IRLL Handout # 1

Introduction to Industrial Relations

Concept of Industrial Relations:
The term Industrial Relations comprises of two terms: Industry and Relations.
Industry refers to any productive activity in which an individual or a group of
individual(s) is (are) engaged. By relations we mean the relationships that exist
within the industry between the employer and his workmen.

The term industrial relations explains the relationship between employees and
management which stem directly or indirectly from union-employer relationship.

Definition:-
The concept of Industrial Relations had been extended to mean and denote the relations
of the state with employers, employees and the organizations. The subject includes
individual relations and joint consultation between employers and people at their
workplace; collective relations between employers and their organizations and trade
unions and the part played by the state in regulating these relations. Encyclopedia
Britannica

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 a 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, the relationships between employers, the relationships employers and workers
have with the organizations 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.
The Industrial Relations are also called as labor - management, employee-employers
relations.

A few notable features pertaining to Industrial Relations are as under:

1. Emerge out of employment relationship in an industrial setting. Without the
existence of the two parties, i.e. labor and management, this relationship cannot
exist. It is the industry, which provides the environment for industrial relat ions.

2. Industrial Relations are characterized by both conflict and co-operation. This is
the basis of adverse relationship. So the focus of Industrial Relations in on the
study of the attitudes, relationships, practices and procedure developed by the
contending parties to resolve or at least minimize conflicts.

3. As the labor and management do not operate in isolation but are parts of large
system, so the study of Industrial Relation also includes vital environment issues
like technology of the workplace, countrys socio-economic and political
environment, nations labor policy, attitude of trade unions workers and
employers.

4. Also involves the study of conditions conducive to the labor, management
co-operation as well as the practices and procedures required to elicit the desired
co-operation from both the parties.

5. Also studies the laws, rules, regulations, agreements, awards of courts, customs
and traditions, as well as policy framework laid down by the governments for
eliciting co-operations between labor and management. Besides this, it makes an
in-depth analysis of the interference patterns of the executive and judiciary in the
regulations of labormanagements relations.

In fact, IR encompasses all such factors that influence behavior of people at work. A few
such important factors are details below:

1. Institution : It includes government, employers, trade unions, unions federations or
associations, government bodies, labor courts, tribunals and other organizations which
have direct or indirect impact on the industrial relations systems.

2. Characters : It aims to study the role of workers union and employers federations,
industrial relations officers / manager, mediator / conciliators / arbitrator, judges of labor
court, tribunal etc.

3. Methods : Focus on collective bargaining, workers participation, discipline
procedure, grievance redressal machinery, dispute settlements machinery, unions, rules,
regulations, policies, procedures, hearing of labor courts, tribunals etc.

4. Contents : Includes matter pertaining to employment conditions like pay, hours of
works, leave with wages, health, and safety disciplinary actions, lay-off, dismissals
retirements etc., laws relating to such activities, regulations governing labor welfare,
social security, industrial relations, issues concerning with workers participation in
management, collective bargaining, etc.

Difference between industrial relations and human relations:
The term Industrial Relations is different from Human Relations.

Industrial relations refer to the relations between the employees and the employer in an
industry. Human relations refer to a personnel-management policy to be adopted in
industrial organizations to develop a sense of belongingness in the workers, improve their
efficiency and treat them as human beings and make them a partner in industry.

Industrial relations cover the matters regulated by law or by collective agreement
between employees and employers. On the other hand, problems of human relations are
personal in character and are related to the behavior of worker where morale and social
elements predominate.

Human relations approach is personnel philosophy which can be applied by the
management of an undertaking. The problem of industrial relations is usually dealt with
at three levels the level of enterprise, the industry and at the national level.

Thus, the term Industrial Relations is more wide and comprehensive and the term
Human Relations is a part of it.

Parties to the IR system:
Three main parties are directly involved in industrial relations:

Employers and their organizations : Employers possess certain rights vis--vis
employees (workers). They have the right to hire and fire them. Management can also
affect workers interests by exercising their right to relocate, close or merge the factory or
to introduce technological changes. The employers organizations are voluntary
bureaucratic institutions.

Workers and their organizations: Workers seek to improve the terms and conditions of
their employment. They exchange views with management and voice their grievances.
They also want to share decision making powers of management. Workers generally
unite to form unions against the management and get support from these unions. These
are mainly political institutions, associations of employees formed and maintained for the
specific purpose of wresting concessions from employers.

