced the concept and method of balancing and cooperating.
Industrial relations formulate rules and regulations to maintain harmonious relations.
The intervention of the Government to shape the industrial relation is made through laws,
agreements, rules, charters, etc.
Industrial relations incorporate both individual relations and collective relations.
Several parties play a role in industrial relations. The main parties are employees and
their organisation, employers and their association, and government.
Objectives of Industrial Relation
Following are the different objectives of industrial relation.”
To establish industrial peace.
To safeguard the interests of both workers and management.
To avoid industrial disputes.
To raise the production capacity.
To establish industrial democracy.
To minimize the labour turnover rate and absenteeism.
To safeguard the workers economic and social interests.
To contribute to the economic development of the country through productivity.
To establish a full employment situation.
To minimize strikes, lockout, Heroes, etc., by providing good working conditions and fair
wages to the workers.
Nature of Industrial Relation
Industrial relations are concerned with the relationship between management and
workers.
Industrial relations safeguard the interest of employees.
Industrial relations are concerned with the system, rules, and procedures used by unions
and employees to determine the reward for effort and other conditions of employment
safeguard the interests of the employees and their employer and regulate how employers
treat their employees.
Industrial relations maintain a balance with employee expectations, employer
associations, trade unions, and other social and economic institutions of societies.
Industrial relations help in resolving disputes, conflicts, and controversies between labour
and management.
Scope of Industrial Relations
Different scholars have expressed their different views on the scope of industrial relations.
According to Dale Yoder,
“Industrial relations incorporate policies related to recruitment, selection, training of
workers, personnel management, and collective bargaining.”
According to the International Labour Organisation (ILO),
Industrial relations incorporate the relations between state and employers and relations
between trade unions and employers associations.
According to Richard A Lester,
The scope of Industrial Relations is no longer limited only to trade unions and industrial
management; rather it includes all aspects of labour such as wages, productivity, social security,
management, and employee policies.
In a modern organization, the industrial relations functions are performed by the Industrial
Relations Department. Different important functions performed by the industrial relation
department include:
Management of policies and programs of industrial relations.
Public Relations
Labour Relation
Recruitment, Selection, and Placement of labourers.
To provide medical and health-related services.
To maintain employment records of the employees.
Provision of recruitment test, ability test, skill test, and intelligence test.
Provision of training and education program
Importance of Industrial Relations
Promotes Democracy: Industrial relations means employing collective bargaining to
resolve issues faced by workers. This collective bargaining is generally employed
through cooperation and mutual agreement amongst all the affected parties, i.e.,
democracy, management, and employees unions. This enables an organisation to
establish industrial democracy, which eventually motivates the workers to perform their
best to the growth and prosperity of the organisation.
High Morale: Good industrial relations enhance the morale of the employees and
motivate the workers to work more efficiently.
Avoid Conflicts Between Management And Union: Industrial relations minimise issues
between unions and management. This is because industrial relations incorporate setting
up machinery to resolve issues faced by management and employees through mutual
agreement to which both these parties are bound. This results in ignoring any unfair
practices that could lead to major conflicts between employers and trade unions.
Minimizes Wastage: Satisfactory Industrial relations are maintained on the basis of co-
operation and recognition of each other in the department. It helps to minimize wastage
of material, manpower, and costs.
Economic Growth and Development: Good and harmonious industrial relations result
in increased efficiency and hence prosperity, which in turn minimize turnover and other
tangible benefits to the organisation. This promotes economic growth and development.
Functions of Industrial Relations
The important functions of industrial relations are:
To establish communication between workers and management
To maintain the sound relationship between the employees, workers and management.
To establish support between managers and employees.
To ensure the creative contribution of trade unions to avoid industrial conflicts.
To safeguard the interests of workers and the management,
To avoid an unhealthy and unethical atmosphere in an industry.
To formulate such considerations that may promote understanding, creativity, and
cooperativeness to enhance industrial productivity.
To ensure better workers’ participation.
Factors Affecting Industrial Relations
Industrial relations are influenced by a variety of factors that impact the relationship between
employers, employees, and trade unions. Key factors include:
Economic Conditions: Economic stability or instability can influence wage negotiations,
job security, and employment conditions.
Government Policies: Laws and regulations, including labour laws, social security, and
minimum wage policies, shape industrial relations.
Technology and Automation: The introduction of new technologies can lead to job
displacement or changes in work roles, affecting employee satisfaction and relations.
Union Strength and Influence: The presence and power of labour unions impact
negotiations and conflict resolution between workers and employers.
Management Style: A company’s approach to management, whether authoritarian or
participative, influences employee morale and industrial relations.
Social and Cultural Factors: Societal values, traditions, and cultural attitudes towards
labour can influence industrial relations in different regions.
