IRLL (MBA) Unit -1 Ms.

Bhawna
Introduction
Industrial relations constitute one of the most delicate and complex problems of the modern industrial
society. This phenomenon of a new complex industrial set-up is directly attributable to the emergence
of Industrial Revolution. The pre-industrial revolution period was characterized by a simple process of
manufacture, small scale investment, local markets and small number of persons employed. All this led
to close proximity between the manager and the managed. Due to personal and direct relationship
between the employer and the employee it was easier to secure cooperation of the latter. Any
grievance or misunderstanding on the part of either party could be promptly removed. Also, there was
no interference by the State in the economic activities of the people. Under such a set-up industrial
relations were simple, direct and personal. This situation underwent a marked change with the advent
of industrial revolution size of the business increased needing investment of enormous financial and
human resources, there emerged a new class of professional managers causing divorce between
ownership and management, and relations between the employer and the employer became entranged
and gradually antagonistic. This new set-up rendered the old philosophy of industrial relation irrelevant
and gave rise to complex, indirect, and impersonal industrial relations.
Industry today is neither viewed as a venture of employers alone nor profit if considered as its sole
objective. It is considered to be a venture based on purposeful cooperation between management and
labour in the process of production and maximum social good is regarded as its ultimate end and both
management and employees contribute in their own way towards its success. Similarly, labour today is
no more an unorganized mass of ignorant works ready to obey without resentment or protest the
arbitrary and discretionary dictates of management. The management has to deal with employees today
to as individuals but also as members of organized social groups who are very much conscious about
their rights and have substantial bargaining strength. Hence, the objective of evolving and maintaining
sound industrial relations is not only to find our ways and means to solve conflicts to resolve differences
but also to secure the cooperation among the employees in the conduct of industry.
But maintaining smooth industrial relation is not an easy task. Almost all the industrialized countries of
the world face the problem of establishing and maintaining good management worker relationships in
their industries. Each country has sought to find our solution, depending upon its economic, social and
political environment. However, industrial conflict still arises and therefore establishment and
maintenance of satisfactory industrial relations forms an important plank in the personnel policies of
modern organization.
IRLL (MBA) Unit -1 Ms. Bhawna

In the broad sense, industrial relations cover all such relationships that a business enterprise
maintains with various sections of the society such as workers, state, customers and public who come
into its contact.
In the narrow sense, it refers to all types of relationships between employer and employees, trade
union and management, works and union and between workers and workers. It also includes all sorts
of relationships at both formal and informal levels in the organization.
The relationship between the employer and employees or trade union is known as Industrial relations.
A good industrial relation is necessary for better environment in the organization and for better
production and performance.
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 individuals) is (are) engaged. By
relations we mean the relationships that exist within the industry between the employer and his
employees.
There are six main parties who are actively associated with any industrial relation system. They are the
employees, employers, employers association, government, the trade union, and courts and
tribunals.
Industrial relation is used to refer all the relationship between the parties in an organization or in an
industry i.e. relationship between employers and employees, management and employees, trade
union and management, employees and unions, employees and employees. Industrial relation is also
known as labour relation or employee relations.
The concept of labour management relation is different from the concept of industrial relations. While
the former refers to absence of government as a party in negotiation, the later pre supposes the
existence of government representation in any negotiation.
The following Tead and Metcalfe observed that Industrial relations are the composite result of the
attitudes and approaches of employers and employees towards each other with regard to planning,
supervision, direction and coordination of the activities of an organization with a minimum of human
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efforts and frictions with an animating spirit of cooperation and with proper regard for the genuine well-
being of all members of the organization
J.T. Dunlop defines industrial relations as the complex interrelations among managers, workers and
agencies of the governments. According to Dale Yoder industrial relations is the process of
management dealing with one or more unions with a view to negotiate and subsequently administer
collective bargaining agreement or labour contract.
Features of Industrial Relations:
1. Industrial relations are outcomes of employment relationships in an industrial enterprise. These
relations cannot exist without the two parties namely employers and employees.
