Management of Industrial Relations

Management of Industrial Relations

 A large number of employees are needed for the functioning of an industrial organization. For the organization to perform well, management and the employees need to have pleasant relations. The control and the managing of human relation between the employees and the management are known as industrial relations. Industrial relations form an indispensable part of the human resource management and it is the basic need and an important aspect of the organizational management. It keeps the management-employees conflicts at bay.

Industrial relations have grown out of employment relations. It is a dynamic and developing socio-economic process. The social, political, and economic factors impact it. The industrial relations continue to evolve. Like other behavioural topics, both the scenario of industrial relations and factors affecting it are perceived differently by different behavioural practitioners and theorists. For example, while some perceive it in terms of class conflict, others view it in terms of mutual co-operation, yet others understand it related to competing interests of various groups and so.

Industrial relations consist of the whole range of relationships between employees and management, and between the employees. It is managed by conflict and cooperation. It includes securing effective and willing co-operation from employees and reducing conflict between the management and the employees and their representatives, the trade unions. The three parties involved in the industrial relations are (i) management, (ii) employees, and (iii) statutory authorities. There are three approaches to the industrial relations. These are (i) psychological approach, (ii) sociological approach, and (iii) human relations approach.

A sound industrial relations is the one in which the relationships between the management and the employees (and their representatives) on one hand and the statutory authorities on the other, are more harmonious and cooperative than conflictual. It creates an environment conducive to economic efficiency and motivation, productivity, and employee development. It generates employee loyalty and mutual trust.

Industrial relations include the relations, formal or informal, between the management and the employees with or without the presence of trade unions. The relationships are governed by the rights, entitlements, and responsibilities of the management and the employees with reference to the conditions of the employment. These relations, further, get its meaningfulness within the framework of statutory regulations where the statutory authorities play the role of a mediator.

In simple terms industrial relations deal with the relations between management and the employees in an industrial organization. Statutory authorities have attempted to make industrial relations healthy by enacting various acts or laws. These acts or laws offer a number of solutions to settle the disputes between the management and the employees within the organization and hence attempts to reduce the conflicts arising out of such disputes. This in turn improves the industrial relations.

Industrial relations involves (i) regulations for the management of the employment, (ii) methods of defining these regulations, (iii) the parties involved which include management, employees and their representatives (trade unions), institutional bodies, and local and statutory authorities, and (iv) interaction processes between these parties. Harmonious and peaceful industrial relations involve (i) display of responsible thinking towards the organization, (ii) understanding of the limitations of the parties involved, and (iii) respect for the views of each other in spite of the different position held by the members involved in collective bargaining.

The two words which constitute the term ‘industrial relations‘ are ‘industry’ and ‘relations’. ‘Industry’ refers to any productive activity in which the employees are engaged. ‘Relations’ refers to the relationship which exists within the industry between the management and the employees.  The management-employees relationship existing in the organization within the organizational settings is represented by the term ‘industrial relations’. Industrial relations stems directly or indirectly from management-trade union relationship.

Maintenance of harmonious industrial relations is of crucial importance for the survival and the growth of the organization. Peaceful industrial relations result in increased efficiency, reduced manpower turnover, and various other tangible benefits to the organization. Harmonious industrial relations have several advantages which include (i) establishing of industrial democracy, (ii) contributing to the economic growth and development of the organization, (iii) improving of the morale of the employees, (iv) ensuring optimum use of the scare resources, (v) discouraging unfair practices on the part of both the management and the trade unions, (vi) prompting enactment of sound regulatory legislation, and (vii) facilitating change for alignment with the ever changing environment.

Industrial relations regulate the working of the employees at the workplace. Strong and sturdy industrial relations ensure cooperation of employees in the efficient running of the organization. It is the corner stone for the growth and success of the organization. It leads to increase in the productivity, improvement in the product quality, improvement in the quality of work, increase in the employees’ efficiency, and reducing the cost of production. On the other hand, bad industrial relations lead to industrial unrest and industrial dispute which results into downward trend of the organization.

