Everything you need to know about industrial relations. Industrial relations mean relations between labourers and managements or the term industrial relations is used to express the relations between trade unions and employers’ organisations.

These relations cannot come into being without the existence of employers’ class and labourers class. Thus, the existence of industrial relations is not possible without an industrial institute or organisation.

According to the International Labour Organisation (ILO), “Industrial Relations deal with either the relationship between the state and employers’ and workers’ organisations or the relation between the occupational organisations themselves.”

The concept of industrial relations has been extended to denote the relations of the state with employers, workers, and their organisations.


The subject therefore includes individual relations and joint consultations between employers and work people at their work place, collective relations between employers and their organisations and trade unions and part played by the State in regulating these relations.

In this article we will discuss about industrial relations. Learn about:-

1. Introduction to Industrial Relations 2. Meaning of Industrial Relations 3. Definition 4. Concept and Scope 5. Goals 6. Objectives 7. Need 8. Parties 9. Importance 10. Functions 11. Factors Responsible 12. Approaches 13. Perspectives 14. Model 15. Causes 16. Effects and 17. Suggestions to Improve.

Industrial Relations: Meaning, Nature, Concept, Scope, Importance, Functions, Approaches and Suggestions to Improve


  1. Introduction to Industrial Relations
  2. Meaning of Industrial Relations
  3. Definition to Industrial Relations
  4. Concept and Scope of Industrial Relations
  5. Goals of Industrial Relations
  6. Objectives of Industrial Relations
  7. Need for Healthy Industrial Relations
  8. Parties to Industrial Relations
  9. Importance of Industrial Relations
  10. Functions of Industrial Relations
  11. Factors Responsible for Industrial Relations
  12. Approaches to Industrial Relations
  13. Perspectives of Industrial Relations
  14. Models of Industrial Relations
  15. Causes of Poor Industrial Relations
  16. Effects of Poor Industrial Relations
  17. Suggestions to Improve Industrial Relations

Industrial Relations – Introduction

Industrial organisation is a human organisation. In order to achieve its objective what is needed is that all human groups engaged in industrial organisation should be related to each other and work with a spirit of co-operation. Industrial relations are the product of industrial economy. Ordinarily, industrial relations mean all those relations which exist in industrial environment.


Industrial economy has divided the society into two classes — employers’ class and workers’ class. Workers’ class is represented by Trade Unions and Employers’ class is represented by Management associations.

Industrial relations mean relations between labourers and managements or the term industrial relations is used to express the relations between trade unions and employers’ organisations. These relations cannot come into being without the existence of employers’ class and labourers class. Thus, the existence of industrial relations is not possible without an industrial institute or organisation.

Origin of industrial relations is the result of Industrial Revolution. There used to be direct and personal contact between the employer and the workers, in the initial stage of Industrial Revolution. On account of this direct and personal relations between both the parties, the problem of Industrial Relations was almost negligible. However, this direct contact between the two parties came to an end with the advent of industrialization and large-scale production process.


In the early stages, government also did not interfere in these relations. As a result, several industrial evils like low wages, long hours of work, inhuman working conditions, exploitation of women and children and inhuman treatment with the workers, etc., came to the fore. In order to safeguard their interest’s labourers organised themselves and thus Trade Unions came into existence. Labourers used the weapon of strikes and employers that of lock-outs to protect their respective interests.

Consequently, industrial conflicts gathered momentum. It had an adverse effect on the economic, social and political situation of the country. Today, government has been playing an important role in regulating these relations. In this way, industrial relations are no longer confined to relations between the labour and the employer alone. Government or state is also the third and significant party. Industrial Relations can thus be expressed as complex inter-relations among labour, management and government.

Industrial Relations – Meaning

The term industrial relations refer to the relationship between management and labour or among employees and their organisation that characterise or grow out of employment.

Two parties of industrial relations i.e. labour and management need to work in a spirit of co­operation, adjustment and accommodation Dale Yoder has defined it as, “a relationship between management and employees or among employees and their organisation, that characteristic and grow out of employment”.


While trade unions are voluntary organisation of workers or employers formed, to promote and protect their interest, through collective action.

If we analyse the above definition, the important parts of trade unions mean:

a. A combination of workers or employers

b. Such a combination could be permanent or temporary


c. Could include federation of two or more unions, and

d. To regulate relations among workmen, between workmen and employers or among employers themselves. Managers have to make several strategic choices regarding the role of unions in the organisation.

The most important choices are as follows the manager:

(i) Must decide whether the organisation should remain union-free or allow unionism.


(ii) If decide that the company should remain union free, they must take steps to keep unions away from the organisation.

(iii) If unionism should be allowed, then it must be decided as to what type of union management relationship they want. Once determined, they must take appropriate steps to make this type of relationship a reality.

(iv) The management must also choose the type of tactic to use while negotiating a new wage settlement.