2. Industrial relations system creates rules and regulations to maintain harmonious relations.
3. The government intervenes to shape the industrial relations through laws, rules, agreements,
terms, charters etc.
4. Several parties are involved in the Industrial relations system. The main parties are employers
and their associations, employees and their unions and the government. These three parties
interact within economic and social environment to shape the Industrial relations structure.
5. Industrial relations are a dynamic and developing concept, not a static one. They undergo
changes with changing structure and scenario of the industry as and when change occurs.
6. Industrial relations include both individual relations and collective relationships.
Distinction between human relations and industrial relations
The term human relations lays stress upon the processes of inter-personal relationships among
individuals as well as the behavior of individuals as members of groups.
The term industrial relations is widely used in organizations and it refers to the relations between the
employers and workers in an organization, at any specified time.
Thus, while problem of human relations are personal in character and are related to the behavior of
individuals where moral and social element predominate, the term industrial relations is
comprehensive covering human relations and the relations between the employers and workers in an
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organization as well as matters regulated by law or by specific collective agreement arrived at between
trade unions and the management.
However, the concept of industrial relations has undergone a considerable change since the objective
of evolving sound and healthy industrial relations today is not only to find out ways and means to solve
conflicts or resolve difference but also t secure unreserved cooperation and goodwill to divert their
interest and energies toward constructive channel. The problems of industrial relations are therefore,
essentially problems that may be solved effectively only by developing in conflicting social groups of an
industrial undertaking, a sense of mutual confidence, dependence and respect and at the same time
encouraging them to come closer to each other for removing misunderstanding if any, in a peaceful
atmosphere and fostering industrial pursuits for mutual benefits.
For a good environment in an organisation it is necessary to have healthy industrial relations.
Following are the importance of industrial relations:
1. It establishes industrial democracy: Industrial relations means settling employees problems
through collective bargaining, mutual cooperation and mutual agreement amongst the parties
i.e., management and employees unions. This helps in establishing industrial democracy in the
organization which motivates them to contribute their best to the growth and prosperity of the
organization.
2. It contributes to economic growth and development: Good industrial relations lead to increased
efficiency and hence higher productivity and income. This will result in economic development
of the economy.
3. It improves morale of he work force: Good industrial relations, built-in mutual cooperation and
common agreed approach motivate one to contribute ones best, result in higher productivity
and hence income, give more job satisfaction and help improve the morale of the workers.
4. It ensures optimum use of scare resources: Good and harmonious industrial relations create a
sense of belongingness and group-cohesiveness among workers, and also a congenial
environment resulting in less industrial unrest, grievances and disputes. This will ensure
optimum use of resources, both human and materials, eliminating all types of wastage.
5. It discourages unfair practices on the part of both management and unions: Industrial relations
involve setting up a machinery to solve problems confronted by management and employees
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through mutual agreement to which both these parties are bound. This results in banning of the
unfair practices being used by employers or trade unions.
6. It prompts enactment of sound labour legislation: Industrial relations necessitate passing of
certain labour laws to protect and promote the welfare of labour and safeguard interests of all
the parties against unfair means or practices.
7. It facilitates change: Good industrial relations help in improvement of cooperation, team work,
performance and productivity and hence in taking full advantages of modern inventions,
innovations and other scientific and technological advances. It helps the work force to adjust
themselves to change easily and quickly
The following are some of the objectives of industrial relation system:
1. Protect management and labor interests by securing mutual relations between the two groups.
2. Avoid disputes between management and labor, and create a harmonizing relationship between the
groups so productivity can be increased.
3. Ensure full employment and reduce absenteeism, hence, increasing productivity and profits.
4. Emphasize labor employer partnership to establish and maintain industrial democracy. This is done
to ensure the sharing of profit gains, and personal developmental of all all employees.
5. Provide better wages and living conditions to labor, so misunderstandings between management
and labor are reduced to a minimum.