Industrial organizations use widely the term ‘industrial relations’. This term refers to the relations between the management and the employees at any specified time which includes the matters regulated by the statutory laws and by specific collective agreement arrived at between the trade unions and the organizational management. On the other hand, the term ‘human relations’ lays stress upon the processes followed for the inter-personal relationships as members of the organizational team. Thus ‘human relations’ are personal in character and are related to the behaviour of individual employees where moral and social elements pre-dominate.

The concept of industrial relations has been defined using various terminologies, but in the strictest sense, it is essentially the relationship between management and the employees. The complete concept of industrial relations is the practice of multi-pronged relationships between management and the employees, employees and trade unions, trade unions and the management in an industrial organization. In fact, it is a ‘whole field of relationships which exists because of the necessary collaboration of employees in the employment process of the industrial organization. Thus industrial relations refer to the relationship between management and employees, or employees and their organization which arise out of employment.

Industrial relations consist of the composite approach of the attitudes and approaches of the management and the employees towards each other with regard to planning, supervision, direction and unification of the activities of the organization with lesser friction and more co-operations and with mutual effort for others well-being. It includes the role of regulatory mechanism in resolving any industrial dispute.

The key underlying concepts of industrial relations are (i) preservation and promotion of economic and social interest of the employees, (ii) since industrial peace and productivity goes hand in hand hence there is a necessity for the reduction of the industrial disputes and promotion of peace in the organization, (iii) settling of the industrial disputes is not to be delayed and is to be settled with open mind for avoiding the situations of the strike or lock-out, (iv) management-employees relation are to be made healthy and are to be on the path of growth, (v) day to day running of the organization is to be made democratic with increase in the participation of the employees, (vi) workplace environment is to make safe, healthy and hazard free for creating interest of the employees in their work, and (vii) management is to take interest towards employees’ welfare.

The essence of good industrial relation lies in the bringing up of good working environment which gives a medium to understand each other (management and the employees) properly. Industrial relations create co-operative thinking and working to achieve the goal of the organization. Effective industrial relations increase the morale of the employers so that they can give their maximum for the organization.

Good industrial relations provides congenial atmosphere where employees think of their work and the management thinks of the employees’ welfare and the goal and objectives of the organization. Management plans to make the employees concentrate for achieving the goal and objectives of the organization. Employees’ welfare boosts employees’ morale and makes them satisfied. Satisfied employees are the most productive employees.

The industrial relations have a broad as well as narrow outlook. Originally, industrial relations have been broadly considered to include the relationships and interactions between the management and the employees. From this perspective, industrial relations have been covering all the aspects of the employment relationship, including human resource management, employee relations, and union-management relations. Now its meaning has become more specific and restricted. Accordingly, industrial relations pertains to the study and practice of collective bargaining, trade unionism, and employee-management relations, while human resource management is a separate, largely distinct field which deals with non-union employee relationships and the human resource practices and policies of the organization.

Industrial relations include both ‘industrial relations’ and ‘collective relations’ as well as the role of the statutory authorities in regulating these relations.  Hence, such a relationship is complex and multi-dimensional which rests on economic, social, psychological, ethical, occupational, political, and legal levels. There are two sets of factors which determine the state of industrial relations in an industrial organization. The first set of factors is known as ‘institutional factors’. It includes labour legislations, statutory policy relating to labour and industry, extent and stage of development of the  trade unions and organizational management, and the type of the social institutions. The second set of factors is known as ‘economic factors’. It includes the nature of economic organization, capitalist or social thinking, technology and equipment employed, the sources of demand and supply in the labour market, and the nature and composition of labour force etc.

The components of the industrial relations include (i) labour relations (ii) relations between the employees and the executives, (iii) human resource management practices, (iv) trade union activities, (v) collective bargaining, and (vi) compliance with regulatory and statutory requirements. Fig 1 shows these six components.

