Management of Industrial Relations Unit 2

INDUSRIAL RELATIONS

Introduction:

“Work dominates the lives of most men and women and management of employee, both
individually and collectively and remains a central feature of organizational life”. The truth of
this emphasize itself due to fast changing business skylines and industrial landscapes which
forces adjustment and readjustment of parameters of employee relations more frequently. ER
has become more strategic and more sensitive because it is this culture of relationships in the
organization that creates symbiotic working and unleashes organizational synergy.

The concept of ER (employee relations) requires proper appreciation. Generally, the

term used is ‘Industrial Relations”, denoting relationships between management and workers
in the industry. IR has its roots in the economic and social changes caused by the industrial
revolution. The early exploitative processes and practices led to inevitable conflict between
labour and capital, the rise of trade unionism, the creation demarcation lines between
managers and managers, and an atmosphere vitiated by restrictive practices, mistrust and
credibility gaps. This further created adversarial, confrontational, mechanistic and legalistic
relationships, characterized by animosity, divergence, irreconcilable aims and disparity. Such
relationship continued for long and this hang over of history has left bitter aftertaste, having a
legacy of narrow, passive and limited vision of Industrial relations. The sole focus of IR has
been skewed in favour of dispute resolution, maintenance of relations and on meeting legal
requirements. The whole IR dispensation is geared to contain crises only.

Definition:

To understand the concept of IR one need to look into different definitions of IR. They are

“Industrial relations is the art of living together for purpose of production.”

- J.Henry Richardson

Or

“The field of industrial include the study of workers and their trade unions, management,
employers associations and the state institutions concerned with the regulation of
employment” - H.A.Clegg.

Or

“Problems of human relationship arising from the sale of service for a wage and working on
the premises of employers and under their control from the subject matter of industrial
relations” - Dale Yoder.

Or

“The subject of industrial relations, therefore, includes individual relations and joint
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consultation between employers and work people at the place of work, collective relations

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Management of Industrial Relations Unit 2

between employers and their organizations and the trade unions, and the party played by the
state in regulating the relations.” - Encyclopedia Britannica.

Or

“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.

Features of IR:

1. Industrial relations do not emerge in vacuum; they are born out of ‘employment
relationship’ in an industrial setting. Without existing of two parties’ i.e. labour and
management, this relationship cannot exist. It is industry which provides the
environment for industrial relations.

2. Industrial relations are characterized by both conflict and cooperation. This is the
basis of adverse relationship. So the focus of industrial relations is on the study of the
attitudes, relationship, practices and procedures developed by the contending parties
to resolve or at least minimize conflicts.

3. As the labour and management do not operate in isolation but are part of a larger
system, so the study of industrial relations also include vital environmental issues like
technology of the work place, country’s socio economic and political environment,
nations’ labour policy, attitude of trade unions, workers and employers and impact of
the new wave of global markets, global supply demand and economy.

4. Industrial relations also involve the study of conditions conducive to the labour,
management cooperation as well as the practices and procedure required to elicit the
desired cooperation from both the parties.

5. Industrial relations also study the laws, rules, regulations, agreements, awards of
court, customs and traditions, as well as policy frame work laid down by the
government for eliciting cooperation between labour and management and defining
rights obligations of both the parties. Besides this, it makes an in-depth analysis of the
interference patterns of the executive and judiciary in the regulation of labour
management relations.

Components of industrial relations system:

1. Workers and their organizations.

2. The Management and
3. The Government.
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Scope of IR:

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Management of Industrial Relations Unit 2

1. Labour relations, i.e. relations between union and management.

2. Employer – employee relations, i.e. relations between management and employees.
3. Group relations, i.e. relations between various groups of workmen.
4. Community or public relations, i.e. relations between industry and society.
5. Promotion and development of healthy labour management relations.
6. Maintenance of industrial peace and avoidance of industrial strife and
7. Development o industrial democracy.