6. To bring about government control over plants where losses are running high, or where products
are produced in the public interest.
7. To bridge a gap between various public factions and reshape the complex social relationships
emerging out of technological advances by controlling and disciplining members, and adjusting their
conflicts of interests.

IRLL (MBA) Unit -1 Ms. Bhawna
Parties to IR
The major parties to IR are the employees, employees representatives, employer, associations of
employers, government, and courts and tribunals.
Role of state in industrial relations
In recent years the State has played an important role in regulating industrial relations but the extent of
its involvement in the process is determined by the level of social and economic development while the
mode of intervention gets patterned in conformity with the political system obtaining in the country and
the social and cultural traditions of its people. The degree of State intervention is also determined by
the stage of economic develop. For example, in a developing economy like ours, work-stoppages to
settle claims have more serious consequences than in a developed economy and similarly, a free market
economy may leave the parties free to settle their relations through strikes and lockouts but in other
systems varying degrees of State participation is required for building up sound industrial relations.
In India, the role played by the State is an important feature in the field of industrial relations and State
intervention in this area has assumed a more direct form. The State has enacted procedural as well as
substantive laws to regulate industrial relations in the country.
Role of management in industrial relations
The management has a significant role to play in maintaining smooth industrial relations. For a positive
improvement in their relations with employees and maintaining sound human relations in the
organization, the management must treat employees with dignity and respect. Employees should be
given say in the affairs of the organization generally and wherever possible, in the decision-making
process as well. A participative and permissive altitude on the part of management tends to give an
employee a feeling that he is an important member of the organization a feeling that encourages a
spirit of cooperativeness and dedication to work.
Management must make a genuine efforts to provide congenial work environment.
They must make the employees feel that they are genuinely interested in their personal
development. To this end, adequate opportunities for appropriate programmes of 18training
and development should be provided.
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Managements must delegate authority to their employees commensurate with responsibility.
They must evolve well conceived and scientific wage and salary plan so that the employees may
receive just compensation for their efforts. They must devise, develop and implement a proper
incentive plan for personnel at all levels in the organization.
There must be a well-planned communication system in the organization to pass on information
and to get feed back from the employees.
Managements must pay personal attention to the problems of their employees irrespective of
the fact whether they arise out of job environment or they are of personal nature.
They must evolve, establish and utilize appropriate machineries for speedy redressal of
employees grievances.
Manageemnts must provide an enlightened leadership to the people in the organization.
An environment of mutual respect, confidence, goodwill and understanding on the part of both
management and employees in the exercise of their rights and performance of their duties should
prevail for maintaining good industrial relations
Role of trade unions in maintaining industrial relations
The trade unions have a crucial role to play in maintaining smooth industrial relations. It is true that the
unions have to protect and safeguard the interests of the workers through collective bargaining. But at
the same time they have equal responsibility to see that the organization do not suffer on account of
their direct actions such as strikes, even for trivial reasons. They must be able to understand and
appreciate the problems of managements and must adopt a policy of give and take while bargaining
with the managements. Trade unions must understand that both management and workers depend on
each other and any sort of problem on either side will do harm to both sides. Besides public are also
affected, particularly when the institutions involved are public utility organizations.



IRLL (MBA) Unit -1 Ms. Bhawna
Approaches to IR
The scenario of IR is perceived differently by different people. For some, IR is related to class conflict,
other perceive it in terms of mutual cooperation and still others understand it in terms of competing
interests of various groups. HR managers are expected to understand these varying approaches because
they provide the theoretical understanding for much of the role of HRM.
The three popular approaches to IR are unitary approach, pluralistic approach and Marxist approach.
a. Unitary approach: In unitary approach, the organization is taken as an integrated and harmonious
system. A core assumption of unitary approach is that management and workers, and all members of
the organization share the same objectives, interests and purposes; thus working together, hand-in-
hand, towards the shared mutual goals. In this approach the union co-operates with the management
and works for a common goal. The assumption of this approach is that everyone benefits when the
focus is on a common interest.