Fig 1 Components and influencing factors of industrial relations

The issues related with the industrial relations are complex and dynamic in nature. The interplay of various types of factors is involved for the achievement of harmonious industrial relations. The industrial relations are influenced by several factors such as technological, social, cultural, economic, political, and regulatory factors (Fig 1).

Technological factors include up-gradation to advanced technologies, mechanization, automation, rationalization, and computerization etc.

Social and cultural factors include population, religion, customs and tradition of people, race ethnic groups, cultures of various groups of people, social institutions like community, caste, creed, system of beliefs, attitudes of employees towards work, and system of power status etc.

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

Political 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.

Regulatory factors consist of institutional factors and statutory regulations. Institutional include government departments dealing with labour related issues and labour legislations, organizational vision and mission, collective agreement, local and higher courts etc. Statutory regulations include various employee related laws and regulations as well as governmental policies like industrial policies, labour policies, and economic policies etc. Changes taking place in these factors affect industrial relations either positively or negatively.  Fig 2 gives interaction of different factors affecting the industrial relations.

Fig 2 Interaction of different factors affecting industrial relations

Healthy industrial relations ensure the maintenance of industrial peace as well as avoidance of work stoppages and industrial strike in the organization besides aiming at promotion and development of healthy employee-management relations. It provides the employees a basis to perform, develop, and grow.

Healthy employee-management relations are the product of strong well organized human relation department, participation of the employees in the management, healthy and safe working environment, responsible functioning of the trade unions, and dignity given to the employees. Healthy employee-management relations cannot take place if there is a lack of faith and trust between various components of the industrial relations.

Mismanagement of men an materials, inadequate safety measures at the workplace, improper management of change, lack of proper training in the new technologies and equipment, absence of systems and procedures, favouritism in promotions, rewards, and placements, incompetent  line managers, lack of transparency, lack of proper managerial communications, lack of succession planning, lack of growth opportunities, lack of trust in the employees and trade unions, inadequate grievance procedure and industrial conflicts are some of the issues which adversely affects the industrial relations in the organization.

Effective communication system supports the management of the industrial relations in the organization especially in the case of industries where there is a hierarchical system. Communication system is to be sufficient to move upwards, downwards and laterally. Adequate communication is necessary to keep the employees informed about decision which affect their interest. Communication is also essential for the building of trust and for the team work among employees. Satisfying of the employees’ urge for self expression is essential for better industrial relations and this can be achieved with transparent and effective communication system in the organization.

Trade unions are important institutions in an organization and they play a vital role in providing proper working environment and congenial and harmonious industrial relations in the organization. The key role played by the trade unions in encouraging the increase in production, maintaining the discipline, and acting as agents of social welfare is well acknowledged both by the management and the employees. Trade unions work together with the employees and the management for a common purpose in a cooperative spirit avoiding conflicting situations. With a lot of technological developments taking place in recent years and with enhanced competition which the organization has to face in the present day scenario, trade unions have changed their approach and they have become now more innovative and creative. They have reoriented themselves towards employees’ based systems which focus on the employees’ motivation, empowerment, disciplined working and larger participation in the decision making processes and thus they aid in achieving harmonious industrial relations in the organization.

Industrial conflicts are inevitable in the industrial organizations. These conflicts normally have adverse impact on the industrial relations. Although a multitude of causes can lead to industrial conflicts, it is not always easy, in specific instances, to ascertain the particular cause or causes involved. The surface manifestations of unrest and dissatisfaction which appear to be responsible for work stoppage can have cover deep-seated and more basic causes which cannot be observed at first sight. Moreover, the relative importance of the causes, when more than one is present, is frequently very difficult to evaluate.

The main reasons for industrial conflicts can be due to (i) misunderstanding or differences in perception, (ii) lack of co operation, real or imaginary, (iii) problems associated with people having authority, (iv) compliance with the changing regulations and the policies, and (v) disagreements in the evaluation of the accomplishment of the agreed goal or set of goals.  Conflict can also have some positive aspects. It can give positive results such as (i) revelation of new aspect of an existing issue, (ii) improvement in long term communication between the concerned employees, and (iii) release of stifled emotion.

