Industrial Relations

 Industrial Relations

Productivity in an organization is the outcome of the joint efforts of two distinct elements namely (i) technological resources, and (ii) human resources. The factors affecting productivity other than the employees can be managed easily. However, the human aspect in the organization is very difficult to manage in a proper perspective. The human elements are the causes and the result of the interaction, ethics, social issues, duties, responsibilities, and other activities. The high rate of industrial growth, increased pace of technological development, and complex nature of the jobs has made the workforce of an organization critical source for achieving success. Hence, human resource management has become an important part of the present-day organizational management. Any negligence of the human elements leads to misunderstanding between the management and the employees, the result of which can be seen in the form of increased employee turnover, absenteeism, indiscipline, the decline in the quality of work done, increased cost of production, and various issues in the market. Because of these reasons, the concept of industrial relations receives widespread attention globally.

The term of industrial relations covers the relationship of the employees with the management and the organization and also with each other. Industrial relations is concerned with anticipating, addressing, and diffusing workplace issues which can interfere with the organizational objectives, as also with resolving disputes between and among the management and the employees. Traditionally, the term industrial relations is used to cover such aspects of industrial life as activities of trade union or employees’ association, collective bargaining, employees participation in the management, discipline and grievance handling, industrial disputes and interpretation of the statutory regulations such as labour laws and rules, and code of conduct. It includes the processes of analyzing the management-employee relationship, ensuring that relations with employees comply with applicable central and local laws and regulations, and resolving workplace disputes. The practice of counseling, disciplining, and terminating employees falls within the domain of this discipline.

Definitions of industrial relations

The term industrial relations consist of (i) industry, and (ii) relations. Industry means any productive activity in which an individual is engaged. It includes (i) primary activities such as mining, agriculture, fisheries, plantation, forestry, and horticulture etc. and (ii) secondary activities such as manufacturing, construction, trade, transport, commerce, banking, and communication etc. Economically speaking, industry constitutes the secondary sector where factors of production (land, workforce, capital, and enterprise or four M’s (men, materials, money, and machines) are gainfully employed for the purpose of production, and where a commercial organization exists. Relations means the relations which exist in the industry between the management and the employees.

Industrial relations is that part of management which is concerned with the employees of the organization, whether machine operator, skilled worker, or executives. There are several definitions which exist for the term industrial relations. The ‘labour dictionary’ defines industrial relations as ‘the relation between employers and employees in industry’.

Industrial relations can be defined as the relations and interaction in the industry particularly between the employees and the management as a result of their composite attitudes and approaches in regard to the management of the affairs of the industry, for the betterment of not only the management and the employees but of the industry and national economy as a whole.

In order that the term industrial relations could cover every sector of the workforce in all parts of the world, the International Institute of Labour Studies has defined it as ‘social relations in production’.

International Labour Organization (ILO) defines industrial relations as ‘Industrial Relations deal with either the relationship between the state and employers and workers organizations or the relation between the occupational organizations themselves’.

In the words of Lester, ‘industrial relations involves attempts at arriving at solutions between the conflicting objectives and values; between the profit motive and social gain; between discipline and freedom, between authority and industrial democracy; between bargaining and co-operation; and between conflicting interests of the individual, the group and the community’.

According to Dale Yoder ‘industrial relations is a relationship between management and employees or among employees and their organization that characterizes and grows out of employment’.

Armstrong has defined industrial relations as ‘IR is concerned with the systems and procedures used by unions and employers to determine the reward for effort and other conditions of employment, to protect the interests of the employed and their employers and to regulate the ways in which employers treat their employees’.

As per V Agnihotri ‘the term industrial relations explains the relationship between employees and management which stems directly or indirectly from union-employer relationship’.

According to CB Kumar ‘industrial relations are broadly concerned with bargaining between employers and trade unions on wages and other terms of employment. The day-to-day relations within a plant also constitute one of the important elements and impinge on the broader aspects of industrial relations’.

As per HA Clegg ‘the field of industrial relations includes the study of workers and their trade unions, management and employers’ associations and the state institutions concerned with the regulation of employment’.

