Everything you need to know about the importance of industrial relations. Industrial relations are human relations in industry. The importance of the human factor in an industrial organisation is beyond question.
Better management of industrial relations in an industry is a sine qua non for the success of the industrial concern. It results in industrial peace which is essential for the countries, particularly for India, where the economy is being geared in a planned way to ameliorate the lot of the masses.
The importance of industrial relations can be studied under the following heads:-
1. Increased Production 2. Reduction in Industrial Disputes 3. Uninterrupted Production 4. Improves Morale 5. Effective Utilization of Resources 6. Mental Revolution 7. Reduced Wastage.
Importance of Industrial Relations: Increased Production, Uninterrupted Production, Improves Morale and a Few Others
Importance of Industrial Relations – With 6 Reasons Why Good Industrial Relations are Necessary
Industrial relations are the key for increased productivity in industrial establishments. For example, at the Alwar plant of Eicher Tractors, productivity went up from 32 per cent between 1994 and 1996 to 38 per cent in 1997. The production of engine cylinders has gone up from 29, 390 (in 1995-96) to 32, 501 (in 1996-97).This increase has been possible because of peaceful industrial relations.
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Industrial relations have moral dimensions too. It is unethical on the part of any management to take advantage of the helplessness of workers and exploit them. Unemployment compels workers – particularly illiterate and unskilled – to accept jobs, inhuman working conditions and niggardly wages, notwithstanding.
Thereby, industrial relations assume relevance in this context. One of its objectives is to protect workers’ interests and to improve their economic conditions.
Industrial relations seek to protect the rights of managers too. Managers expect workers to observe codes of discipline, not to join illegal strikes, not to indulge in damage to company’s property, not to assault supervisors or peers, and not to come inebriated to the workplace. Where a worker’s behavior deviates from expected lines, it is the management’s prerogative to take action.
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There is a set procedure for handling any act of indiscipline or indiscretion on the part of an employee, and if the management satisfies the procedure, it is justified in taking action or even dismissing the employee from service.
Good industrial relations are necessary for the following reasons:
1. To help in the economic progress of a country. The problem of an increase in productivity is essentially the problem of maintaining good industrial relations. That is why they form an important plank of the economic development plan of every civilized nation.
2. To help establish and maintain true industrial democracy which is a prerequisite for the establishment of a socialist society.
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3. To help management both in the formulation of informed labour relations policies and in their translation into action.
4. To encourage collective bargaining as a means of self-regulation. They consider the negotiation process as an educational opportunity, a chance both to learn and to teach.
5. To help government in making laws forbidding unfair practices of unions and employers. In a climate of good industrial relations, every party works for the solidarity of workers’ movement. Unions gain more strength and vitality.
There is no inter-union rivalry. Employers give unions their rightful recognition and encourage them to participate in all decisions. Unions divert their activities from fighting and belligerence to increasing the size of the distribution-cake and to make their members more informed (Workers’ education) on vital issues concerning them.
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6. To boost the discipline and morale of workers. Maintenance of discipline ensures orderliness, effectiveness, and economy in the use of resources. On the other hand, lack of discipline means waste, accidents, and confusion. It also means insubordination and non-cooperation.
Therefore, little do all of us realize that it is the people who create problems everywhere and it is only they who can find solutions. Viewing every problem seriously and resorting to manipulative style of industrial relations which emphasize the need to keep labour in check by floating stooge unions, buying up union leaders, and striking clandestine deals with powerful politicians do no good to managers or to the organizations they represent.
The field of industrial relations needs a new looks which is free from suspicion, prejudice and ill-will towards workers.
There has been an acute necessity in India, especially during the post-independence period, to industrialize her economy in order to tackle the multifarious socio-economic problems. In the words of Pandit Jawaharlal Nehru, “The alternative (to industrialization) is to remain in a backward, underdeveloped, poverty-stricken and a weak country. We can’t even retain our freedom without industrial growth”.
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Hence, one of the main goals of the Five Year Plans in India has been rapid industrialization and more employment in secondary and tertiary industries. It is also viewed that one of the essential steps for building up an economically free and self-sustaining India is, large- scale industrialization at a rapid and steady growth.