Approaches of Industrial Relations
Different theorists and professionals have viewed Industrial Relations differently. On the basis of
the orientations of different practitioner different approaches have been developed to explain the
concept of Industrial Relations. Some of the important approaches are as following:
1. Unitary Approach
Key Features:
Single Entity: The organization is viewed as a cohesive and harmonious entity with a common
purpose.
Common Interests: It assumes that employers and employees share the same goals and
interests.
Management Authority: Management’s role is to provide strong leadership and foster loyalty
and cooperation among employees.
Conflict as Abnormal: Industrial conflicts are seen as a result of poor communication, lack of
understanding, or the influence of external agitators.
Implications:
Emphasizes teamwork and mutual cooperation.
Promotes a paternalistic style of management.
Seeks to minimize the role and influence of trade unions.
2. Pluralist Approach
Key Features:
Diverse Interests: Recognizes that the workplace is composed of various interest groups, each
with its own legitimate interests and goals.
Conflict as Inevitable: Sees industrial conflict as normal due to different interests between
management and labor.
Power Distribution: Emphasizes a balance of power between management and trade unions,
with collective bargaining as a key mechanism for resolving conflicts.
Role of Trade Unions: Views trade unions as legitimate representatives of employee interests.
Implications:
Supports the existence of multiple sources of authority within the organization.
Promotes collective bargaining and institutional mechanisms for conflict resolution.
Encourages negotiation and compromise between management and labor.
3. Marxist Approach
Key Features:
Class Conflict: Focuses on the inherent class conflict between capital (employers) and labor
(employees) within the capitalist system.
Exploitation: Views industrial relations as a reflection of broader social and economic
inequalities and the exploitation of labor by capital.
Revolutionary Change: Advocates for fundamental changes in the social and economic system
to address the root causes of industrial conflict.
Role of Trade Unions: Sees trade unions as instruments for challenging capitalist exploitation
and advancing the interests of the working class.
Implications:
Emphasizes the need for structural changes in society and the economy.
Supports strong, militant trade unionism and political action to achieve labor rights.
Focuses on addressing the power imbalances and inequalities inherent in the capitalist system.
4. Systems Approach
Key Features:
Holistic View: Considers industrial relations as a subsystem of the broader social system.
Interconnectedness: Emphasizes the interrelationships between various parts of the industrial
relations system, including institutions, rules, and behaviors.
Rules and Regulations: Focuses on the formal and informal rules governing employment
relationships and the processes for making and enforcing these rules.
Actors and Contexts: Identifies key actors (management, labor, government) and the
environmental contexts (economic, political, social) in which they operate.
Implications:
Promotes the development and enforcement of clear rules and procedures for managing
industrial relations.
Supports a structured and systematic approach to resolving industrial disputes.
Recognizes the influence of external factors on industrial relations.
5. Human Relations Approach
Key Features:
Employee Well-being: Emphasizes the importance of employee satisfaction, motivation, and
well-being.
Social and Psychological Factors: Focuses on the social and psychological aspects of work,
including group dynamics, leadership styles, and communication.
Participative Management: Advocates for participative management practices and involving
employees in decision-making processes.
Conflict Prevention: Sees good interpersonal relationships and effective communication as key
to preventing industrial conflicts.
Implications:
Encourages management practices that prioritize employee welfare and engagement.
Supports programs and initiatives aimed at improving workplace relationships and morale.
Emphasizes the role of effective communication and leadership in managing industrial relations.
6. Psychological Approach
Key Features:
Individual Behavior: Focuses on the psychological aspects of individual behavior in the
workplace.
Motivation and Attitudes: Studies how motivation, attitudes, and personality traits influence
work behavior and industrial relations.
Conflict Resolution: Looks at psychological techniques for resolving conflicts and improving
employee relations.
Work Environment: Examines the impact of the work environment on employee behavior and
productivity.
Implications:
Emphasizes the importance of understanding and addressing individual psychological needs.
Supports the use of psychological assessments and interventions to improve industrial relations.
Promotes the creation of a supportive and psychologically healthy work environment.
7. Social Action Approach
Key Features:
Social Context: Considers industrial relations as a product of social interactions and contexts.
Role of Social Actors: Emphasizes the role of social actors (employees, employers, unions) and
their actions in shaping industrial relations.
Dynamic Interactions: Views industrial relations as dynamic and evolving through continuous
interactions between social actors.
Cultural and Social Factors: Recognizes the influence of cultural and social factors on
industrial relations practices and outcomes.
Implications:
Highlights the importance of understanding the social and cultural context of industrial relations.
Supports approaches that consider the actions and interactions of various social actors.
Encourages adaptive and flexible strategies for managing industrial relations.