As per J Henry Richardson ‘industrial Relations is an art, the art of living together for purposes of production’.

According to John T Dunlop, ‘Industrial societies necessarily create industrial relations, defined as the complex of interrelations among managers, workers and agencies of government’.

Today, the term ‘industrial relations’ stands for such a wide variety of practices and institutions and has been used in such divergent contexts, that to define just an essence of it, is an extremely complicated task. However, a few elements of this term are clear. These are (i) originally, the term stood for management-employee relations in industry, (ii) later on, when the employees organized themselves into trade unions and the latter started dealing with the management, trade union activities also came to be included under this term, (iii) still later, when the relations between the management and employees came to be vested with public importance and ceased to be private, the ‘state’ had to be involved in such relations and because of it, the activities of the ‘state’ designed to modify, regulate, and control relations between the management and employees also became a part of industrial relations, (iv) the term ‘industry’ is no longer confined to a small segment of economic activity, but has come to include all gainful employments, including service under the ‘state’.

The relationship between the ‘state’ and its employees has also come to acquire several of the characteristics and features of the management-employee relationship in the industry. Hence management-employees relationship under public services has also come to be covered by the term. Hence, industrial relations refers the relationship which exists between the management and the employees in the day-to-day working of an organization.

The concept of ‘industrial relations’ is a dynamic and developing concept. It is described as a relationship between the management and the employees, or among the employees and their organization, their trade unions, and the statutory authorities. It is a set of functional relations. Industrial relations do not constitute a simple relationship, but they are set of functional, inter-dependent complexities involving various factors or different variables such as economic, political, social, psychological, and statutory factors or variables. Without the existence of the minimum two parties, industrial relations cannot exist. Industrial relations is the product of economic, social, and political system arising out of the employment in the industrial field. The important purpose of industrial relations is the development of healthy employees-management relations, maintenance of the industrial peace, avoidance of industrial strife, and development and growth of industrial democracy etc.

Industrial relations differs from traditional human resource management since it focus on the collective aspect of relations such as statutory regulations for labour, collective bargaining, the right to strike, and trade union activities etc. In short, industrial relations consists of management of collective relations between the management and the employees. Collective bargaining is a process through which employee issues are settled through mutual discussions and negotiations through give and take approach. If the issues are not settled through collective bargaining, then they are to be referred to voluntary arbitration but not to adjudication in order to maintain congenial relations.

The three main participants in the industrial relations activities are management, employees and employees’ associations such as trade union etc., and statutory authorities (Fig 1). All the three participants are to play important and pro-active role to build a positive peaceful industrial relations environment and to avoid of industrial conflicts in the organization. While the employees’ associations and the management representatives carry out the activity of collective bargaining, the statutory authorities play a balancing role in the negotiations.

Fig 1 Participants in industrial relations

Objectives of industrial relations

Objectives of industrial relations are (i) enhancing of status, (ii) regulation of production, (iii) occupational instability, (iv) poor organizational climate, (v) good relations among employees, (vi) increase in the productivity, (vii) enhancement of social responsibility, (viii) improvement of economic conditions of the employees, (ix) to extend and maintain industrial democracy, (x) to avoid industrial conflict, and (xi) uninterrupted production.

Good industrial relations reduces 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, and grievances are some of the reflections of industrial unrest which do not spring up in an environment of industrial peace. Good industrial relations helps to promote co-operation and increase the production. The uninterrupted production is the most important benefit of industrial relations since it ensures continuity of production. This means, continuous employment for all ranging from executives to employees. The resources are fully utilized, resulting in the maximum possible production. There is an uninterrupted flow of income for all. Smooth running of the organization is of vital importance for several industries since the products of downstream industries are intermediaries or inputs, the upstream industries are assured of continuous supply of the product of the organization, the exporters are ensured of the products if these are export goods, and consumers are happy if the organizational products are goods of mass consumption.