The First Five Year Plan has clearly demonstrated the fact that, “as economy organized for planned production and distribution, aiming at the realization of social justice and the welfare of masses can function effectively only in an atmosphere of industrial peace”.
Importance of Industrial Relations
In narrow sense, the term ‘industrial relations’ means relations between parties in industrial establishments. That means, nature of relationship established amongst the parties in the industry. Dictionary meaning of industrial relations is the relations between management and employees in industrial concerns. In short, the term, ‘industrial relations’ means the relations between employees and management arising out of day to day work in industry.
Different authors and experts have expressed their views on the concept of industrial relations. Dale Yoder views industrial relations, ‘as a whole field of relationship that exists because of the necessary collaboration of men and women in the employment process of an industry’.
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From the analysis of Dale Yoder’s opinion it is revealed that, the employees work in industry as per terms and conditions of employment and in the process of working in collaborative system both, management and employees develop relations with each other and this relationship as a whole is industrial relations.
International Labour Organization has stressed upon the relations between state, employers’ organizations and workers’ organization or the relationship between occupational organizations. John T Dunlop (1958) has expressed his views on the concept of industrial relations as the relations between three actors-employer, employees and government.
We may have clear idea about industrial relations from the following:
i. Industrial relations is the relation between management and employees.
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ii. The relationship may be positive, negative or mixed.
iii. Pattern of IRs is influenced by people’s value, belief, perception, aptitude, personality, attitudes, ethical value etc.
iv. State acts as regulator, facilitator in shaping IRs pattern in industry.
v. The relationship is based on economic, non-economic issues arising out of terms and conditions of employment as also practices not covered under the terms.
vi. Means of IRs are HR/IR policies, procedures, rules, regulations, legislations etc.
vii. Collective bargaining is the effective mechanism of shaping the pattern of industrial relations.
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viii. Changing economic scenario, technological advances, organization mission, strategic approach, trade unions’ role contribute a lot to influence IRs pattern.
A healthy industrial relation is essential for smooth functioning and success of the organization.
The importance of industrial relation is as follows:
1. Increased Production:
Healthy cordial relationship between the work force and the employer and management and amongst the workers within the workplace improves the workers’ productivity and efficiency. It motivates the workers to contribute their best towards attainment of organisational objectives. This leads to increase in production in the organisation.
2. Reduction in Industrial Disputes:
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Good industrial relation helps in reducing the industrial disputes. Good Industrial relationship removes dissatisfaction among the workers. Adequate financial and non-financial benefits, provision of employee participation in sharing of profits and of management and decision making, improved bargaining capacity through mutual negotiations and consultation with the management provides satisfaction to the workers.
Satisfied workers are less inclined towards entering into conflict with the management on issues like low wages, long work hours, and unhealthy work environment. Thus industrial unrest can be avoided.
3. Uninterrupted Production:
The most important benefit of industrial relations is that it ensures uninterrupted production. Reduced industrial dispute, industrial unrest, strike, lock outs can be avoided through good industrial relation. This ensures smooth running of the organization and continuous production.
4. Improves Morale:
Good industrial relation boosts the morale of the employees. Employees feel that they are part of the organization and their contribution will improve productivity of the organization. Good industrial relation brings about realization among the employees that gain to the organization will not only benefit the employer but will benefit them as well. This makes the workers work with zeal, energy and efficiency.
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5. Effective Utilization of Resources:
Good industrial relation helps in effective utilization of man, money and material. Improved employee morale, industrial peace, recognition of employee’s interest and reconciliation of employer’s and employee objectives and interest increased production with minimum wastage of resources.
Importance of Industrial Relations
Industrial relations are human relations in industry. The importance of the human factor in an industrial organisation is beyond question. Better management of industrial relations in an industry is a sine qua non for the success of the industrial concern. It results in industrial peace which is essential for the countries, particularly for India, where the economy is being geared in a planned way to ameliorate the lot of the masses.
Complete harmony between labour and capital may be a dream but quite a considerable amount of unrest and discontent among workers can be removed through efficient handling of industrial relations. It does not require much prudence to realise that in industry the human factor is most important; everywhere in production, man is needed, no matter how sophisticated machinery have been installed.
Interacting between management and workers and between worker and worker are regular features in industry and these constitute industrial relations. So, the importance of industrial relations in industry is self-evident and does not need any elucidation.