Under unitary approach, IR is grounded in mutual cooperation, individual treatment, teamwork and
shared goals. Workplace conflict is seen as a temporary aberration, resulting from poor management,
from employees who do not mix well with the organisations culture. Unions cooperate with the
management and the managements rights to manage is accepted because there is no "we-they" feeling.
The underline assumption is that everyone benefits when the focus is on common interest and
promotion of harmony. Conflict in the form of strikes is not regarded as necessary but destructive.
Advocates of the unitary approach emphasise on a reactive IR strategy. They seek negotiations with
employees. Participation of government, tribunals, and unions is not sought or are seen as been
necessary harmonious employee relations.
The unitary approach is being criticized as a tool for seducing employees away from unionism and
socialism. It is also criticized as manipulative and exploitative.
b. Pluralistic approach: Pluralistic approach is opposite to unitary approach. In pluralism approach, the
organization is divided in sub-groups - management and trade unions. In this approach, the conflict
between the managers and the workers over the distribution of profits is unavoidable. Union plays an
important role in this approach. Employees join union to protect their interest and influence the
decision making by the management. Trade unions are viewed as legitimate representatives of
employees. Conflict is dealt by collective bargaining and industrial tribunals, conciliation and arbitration.
IRLL (MBA) Unit -1 Ms. Bhawna
The pluralistic approach totally departs from the unitary approach. The pluralistic approach perceives:
1. Organisations as coalition of competing interest, where the management role is to mediate amongst
the different interest groups.
2. Trade unions as legitimate representatives of employee interests.
3. Stability in IR as the product of concessions and compromises between management and unions.
Legitimacy of the management authority is not automatically accepted. Conflict between the
management and workers is understood as inevitable and in fact, is viewed as conductive for innovation
and growth. Employees join unions to protect their interest and influence decision making by the
management. Unions thus balance the power between the management and employees. In the
pluralistic approach, therefore, a strong union is not only desirable but necessary. Similarly, society's
interests are protected by state intervention through legislation and industrial tribunals which provide
orderly process for regulation and resolutions of conflict.
The theories on pluralism were evolved in the mid-sixties and early seventies when England witnessed a
resurgence of industrial conflicts. However, the recent theories of pluralism emanate from British
scholars, and in particular from Flanders and Fox. According to pluralists, industrial conflict is inevitable
and it needs to contain within the social mechanism of collective bargaining, conciliation and arbitration.
c. Marxist Approach: According to Marxist approach, the conflict in an organisation arises not because
of the employees and the employer. The conflict takes place due to the division in the society between
the capital (i.e. with those who own resources) and labor (i.e. who has only labour to offer). Conflict is
therefore seen as inevitable and trade unions are a natural response of workers to their exploitation by
capital.
Adversarial relations in the workplace are simply one aspect of class conflict. The Marxist approach
focuses on the type of society in which an organisation functions. Conflict arises not just because of
competing interest within the organisation, but because of the division within society between those
who own or manage the means of production and those who have only their labour to offer. Industrial
conflict is thus seen as being synonymous with political and social unrest.
Trade unions are seen both as labour reaction to exploitation by capital, as well as a weapon to bring
about a revolutionary social change. Concern with wage related disputes are secondary. Trade unions
focus on improving the position of workers within the capitalist system and not to overthrow. For the
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Marxist, all strikes are political. Besides, Marxists regards state intervention via legislation and the
creation of industrial tribunals as supporting managements interest rather than insuring a balance
between the competing groups. This view is in contrast to the belief of the pluralists who argue that
state intervention is necessary to protect the overall interest of society. To Marxists, the pluralists
approach is supportive of capitalism, the unitary approach anathema. Consequently, enterprise
bargaining, employee participation, cooperative work culture etc. helps in cordial IR and is not
acceptable to Marxists. Such initiatives are regarded as nothing more than sophisticated management
techniques designed to reinforce management control and the continuation of the capitalist system.
