What is Industrial Relations ?
Industrial relations is also known as labour-management relationship. It is distinguished by prompt changes, industrial turbulence, and colliding philosophies both nationally and internationally and hence represents one of the most intricate challenges for the modern industrial society. It is a constantly changing process that is based on societal pattern, the economic system and the political organisation of the country.
The term 'Industrial Relations' is made up of two words 'Industry' and 'Relations' where 'Industry' denotes a fruitful and creative activity that involves individuals or group of people and 'Relations' denotes association between employer and employee, employee and employee, labour union and management, organisation and society, etc., which exists in the industry. Therefore, industrial relation is the relationship between the employees and management which is a direct or indirect result of the union-employer relationship.
Industrial relations can be understood in both narrow as well as wide sense. In the narrow sense, industrial relations talk about every sort of association between all the members of an organisation such as between employees, employers, unions and workers. This concept is basically used in India and Britain. In the wider sense, industrial relations talk about all forms of associations that the organisation forms with different segments of the society which come in its contact.
Definition of Industrial Relations
According to Prof. Dunlop:
"Industrial relations may be defined as the complex of inter-relations among workers, managers and government".
According to Dale Yoder:
"Industrial relations are a relationship between management and employees or among employees and their organisations that characterize and grow out of employment".
According to Professor Clegg:
"Industrial relation encompasses the rules governing employment together with the ways in which the rules are made and changed and their interpretation d administration".
According to the ILO:
"Industrial relations deal with either the relationships between the state and the employers' and workers organisation or the relation between the occupational organisations themselves".
Features of Industrial Relations
Features of industrial relations (labour-management relations) are explained below:
1) Complex Relationship:
The relationship that industrial relations develops between an employee and employer is not a simple and an easy one. It is relatively an art of living together to fulfil the common objective of production, productive efficiency, individual welfare and industrial growth. It is necessary for the organisation to maintain cordial industrial relations in order to build healthy behaviors, conducive working environment, easy working procedures, etc.
2) Mixture of Cooperation and Conflict:
Industrial relations is considered to be a fusion of cooperation and conflict. Though, the organisation's objective is always to gain employee's cooperation, yet a degree of conflict is ever present. The reasons behind this might be:
- Labour and management are two groups which are present in every organisation. They usually have different perspectives and perceptions of their interests and develop negative thinking about each other.
- Organisations usually do not have proper guidelines or rules to set their limits in order to fulfil their goals. Due to lack of norms, both groups go to any extent and even try to justify their actions.
- When the groups come together for negotiation, some past bitterness crops up apart from the present distrust and hinders the negotiation process. So, they do not reach at a joint decision.
- Industrial relations are concerned with the formation and observance of multi-faceted association between the labour and union in an organisation. These relations can either be in organised or unorganized form.
3) Interdisciplinary:
Industrial relations can be called as an inter-disciplinary field. This is because it is not a fusion of multiple disciplines rather it draws its components from various fields like sociology. law, economics, psychology, political science, etc. Hence, in a wider perspective, industrial relation is the inter- disciplinary area that includes the study of various characteristics of individuals at workplace. This comprises of the study of individuals, groups of workers who may or may not form a union or association, the attitudes of the union organisations and employer, the public 4 policy or legal framework ruling terms of employment, the economics of employment issues, and even the comparative analysis of industrial relation system in various countries over various time zones. An integrated interdisciplinary approach helps one to know industrial relations as an area that consists of different subjects such as grievance redressed, collective bargaining, pay fixation, employee benefits, the quality of work-life, state labour policy, industrial conflict, etc.
4) Multi-Dimensional in Nature:
Industrial relations does not operate purposelessly. Rather, it is multi-dimensional in nature and affected by several factors viz., institutional, economic, and technological factors, etc.
Objectives of Industrial Relations
Following are the objectives of industrial relations:
1) To Protect Worker's and Management's Interest:
Protecting the well-being of worker and management by creating excellent understanding and goodwill between the various sections that are responsible for production is the prime objective of industrial relations.