Industrial relations promote industrial democracy. Industrial democracy means the employee participation at various levels of the organization with regard to decisions which affect the employees. It is mainly the joint consultations, which pave the way for industrial democracy and cement relationship between the employees and the management

The primary objective of industrial relations is to bring about good and healthy relations between the two partners (the employees and the management) for the running of the organization. It is on this objective that other objectives revolve. According to Kirkadly, ‘the state of industrial relations in a country is intimately connected with the form of its political government and the objectives of an industrial organization may change from economic to political ends’. Kirkadly divides the objectives of industrial relations into four namely (i) improving the economic condition of the employees in the existing state of industrial management and political government, (ii) control by the state over industries to regulate production and industrial relations, (iii) socialization or nationalization of industries by making the state itself the employer, and (iv) vesting the proprietorship of the industries in the employees.

The labour-management committee of the Asian Regional Conference of the ILO has recognized certain fundamental principles as objectives of social policy in governing industrial relations with a view to establishing harmonious employee-management relations. They are (i) good employee-management relations depend on the management and trade unions being able to deal with their mutual problems freely, independently, and responsibly, (ii) the trade unions, the managements, and their organizations are desirous of resolving their problems through collective bargaining though in resolving such problems (the assistance of appropriate statutory authorities may be necessary in public interest, and hence, collective bargaining is the corner-stone of good relations and thus the statutory framework of industrial relations aids the maximum use of the process of mutual accommodation), (iii) the management and the employees of the organization is to be desirous of associating with statutory authorities in consideration of general, public, social, and economic measures affecting the relations between the management and the employees, (iv) safeguarding the interest of the employees as well as the management by securing the highest level of mutual understanding and goodwill between all sections of the organization which take part in the process of the production, (v) avoiding industrial conflicts, and developing harmonious relations, which is essential for productive efficiency of the employees and organizational progress, (vi) raising of the productivity to a higher level in an era of full employment by reducing the tendency of higher employee turnover and frequent absenteeism, (vii) establishing and maintaining industrial democracy, based on employee partnership not only for sharing gains of organization but of managerial decisions themselves so that individual employees’ personality is fully recognized and developed into a civilized citizen, (viii) bringing down strikes, lockouts, and gheraos by providing better and reasonable wages and improved living conditions, and fringe benefits to the employees, (ix) bringing about regulatory control over such organizations which are running at losses or where production has to be regulated in public interest, and (x) through industrial relations, the regulatory authorities tries to bridge the gap between the imbalanced, disordered, and maladjusted social order and the need for reshaping the complex social relationships adaptable to the technological advances.

The primary objective of the industrial relations is to maintain congenial relations between the management and the employees. The other basic objectives include (i) maintenance of industrial peace since permanent industrial peace in the organization is essential for achieving the production and financial targets, (ii) creation of a congenial environment so that employees own the production and financial targets, (iii) efficient production of goods and services through adequate terms and conditions of employment which satisfies the interests of the management, employees and society as a whole, (iv) improvement of economic and social status of the employees, (v) minimization of the industrial conflicts and settlement of industrial disputes through consensus achieved by negotiations, (vi) avoidance of differences and settlement of disputes through dispute settlement mechanism, (vii) establishment of mechanisms for communication, consultation, and cooperation in order to resolve workplace issues at the organization and industry level, (viii) having a say in the management and decision making, (ix) maintenance of the industrial democracy, (x) achieving through a tripartite process on issues like labour policy at national level, (xi) providing social protection where needed for example in the area of safety, occupational health, and social security etc., and (xii) establishment of stable and harmonious relationship between employees, management, and the organization and between them and the statutory authorities.

The establishment of good industrial relations depends on the constructive attitude on the part of both the management and the employees through trade union. The constructive attitude, in turn, depends on all the basic policies and procedures laid down in the organization for the promotion of healthy industrial relations. It also depends on the ability of the management and the employees’ trade union to deal with the mutual problems freely, independently, and with responsibility. Both the management and the employees are to have their faith in collective bargaining rather than in collective action.