In some of the organizations, the industrial relations are threatened by the extensive industrial disharmony characterized by the unpleasant relationships between the management and the employees. A smooth industrial relations need that all the participants are to be motivated to work whole heartedly for making the system work. Normally, the reasons for industrial disputes are psychological, political, and economic. To achieve industrial peace, changes in the attitude of the management, employees, and trade unions are needed along with political and economic changes.

Normal causes of the industrial disputes which hurt the industrial relationships are (i) close mindedness of the management and the employees, (ii) irrational wage, wage system, and structure not mutually acceptable, (iii) poor working environment, low presence of safety, hygiene condi­tions and vitiated atmosphere for smooth working, (iv) insufficient human relations and lack of skilfulness on the part of the executives, (v) lack of control over the situations, erosion of discipline which rebounds on the performances of the employees and the industry as a whole, (vi) introduction of new technology, automation, mechanization, computerization etc. without proper consultations with the employees, (vii) favouritism, unequal workloads, disproportionate wage and responsibilities, (viii) adoption of unfair practices either by the management or by the employees and the trade unions, (ix) unjustifiable profit sharing and disregarding employees contribution towards the organizational gains, (x) frequent rivalries of trade unions over membership and foisting up of fake unions, (xi) strikes, lock out, lay off, and resulting retrenchment due to high handedness on the part of the concerned parties, (xii) throwing away the agreements and arrived settlements, (xiii) militant attitudes of the parties involved in the dispute, (xiv) partitioned attitude of the statutory authorities, and (xv) vested interests of the political parties who can indirectly control some the unions for their own gains or to get a hold on the industry.

In recent years there is shift in the mechanisms for keeping of healthy industrial relations in the organization. This shift in the mechanisms has become necessary because of enormous changes in the industrial culture which have taken place in the recent years. The reasons for the changes in the industrial culture are because of (i) increased organization size for improving its competitiveness, (ii) shifting of the functioning of the organization from single location to multi locations, (iii) the increased education and knowledge levels of the employees, (iv) very fast advancement in the technology which is taking place around the world, (v) increase in the competitions because of the growing industry, and  (vi) expanding of the markets and changes which are taking place in the concepts of marketing.

Shift in the mechanisms of industrial relations needs (i) complete transparency in the dealings by the management, employees, and the trade unions, (ii) change of the outlook of the management, employees, and the trade unions, and (iii changes in the regulatory provisions to align them to the technological and other changes which are taking place around the world.

Industrial relations can be harmonious or strained and hostile. In the latter case, there can be several causes which are rooted in historical, political and socio-economic factors, and in the attitudes of the management and the employers.

Strategies for the management of industrial relations

The strategies for the management of industrial relations need achieving maximum co-operation both from the management and the employees for minimizing the chances of industrial unrest and conflicts. The strategies are to consider both the external and the internal factors and based on these factors measures are required to be taken. These measures are to be helpful in building up a congenial work environment. While taking the measures, it is to be remembered that employees are human beings and this fact is to be recognized and appreciated so that the respect for the dignity of the employees is available when developing sound and harmonious industrial relations. Some of the useful strategies for the management of industrial relations are given below.

Objective of industrial harmony – Industrial relations strategy need to have industrial harmony as the prime objective for the achievement of the organizational goal and objectives. Management need to assign industrial harmony same importance as being assigned to other objectives. Further, all out efforts are needed to be made both by the management and the employees for the achievement of this objective.

Proactive approach of the management – Management is required to have proactive approach for the management of the industrial relations. For this approach, management is to anticipate the problem and take affirmative and timely steps for minimizing the impact of the problem. Management is not to wait for the problem to arrive for taking of the action. Postponing the decision for the action can have adverse effect on the industrial relations and in finding peaceful solution to the problem. Postponement of decisions results into taking reactive actions after the arrival of the problem and these actions compounds and aggravates the problem and causes more discontent.