2) To Improve Economic Status of Workers:
The aim of industrial relations is to enhance the economic standing of workers by increasing their wages and benefits and by assisting the workers in developing an effective budget.
3) To Regulate Control of Government:
Industrial relations handle control of the government of those units that are facing a constant loss or the ones where production is controlled for the benefit of the public,
4) To Ensure Workers' Participation:
It aims at giving a chance to the workers to express their views in management and participate in decision- making. It also increases workers' power so that their problems are solved through joint discussion between the workers and management.
5) To develop and Support Labour Unions:
It creates and promotes labour unions so that the worker's strength can be enhanced.
6) To Prevent Industrial Conflicts:
Another objective is to reduce the chances of industrial conflicts and cultivate peaceful relations that are vital characteristics of a productive workforce and industrial progress of a nation.
7) To Reduce Strikes and Lockouts:
Getting rid of strikes, lock-outs, and gheraos to the maximum extent by granting suitable wages, better life and workplace environment and promised perks and benefits is one of the main objectives of industrial relations.
8) To Sustain Industrial Democracy:
Industrial relations also aims to develop and maintain industrial democracy which is based on labour partnership in profit-sharing and decision-making. This enables individuals to develop their personality fully so that they can work for the benefit of the industry, and of course for the nation.
9) To Increase Productivity:
Another objective of industrial relations is to enhance productivity to superior level by ensuring that employees work with full strength.
10) To Provide Proprietary Interest:
Finally, it provides ownership to the workers in the organisation where they are working. The objective of industrial relations is to fill the gap between the different sections of the industry and society and reform the complicated social relationships developing as a result of technological progress by regulating and monitoring members and adjusting their conflicting Interest.
Scope of Industrial Relations
In any industry, the workers who work with each other, not only influence work relations, but also influence the social, economic, political, professional and moral lives of individuals doing jobs at various organisations. An industry is a small social universe in itself. Hence, the scope of industrial relations comprises of all sort of relations in an industry like creating and nurturing useful and friendly labour management relations, industrial harmony and industrial democracy. Currently, the scope of industrial relations comprises of the following fields:
1) Participative Management:
Participative management is also known as participatory management of participative decision-making or employee involvement. It involves employees in the process of decision-making of the organisation by contributing in actions such as forming work schedules, goal-setting, and giving ideas or suggestions.
2) Dispute Settlement:
Any discrepancy in industrial relations can give rise to industrial disputes. It can be in the form of strikes, protests, lock-outs, cutback, firing of employees, etc. The Industrial Disputes Act, 1947 is a major legislation for identifying and resolving the industrial disputes.
3) Trade Unions:
Trade union is a long-lasting association created by employees in order to gain benefits out of the industry. It is a permanent association of workers formed with the aim of enhancing and sustaining their working environment.
4) Employers' Organisations:
Employers' organisations are made up of business enterprises and are the most important players in industrial relations. In India, the Council of Indian Employers (CIE) and All India Organisation of Employers (AIOE) are the major associations for Indian employers. They include members from Employers' organisations which consist of representative organisations, Chambers of Commerce and Trade, and the industry associations of the public sector.
5) Collective Bargaining:
If a country strives for economic growth, maintaining industrial harmony and peace is important. Industrial harmony refers to an atmosphere of perfect understanding, acceptance and a sense of partnership among the worker and capital. Collective bargaining is the official procedure that comprises of negotiation, consultation and information sharing between employees and employers, resulting in an agreement which is suitable to both the parties. This process involves both the parties. However, in many countries, government plays a vital role in encouraging collective bargaining by creating relevant law for it. Hence, collective bargaining results in a consent called union contract, collective agreement, or labour-contract.
6) Labour Legislation:
In order to improve health and welfare of workers, labour legislation came into existence.
7) Grievance Redressal:
Employee's grievances are connected to the contract, work rule or regulation, policy or procedure, health and safety regulation, past practice, changing the cultural norms unilaterally, individual victimization, wage, bonus, etc. All these grievances can be resolved through the grievance redressal procedure. Hence, to develop harmonious industrial relations, to run an unbiased, successful and dynamic workplace, grievance handling must be done effectively.