Causes of Poor Industrial Relations
Perhaps the main cause or source of poor industrial relations resulting in inefficiency and labour unrest
is mental laziness on the part of both management and labour. Management is not sufficiently
concerned to ascertain the causes of inefficiency and unrest following the laissez-faire policy, until it is
faced with strikes and more serious unrest. Even with regard to methods of work, management does
not bother to devise the best method but leaves it mainly to the subordinates to work it out for
themselves. Contempt on the part of the employers towards the workers is another major cause.
However, the following are briefly the causes of poor industrial relations:
1. Mental inertia on the part of management and labour;
2. An intolerant attitude of contempt of contempt towards the workers on the part of
management.
3. Inadequate fixation of wage or wage structure;
4. Unhealthy working conditions;
5. Indiscipline;
6. Lack of human relations skill on the part of supervisors and other managers;
7. Desire on the part of the workers for higher bonus or DA and the corresponding desire of the
employers to give as little as possible;
8. Inappropriate introduction of automation without providing the right climate;
9. Unduly heavy workloads;
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10. Inadequate welfare facilities;
11. Dispute on sharing the gains of productivity;
12. Unfair labour practices, like victimization and undue dismissal;
13. Retrenchment, dismissals and lock-outs on the part of management and strikes on the part of
the workers;
14. Inter-union rivalries; and
15. General economic and political environment, such as rising prices, strikes by others, and general
indiscipline having their effect on the employees attitudes.
The foregoing discussion of the causes of industrial disputes in India makes it clear that the problem of
labour unrest is quite complex. The worker is a human being and as a being he feels discontented and
frustrated if his day to day needs are not met properly. If the workers are given adequate wages, there is
improvement of working conditions. If brokers and political agents are eliminated the chances of conflict
and tensions among workers and employers will be greatly minimised.
Industrial relations and productivity
Industrial relations and productivity, Industrial relations are that part of management which is
concerned with the man power of the enterprise whether ordinary, skilled workers or manager Betrel
smith. Good industrial relations provides congenial atmosphere where workers can think of their
job management thinks of their welfare and goal of the company the workers also are concentrating to
achieve the goal of company.
Welfare of the company where both manager and worker works becomes foremost there by all derive
theirbenefit.Motivated workers moral become high the team spirit participative management profitshar
ing scheme etc. leaves the worker satisfied. A Satisfied worker is a most productive worker. Thus good
1.R achieves better productivity increasing production is one thing, but increasing productivity is
another thing. The achievement of greater productivity can be had by good industrial relations only.
1. Productivity can be of manpower, finance, marketing and workers productivity manpower
productivity can be had by efficient development of work force, right man, the right place at the right
time, for right type of job.
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2. A deployment which equates full load to a perfect worker his optimum capacity is brought out. He
can bring out his optimum only when he is fully satisfied his psychology is in good condition.
Improvement of industrial psychology is done by good relations only.
3. Finance productivity is deployment of finance for just and best output. The receipt of finance at low
interest and payout should fetch high interest payment to workers also.
If payment to workers are just and incentive oriented, stimulating, competitive, workers interest is
aroused results in higher production and more return on the money invested as finance, Hence this
besides creating mutual confidence develops a team spirit and better relations.
4. Marketing productivity, for the efforts taken expenditure incurred by marketing department if sales
are high it may be called a productive marketing philosophy more marketing can be achieved if cost of
production is less. Cost of production will be low if workers are a satisfied lot, if wastage is avoided, if
best quality is produced, if disciplined production takes place with in stipulated time at the stipulated
cost and quality. This is easily achieved if morale of work force if high is they are motivated.
5. Workers productivity with increased sense of responsibility which comes of best team and
cooperative spirit, we will produce, shows togetherness, best relation between employer and employee.
Besides satisfied employment results in less absenteeism and reduced turnover absence of
both automatically increase production and productivity.