It is very difficult to promote and to maintain sound industrial relations. Industrial relations encompass all such features which influence behaviour of employees at work. These features are (i) industrial relations are mainly the relations between the management and the employees, (ii) the industrial relations encompass the organization, management, employees, employees’ associations and trade unions, and local and statutory authorities, (iii) industrial relations are the outcome of the practice of human resource management and employment relations, (iv) industrial relations emphasis on accommodating other group’s interest, values, and needs hence groups develop skills of adjusting to and cooperating with each other, (v) industrial relations is governed by the system of rules and regulations concerning workplace and employees, (vi) the main objective of industrial relations is to maintain harmonious relations between management and employees by solving the problems through grievance procedures and collective bargaining, (vii) the statutory authorities shape the industrial relations through industrial relations policies, rules, agreements, mediations, rewards and acts etc., (viii) trade unions play an important role in the industrial relations since they influence and shape the industrial relations through collective bargaining.

The approach to industrial relations is not to be casual. The organization success revolves around good industrial relations. Industrial relations is seen as a co-operation between the management and the employee since it is (i) done with discipline (ii) done in organized manner, and (iii) it satisfies the needs.

The different factors (Fig 2) which influence greatly the industrial relations in an organization are institutional factors. (ii) economic factors, (iii) technological factors, (iv) political factors, (v) social and cultural factors, and (vi) regulatory factors.

Institutional factors – These factors include government departments dealing with labour related issues and labour legislations, organizational vision and mission, collective agreement, lower and higher courts, social institutions like community, caste, creed, system of beliefs, attitudes of employee towards work, system of power status etc.

Economic factors – These factors include type of organization like public sector and private sector etc., compensation levels, cost of living, saving potential, organizational profitability, structure of workforce, and availability of personnel in the employment market etc.

Technological factors – These factors are related to technology and include mechanization, control and automation, rationalization, and computerization etc.

Political factors – These factors include political system in the country, political parties and their ideologies, their growth, mode of achievement of their policies, and their involvement in trade unions etc.

Social and cultural factors – These factors include population, religion, customs and tradition of people, race ethnic groups, and cultures of various groups of people etc.

Regulatory factors – These factors include statutory regulation because of various governmental policies such as industrial policies, labour policies and economic policies etc.

Fig 2 Factors affecting industrial relations in an organization

Industrial dispute and conflict

Industrial dispute means any dispute or differences between the management and the employees, management and the executives, or employee and employees, which is connected with the employment or non-employment, or terms of employment, or with the conditions of work of an employee. For a dispute to become an industrial dispute, it is to satisfy some essentials consisting of (i) there is to be a dispute or a difference (a) between management of different organizations (such as wage warfare where workmen are scarce), (b) between management and employees (such as demarcation dispute), and (c) between employee and employees, (ii) It is connected with the employment or non-employment or the terms of employment or with the condition of work of an employee (but not with the executives), or it is to be pertaining to any industrial matter, (iii) the employee does not draw wages exceeding a small amount per month, and (iv) the relationship between the management and the employee is to be in existence and is to be the result of the contract and the employee actually employed. Industrial disputes, hence means dispute relating to existing industry, it is to be a real dispute and the employee regarding whom the dispute is raised and the parties to a dispute are to have a direct or substantial interest.

Industrial disputes are symptoms of industrial unrest in the same way as the boils are symptoms of a disordered body. Industrial disputes can take the form of strikes, go-slow tactics, token strikes, sympathetic strikes, pen-down strikes, hunger strikes, work stoppages, and lockouts. A strike is stoppage of work initiated or supported by a trade union when a group of employees act together as a last resort to bring pressure on the management, to resolve a grievance or constrain it to accept such terms and conditions of service as the employees want to enjoy. If, however, the management closes down the facility or place where the employees are employed, or if the management refuses to continue to employ, an employee or employees because they want to force the management to agree to their terms and conditions of service during the pendency of a dispute, the resulting situation is a lockout.