Participants in Industrial Relations
The system of industrial relations consists of mainly three actors or participants. Actors are considered as a single set of variables; however their extent of influence varies from each other. The three actors of industrial relations are as follows:
1) Workers and their Organisations:
Workers are an integral part of industrial relations. Workers can be of different age, educational background, social and family background, skills, culture, etc. Workers continuously strive to make their employment terms and conditions better. They share their viewpoints and their problems with the management. They also intend to be a part of the management's decision-making process. To achieve all this, the workers come together to form the trade unions also known as workers" organisations against management and get maximum help from these unions. The most important aim of the trade unions is to safeguard the economic right of the workers with the help of collective bargaining and also by asserting pressure on the management using political and economic strategies.
2) Employers and their Organisations:
Employer is a very important variable of industrial relations. He is the one who is responsible for giving jobs to the workers, paying the wages and perks, and controlling the work relations with the help of rules and regulations and by enforcing labour legislations. The worker is expected to abide by the rules and laws. He is also expected to give his best to the task at hand. An industrial dispute occurs when the workers and employers have conflicting expectations. Employers usually have a greater power of bargaining than the workers, but when compared with trade union, their power is considerably low. To balance the situation and stand at par with trade unions, employers also have their organisations. These organisations pressurize both the government and trade unions and safeguard employer's wellbeing.
3) Government/State:
Government is supposed to be the caretaker of the nation. Therefore, it plays a balancing role. It affects industrial relations by formulating the policy of labour and industrial relations, implementing labour legislations, acts as a mediator and resolves disputes, etc. It intends to control the working and behavior of both employees and employers in an organisation. The Central and State Government controls and affects industrial relations using laws, agreements, awards of court, etc. Third parties and labour and tribunal courts come in this category.
Factors Influencing Industrial Relations
Factors influencing industrial relations or labour-management relations are as follows:
1) Economic Factors:
The structure of economy (socialist, capitalist or mixed) determines the economic factors. The character and composition of workforce, demand and supply of labour, and the association of labour would determine the economic position of the workforce and also the strength of bargaining which affects the industrial relations.
2) Institutional Factors:
Government policy, labour laws, working of labour courts/industrial tribunals, labour unions and employee organisations are the institutional factors. The industrial relation scenario is also affected by religious and social institutions by way of existing value 'system and by ensuring their compliance, e.g., gender bias existing in certain industries and countries.
3) Technological Factors:
These factors include methods of modernization, production. automation, etc. An organisation that is technologically more advanced needs lesser human capital and hence the bargaining power of the employee organisations decreases. Greater progression in "technowledge" and advancement in the proficiency of workers have also introduced a new class of employees called the "knowledge workers" who possess a different set of requirements and goals.
4) Political Factors:
The political factors consist of the political system, political parties and their principles. Industrial relations is affected by the rise and power of political parties and the methods they use while creating policies. In addition to this, since the trade union is much engaged in the formulation of policies, the policies are somewhat biased in favour of the workers. On the other hand, if the political parties are in any way financially dependent on the corporate lobby, the political equation would then be totally different. There are certain countries where state capitalism exists and collective bargaining is totally discouraged. In such a scenario, trade unions have no value and labour-management relations are dealt strictly. In countries like former U.S.S.R., state socialism exists, and trade unions have definite responsibilities and functions under the purview of the government. Since India has a mixed economic system, conciliation, arbitration. adjudication, participative management and collective bargaining are all a part of industrial relations.
5) Social and Cultural Factors:
These factors are about different rules, ethics and principles that exist in a society. In countries like U.S.A., where there is a stable socio-political order, the government encourages a general philosophy of free enterprise, or democratic capitalism. In these types of countries, "collective bargaining" is supported by the law and government involvement. In Scandinavian countries and the U.K., where democratic socialism exists, collective bargaining is the regular model, without the need of the government to get involved.