Productivity implies development of an attitude of mind and a constant urge to find better, cheaper,
quicker easier and safe ways of doing a job manufacturing an article and providing a service V.K.R.
Menon. Normally productivity is ratio of output / Input as per international labor organization. The
ratio between output and factors of input (men, material, money, talent etc.) is generally known as
productivity of the factor concerned so far we explained this greatest output with smallest input
productivity is to be calculated from the quantity of produce vis-q-vis the resources utilized
(make best out of the things available) for that production. Productivity is necessary for all type of
enterprises government quasi government or private sector etc. Not mere production will elevate us we
are to compete with the world, hence effective production improvement and productivity alone can
raise us national productivity level should be hoisted up, economic growth will be stable only with rising

IRLL (MBA) Unit -1 Ms. Bhawna
productivity and industrial goal is centred around good industrial relations when productivity goes up
economic growth shoots up, the industrial climate remains cordial and congenial to production
development activities economic use of raw materials avoiding wastages giving optimum thrust by
industrial workers reduces the cost of production the benefit of which goes to customers and society at
large with more sales and profit automatically the workers wages
and benefits becomes better developing countries like us should give more thrust on productivity and
attempts are made to link bonus with productivity a golden rule if it comes to adoption legally. In a way
increase in productivity expenditure on sees that Industrial Relations is stable input is reduced capital
investment also may be reduced hence general economy improves with heightened productivity we see.
1. Industrial workers touch their peak of efficiency
2. Wasteful expenditure, wastages are systematically reduced.
3. Total cost is reduced
4. Automatically the quality improves by fine tuning by dedicated, motivated workers
.5. Workers emoluments are increasing and get share in the increasing profits.
6. Industrial environment becomes healthy for expansion diversification and more
employment industrial relations are influenced by
The competitive market and dynamics of change necessities
required. globally has pushed us to resort to automation
introduction of new and modern technology, mechanisation, computarisation etc. all those are
aimed to improve not only production, but productivity also which can be achieved only by
improved relation with worker
Up gradation of employees by
proper training developmentprogrammes etc. only will bring them at par to match with
technology change etc as envisaged earlier simultaneously, they are to be motivated there
should be morale boosting which will improve the relations and go to improve productivity.
A capable H.R.M management should be there to cope up with the aspirations of new set of
workers under new technology the managers should be talented to deal and convert the
workers in to a useful team to achieve common goal.
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I) From its side, the government rules, regulations
sops, etc shouldbe compatible with the industrial needs. They should aid theimprovement in
productivity, such as pressure for a bonus which is productivity linked etc putting more
responsibility on workers in industrial production. This will improve employers relations
which is also a part of industrial relations. Following actions of management may
affect labour relations.
1) un balanced management of men material by supervising managers hereworkers may be displeased
and lower their efficiency
2) Untrained low caliber management, cannot
cope with modernizationresulting in fall out and cannot contribute to improve productivity orindustr
ial relations.
3) Failure to make scientific management to evolve systems and boost productivity.
4) In competency at all three levels of management to bolster production or productivity. The
productivity can be increased along with better industrial relations and allied activities like
a) Adoption of supply chain management to get best raw materials where maximum
utilization becomes possible
b) Giving better environment to workers and improved working conditions environment
should remove boredom or monotony and create zeal and dynamism.
c) updated machines with full scale mechanization will reduce cost of production
d) The work force should be correctly selected properly trained and fully loaded. This
should be followed by training for updating.
e) Proper rewards, either monetary or non-monetary should be
arranged, incentive plans mutually agreeable should be framed and adhered to for
moral boosting.
f) Grievance Procedures should be implemented to nip the grievance in the loud stage
to avoid conflict, dispute etc.
g) Quality circles should be formed along with workers to take care of quality products
wastage avoidance etc, which will improve productivity, but above two quality
control and wastage control, can be there if relations are good thus interlinking has
become a perpetual need