The term “industrial relations” indicates the relationship between labour and management arising out of employment. In order to deliver results, both labour and management, should work in an atmosphere of cooperation, adjustment and accommodation. In their own mutual interest, certain rules for co-existence are formed and adhered to. Over the years, the State has also come to play a major role in industrial relations – one, as an initiator of policies and the other, as an employer by setting up an extremely large public sector.


The relations between management and labour are impacted by a variety of complex issues that are discussed below:

1. Employer-Employee Interactions:

Industrial relations arise out of em­ployer-employee interactions. These relations cannot exist without the basic building blocks, i.e., the employer on one side and the employees on the other side.

2. Web of Rules:

Industrial relations are a ‘web of rules’ formed by the interaction of the government, the industry and the labour. They include the relations between employer and employees and between employers’ associations, trade unions as well as the State.

3. Multidimensional:


Industrial relations are fairly multi-dimensional in nature as they are influenced, by a complex set of institutional, economic and technological factors.

i. Institutional Factors:

These factors include government policy, la­bour legislation, voluntary courts, collective agreements, employee courts, employers’ federations, social institutions like community, caste, joint family, creed, system of beliefs, attitudes of workers, system of power, status, etc.

ii. Economic Factors:

These factors include economic organisations, like capitalist, communist, mixed, etc., the structure of labour force, demand for and supply of labour force, etc.

iii. Technological Factors:


These factors include mechanisation, automation, rationalisation, computerisation etc.

iv. Dynamic and Changing:

Industrial relations change with the times, generally keeping pace with the expectations of employees, trade unions, employers’ associations, and other economic and social institutions in a society. Apart from the legal framework, these societal forces generally influence the direction of industrial re­lations within a country.

v. Spirit of Compromise and Accommodation:

The industrial relations system is characterized by forces of conflict and compromise on either side. In the larger interests of society, both the employer and the employees must put out fires amicably and get along with each other in a spirit of compromise and accommodation. The individual differences and disagreements must be dissolved through persuasion and even pressure. The factors responsible for conflictful situations need to be resolved through constructive means

vi. Government’s Role:


The government influences and shapes indus­trial relations with the help of laws, rules, agreements, awards of courts and emphasis on usages, customs, traditions, as well as the implementation of its policies and interference through executive and judicial machinery.

vii. Wide Coverage:

The scope of industrial relations is wide enough to cover a vast territory comprising of grievances, disciplinary measures, ethics, standing orders, collective bargaining, partici­patory schemes, dispute settlement mechanisms etc.

viii. Interactive and Consultative in Nature:

Industrial relations in­cludes individual relations and joint consultation between labour, management, unions, the state etc. It pinpoints the importance of compromise and accommodation in place of conflict and contro­versy in resolving disputes between labour and management.

Industrial Relations – Definition by ILO

It is that part of management which is concerned with the manpower of the organisation. The fields of IR includes the study of workers and their trade unions, management, employee’s associations and the state institutions concerned with the regulation of employment.


Industrial Relation means industrial relations means the relationship between employees and management in the day-to-day working of industry. But the concept has a wide meaning. When taken in the wider sense, industrial relations are a “set of functional interdependence involving historical, economic, social psychological, demographic, technological, occupational, political and legal variables.” According to Dale Yoder, industrial relations are a “whole field of relationship that exists because of the necessary collaboration of men and women in the employment process of an industry.”

According to the International Labour Organisation (ILO), “Industrial Relations deal with either the relationship between the state and employers’ and workers’ organisations or the relation between the occupational organisations themselves.” The concept of industrial relations has been extended to denote the relations of the state with employers, workers, and their organisations. The subject therefore includes individual relations and joint consultations between employers and work people at their work place, collective relations between employers and their organisations and trade unions and part played by the State in regulating these relations.

Industrial Relations – Concept and Scope

The term ‘Industrial Relations’ refers to the collective relationship between management, employees and government in any industrial or non-industrial organization. Individual relationships of workers with their management are not within the scope of industrial relations.

In Edwin B. Flippo’s view the term’ Industrial relations’ refers to all types of relations that exist in an industrial enterprise, and they are constituted by employer and employees. The term denotes all types of intra-group relations within and inter- group relation between these constituent groups.

These relations can be formal, informal and mixed relations:

(a) Formal Relations:


Formal industrial relations are those which are established among individuals in an industry by the rules and regulations of the enterprise.

(b) Informal Relations:

The personal and individualized relations among the members of management and employees are called informal relations.

(c) Mixed Relations:

Relations which are neither purely formal nor purely informal. Such relations are called mixed relations.

J.H. Richardson gives the most exhaustive description of industrial relations. He says,” The subject of industrial relations includes individual relations and joint consultations between employers and work people at the place of work, collective relations between employers and their organizations and the trade unions and the part played by the State in regulating these relations.

