01CH 01

Background to Industrial Relations
Chapter
1 Background
to
Industrial Relations
Copyright © 2008, B D Singh
1-1 INDUSTRIAL RELATIONS Emerging Paradigms (2nd Edition) B D Singh Excel Books
Understanding/Appreciating Industrial Relations/Employee

Relations
Introduction
"Work dominates the lives of most men and women and management of employees,
both individually and collectively, and remains a central feature of organisational life"-
observed Blyton and Turnkoll (1994). The truth behind these words is fast becoming
reality because of the rapid-changing business skylines and industrial landscapes
which force adjustment and readjustment of parameters of Employees Relations,
more frequently.
The concept of Employee-Relations requires proper appreciation. Generally, the

term used is "Industrial Relations" and means relationship between management
and workers in the Industry.
Cont….
Industrial Relations: Definitions, Concepts and Theories
The term ‘industrial relations’ refers to the complex of human relationships which
emerges in work situations.
One of the most comprehensive definitions which puts industrial relations in a

proper perspective of human relationships is by J. Henry Richardson. He says:
"Industrial relations are the art of living together for purposes of production."
The definition by Allan Flanders focuses attention on the institutionalisation of the

relationship in which forums are created to regulate the relations. 'The subject of
industrial relations deals with certain regulated and institutionalised relationships in
the industry.' Similar emphasis on regulation and institution is noticed in the
definition by H.A. Clegg. He observes: "The field of industrial relations includes the
study of workers and their trade unions, management, employers' associations and
the state institutions concerned with the regulation of employment." Cont….
The present is only a part of a continuum linking the past with the future.
Consequently, current industrial relations owe much to their past and the
participant's goal and expectations for the future. At the micro level, the time-context
may be evident in two ways:-
a) Today's problem stems from yesterday's decision and its solution will, as the
environments change, become a problem in the future, and
b) The attitudes, expectations and relationships manifest, led by the participants,
are at least in part, the product of their past individual and collective
experiences.
"A distinctive approach of employment management is the need of the hour which
seeks to achieve competitive advantage through strategic development of a highly
committed and capable workforce, using an integrated array of cultural, structural
and personnel techniques." - John Storey, (1995).
Cont….
Difference Between Traditional Industrial Relations and Emerging

Employee Relations (HRM)
S.NO. DIMENSION TIR EER/HRM
1. Nature of Relations Pluralist Unitarist
2. Contract Emphasis on terms of contract Beyond contract,
defined rules, contract innovative ways
3. Conflict Institutionalised De-emphasised, is
pathological
4. Union legitimacy Unions are acceptable Not considered
desirable Nurturing
5. Managerial task in relation to Monitoring Nurturing
labour
6. Key relation Labour-management Customer
7. Pay Standardised, based on job Performance related
evaluation
8. Basis of labour -manage ment Collective bargaining contract Individual contract
relations
9. Job design Division of labour Team work
10. Conflict handling Reach temporary truce, reactive Managing climate and
culture -proactive
11. Key people PM/IR Specialists Line People
12. Focus of attention Personnel procedures Various culture and
structure -related
personnel strategies.
Union-free Employees Relation

Some of the factors which have a bearing on this issue in the Indian context
are:
a) The aggressive approaches of Indian employers in the service sector to trade
unionism;
b) The growth of BPO organizations, a majority of which are of American origin
and which are manifestly anti-union;
c) The declining membership of trade unions, as, for instance, from 92 lakh
members in 1989 to some 30 lakh members in 1997;
d) The decline in the number of 'skill' workers and their replacement by
'knowledge‘ workers; and
e) A perceptible change in the attitude of the Central and State Governments
towards trade unions and trade unionism.
HRM Dimensions to Employee Relations

The key contrasting dimensions of traditional industrial relations and HRM have
been presented by Guest (1995) as follows:
Dimension Industrial Relations HRM

Psychological contract Compliance Commitment
Behavioural references Norms, custom and practice Values and mission
Relations Low trust, pluralist, collective High trust, unitarist, individual
Organisation design Formal roles, hierarchy, division Flexible roles, flat structure,
of labour, managerial control teamwork, autonomy, self-control
Cont….
HRM – IR - INTERFACE
The relationship between an MANAGEMENT
employee and employer is primary.

