Chapter-1 Introduction to Industrial Relations

Industrial Relations:

Industrial relation (IR) means the relationship between employers and employees
in course of employment in industrial organizations. However, the concept of
Industrial Relations has a broader meaning. In a broad sense, the term Industrial
Relations includes the relationship between the various unions, between the state
and the unions as well as those between the various employers and the
government. Relations of all those associated in an industry may be called
Industrial Relations.

According to International Labor Organization- Industrial relations comprise

relationships between the state on one hand and the employer’s and employee’s
organization on the other, and the relationship among the occupational
organizations themselves.

According to J.T. Dunlop, “Industrial relations are the complex interrelations

among managers, workers and agencies of the government”
 Scope of Industrial Relations
When we talk about industrial relations, it covers a vast arena, including all kinds of formal
relationships existing in an organization.

The scope of industrial relations can be briefly classified into the following four dimensions:

1. Employer-Employee Relations: The relationship that pertains between the

employer or the owner and the employees of a particular company is known
as the employer-employee relationship. To maintain sound relations, the
employer must treat the employees fairly and should value their efforts.
Also adopting the various human resource strategies like employee relations
program, performance-based promotions and even making the productive
employees the stakeholders of the company.
2. Group Relations: The interactions and communication between the workers
belonging to different work groups are studied under group relations.
3. Labor Relations: In an organization, the relationship shared by the
managers and the workers is termed as labor relations. It includes their
behavior, thoughts, actions and perception against each other.
4. Public Relations: It is also termed as community relations. The interaction
and relationship of the organization (i.e., its owner, management and
employees) with the society or external bodies is termed as public relations.
For long-term existence in the business, every organization needs to
maintain cordial public ties.

Objectives of industrial relations

 Establish and foster sound relationship between workers and management by
safeguarding their interest.

 Avoid industrial conflicts and strikes by developing mutuality among the

interests of concerned parties.

 Keep, as far as possible, the Industrial Disputes such as, strikes, lockouts at
bay by enhancing the harmony among the parties and organization.
 Provide an opportunity to the workers to participate in management and
decision making process.
 Raise productivity in the organization to curb the employee
turnover and absenteeism.
 To improve the bargaining capacity of the workers
through trade unions.
 To ensure discipline in the organization and in the
industry.
 To provide a basic framework for the management & the
employees to resolve their differences.
 To safeguard the interests of the labor and the management by preventing
one of the players from getting a strong hold over the other.
 To develop & secure mutual understanding & good relationships among all
the players in the industrial set-up.
 To maintain industrial peace & harmony by preventing industrial conflicts.
 Factors Affecting Industrial Relations:
 Individual Behavior: Every person has a different perception, background,
skills, knowledge, experience and achievements which influence an
individual’s behavior. The employees, therefore, behave differently in
different situations, thus impacting the work environment in the
organization.
 Organizational Structure: The hierarchical structure creates more formal
relationships among the employees belonging to different hierarchical levels
in an organization. Also, the delegation and execution of decision-making
power by the superior affects the industrial relations between the managers
and the employees.
 Psychological Factors: An employee’s attitude and mentality towards the
employer and the given task; and the employer’s psychology towards the
workers can be positive or negative, which ultimately impacts the employee-
employer relationship.
 Leadership Style: Every manager possesses certain leadership traits and
different style to function even in a formal organization through his formal
or informal ways of generating team spirit and motivating the employees
which impact the organization’s industrial relations too.
 Economic and Technical Environment: To cope up with the changes in
the economic conditions or technology, organizations need to restructure the
task of the employees including their work duration, conditions and wages;
which leads to a difference in their behavior, attitude, adapting spirit, etc.
towards the organization and its people.
  Legal and Political Environment: The organization and its industrial
relations are influenced by the legal framework and political circumstances
which contributes to the framing of rules, rights, authority, powers, roles and
responsibilities of all the parties of the organization.

Causes of poor Industrial Relations:

1. Economic causes: Often poor wages and poor working conditions are the
main causes for unhealthy relations between management and
labor. Unauthorized deductions from wages, lack of fringe benefits, absence
of promotion opportunities, faulty incentive schemes are other economic
causes. Other causes for Industrial conflicts are inadequate infrastructure,
worn-out plant and machinery, poor layout, unsatisfactory maintenance etc.
2. Organizational causes: Faulty communications system, unfair practices,
non-recognition of trade unions and labor laws are also some other causes of
poor relations in industry.
3. Social causes: Uninteresting nature of work is the main social cause of poor
Industrial relations. Dissatisfaction with job and personal life culminates into
Industrial conflicts.
4. Psychological causes: Lack of job security, non-recognition of merit and
performance, poor interpersonal relations are the psychological reasons for
unsatisfactory employer-employee relations.
5. Political causes: Multiple unions, inter-union rivalry weaken the trade
unions. Defective trade unions system prevailing in the country has been one
of the most responsible causes for Industrial disputes in the country.
Suggestions to improve Industrial Relations:

1. Sound personnel policies: Policies and procedures concerning the

compensation, transfer and promotion, etc. of employees should be fair and
transparent. All policies and rules relating to Industrial relations should be
fair and transparent to everybody in the enterprise and to the union leaders.
2. Participative management: Employees should associate workers and
unions in the formulation and implementation of HR policies and practices.
3. Responsible unions: A strong trade union is an asset to the employer. Trade
unions should adopt a responsible rather than political approach to industrial
relations.
4. Employee welfare: Employers should recognize the need for the welfare of
workers. They must ensure reasonable wages, satisfactory working
conditions, and other necessary facilities for labor. Management should have
a genuine concern for the welfare and betterment of the working class.
5. Grievance procedure: A well-established and properly administered system
committed to the timely and satisfactory redressal of employee’s grievances
can be very helpful in improving Industrial relations.
6. Constructive attitude: Both management and trade unions should adopt
positive attitude towards each other. Management must recognize unions as
the spokesmen of the workers’ grievances and as custodians of their
interests. The employer should accept workers as equal partners in a joint
endeavor for good Industrial relations.
7. Creating a proper communication channel to avoid grievances and
misunderstandings among employees
8. Education and training imparted to the employees.
Importance of Industrial Relations:

1. Uninterrupted Production: The most important benefit of industrial

benefits is that it ensures continuity of production. This means continuous
employment for all involved right from managers to workers. There is
uninterrupted flow of income for all. Smooth running of industries is
important for manufacturers, if their products are perishable goods and to
consumers if the goods are for mass consumption (essential commodities,
food grains etc.). Good industrial relations bring industrial peace which in
turn tends to increase production.

2. Reduction in Industrial disputes: Good Industrial relations reduce

Industrial disputes. Strikes, grievances and lockouts are some of the
reflections of Industrial unrest. Industrial peace helps in promoting co-
operation and increasing production. Thus good Industrial relations help in
establishing Industrial democracy, discipline and a conducive workplace
environment.

3. High morale: Good Industrial relations improve the morale of the employees
and motivate the workers to work more and better.

4. Reduced wastage: Good Industrial relations are maintained on the basis of

co-operation and recognition of each other. It helps to reduce wastage of
material, manpower and costs.

5. Contributes to economic growth and development.