6) Organisational Factors:
These factors consist of management style existing in the organisation, its perspective, organisational environment, health of the organisation, degree of competition, flexibility towards change, and diverse HRM policies.
7) Global Factors:
These factors include global differences, international relations, economic- political principles, functions of ILO, foreign trade agreements and relations, economic and trading policies of power blocks, global culture environment, international labour agreements, etc.
Importance of Industrial Relations
Importance of industrial relations is as follows:
1) Minimizes Industrial Conflicts:
Industrial relations is prone to industrial disputes which occur as a result of various differences, for example, failure to fulfil basic human desires or lacking sufficient motivation to gain satisfaction, etc. Some forms of industrial disturbances also hamper industrial harmony, e.g., strikes, lockouts, go slow tactics, grievances, and gheraos, etc. All these issues can be handled through good industrial relations.
2) Increases Worker's Morale:
Good industrial relations increase the worker's morale. The employee and the employer think about the benefit of each other. Workers work enthusiastically for the achievement of the organisational goals. This is because workers believe that they share the same concern as the employer, i.c., increased production. This correspondingly motivates them to work harder. Employers also have a feeling that the profits of the firm are not only due to their efforts and workers are equally responsible for the increased production and profit. Therefore, workers should be given an equal share of the benefits.
3) Provides Fair Benefits to Workers:
The workers must be given enough monetary and non-monetary motivation so that they can live a balanced life. This can happen only when the industrial relations between the workers and the management are friendly.
4) Helps in Facilitation of Changes:
If the organisation has a supportive and cooperative atmosphere, changes are easily accepted. Due to this, the benefits of all the most recent innovations, inventions, and other technical advances can be utilized effectively. The workers understand the need of the hour and willingly adapt themselves to the required changes. Hence, peaceful industrial relations are important for both employees and employers.
5) Makes Collective Bargaining Effective:
Harmonious industrial relations are very crucial for effective collective bargaining as it helps both the parties, i.e., employee and employer to arrive at such an agreement which is beneficial for both of them.
6) Mental Revolution:
The process of joint consultation between employee and employer opens the path for individual democracy. This encourages the workers to perform excellently and in turn get a share in the profits of the organisation together with the management. Thus, industrial relations totally change the perspective of the employees and employers.
7) Facilitates Worker's Development:
In a harmonious climate, new programs like labour welfare facilities, training facilities, etc can be introduced that help in development of workers. These programs enhance the skills of the workers and result in increased productivity at a lower cost.
8) Reduces Wastage:
Cordial industrial relations are always based on mutual support and acknowledgment of each other's needs. It enhances production and reduces the wastage of organisational resources, i.e., man, material, and machines, hence safeguarding the national interest.
9) Guarantees Smooth Production:
The main role of industrial relations is that it guarantees uninterrupted production, resulting in continuous employment at all levels of the organisation, whether it is for a manager or worker. Due to continuity of production, all the organisational resources are efficiently used which leads to higher production for the firm and continuous earnings for the workers.
Approaches of Industrial Relations
Approaches of industrial or labour-management relations are as follows:
1) Psychological Approach:
The psychological approach views the issues of industrial relations intensely embedded in the attitude and the perception of the key participants. Mason Harie studied the impact of perception of an individual on his own behavior. In his study the behavior of two dissimilar groups, i.e., "Executives" and the "Union leaders" are analysed with the help of TAT (Thematic Apperception Test). To conduct the test, a photograph of an ordinary middle-aged person was taken as input, and it was expected from both the groups to give their ratings. The photograph was rated by the groups in a different manner, i.e., the union leaders referred to the person in the photograph as "Manager" while the group of "Executive" "identified it as their "Union leader" in the photograph. It was concluded that the conflict between management and labour arise as every group negatively perceives the other one.
2) Human Relations Approach:
Elton Mayo was the founder of the human relations approach. This school of thought was later extended by Roethlisberger, Whitehead, W.F. Whyte and Homans who gave a rational view of the characteristics of industrial conflicts and harmony. This approach emphasizes on those policies and methods that can be implemented to improve the worker's/employee's self-esteem, competence and job satisfaction. It also helps to maintain peaceful relations between labour and management.