Industrial peace must be maintained at any cost to ensure better performance in industry. Industrial relations should be so maintained that it would contribute to increased productivity. Industrial relations have their impact not only on the industrial unit but also on the society.
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Industrial friction may inflict lasting injury on the workers. It may affect their careers. Families of workers are likely to suffer which must have repercussion on the society as a whole. Industrial unrests and conflicts foment class-hatred, embitter mutual relations, and put a hurdle in the development of the society and the nation.
As S. C. Kuchhal rightly put it, “the larger the range they cover and the more fundamental the commodities or services they are associated with, the more marked is their influence and damage”. So, there is the impact of industrial relations not only on the economy of a country but also on its society and culture.
In a conflict between the workers and the employer, it is not the fact that only one of the parties suffer, usually the workers. A close watch will reveal that it becomes a vital concern for the community also. It has been rightly emphasised that “in the heat of the daily conflict, workers and employers are apt to forget that they are only two limbs of the body politic and that there is always a third partner, in fact, the most dominant partner, namely, the community at large, to be reckoned with”.
So, to ensure social justice, industrial relations play a dominant role and thus the importance of industrial relations has been gaining more and more importance. Industrial relations contribute to world peace. Peace in industry is a powerful factor for good international relations.
Class struggles and class antagonisms have been responsible for bloody revolutions in the past, threatening world peace. When the entire world is striving for material well-being and when the nations of the world are moving in a planned way for industrial development; industrial relations are naturally drawing more and more attention. The recognition of the human factor in production as the supreme one puts a premium on the importance of industrial relations.
All the world over, the Government of different countries – wedded to the policy of doing welfare to the people of the country – are passing labour legislations with provisions for sufficient scope of ushering in industrial peace through various reconciliatory devices.
Importance of Industrial Relations – With the Need for Industrial Peace
There has been a phenomenal growth in employment, wages, benefits, working conditions, status of the worker, educational facilities etc. with the growth and spread of industry. Moreover, career patterns have also changed widely by providing change for wide varieties of jobs to the working communities. This has been possible only through fast industrial development which, in its turn, depends on industrial peace.
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There has been an acute necessity in India especially during the post-independence period, to industrialise her economy in order to tackle the multifarious socio-economic problems. In the words of Pandit Jawaharlal Nehru ‘The alternative (to industrialisation) is to remain in a backward, under-developed, poverty-stricken and a weak country. We can’t even retain our freedom without industrial growth.”
Hence, one of the main goals of the Five Year Plans in India has been rapid industrialisation and more employment in secondary and tertiary industries. It is also viewed that one of the essential steps for building up an economically free and self-sustaining India is, large- scale industrialisation at a rapid and steady growth.
With the attainment of independence and with the launching of planning era, serious and earnest efforts have been made towards rapid economic development of India. India has been… in the midst of an ambitious and critically important effort to raise the living standards of her people by an integrated… industrial and economic development plan. The size of industrial labour in India has increased remarkably due to rapid and planned industrial development.
The increase in industrial labour led to the formation and development of trade unions and various social groups. It has also been recognised that management without labour would be sterile and labour without management would be disorganised, ill-equipped and ineffective.
It is realised that the concrete cooperation between labour and management is highly essential to fulfill the individual, organisation and national goals. The First Five Year Plan has clearly demonstrated the fact that, an economy organised for planned production and distribution, aiming at the realisation of social justice and the welfare of masses can function effectively only in an atmosphere of industrial peace.
All these necessitate the maintenance of harmonious industrial relations so as to maintain higher productivity to fulfill the goals of the Five Year Plans in India. The investment in and the scope of industries in India have been growing plan after plan. Much of the success or failure of Indian Five Year Plans would be dependent on the maintenance of harmonious employee-employer relations. Frequent industrial conflicts not only affect the management and labour but also tend to impoverish the community as a whole.
They lead to wastage, class hatred, embitter mutual relations and inflict damages on the progress of the nation. They affect production and national income in an adverse manner. They also clog the progress the nation. They affect production and national income in an adverse manner. They also clog the progress and development of the nation. Further, it is not an exaggeration to say that if we are successful in industry the answer to class-antagonisms and world conflicts becomes easier.
