UNIT I
Industrial Relations
Industrial Relations – Introduction
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.
Industrial Relations (IR) is the study of the laws, conventions and institutions that regulate 'the
workplace'. It is a fundamentally important aspect of our way of life, our culture and our society.
Industrial relations means different things to different people. The following illustration depicts how
IR shapes our working life, our society and the national economy.
As workers, we associate Industrial Relations with Unions, Industrial Awards, and labour laws
that set the conditions under which we work. This includes our pay, safety, employment security and
opportunities for training. 150 years ago people worked 6 days a week, 12 hours a day or more, and
there were no provisions for sick pay or holiday pay. There was no protection for children who were
often a form of cheap labour, or worse, were sold into slavery. As a society we have come a long way
since, and this is largely due to the formation and actions of labour unions.
The modern day employer attaches great importance to maintaining good industrial relations as a
cornerstone of business growth and success. Industrial relations, for the employer, is about
negotiations between workers and business owners/managers that lead to increased productivity and
improved product quality in exchange for better pay and conditions of employment for workers.
These negotiations between business owners/managers and their workers is often referred to as
enterprise bargaining. The reduction of conflict between workers and business management is also a
highly desirable objective in Industrial Relations.
Whether we have good jobs and how we work has a fundamental effect on the quality of our lives.
Unemployment causes social isolation and economic deprivation. When there is high levels of
unemployment, there is social tension and upheaval. Too much employment has its own set of woes.
People who work long hours often suffer from health issues and family problems. There is a need to
strike a work-life balance to ensure a healthy, happy and productive populations.
Industrial relations is a major factor in managing the economy. As a nation we compete in the global
marketplace for goods and services. If the workforce is inefficient and wage demands are too high,
then the cost of our goods and services is greater and consequently we are less competitive in the
global marketplace (see more about Globalisation). Governments create laws and policies that affect
Industrial Relations and thereby influence the pay and conditions of work for workers.
,History
Industrial relations has its roots in the industrial revolution which created the modern
employment relationship by spawning free labor markets and large-scale industrial organizations
with thousands of wage workers. As society wrestled with these massive economic and social
changes, labor problems arose. Low wages, long working hours, monotonous and dangerous
work, and abusive supervisory practices led to high employee turnover, violent strikes, and the
threat of social instability. Intellectually, industrial relations was formed at the end of the 19th
century as a middle ground between classical economics and Marxism, with Sidney Webb and
Beatrice Webb's Industrial Democracy (1897) being the key intellectual work. Industrial relations
thus rejected the classical econ.
Institutionally, industrial relations was founded by John R. Commons when he created the first
academic industrial relations program at the University of Wisconsin in 1920. Another scholarly
pioneer in industrial relations and labor research was Robert F. Hoxie.Early financial support for
the field came from John D. Rockefeller, Jr. who supported progressive labor-management
relations in the aftermath of the bloody strike at a Rockefeller-owned coal mine in Colorado. In
Britain, another progressive industrialist, Montague Burton, endowed chairs in industrial
relations at Leeds, Cardiff and Cambridge in 1930.
Beginning in the early 1930s there was a rapid increase in membership of labor unions in
America, and with that came frequent and sometimes violent labor-management conflict. During
World War II these were suppressed by the arbitration powers of the National War Labor Board.
However, as World War II drew to a close and in anticipation of a renewal of labor-management
conflict after the war, there was a wave of creations of new academic institutes and degree
programs that sought to analyze such conflicts and the role of collective bargaining. The most
known of these was the Cornell University School of Industrial and Labor Relations, founded in
1945. But counting various forms, there were over seventy-five others. These included the Yale
Labor and Management Center, directed by E. Wight Bakke, which began in 1945. An influential
industrial relations scholar in the 1940s and 1950s was Neil W. Chamberlain at Yale and
Columbia Universities. The discipline was formalized in the 1950s with the formation of the
Oxford School by Allan Flanders and Hugh Clegg.
Industrial relations was formed with a strong problem-solving orientation that rejected both the
classical economists' laissez faire solutions to labor problems and the Marxist solution of class
revolution. It is this approach that underlies the New Deal legislation in the United States, such
as the National Labor Relations Act and the Fair Labor Standards Act.
,Concept of Industrial Relations
Industrial relations are the relationships between employees and employers within the
organizational settings. The field of industrial relations looks at the relationship between
management and workers, particularly groups of workers represented by a union. Industrial
relations are basically the interactions between employers, employees and the government, and
the institutions and associations through which such interactions are mediated.
The term industrial relations has a broad as well as narrow outlook. Originally, industrial
relations was broadly defined to include the relationships and interactions between employers
and employees. From this perspective, industrial relations covers all aspects of the employment
relationship, including human resource management, employee relations, and union-management
(or labor) relations. Now its meaning has become more specific and restricted. Accordingly,
industrial relations pertains to the study and practice of collective bargaining, trade unionism,
and labor-management relations, while human resource management is a separate, largely
distinct field that deals with nonunion employment relationships and the personnel practices and
policies of employers.