It may be referred to as employer-
employee relationship or as
employee relations. The
relationship between employees
and union(s) is secondary, for
except where closed-shop situation
exists, a person joins an
organisation as an employee first
and later s/he may become a
WORKERS/ TRADE UNIONS
member of a union, if one exists EMPLOYEES
(Figure). This relationship may be

referred to as union-management Cont….
relations or industrial relations. Copyright © 2008, B D Singh
There is a predominant view that modern human resource management policies

focus on the employee as an individual, reduce the emphasis on collectivism, and
seek to marginalize the role of trade union. This view gains strength when
managements:
 communicate directly with employees even though in the past they used to
communicate with their employees through the workers' representatives or the
trade union,
 substitute and supplant rather than supplement representative forms of
employee participation/involvement through direct forms of employee
participation/involvement such as suggestion schemes, quality control circles,
Kaizen, 5S, etc.,
 make the maintenance of union-free environment a key result area for the
Director Human Resources,
 actively pursue anti-union or discriminatory policies against trade union
members, and
Cont….
 refuse to deal with trade union. Copyright © 2008, B D Singh
Handling the link between HR & IR

 Develop sensitivity to human needs and human problems at work and beyond
work.
 Evolve a value system based on trust, transparency, fairness, and equity. Pay
attention and practice the core values professed by the organisation: walk the
talk and talk the walk.
 Institutionalize openness in subordinate- superior relationships. Allow the
subordinates to speak hard facts and ventilate their grievances even though
they appear to be, initially, unpalatable and fictitious assumptions respectively.
 Deal with employee grievances promptly and explain the logic and rationale of
decisions to convince the aggrieved. People cooperate when they understand.
 Tell the human resource management department and professionals to operate
through the line of departments/professionals.
 Consciously provide exposure and understanding to line managers on human
resource management aspects.
 Review HR/IR policies and practices from time to time. Rules and procedures
should unleash and facilitate, not block and hinder human potential in the
organisation. Copyright © 2008, B D Singh
Theories in Industrial Relations

Theories are body of propositions from which uniformities can be derived. A theory
should attempt to explain why certain events happen and how an why the rules of
the system change. Significant points for theory are: (a) it should deal with a set of
variables to identify input-output relationships; (b) it should establish inter-
relationships between individualism and collectivism; (c) it should testify hypothesis;
and (d) it should predict quality. The first initiative refers to theorization of Dunlop's
concept of industrial relations.
Cont….
Approaches to Industrial Relations
Input Conversion Output
CONFLICT INSTITUTIONS /PROCESSES