Need for Industrial Peace:
The objectives of maintenance of industrial peace is not only to find out ways and means to solve conflicts or to settle differences but also to secure the unreserved co-operation of and goodwill among different groups in industry with a view to drive their energies and interest towards economically viable, commercially feasible, financially profitable and socially desirable channels.
It also aims at the development of a sense of mutual confidence, dependence and respect and at the same time encouraging them to come to closer to each other for removing misunderstandings, redressing grievances, if any, in a peaceful atmosphere and with open mind and fostering industrial pursuits for mutual benefits and social progress. But the maintenance of congenial industrial relations, particularly in a democratic society like ours is not only a significant task but also a complicated one.
Importance of Industrial Relations – Reduction in Industrial Disputes, Uninterrupted Production, High Morale, Mental Revolution and Reduced Wastage
The healthy industrial relations are key to the progress and success.
Their significance may be discussed as under:
1. Reduction in Industrial Disputes:
Good industrial relations reduce the industrial disputes. Disputes are reflections of the failure of basic human urges or motivations to secure adequate satisfaction or expression which are fully cured by good industrial relations. Strikes, lockouts, go-slow tactics, gherao and grievances are some of the reflections of industrial unrest which do not spring up in an atmosphere of industrial peace. It helps promoting cooperation and increasing production.
2. Uninterrupted Production:
The most important benefit of industrial relations is that this ensures continuity of production. This means, continuous employment for all from manager to workers. The resources are fully utilised, resulting in the maximum possible production. There is uninterrupted flow of income for all.
Smooth running of an industry is of vital importance for several other industries; to other industries if the products are intermediaries or inputs; to exporters if these are export goods; to consumers and workers, if these are goods of mass consumption.
3. High Morale:
Good industrial relations improve the morale of the employees. Employees work with great zeal with the feeling in mind that the interest of employer and employees is one and the same, i.e., to increase production. Every worker feels that he is a co-owner of the gains of industry. The employer in his turn must realise that the gains of industry are not for him along but they should be shared equally and generously with his workers.
In other words, complete unity of thought and action is the main achievement of industrial peace. It increases the place of workers in the society and their ego is satisfied. It naturally affects production because mighty cooperative efforts alone can produce great results.
4. Mental Revolution:
The main object of industrial relation is a complete mental revolution of workers and employees. The industrial peace lies ultimately in a transformed outlook on the part of both. It is the business of leadership in the ranks of workers, employees and Government to work out a new relationship in consonance with a spirit of true democracy.
Both should think themselves as partners of the industry and the role of workers in such a partnership should be recognised. On the other hand, workers must recognise employer’s authority. It will naturally have impact on production because they recognise the interest of each other.
5. Reduced Wastage:
Good industrial relations are maintained on the basis of cooperation and recognition of each other. It will help increase production. Wastages of man, material and machines are reduced to the minimum and thus national interest is protected.
Thus, it is evident that good industrial relations is the basis of higher production with minimum cost and higher profits. It also results in increased efficiency of workers. New and new projects may be introduced for the welfare of the workers and to promote the morale of the people at work.
An economy organised for planned production and distribution, aiming at the realisation of social justice and welfare of the masses can function effectively only in an atmosphere of industrial peace. If the twin objectives of rapid national development and increased social justice are to be achieved, there must be harmonious relationship between management and labour.
Importance of Industrial Relations
The concept of industrial relations has assumed more significance nowadays than in the past. The concept of union is no longer confined to the relationship between shop floor level worker and management due to increasing unionization of other classes of employees. We find union of bank officers, pilots, engineers and so on. These unions exert the similar kind of pressure like trade unions do.
Further, profile of workers have changed from uneducated to educated ones; from semi-skilled to skilled; from technical to executives in industrial sector more particularly in knowledge-based sector. These dynamics require more different IR strategy than the conventional one. Moreover IR strategy used to be reactive in the past. In other words, personnel manager jump into fire-fighting when industrial conflict erupts.
In today’s context, contemporary IR strategy needs to be proactive due to factors like pressure to enhance productivity, high degree of attrition, downsizing, increasing presence of women employees, competitiveness, etc.
Significance of IR:
Basically IR stems from employment relation. Hence it is broader in meaning and wider in scope. It is a dynamic and developing socio-economic process. As such, there are many definitions of IR.