Objectives of Industrial relations:

1. The development of healthy employer employee relations.

2. The maintenance of industrial peace and high productivity.
3. The development and growth of industrial democracy.
4. Improvement of economic conditions of workers.
5. State control on industries for regulating production and promoting harmonious
industrial relations
6. Socialization or rationalization of industries by making state itself a major employer.
7. Vesting of the proprietary interest of the workers in the industries in which they are
employed.

Importance of Industrial relations:

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; to other industries if the products are intermediaries or inputs;
to exporters if these are export goods; to consumers and workers, if these are goods of
mass consumption.

2. Reduction in Industrial Disputes :

Good industrial relations reduce the industrial disputes. Disputes are reflections of the
failure of basic human urges or motivations to secure adequate satisfaction or expression
which are fully cured by good industrial relations. Strikes, lockouts, go-slow tactics,
gherao and grievances are some of the reflections of industrial unrest which do not spring
up in an atmosphere of industrial peace. It helps promoting co-operation and increasing
production.

3. Reduction in Industrial Disputes:

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Good industrial relations reduce the industrial disputes. Disputes are reflections of the
failure of basic human urges or motivations to secure adequate satisfaction or expression
which are fully cured by good industrial relations. Strikes, lockouts, go-slow tactics,
gherao and grievances are some of the reflections of industrial unrest which do not spring
up in an atmosphere of industrial peace. It helps promoting co-operation and increasing
production.

4. Mental Revolution:

The main object 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. It is the business of leadership in the ranks of workers, employees and Government
to work out a new relationship in consonance with a spirit of true democracy. Both should
think themselves as partners of the industry and the role of workers in such a partnership
should be recognized. On the other hand, workers must recognize employer’s 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 man, material and machines are
reduced to the minimum and thus national interest is protected.

Approaches to Industrial relations:

The Industrial relations can be viewed from various angles which may range from the
economic and social, political to the legal, psychological and managerial. But none of these
give a perfect view of industrial relations but certainly adds to our intellectual dimension in
this context. A few approaches to industrial relations are discussed here in somewhat greater
detail.

1. Psychological Approach to Industrial relations:

The psychologists are of the view that the problem industrial relations are deeply
rooted in the perception and the attitude of focal participants. The influence of
individual’s perception on his behavior has been studied. In this study the behavior of
two different groups, namely, “union leaders” and the “Executives” through a test. For
the test a photograph of an ordinary middle aged person served as input, which both
the group rated the photograph in different manner. i.e. the union leaders referred the
person in the photograph as “manager” where the group of executives” saw “union
leader” in the photograph. The result of study led to conclude that:

a) The general impression about a person is radically different when he is seen as

a representative of management from that of the person as a representative of
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labour.

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b) The management and labour see each other as less dependable.

c) The management and labour see each other as deficient in thinking regarding
emotional characteristics and inter personal relations.

This variance in perception of parties is largely because of their individual

perception. It is for this reason that most invariably some aspect of the situation
are glorified, some suppressed or totally distorted by the individual making a
judgment in the issue. The conflict between labour and management occurs
because every group negatively views/ perceives the behavior of the other. i.e.
even the honest intention of a party is looked with suspicion. In most of industrial
conflicts, not only the interest but also the personalities of actors in the system are
at stake. The problem is further aggravated by the unfulfilled needs of power,
prestige, recognition, economic motives etc. Also strained inter personal and inter
group relations breed disharmony in the system.

2. Sociological Approach to Industrial Relations:

The industry is a social world in miniature and the workshop is in reality a community
made up of various individuals and groups with differing personalities, educational
back ground, family breeding, emotions, likes and dislikes, and a host of other
personal factors, such as attitudes and behavior create problems of conflict and
competition among the members of an industrial society. Since ages, the problems of
industrial relations have been looked upon as one basically concerned with wages,
employment conditions and labour welfare. But in fact sociological aspects of the
problem are more important than others. This largely includes various sociological
factors like value system, customs, norms, symbols, attitude and perception of both
labour and management that affect the industrial environment, their work behavior is
largely monitored by social factors. Further, the social consequences of
industrialization like organization, social mobility, migration generate many social
disorganization do influence workers efficiency and productivity that in turn influence
industrial relations system of an industry. In fact as industrialization gets momentum,
a set of new industrial cum social patterns emerges and in its wake, new relationships,
institutions, behavioral patterns and techniques of handling human resources develop.
These influences shape the industrial relations in one or other ways.