The relationships which arise at and out of the workplace generally include the relationships
between individual workers, the relationships between workers and their employer and the
relationships between employees. The relationships employers and workers have with the
organizations are formed to promote their respective interests, and the relations between those
organizations, at all levels. Industrial relations also includes the processes through which these
relationships are expressed (such as, collective bargaining, workers‘ participation in decision-
making, and grievance and dispute settlement), and the management of conflict between
employers, workers and trade unions, when it arises.
Importance of Industrial Relation
1. Foster Industrial Peace:
Under the mechanism of IR, both employees and managers discuss the matter and consult each
other before initiating any actions. Doubts, if any, in the minds of either party are removed. Thus,
unilateral actions that prop confusion and misunderstanding disappear from the scene. In this
way, IR helps create a peaceful environment in the organisation. Peace, in turn, breeds prosperity.
, 2. Promote Industrial Democracy:
Industrial democracy means the government mandated worker participation at various levels of
the organisation with regard to decisions that affect workers. It is mainly the joint consultations,
that pave the way for industrial democracy and cement relationship between workers and
management. This benefits the both. The motivated workers give their best and maximum to the
organisation, on the one hand, and share their share of the fruits of organisational progress jointly
with management, on the other.
3. Benefit to Workers:
IR benefits workers in several ways. For example, it protects workers against unethical practices
on the part of management to exploit workers by putting them under inhuman working
conditions and niggardly wages. It also provides a procedure to resolve workers‘ grievances
relating to work.
4. Benefit to Management:
IR protects the rights of managers too. As and when workers create the problem of indiscipline,
IR provides mangers with a system to handle with employee indiscipline in the organisation.
5. Improve Productivity:
Experiences indicate that good industrial relations serve as the key for increased productivity in
industrial organisations. Eicher Tractors, Alwar represents one such case. In this plant,
productivity went up from 32 per cent to 38 per cent between 1994 and 1997. This increase is
attributed to the peaceful IR in the plant.
Similar other success stories abound in the country. As reported by V.S.P. Rao, Sundaram
Fasteners (A TVS group company which begged the prestigious GM award for the fourth
successive year in 1999 as a quality supplier of radiator caps) is well known for zero
breakdowns, zero accidents and zero defects. Company did not lose even a single day due to
strike. The per-employee productivity is comparable to the best in the world. One study rates the
company among the 20 most competitive companies in the Asia.
Approaches / Theories of IR
The scenario of Industrial Relations(IR) is perceived differently by different people. For some,
Industrial Relations is related to class conflict, others perceive it in terms of mutual co-operation
and still others understand it in terms of competing interests of various groups. HR managers are
expected to understand these varying approaches because they provide the theoretical
Industrial Relations
Industrial Relations – Introduction
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.
Industrial Relations (IR) is the study of the laws, conventions and institutions that regulate 'the
workplace'. It is a fundamentally important aspect of our way of life, our culture and our society.
Industrial relations means different things to different people. The following illustration depicts how
IR shapes our working life, our society and the national economy.
As workers, we associate Industrial Relations with Unions, Industrial Awards, and labour laws
that set the conditions under which we work. This includes our pay, safety, employment security and
opportunities for training. 150 years ago people worked 6 days a week, 12 hours a day or more, and
there were no provisions for sick pay or holiday pay. There was no protection for children who were
often a form of cheap labour, or worse, were sold into slavery. As a society we have come a long way
since, and this is largely due to the formation and actions of labour unions.
The modern day employer attaches great importance to maintaining good industrial relations as a
cornerstone of business growth and success. Industrial relations, for the employer, is about
negotiations between workers and business owners/managers that lead to increased productivity and
improved product quality in exchange for better pay and conditions of employment for workers.
These negotiations between business owners/managers and their workers is often referred to as
enterprise bargaining. The reduction of conflict between workers and business management is also a
highly desirable objective in Industrial Relations.
Whether we have good jobs and how we work has a fundamental effect on the quality of our lives.
Unemployment causes social isolation and economic deprivation. When there is high levels of
unemployment, there is social tension and upheaval. Too much employment has its own set of woes.
People who work long hours often suffer from health issues and family problems. There is a need to
strike a work-life balance to ensure a healthy, happy and productive populations.
Industrial relations is a major factor in managing the economy. As a nation we compete in the global
marketplace for goods and services. If the workforce is inefficient and wage demands are too high,
then the cost of our goods and services is greater and consequently we are less competitive in the
global marketplace (see more about Globalisation). Governments create laws and policies that affect
Industrial Relations and thereby influence the pay and conditions of work for workers.
,History
Industrial relations has its roots in the industrial revolution which created the modern
employment relationship by spawning free labor markets and large-scale industrial organizations
with thousands of wage workers. As society wrestled with these massive economic and social
changes, labor problems arose. Low wages, long working hours, monotonous and dangerous
work, and abusive supervisory practices led to high employee turnover, violent strikes, and the
threat of social instability. Intellectually, industrial relations was formed at the end of the 19th
century as a middle ground between classical economics and Marxism, with Sidney Webb and
Beatrice Webb's Industrial Democracy (1897) being the key intellectual work. Industrial relations
thus rejected the classical econ.