Some important definitions of IR are presented below:
According to Dale Yoder, “IR is a designation of a whole field of relationship that exists because of the necessary collaboration of men and women in the employment processes of Industry”.
Armstrong has defined IR 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 the employees”.
In the opinion of V. B. Singh, “Industrial relations are an integral aspect of social relations arising out of employer-employee interaction in modern industries which are regulated by State in varying degrees, in conjunction with organized social forces and influenced by the existing institutions. This involves a study of the State, the legal system, and the workers’ and employer’s organizations at the institutional level; and of the patterns of industrial organization (including management), capital structure (including technology), compensation of the labour force and study of market forces all at the economic level”.
Encyclopedia Britannica defined IR more elaborately as “The concept of industrial relation has been extended to denote the relations of the State with employers, workers and other organizations. The subject, therefore, includes individual relations and joint consultation between employers and workers at their places of work, collective relations between employers and trade unions; and the part played by the State in regulating these relations”.
IR can now safely be defined as a coin having two faces- cooperation and conflict. This relationship undergoes change from thesis to antithesis and then to synthesis. Thus, the relationship starting with cooperation soon changes into conflict and after its resolution again changes into cooperation. This changing process becomes a continuous feature in industrial system and makes IR concept a dynamic and evolving one.
Good IR helps to run an industry effectively and successfully.
The importance of IR can be understood from the following justification:
1. Nurturing Industrial Peace – Both employer and employees sit across the table and thrash out issues of difference. As a result, doubts and suspicions are clarified to the full understanding of each other. Thus, IR paves way for smooth relation between the traditional warring groups.
2. Promotion of Industrial Harmony – Industrial democracy is practised by various workers’ participation schemes like collective bargaining, works committee, quality circle, functional committee, board of directors scheme, joint consultation and employee stock option plans. These mechanisms enable the workers to give their best to the organization.
3. Benefits to Workers – Harmonious industrial relations climate ensures implementation of welfare measures, better service terms, better physical environment, implementation of social security schemes, higher wages, optimum work load, bonus, fringe benefits, etc.
4. Benefits to Management – Management gets benefit from strikeless environment, introduction of change, higher productivity, minimum absenteeism and turnover, disciplined work force, free flow of communication, higher profit and health maximization, high employee morale, etc.
Importance of Industrial Relations – 7 Important Points from which the Importance of Good Industrial Relations can be Judged
Industrial disputes disrupt the flow of production; bring strikes, gheraoes and lockouts, organized demonstration, picketing, etc. Thus good industrial relation plays a vital role in establishing industrial peace, industrial discipline and industrial democracy.
All the three factors are very much required for the smooth and better economic development of a country. As such the main objective of industrial relations is to establish good and harmonious labour management relations which promote mutual understanding, mutual confidence and resolve the mutual differences.
Today labour is no more an unorganized mass of ignorant and unconscious workers ready to obey the arbitrary and discretionary distates of the management. Management has to deal with them not only as individuals but also as members of organized social group having human dignity and self-respect.
Hence, one of the major objectives of industrial relations is to change the traditional and contradictory views of labour and management towards each other, so that they may develop mutual understanding and cooperation and both may work in the best interests of enterprise. Good industrial relations bring industrial peace, which is turn tends to increase production.
Good industrial relations increase the morale of the workers and motivate the workers to work more. When parties think of mutual interests, it gives more changes of newer development. Any problem is solved by mutual consent which develops many incentive schemes, such as – workers’ participation in management, profit sharing, suggestion schemes and so on.
These all bring job satisfaction to the workers and they all put positive effective on the production. From all these we can conclude that good industrial relations certainly boost up the production and improves the quality and quantity both. They increase labour efficiency also. An increase in the morale of workers reduces per unit cost of production too. Thus we can say that industrial relations have far-reaching impact on the production.
The importance of good industrial relations can be judged from the following points:
(a) Develops good working environment.
(b) Develops sense of cooperation.
(c) Creates sense of commitment.
(d) Workers work sincerely.
(e) Avoids labour problems.
(f) Controls industrial disputes and maintains industrial peace.
(g) Accidents and wastes are reduced.
(h) Production and productivity improves.
(i) Quality of work improves,
(j) Profit of the firm goes high.
(k) Contributes to national economy.