3) Sociological Approach:
The sociological approach compares the industry to a small social world that comprises of a mix of several individuals and groups having different types of personalities, academic background, family upbringing, feelings, likes and dislikes, as well as other personal factors like attitude, behavior, etc. Since no two members in an industrial society have similar attitude and behavior, this leads to problems of conflict, disharmony and negative competition among the members. The issues involved in industrial relations are related to wages, working conditions, and labour welfare. However, one must not ignore the most important factor, Le., sociological factor. The sociological factors consist of the value system, traditions, patterns, symbols, attitude and perception of both labour and management that have an impact on the industrial relations in a different ways.
4) Gandhian Approach:
Mahatma Gandhi is popular for his contributions towards the development of human being and his beliefs of ahimsa and non-violence which have left a remarkable impression on the world's history. He considered all human beings good and believed that the individuals are not the ones who are responsible for the problems but it is the existence of the wrong systems which has led to several problems in the society. He laid stress on maintaining the dignity of the employees by accepting each individual worker as a human being and emphasized on non-violent communism. He went to the extent of saying that "if communism comes without any violence it would be welcomed". He did not oppose strikes by workers but he permitted this option to be the last resort when all available methods of negotiations, conciliation and arbitration to restore peace have failed. He gave the concept of trusteeship which contributed mainly towards industrial relations.
Briefly, according to the trusteeship theory, all the materialistic aspects of life like property or any human achievement is not the ownership of any one individual, rather it belongs to the entire society. These talents or skills can be taken as gifts of nature and no particular individual has exclusive right over them. Trusteeship system is a unique concept compared to the other contemporary industrial relations systems.
5) Socio-Ethical Approach:
This approach asserts that industrial relations not only has a sociological base but also has some ethical consequences. According to this approach, for maintaining good industrial relations, it is necessary that the labour and the management understand their ethical responsibilities towards good industrial relations. This can only be achieved with the help of mutual cooperation and by developing sensitivity towards each other's issues.
6) Dunlop's Systems Approach:
John Dunlop has developed a system approach to industrial relations. According to Dunlop, "An industrial relations system at any one time in its development is regarded as comprised of certain actors, certain contexts, an ideology, which binds the industrial relations system together, and a body of rules created to govern the actors at the workplace and work community".
Causes for Poor Industrial Relations
In an industrial organisation, various factors responsible for poor labour-management relations are as follows:
1) Type of Work:
If the task designated to the employee is not as per his interest, it can create chances of poor industrial relations since the employee might raise useless claims in order to compensate the behavioral issues that have occurred due to boring task. If the socio- technical system is not properly designed, technology can cause loneliness and unfriendliness. All these feelings result in lack of power, losing interest in job, detachment to the workgroup and organisation. Isolation is usually high in automated assembly line operations. This isolation may irritate the workers and force them to look for ways to overcome their irritation and indulge themselves into various misdeeds which may result in disturbing the harmonious industrial relations.
2) Unfair Wages and Working Conditions:
Many times, ineffective industrial relations is a result of low wages and poor working conditions of the workers. Poor wages are subjected to justification as they are calculated on the basis of equity which is based on comparison. When an employee who earns less compares his wages with an employee who earns more, after doing the same kind of work, the feeling of dissatisfaction arises in the low earner resulting in poor industrial relations. In the same way. workers believe that unfavorable working conditions are a result of authoritarian management and this results in poor relations between the management and the workers.
3) Defective Trade Union System:
One of the factors that are responsible for poor industrial relations is the defective trade union system existing in the country. This system is defined by multiplicity, rivalry between unions, lack of productive aims, trade union politics, or regulation from outside leaders. In such circumstances, the trade union works only for a few dominant leaders rather than protecting the interest of all workers. Moreover, there are some unions that themselves hamper the development of cordial relations between the employees and the employers as they assume it to be a danger for their survival as union leader. Many strikes that go on for a long time are the result of this belief of the trade unions.