Job security – A healthy industrial relations strategy is required to give importance to job security. Job security is one of the basic factors of employees’ satisfaction. The policy of hire and fire of some of the managements does not always work. Organization which creates an environment of insecurity of job cannot create in its employees the sense of belongingness and affiliation towards the organization. Insecure employees cannot make an effective contribution for achieving the goal and objectives of the organization since the employees’ morale is normally low. Considering all these, job insecurity has an adverse impact on the industrial relations.

Status of trade unions in the organization – Management is required to give due importance to the trade unions for the effective management of the industrial relations. Management is to accept and respect the trade unions since they carry the voice of the employees. At the same time, trade unions and their leaders are to keep the organizational interest in front of them while raising any issue before the management. Trade unions are required to use their bargaining power for constructive issues which do not have any negative perceptions and doubts. The common objective of the strategy of the managing industrial relations both for the management and the trade union is to be the peace and harmony in the organization.

Informal organizational relations – In the organizations which have peaceful and harmonious industrial relations, the management and the employees work together and keep the organizational interest before them. Strategy of managing industrial relations is to aim at informal relations for achieving efficient working and for better organizational productivity. The management is to encourage more of informal relations at workplace since such relations are always more productive as compared to formal relations. Informal relations give the employees a better opportunity to understand each other and a bond is created between the employees. Employees with high level of bonding and affiliation are more cooperative as they have a positive attitude and are ready to accept new challenges and responsibilities. Good informal relations at all the levels in the organization are needed for the control of poor industrial relations.

Effective communication – Strategy for managing industrial relations needs effective communication in the organization since without proper communication employees’ cooperation cannot be achieved in the organization. Communication is required to be open, direct, two way, and at all the levels specially when something new is introduced or a change is to takes place or when any decision is to be taken which has an impact on all the members of the organization. It is the normal human tendency to resist change but proper communication can help in minimizing resistance to change. Effective communication satisfies the employees of their urge for self expression which is essential for better industrial relations.

Training, development, and education – Strategy for managing industrial relations needs priority to be given for the employees’ training, development, and education. The employees’ training, development, and education programmes result into sound industrial relations in the organization. Organization which gives importance to the employees’ training, development, and education finds a positive attitude in the employees towards the organization. Training and development programmes are to be conducted at regular intervals for updating the employees knowledge with respect to technological developments, working and maintenance of the equipments, safety and housekeeping at the workplace, first aid, industrial relations and human relations both at the employees’ level and at the managerial level. Such programmes prepare the employees for any proposed change and they develop a positive attitude towards the change. Management has to appreciate the importance of such training programmes for aiding harmonious industrial relations in the organization.

Fair and liberal policy towards compensation, incentive, and rewards – Strategy for managing industrial relations is to be based upon fair and liberal compensation, incentive, and reward systems. Fairness is very important for harmonious industrial relations. The fair and liberal attitude of the management creates a sense of loyalty and job satisfaction among the employees.

Development of the spirit of collective bargaining and voluntary arbitration – The industrial relations is going to be peaceful and harmonious only when the differences between the management and the employees are settled through mutual negotiation and consultation rather than through the intervention of the third party. Industrial relations strategy is required to support the process of joint decision making and involve a democratic process in the organization. Flexible methods of adjustment to economic and technical changes in the industry are to be established. Also methods of voluntary arbitration are to be used very frequently. One of the main factors which acts as a hurdle to the maintenance and promotion of peaceful industrial relations at present is the increasing dependence on adjudication machinery as against collective bargaining, voluntary arbitration, and conciliation.

Maintenance of peaceful industrial relations – Strategy for managing industrial relations is to aim at permanent industrial peace in the organisation. The success of such a strategy depends both on the management and the employees. Industrial peace requires continuous efforts from both the sides and hence, it is a necessity to develop faith and trust in each other and the fine art of making adjustments.

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