REGULATION
(RULES)
SYSTEMS
Approaches to Industrial Relations

Cont….
Unitary Perspective
The unitary perspective is based on the assumptions that the organisation is, or if it
is not, then it should be, an integrated group of people with a single authority/loyalty
structure and a set of common values, interests and objectives shared by all
members of the organisation.
The unitary perspective is found predominantly amongst managers – particularly
line-management-and, therefore, is often regarded as a management ideology. Fox
has argued that management clings to this view because:
i. It legitimises its authority-role by projecting the interests of management and
employees as being the same and by emphasising management's role of
'governing' in the best interests of the organisation, as a whole;
ii. It reassures managers by confirming that conflict (dissatisfaction), where it
exists, is largely the fault of the government rather than the management;
iii. It may be projected to the outside world as a means of persuading them that
the management's decisions and actions are right and the best in the
circumstances
Cont….
Pluralistic Perspective
Fox believes that this view of the organisation "probably represents the received
orthodoxy in many Western societies" and is often associated with a view of society
as being 'post-capitalist', i.e., there is a relatively widespread distribution of authority
and power within the society, a separation of ownership from management, a
separation of political and industrial conflict, and an acceptance and
institutionalisation of conflict in both spheres. This perspective is based on the
assumption that the organisation is composed of individuals who coalesce into a
variety of distinct sectional groups, each with its own interest, objectives and
leadership (either formal or informal). The organisation is perceived as being multi-
structured and competitive in terms of groupings, leadership, authority and loyalty
and this, Fox argues, gives rise to 'complex of tensions and competing claims which
have to be 'managed' in the interests of maintaining a viable collaborative structure'.
Cont….
Radical Perspective
The radical perspective, which is also often referred to as the Marxist perspective,
concentrates on the nature of the society surrounding the organisation. The Marxist
general theory of society argues that:
1. Class (group) conflict is the source of societal change-without such conflict the
society would stagnate;
2. Class conflict arises primarily from the disparity in the distribution of, and
access to, economic power within the society -the principal disparity being
between those who own capital and those who supply their labour;
3. The nature of the society's social and political institutions is derived from this
economic disparity and reinforces the position of the dominant establishment
group, for example, through differential access to education, the media,
employment in government and other establishment bodies, etc.;
4. Social and political conflict in whatever form is merely an expression of the
underlying economic conflict within the society.
Objectives of Industrial Relations

The Nair & Nair attribute to IR:
 The development of healthy employer- employee relations
 The maintenance of industrial peace and high productivity
 The development and growth of industrial democracy
Nair & Nair cite Kirkaldy (1947), according to whom there are four objectives
for IR:
 Improvement of economic conditions of workers.
 State control on industries for regulating production and promoting harmonious
industrial relations.
 Socialisation or rationalisation of industries by making State itself a major
employer.
 Vesting of the proprietory interest of the workers in the industries in which they
are employed. Cont…. Copyright © 2008, B D Singh
Industrial relations activities contribute significantly is that of overall industrial goals

such as productivity, labour peace and industrial democracy. Now, let us draw our
attention to some of these:
1. Employer to Individual Employee Relationships
2. Labour Management Relations
3. Industrial Peace and Productivity
4. Industrial Democracy
5. Liaison Functions
Forms of Industrial Relations

The interaction among the stakeholders in Industrial Relations is characterised by a
certain "balance of power". In highly regulated industrial relations environment, the
State is likely to be the dominant player. Similarly, in a market-driven economy,
employers tend to dominate as a result of the right to "hire and fire" in response to
market exigencies. In a socialist economy, trade unions tend to have a dominant
role. In that process, industrial relations degenerate into a dominance-submission
syndrome in which the dominant stakeholder tends to control. The management of
industrial relations within the framework of culture of dominance can take three
forms:
 Managing by Contending
 Managing by Conceding
 Managing by Colluding
Theories of Industrial Relations

Several systematic attempts have been made by Industrialists, Sociologists and
Industrial Relations theorists to develop the theoretical perspectives to analyse
industrial relations and trade unionism. It might be useful to examine some
significant approaches to the analysis of industrial relations in order to be able to
develop an appreciation of alternative industrial relations perspectives. Some of the
theories are below:-
 Dunlop's System Theory (1958)
 The Pluralist Theory of Flanders (1970)
 The Structural Contradictions Theory of Hyman, 1971
 Human Relations Theory
 The Trusteeship Theory of Mahatma Gandhi Cont….

Basic Postulates of IR
EQUITY and FAIRNESS
Equity refers to equal treatment to one and all under comparable circumstances.
Equity and fairness are used synonymously in industrial relations. The concept of
fairness is an objective when one applies a technical yardstick like market forces
Cont….
POWER AND AUTHORITY