Government: The central and state government influences and regulates industrial
relations through laws, rules, agreements, awards of court and the like. It also includes
third parties and labor and tribunal courts.

Scope:
The concept of industrial relations has a very wide meaning and connotation. In the
narrow sense, it means that the employer, employee relationship confines itself to the
relationship that emerges out of the day to day association of the management and the
labor. In its wider sense, industrial relations include the relationship between an
employee and an employer in the course of the running of an industry and may project it
to spheres, which may overlap the areas of quality control, marketing, price fixation and
disposition of profits among others.

Factors affecting Industrial Relations
The factors affecting industrial relations system of an organization are :

(1) Institutional factors : Include factors like state policy, labour laws, collective
bargaining agreements, employers organizations / federations, etc.

(2) Economic factors : Include factors like type of ownership, individual, company
whether domestic or MNC, government, etc., source of labour supply, level of
unemployment, etc.

(3) Social Factors : Include factors like social values, norms, social status (high or
low)

(4) Technological factors : Include factors like work methods, type of technology
used, rate of technological change, R&D activities, etc. These factors directly
influence employment status, wage level, collective bargaining process in an
organization.

(5) Psychological factors : Include factors such as owners attitude perception of
workforce, motivation, morale, interest, dissatisfaction of workers, worker
attitude towards work. These factors affect workers job and personal life that
directly or indirectly influences industrial relations systems.

(6) Political factors : Include factors such as political institutions, system of
government, attitude of government. Most of the trade unions are controlled by
political parties, so the trade relations are shaped by the gravity of involvement of
political parties in trade union activities.

(7) Enterprise-related factors : Include factors like style of management, its
philosophy and value system, organizational climate, extent of competition,
adaptability of change and the various human resource management policies

(8) Global factors : Issues included are international relations, global conflicts,
international trade agreements and relations, international labour agreements (role
of ILO) etc.

Objectives of Industrial Relations
1. To safeguard the interest of labor and management by securing the highest level of
mutual understanding and goodwill among all sections in the industry which
participate in the process of production.
2. To avoid industrial conflict or strife and develop harmonious relations, which are an
essential factor in the productivity of workers and the industrial progress of a country.
3. Reduce high turnover and absenteeism.
4. To encourage sharing of profits and of managerial decisions
5. To eliminate, as far as is possible and practicable, strikes, lockouts and gheraos by
providing reasonable wages, improved living and working conditions and fringe
benefits.
6. Improvements in the economic conditions of workers in the existing state of industrial
managements and political government.
7. Control exercised by the state over industrial undertaking with a view to regulating
production and promoting harmonious industrial relations.
8. Socialization or rationalization of industries by making the state itself a major
employer
9. Vesting of a proprietary interest of the workers in the industries in which they are
employed.

Sound Industrial Relations
A sound industrial relations system is one in which relationships between management
and employees (and their representatives) on the one hand, and between them and the
State on the other, are more harmonious and cooperative than conflictual and creates an
environment conducive to economic efficiency and the motivation, productivity and
development of the employee and generates employee loyalty and mutual trust. Industrial
relations itself may again be described as being concerned with the rules, processes and
mechanisms (and the results emanating therefrom) through which the relationship
between employers and employees and their respective representatives, as well as
between them on the one hand and the State and its agencies on the other, is regulated.
The rules, processes and mechanisms of an industrial relations system are found in
sources such as laws (legislative, judicial, quasi-judicial), practices, customs, agreements
and arrangements arrived at through a bipartite or tripartite process or through
prescription by the State.

Industrial relations operates at different levels :
(i) at the national level
(ii) at the industry level
(iii) at the enterprise level.

The elements which reflect a sound industrial relations system at all these levels are not
necessarily the same.

At the national level industrial relations operates so as to formulate labour relations
policy. In market economies this is usually done through a tripartite process involving
government, employers and workers and their representative organizations.
At the industry level industrial relations often takes the form of collective bargaining
between employers' organizations and unions. This process may result in determining
wages and other terms and conditions of employment for an industry or sector. It may
also result in arrangements on issues which are of mutual concern such as training, ways
of avoiding or settling disputes, etc.