3. Human relations Approach in Industrial relations:

Among all the areas of management, perhaps one of the most delicate and tricky ones
is concerned with human resource management, Perhaps one of the most delicate and
tricky ones is concerned with human resource management. Their handling is
radically different from that physical, material and financial resource because these
are not inanimate or passive, but are composed of pulsating human beings having
their own emotions, perceptions, attitude, personality etc. These characteristics make
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them complex individuals and when they interact with others, either individually or in
groups, their complexity further multiplies.

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So when such resources are not properly managed, the problem of industrial relations
surfaces which can be only managed by deciphering and managing the dynamics of
human behavior both at the individual and group level.

4. Socio Ethical Approach for Industrial relations:

Though not much widely accepted but one of the often discussed approach to
industrial relations is the socio ethical approach. This approach holds that industrial
relations besides having a sociological base does have some ethical ramification.
Good industrial relations can be only maintained when both the labour and
management realize, their moral responsibility in contributing to the said task through
mutual cooperation and greatest understanding of each other’s problem.

5. Gandhian Approach to Industrial relations:

Gandhijis view on industrial relations are based on his fundamental principle of truth
and non violence, and non possession or aparigraha. Ut of these principals evolved the
concept of non cooperation and trusteeship on which his philosophy of industrial
relations rests. This philosophy presumes the peaceful coexistence of capital and
labour, which calls for the resolution of conflict by non violent, non cooperation,
which actually amounts to peaceful strikes in ordinary parlance. Gandhiji has
accepted the workers right to strike, but remarked that this right is to be exercised in a
just cause, and in a peaceful and non violent manner and it should be resorted to only
after employers fail to respond to their moral appeals.

The principle of trusteeship held that the present capitalist order can be transformed
into an egalitarian one. It does not recognize the right to property except to the extent
permitted by society for its own welfare, the individuals does not have any right to
hold or use wealth in disregard of the interests of society and the charater of
production is to be determined by social necessity rather than by personal whims or
greed. The capitalist is expected to hold industry in trust for the community and it is
envisaged that as individual workers in collaboration with employers they too are
expected to be co trustees with the latter.

Gandhiji advocated that for resolving disputes the following rules to be observed:

a) The workers should seek redressal of reasonable demands only through

collective action.

b) If they have to organize a strike, trade unions should seek by ballot authority
from all workers to do so, remain peaceful and use non violent methods.

c) The workers should avoid strikes as far as possible in industries of essential

services.

d) The workers should avoid formation of unions in philanthropic organizations

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e) The strikes should be resorted to only as a last resort after all other legitimate
measures have failed, and

f) As far as possible, workers should take resources to voluntary arbitration

where efforts at direct settlement have not succeeded.

Indian industrial relations system has been largely influenced by gandhian

thought.

6. System approach to Industrial relations:

John Dunlop has developed a system approach to industrial relations. This approach is
quite useful in studying the industrial relations in the sense that it focuses on
participation in the process, environmental forces and the output. Further, it studies
inter relations among different facets of industrial relations system. Figure below
illustrates the concept.

Environmental Forces Participants in the system Outputs

1) Market or Budgetary Rules of the work place
restraints.
Union – Management
2) Technology

3) Distribution of power
in society. Government

Factors affecting industrial relations:

The industrial relations system of an organization is influenced by a variety of factors. A few

important are

1) Institutional factors:

Under institutional factors are included items like state policy, labour laws, voluntary
codes, collective bargaining agreements, labour unions, employers’ organizations/
federations.