Power has the ability to influence, impose, or control. It implies the use of force.
Power emanates from six major interrelated aspects:
 the power to reward and/or punish
 power to coerce others
 position power
 expert power due to one's access to information, knowledge, or experience
 associational power through membership in trade unions, employers
organizations, chambers of commerce, networking/coalitions, etc.
Cont….
INDIVIDUALISM AND COLLECTIVISM
The fundamental basis of a democratic society is the freedom of the individual. In an

employment relationship, collectivist basis may negate or limit an individual's
freedom. The closed-shop system is a case in point. An individual should have the
right to join a trade union. Likewise, he or she should have the right not to join a
union. Compelling an employee to join a union due to the union shop clause or
closed-shop system in a collective agreement negates the right of freedom of the
individual employee.
Cont….
COLLABORATIVE MODEL FOR SOUND INDUSTRIAL RELATIONS

 sharing information
 consulting with each other on a regular basis
 brainstorming together
 organizing morale-boosting safaris to units where labour and management
have benefited through cooperation
 creating opportunities for both management and labour to review, learn and put
positive learning into practice
 bridging the gap between precept and practice
 ensuring the support and sustenance of top management
Cont….
Obligations of the Management
For management, the following obligations are critical:
 Clarify and reason with the other party;
 Provide for say and share for all employees;
 Focus on fairness;
 Empower people;
 Be transparent
Cont….
Obligations of the Union

Unions need to:
 Accept the nexus between the financial success of an enterprise and the
livelihood and well-being of the people in that organisation; improvement in
wages and welfare can come only from improved business results;
 Develop a long-term perspective;
 Understand the link between macro and micro relationships in assessing the
behaviour and performance of a firm;
 Realize the importance of knowledge, skills, attitudes, and habits; lifelong
employability can come through proactively addressing, jointly with the
management, the issues relating to human obsolescence;
 Cope with the imperatives of simultaneously pursuing two apparently conflicting
goals: 'pattern maintenance' and 'adaptation to change';
 Understand and assess the consequence of working together versus working
at cross-purpose. Cont….
The Choices
Labour and management have six options;
 Coerce: Only one side gets what it wants.
 Conflict: While both sides spend more energy while only one side usually has
marginal gains.
 Compete: One party wins and the other loses.
 Compromise: No one gets what they want.
 Co-opt/cooperate: It is usually possible for the initiator to walk away with a
larger slice of the cake.
 Collaborate: Both parties evolve an option that provides for mutual gain.
 Obviously, collaboration is the most preferred mode. Collaborative collective
bargaining can lead to win-win situations and mutual gains for both, the worker
and the management.

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Background to Industrial Relations

Copyright © 2008, B D Singh

Understanding/Appreciating Industrial Relations/Employee

The concept of Employee-Relations requires proper appreciation. Generally, the

Industrial Relations: Definitions, Concepts and Theories

One of the most comprehensive definitions which puts industrial relations in a

The definition by Allan Flanders focuses attention on the institutionalisation of the

Difference Between Traditional Industrial Relations and Emerging

Copyright © 2008, B D Singh

Union-free Employees Relation

HRM Dimensions to Employee Relations

Dimension Industrial Relations HRM

employee and employer is primary.

(Figure). This relationship may be

relations or industrial relations. Copyright © 2008, B D Singh

There is a predominant view that modern human resource management policies

Handling the link between HR & IR

Theories in Industrial Relations

Approaches to Industrial Relations

Input Conversion Output

CONFLICT INSTITUTIONS /PROCESSES

Approaches to Industrial Relations

Objectives of Industrial Relations

Industrial relations activities contribute significantly is that of overall industrial goals

1. Employer to Individual Employee Relationships

2. Labour Management Relations

3. Industrial Peace and Productivity

Copyright © 2008, B D Singh

Forms of Industrial Relations

Copyright © 2008, B D Singh

Theories of Industrial Relations

 Dunlop's System Theory (1958)

 The Pluralist Theory of Flanders (1970)

 The Structural Contradictions Theory of Hyman, 1971

 Human Relations Theory

 The Trusteeship Theory of Mahatma Gandhi Cont….

POWER AND AUTHORITY

INDIVIDUALISM AND COLLECTIVISM

The fundamental basis of a democratic society is the freedom of the individual. In an

COLLABORATIVE MODEL FOR SOUND INDUSTRIAL RELATIONS

Obligations of the Management

For management, the following obligations are critical:

 Clarify and reason with the other party;

 Provide for say and share for all employees;

Obligations of the Union

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