At the enterprise level the relationship between employers and workers is more direct,
but the interests of workers may be represented by unions. Employers' organizations,
however, are not usually involved (though sometimes they are when negotiations take
place between them and unions in respect of enterprise issues) at the enterprise level in
representing the employers' interests with workers or their union, but this does not mean
that they do not have an important promotional role at this level.

Sound industrial relations at the national level build trust and confidence between
representatives of workers and employers. Sound relations at the enterprise level builds
trust and confidence between workers and management, which is the point at which the
system must ultimately be effective. Effectiveness at one level would naturally have
some impact on the other.

Objectives of sound Industrial Relations:
i. Employment and job security and increased employment opportunities.
ii. Raising living standards through improved terms and conditions of employment.
iii. Productivity improvement which enables employers to be more competitive and
to increase their financial capacity to raise the living standards of the employees.
iv. Minimizing conflict, achieving harmonious relations, resolving conflicts through
peaceful means and establishing stable social relationships.

A sound industrial relations climate is essential to a number of issues which are critical to
employers, employees and the community. The efficient production of goods and
services depends to an extent on the existence of a harmonious industrial relations
climate. Efficiency and quality depend on a motivated workforce, for which a sound
industrial relations climate is necessary. Productivity - a key consideration of
profitability, the ability of enterprises to grant better terms and conditions of employment
and for economic and social development - needs a sound labour relations base.
Productivity does not depend on individual effort alone. Many mechanisms which
contribute towards productivity gains are workable only where there is teamwork and
cooperation e.g. small group activities, joint consultation mechanisms. Therefore labour
management relations should be geared to creating the climate appropriate to securing the
cooperation necessary for productivity growth. Labour Management Relations (LMR)
and Labour Management Cooperation (LMC) are also important to the creation of a
culture which is oriented towards innovation, adaptable to and encourages change, where
authority is decentralized and two-way communication, risk-taking and maximizing
opportunities are encouraged, and where the output rather than the process is what
matters.

Importance of Industrial Relations
The healthy industrial relations are key to the progress and success. Their significance
may be discussed as under :
1. Uninterrupted production The most important benefit of industrial relations is
that this ensures continuity of production. This means, continuous employment
for all from manager to workers. The resources are fully utilized, resulting in the
maximum possible production. There is uninterrupted flow of income for all.
Smooth running of an industry is of vital importance for several other industries
2. Reduction in Industrial Disputes Good industrial relations reduce industrial
disputes. Strikes, lockouts, go-slow tactics, gherao and grievances are some of the
reflections of industrial unrest which do not arise in an environment of industrial
peace. It helps promoting co-operation and increasing production.
3. High morale Good industrial relations improve morale of employees.
Employees work to increase productivity. It elevates the status of workers in the
society and their ego is satisfied. It naturally affects production because mighty
co-operative efforts can produce great results.
4. Mental Revolution The main objective of industrial relation is a complete
mental revolution of workers and employees. The industrial peace lies ultimately
in a transformed outlook on the part of both. Workers must recognize employers
authority. It will naturally have impact on production because they recognize the
interest of each other.
5. Reduced Wastage Good industrial relations are maintained on the basis of
cooperation and recognition of each other. It will help increase production.
Wastages of men, material and machines are reduced to the minimum and thus
national interest is protected.

Thus, it is evident that good industrial relations is the basis of higher production with
minimum cost and higher profits. It also results in increased efficiency of workers.

Functional Requirements of a successful Industrial Relations Programme :
A successful industrial relations programme is based on the following basic
requirements:
1. Top management support : The IR head should have the support and should
report to the top management in the organization.

2. Sound personnel policies : The purpose of such policies is to decide, before
any emergency arises, what shall be done about the large number of problems
which crop up every day during the working of an organization. Policies,
however, can be successful only when they are followed at all the levels of the
organization
3. Adequate practices should be developed by professionals : A system of
procedures is essential if the policies have to be translated into action.
4. Detailed supervisory training : To ensure that organizational policies and
practices are properly implemented and carried into effect by the industrial
relations staff, supervisors should be trained thoroughly, so that they may
convey to the employees, the significance of those policies and practices.
5. Follow up of results : A constant review of IR programme is essential so that
existing practices may be properly evaluated and check may be exercised on
certain undesirable tendencies, should they manifest themselves. The
grievances and suggestions, wage administration, etc. should be supplemented
by continuous research to ensure that the policies that have been pursued are
best fitted to companys needs and employees satisfaction.