2) Economic factors:
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Under economic factors are included economic organizations, nature and composition
of the workforce, the source of labour supply, labour market relative status, disparity
of wages between groups, level of unemployment, economic cycle. These variables
influence industrial relations in many ways.

3) Social factors:

Under social factors items like social group creed, social values, norms, social status –
influenced industrial relations in the early stages of industrialization. They gave rise to
relationship as master and servant, haves and have-nots, high caste and low caste etc.
But with the acceleration of industrialization, these factors gradually lost their force
but one cannot overlook their importance.

4) Technological factors:

Under technological factors fall items like work methods, type of technology used,
rate of technological change, R&D activities ability to cope with emerging trends etc.
These factors considerably influence the patterns of industrial relations, as they are
known to have direct influence on employment status, wage level, collective
bargaining process in an organization.

5) Psychological factors:

Under psychological factors fall items pertain to industrial relations like owners
attitude, perception of workforce, workers attitude towards work, their motivation,
morale interest, alienation, dissatisfaction and boredom resulting from man machine
interface. The various psychological problems resulting from work have a far
reaching impact on workers job and personal life that directly or indirectly influences
industrial relations system of an enterprise.

6) Political factors:

The political factors are political institutions, system of government, political

philosophy, attitude of government, ruling elite and opposition towards labour
problems. For instance, the various communist countries prior to the adoption of new
political philosophy, the industrial relations environment was very much controlled by
the government ever since change has altered considerably like other capitalist
economics. There too, unions are now at helm of the labour activities, the industrial
relations and is marked by labor unrest. Most of the trade unions are controlled by
political parties, so here the industrial relations are largely shaped by the gravity of
involvement of political parties in trade union activities.

7) Enterprise related factors:

Under enterprise related factors, fall issues like style of management prevailing in the
enterprise, its philosophy and value system, organizational climate, organizational
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health, extent of competition, adaptability to change and the various human resources
management policies.

8) Global factors:

Under global factors, the various issues included are international relations, global
conflicts, dominant economic political ideologies, global cultural milieu, economic
and trading policies of power blocks, international labor agreements etc.

Recent trends in Industrial relations:

Emerging business scenario has brought in new market imperatives. The traditional IR
system is under unprecedented pressure because it is not geared to meet this. A market
determined profile of industrial relations is required to meet the challenge of the market.
Therefore, traditional IR is giving way to emerging employee relations. Some of the features
of this phenomenon are

1) The institution of trade union is getting weak. Employers are going for unitarism and
non unionism. In IT industry there are hardly any trade unions.

2) The institutions of collective bargaining is being decentralized and being replaced by

unit bargaining, individual bargaining and commercial bargaining/ collaborative
bargaining.

3) Disinvestment/ privatization and VRS (voluntary retirement scheme) are almost

accepted facts of industrial relations.

4) Changing pattern of compensation/ Reward management – Fixed/ Assured time rate

wages are replaced by variable / performance based wages.

5) Well paying, secure, low productive jobs in organized sector are replaced by low
paying more insecure productive jobs in unorganized/ self employed sectors.

6) Pro labour stance of government is getting reduced. The government is aligning its
labour policies with business imperatives. The attitude of judiciary is also changing.
This can be clearly from recent judgments which are sending message to unions that
they mean business.

7) Other changes are

a) There is proposal for labour law simplification/ codification

b) There is a trend to make employer friendly conciliation.

c) There has been ease in labour inspection

d) There has been use of section 10 (3) of IDA (Industrial dispute act), declaring
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strikes illegal.

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e) Strict enforcement of unfair labour practices.

f) Use of police for diluting labour struggle.

g) Re engineering and rationalization of work, job mobility, redeployment, Job

rotation, shedding surplus manpower.

h) Competencies management and skill formation, multi skilling and career

development.

i) Employee involvement, participation and communication.

j) Trade union participation.

k) Enterprise based unions.

l) Responsive trade unionism.

m) Diluting political ideology.

All these activities have become regular features and are increasingly impinging
on emerging employee employer relations. This trend is going to be accelerated in
future.

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