Institutionally, industrial relations was founded by John R. Commons when he created the first
academic industrial relations program at the University of Wisconsin in 1920. Another scholarly
pioneer in industrial relations and labor research was Robert F. Hoxie.Early financial support for
the field came from John D. Rockefeller, Jr. who supported progressive labor-management
relations in the aftermath of the bloody strike at a Rockefeller-owned coal mine in Colorado. In
Britain, another progressive industrialist, Montague Burton, endowed chairs in industrial
relations at Leeds, Cardiff and Cambridge in 1930.
Beginning in the early 1930s there was a rapid increase in membership of labor unions in
America, and with that came frequent and sometimes violent labor-management conflict. During
World War II these were suppressed by the arbitration powers of the National War Labor Board.
However, as World War II drew to a close and in anticipation of a renewal of labor-management
conflict after the war, there was a wave of creations of new academic institutes and degree
programs that sought to analyze such conflicts and the role of collective bargaining. The most
known of these was the Cornell University School of Industrial and Labor Relations, founded in
1945. But counting various forms, there were over seventy-five others. These included the Yale
Labor and Management Center, directed by E. Wight Bakke, which began in 1945. An influential
industrial relations scholar in the 1940s and 1950s was Neil W. Chamberlain at Yale and
Columbia Universities. The discipline was formalized in the 1950s with the formation of the
Oxford School by Allan Flanders and Hugh Clegg.
Industrial relations was formed with a strong problem-solving orientation that rejected both the
classical economists' laissez faire solutions to labor problems and the Marxist solution of class
revolution. It is this approach that underlies the New Deal legislation in the United States, such
as the National Labor Relations Act and the Fair Labor Standards Act.
,Concept of Industrial Relations
Industrial relations are the relationships between employees and employers within the
organizational settings. The field of industrial relations looks at the relationship between
management and workers, particularly groups of workers represented by a union. Industrial
relations are basically the interactions between employers, employees and the government, and
the institutions and associations through which such interactions are mediated.
The term industrial relations has a broad as well as narrow outlook. Originally, industrial
relations was broadly defined to include the relationships and interactions between employers
and employees. From this perspective, industrial relations covers all aspects of the employment
relationship, including human resource management, employee relations, and union-management
(or labor) relations. Now its meaning has become more specific and restricted. Accordingly,
industrial relations pertains to the study and practice of collective bargaining, trade unionism,
and labor-management relations, while human resource management is a separate, largely
distinct field that deals with nonunion employment relationships and the personnel practices and
policies of employers.
The relationships which arise at and out of the workplace generally include the relationships
between individual workers, the relationships between workers and their employer and the
relationships between employees. The relationships employers and workers have with the
organizations are formed to promote their respective interests, and the relations between those
organizations, at all levels. Industrial relations also includes the processes through which these
relationships are expressed (such as, collective bargaining, workers‘ participation in decision-
making, and grievance and dispute settlement), and the management of conflict between
employers, workers and trade unions, when it arises.
Importance of Industrial Relation
1. Foster Industrial Peace:
Under the mechanism of IR, both employees and managers discuss the matter and consult each
other before initiating any actions. Doubts, if any, in the minds of either party are removed. Thus,
unilateral actions that prop confusion and misunderstanding disappear from the scene. In this
way, IR helps create a peaceful environment in the organisation. Peace, in turn, breeds prosperity.
, 2. Promote Industrial Democracy:
Industrial democracy means the government mandated worker participation at various levels of
the organisation with regard to decisions that affect workers. It is mainly the joint consultations,
that pave the way for industrial democracy and cement relationship between workers and
management. This benefits the both. The motivated workers give their best and maximum to the
organisation, on the one hand, and share their share of the fruits of organisational progress jointly
with management, on the other.
3. Benefit to Workers:
IR benefits workers in several ways. For example, it protects workers against unethical practices
on the part of management to exploit workers by putting them under inhuman working
conditions and niggardly wages. It also provides a procedure to resolve workers‘ grievances
relating to work.
4. Benefit to Management:
IR protects the rights of managers too. As and when workers create the problem of indiscipline,
IR provides mangers with a system to handle with employee indiscipline in the organisation.
5. Improve Productivity:
Experiences indicate that good industrial relations serve as the key for increased productivity in
industrial organisations. Eicher Tractors, Alwar represents one such case. In this plant,
productivity went up from 32 per cent to 38 per cent between 1994 and 1997. This increase is
attributed to the peaceful IR in the plant.
Similar other success stories abound in the country. As reported by V.S.P. Rao, Sundaram
Fasteners (A TVS group company which begged the prestigious GM award for the fourth
successive year in 1999 as a quality supplier of radiator caps) is well known for zero
breakdowns, zero accidents and zero defects. Company did not lose even a single day due to
strike. The per-employee productivity is comparable to the best in the world. One study rates the
company among the 20 most competitive companies in the Asia.
Approaches / Theories of IR
The scenario of Industrial Relations(IR) is perceived differently by different people. For some,
Industrial Relations is related to class conflict, others perceive it in terms of mutual co-operation
and still others understand it in terms of competing interests of various groups. HR managers are
expected to understand these varying approaches because they provide the theoretical