Procedure for avoiding strikes, lockouts, and other forms of coercive action, in connection with industrial disputes between trade unions and employers are normally laid down in the form of a clause or clauses in an agreement between the management and the employees.  At the same time, it is also laid down that there shall be no stoppage of work and no coercive act on the part of either party, to a dispute till the procedures outlined in the agreement have been gone through and the two parties have been unable to come to a compromise or reach a settlement.

The most common practice is to make distinction between two main types of disputes relating to terms of employment. These are (i) dispute which arise out of deadlocks in the negotiations for a collective agreement, popularly known as interest disputes, and (ii) dispute which arise from day-to-day employees’ grievances or complaints, popularly known as grievance disputes.

Interest disputes are also called as ‘conflict of interests’ or economic dispute. These correspond normally to what in certain countries are called collective labour disputes. In general, these relate to the establishment of new terms and conditions of employment for the general body of employees concerned. In most cases, the disputes originate from trade union demands or proposals are normally made with a view to the conclusion of a collective agreement, and a dispute arises when the parties fail in their negotiations to reach an agreement on the outstanding issues. The expressions ‘conflict of interests’ and economic disputes both describe the nature of the issues involved. Since there are normally no mutually binding standards which can be relied upon to arrive at a settlement of interest disputes, recourse is to have bargaining power, compromise, and sometimes a test of economic strength for the parties to reach an agreed solution. Since the issues in such disputes are ‘compromisable’ the parties land themselves best to conciliation adopting the process of give-and-take during the haggling and bargaining between the parties.

The grievance or rights disputes are also known as conflict of rights or legal disputes. These involve individual employees or a group of employees in the same team and correspond largely to what in certain countries are called individual disputes. These normally arise from day-to-day working relations in the organization, normally as a protest by the employee or employees concerned against an act of management which is considered to violate the employees’ rights. Grievances typically arises on such questions as discipline and dismissal, the payment of wages and other fringe benefits, working time, over time, time off entitlements, promotions, demotion, transfer, rights deriving from seniority, rights of line managers and union officers, job classification issues, the relationship of work rules to the collective agreement and the fulfillment of obligations relating to safety and health laid down in the agreement. In some countries, grievances arise especially over the interpretation and application of collective agreements, grievance disputes are hence also called interpretation disputes. Such grievances, if not dealt with in accordance with a procedure which secure the respect of the parties, can result in embitterment of working relationship and a climate of industrial strife.

The existence of a grievance is necessary and it is to be communicated to the management. The term industrial dispute connotes a real and substantial difference having some elements of persistency and continuity, till resolved and likely, if not, adjusted to endanger the industrial peace of the organization or the community. When the parties are at variance and the dispute or difference is connected with the employment, non-employment, terms of employment, or with the condition of work. There comes in to existence an industrial dispute.

General reasons of industrial disputes which results in bad industrial relations are (i) close mindedness of management and employees with one thinking to extract maximum work with minimum remuneration, while other thinking to avoid work and get more enhancement in pay and wages, (ii) irrational wage, wage system and structure not mutually acceptable, (iii) poor working environment, low presence of safety, hygiene conditions vitiated atmosphere for smooth working, (iv) poor human relations, and lack of dexterity on the part of management personnel, (v) lack of control over the situations, erosion of discipline, which rebounds, (vi) introduction of new technology or automation, mechanization, and computerization etc. without proper consultations, preparations, and discussion with the employees and creating climate, (vii) nepotism, unequal work-loads, disproportionate wage, and responsibilities, (viii) adoption of unfair work practices either by the management or employees and unions, (ix) unjustifiable profit sharing, and not considering employees as a co-shares of the gains of the organization, (x) frequent union rivalries over membership foisting up of fake unions, (xi) strikes lock out, lay off, and resulting retrenchment due to high handedness on the part of the concerned, (xii) throwing away the agreements and arrived settlements, (xiii) militancy of the unions, and (xiv) attitude of government and political parties who may indirectly control some the unions for their own gains or to get a hold on the industry.

Conflict as one of the features of industrial relations is a general concept, when it expresses itself, it become a dispute i.e., industrial conflict is general whereas industrial dispute is specific. Industrial dispute is used to denote work-stoppages as well as those differences between employees and management which are settled through the industrial relations machinery.