4) Lack of Job Stability:
It is another factor that impacts harmonious industrial relations. Lack of stability in job creates a feeling of insecurity in the workers regarding the job. The workers who are performing the same job since a long time, feel proficient and have a fear that if any changes are incorporated, they may face following problems:
- New job may not be able to give satisfaction as the old one.
- It may decrease their earnings and superiority in the organisation.
- It might need them to take up some kind of training.
- It can affect their current social relations.
- It may result in reduced chances of growth and improvement.
5) Poor Behavioral Climate:
The behavioral climate of an organisation comprises of its culture, customs and methods of action and can be both favorable and unfavorable for the workers, depending upon the situation. A favorable climate supports the worker in fulfilling his social, economic and psychological needs and creates a positive image of the organisation in his mind. Alternatively, an unfavorable climate obstructs him from fulfilling his different requirements and thus creates a negative image of the organisation in his mind. This might compel an employee to join a militant labour organisation to voice his disapproval for the enterprise and the employer. This becomes yet another reason for poor industrial relations.
Measures for Improving Industrial Relations
Measures for improving industrial relations are as follows:
1) Support of Top Management:
The top management of an organisation consists of Chairman, Chief Executive Officer, Managing Director, etc. Industrial relations can be improved with the support of the top management. The top management should act as a role model for the employees of the organisation.
2) Strong and Stable Union:
When the union is weak, it is easier for the employers to refuse the demands raised by the union. A weak'union also finds it difficult to receive the support of majority of workers. It is only the strong and stable unions in every enterprise that are supported by a large number of workers. Such unions also have the power to negotiate and put up their demand about the terms and conditions of services before the management. Therefore, a strong and stable union is very essential in an organisation in order to have cordial industrial relations.
3) Providing Training to Supervisors:
Job supervisors should be given extensive training for executing the practices of industrial relations. Training should be related to building the skills of leadership and communication. Supervisors should also make the employees aware about the importance of the policies
4) Using Methods of Workers' Participation:
Workers are an important component of industrial relations. Industrial relations cannot be effective if there is no workers' involvement. Therefore, method of workers' participation such as works committees, joint consultation, unit councils, shop councils, etc., should be implemented so that productivity and efficiency of the organisation can be increased.
5) Feeling of Trust:
Successful industrial relations can only be established when both the management and labour trust each other. Both the parties should cooperate with each other. Management must think about the rights and interests of workers and similarly workers must also be committed towards the achievement of organisational objectives.
6) Mutual Accommodation:
Trade unions have the right of collective bargaining which should be recognized by the employers. Organisations must have a flexible attitude on issues rather than adopting a rigid one, as it is not favorable for friendly labour relations. Therefore, it is suitable for the interest of both the parties to be willing to "give and take" rather than "take or leave".
7) Proper Implementation of Agreements:
The agreements made with the trade unions must be strictly enforced by the management in writing. If agreements are not implemented then the trust between management and union may fade away. Lack of trust creates an environment of uncertainty. This should be avoided by making efforts from both parties to follow-up on the agreements.
8) Sound HR Policies:
The personnel policies should have the following features:
- The policy formulation must involve workers and their representatives for proper implementation of the policies.
- The policies must be expressed explicitly to avoid any kind of doubt and confusion among the workers.
- The policies must be uniformly implemented in the entire organisation to ensure equal treatment among workers.
9) Government's Role:
The government is also responsible for maintaining industrial peace. The government must make legislations for recognizing worker's representatives and resolving disputes if the management and workers are unable resolve their problem.
10) Follow-Up of Results:
There should be continuous assessment of the various industrial relations programs. This is done to measure the success of the existing practices and also to control unwanted trends. Regular follow-up of turnover, absence from work, motivation, grievances, opinion of employees, wage and salary administration must be done. This erasures that policies formulated and implemented are in accordance with the needs and wishes of the company and its employees. Those issues, which are areas of concern for the employees, may also be mentioned in exit interviews, union demand, and management meetings.