Industrial conflict is human conflict. It is just one aspect of the general conflict inherent in the society, based upon the pursuit of self-interest in the economic life by the people and the group to which they belong. If an economic and social order is based upon the open acceptance of the principle which people are the best judge of their self-interest and they are to be free to pursue this interest, conflict becomes inherent in that order. The industrial conflict between employees and management is one manifestation of this all-pervasive conflict in the present society.

The coming together of employees motivated by their urge of obtaining the highest possible wages and the management motivated by profit maximization is the basic cause of industrial conflict in the present economic system. The products of the joint efforts of employees and management, that is, the output or proceeds of an organization limited at a particular time, if more goes to the employees in the form of higher wages and other amenities of life, less is available for profits to the organization. Hence, at a particular moment of time, the satisfaction of the interests of the employee conflicts with the pursuit of the interests of the management and the two groups become antagonistic to each other.

It has to be realized that this conflict is like the conflict between any buyers and sellers. The sellers seek to sell the commodity at the highest possible price which they can extract and the buyers seek to pay the lowest possible price. The employees are the sellers of the commodity since they have the labour power, and the management buy this commodity. Even though the ILO (International Labour Organization) has declared that ‘labour is not a commodity to be sold and purchased’, it continues to be so. Naturally, the determination of the price of labour including other terms and conditions of employment becomes the chief source of conflict between the management and the employees.

Further, it has to be appreciated that the conflict is not personal, but results from the system itself. In a competitive market situation, the constant drive for cost reduction is needed for the mere survival of the organization. The management attempts to economize on wages also since they constitute an important element in the cost of production. But what is cost to the management is the main source of income to the employees who seek to maximize their wages and industrial conflict is the result. It is not that the management is cruel and enjoys the sight of misery, disease, squalor and want among the employees. The point is that it cannot afford to be liberal and altruistic. It has his own limitations of the system.

Moreover, labour power is fundamentally different from any other commodity. Not only is the labour power a function of time and hence is most perishable but also that it cannot be separated from the employees. The employees sell their labour power but retains it in them. The sellers are least concerned with what happens to the commodity after they have sold it. But the employees are very much concerned with the way the management uses the labour power, with the temperature under which it is used, speed with which it is worked, and the tension and the pressure which the use creates. Hence, the conditions under which the work is performed are also of utmost importance to the life and happiness of the employees and do become a source of conflict.

Conflict of interests is found not only in the spheres of wages and profits alone, rather it bedevils the totality of relationship arising out of coming together of employees and management in the normal form of economic organization. The profit maximization goal of management can demand change in the types of goods produced, installation of new machineries, adoption of newer methods of production involving loss of hard-earned skills, transfers, retrenchment, and compulsory retirement of the employees. On the one hand, the employees expect and demand stability in their income, security of employment, protection of skills and improvement in their status.

Industrial conflict requires not a very imaginative mind to realize the consequences of a situation full of conflicts. It is surprising that the existing set-up of industrial relations, whose roots lie in an all-pervasive conflict, functions at all. It is clear that such conflicts have adverse effects on industrial production, efficiency, costs, quality, human satisfaction, discipline, technological and economic progress and finally on the welfare of the society. Even in the absence of open strikes, in those situations, where the production machinery comes to a halt and the costs and losses are apparent, the corrosive effect of industrial conflict is much too widespread and deep to be neglected.

Discontented employees, nursing in their heart mute grievances and resentments, cannot be efficient and do not possess a high degree of industrial morale. Under such conditions, absenteeism and employee turnover increase, plant discipline breaks down, both the quality and quantity of production suffer, and costs mount up to the detriment of all concerned i.e., employees, management, and customers. In the end, the accumulation of these individual and collective resentments and dissatisfaction finds expression in violent strikes and lock-outs. Then, the realization comes that something is vitally wrong with the relations between the management and the employees and preventive and corrective measures are urgently needed.

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