Tead and Matcalf give a formal definition of industrial relations as follows:

“Industrial relationship is the composite result of the attitudes and approaches of the employers and employees towards each other with regard to the planning, supervision, direction and coordination of the activities of an organization with a minimum of human efforts and friction, with an animating spirit of co-operation, and with proper regard for the genuine well-being of all the members of the organization.”

In other words industrial relations is that part of management which is related with the human resources of the enterprise. It is, thus, the relationship created at different levels of the organization by the diverse, complex and composite needs and aspirations and attitudes and approaches among the participants. It is highly complex and dynamic process of relationships involving not only employees and managements, but also their collective forums and the State.

The four main parties associated with any industrial relations system are the workers, the managements, the organizations of workers and managements, and the State. And the term industrial relations denote an organized relationship between organized parties representing employers and employees regarding issues of collective interest. With the rise and growth of professional management, the representatives of employers and those of the employees represent the industrial relations.

But the scope of industrial relations cannot be restricted to common labor-management relations or employer-employee relations. It is a comprehensive and total concept embracing the sum total of relations at different levels of the organization structure. Specifically, it denotes relations among workers themselves within the class of employees, relations among the managements within the managerial class, and relations between two distinct classes of workers and management. It denotes all types of inter-group and intra-group relations within industry.

Industrial Relations – Goals: Development of Healthy Labour-Management Relations, Maintenance of Industrial Peace and Industrial Democracy

1. Development of Healthy Labour-Management Relations:

(i) Trade Unions and Employers Associations:

Strong, well-organized, democratic and responsible trade unions and associations of employers in an industry bring about a greater sense of job security among the employees and assist in the workers’ increased participation in decision-making regarding issues directly affecting them. They also try to create favourable conditions for negotiations, consultations and discussions with employers to pave the way to better labour-management relations.

(ii) Collective Bargaining and a Willingness to Accept Voluntary Arbitration:

Collective bargaining, plant discipline and satisfactory trade union relations are the three principal items which determine the quality of industrial relations. Collective bargaining presumes an equality of status between two contending groups conflicting with each other. It prepares the ground for mutual trust and goodwill to ensure fair discussion, consultation and negotiation on matters of common interest to both industry and labour.

(iii) The Welfare Work Undertaken by the Government, the Trade Unions and Employers:

It creates and maintains good and healthy labour-management relations and creates an atmosphere conducive for industrial peace.

2. Maintenance of Industrial Peace:

It can be established by the following:

(i) Machinery for the Prevention and Settlement of Industrial Disputes:

It is provided in the form of legislative enactments and administrative action, works committees and joint management councils, conciliation officers and conciliation boards, labour courts, industrial tribunals, national tribunals, courts of enquiry and voluntary arbitration.

(ii) Adjudicator:

The government has armed itself with appropriate powers to refer disputes to an adjudicator when the situation gets out of control and the industry is faced with economic collapse because of strikes, or when it is urgent and in the public interest to refer disputes for adjudication.

(iii) Maintenance of Status Quo:

The government has the power to maintain the status quo, and exercise it when it discovers that even after a dispute has been referred to an adjudicator, a strike or lockout continues which is likely to adversely affect the economic life of the community or create chaotic conditions in an industry.

(iv) Bipartite and Tripartite Forms of the Settlement of Disputes:

These operate on the basis of the code of discipline in industry, the code of conduct, the code of efficiency and welfare, and on the basis of model standing orders, grievance redressal procedure and the grant of voluntary recognition to trade unions by industrial organizations.

(v) Implementation and Evaluation Committees:

These are created and maintained for the specific purposes of ensuring the implementation of agreements, settlements and awards, and of looking into any violations of statutory provisions of the various labour laws.

3. Industrial Democracy:

It can be established by the following:

(i) Joint Management Councils:

These endeavour to improve the working and living conditions of employees, to step up their productivity, to encourage suggestions from workers, to assist in the administration of labour laws and agreements, to serve as a channel of communication between management and workers, and to create in the latter a sense of participation in the decision-making process and a sense of belonging to the organization.

(ii) Recognition of Human Rights in an Industry:

The era when labour was regarded as a commodity is long by-gone. Today it is a recognized fact that human beings should be treated with respect and dignity. Workers should be recognized as valuable assets of the organization and they should be given a chance to satisfy their urge for self-expression through close association with the management.

(iii) Increased Labour Productivity:

The factors which contribute to higher productivity are improvements in the efforts and skill of the workers, the production design and the process of manufacture, in the materials and equipment used, in layout and methods of work, research and techniques of manufacture, the management methods and practices.

(iv) Suitable Social Environment:

Workers may adjust and adapt themselves according to the work environment of the organization where they are employed. The work environment has a profound influence on industrial relations. A congenial atmosphere and comfortable working conditions would stimulate the workers to perform better and improve industrial relations.

Industrial Relations – Objectives

The primary objective of industrial relations is to bring about sound and healthy relations between employers and employees.

In addition to the primary objective, industrial relations aim:

(i) To facilitate increased production and productivity;

(ii) To safeguard the rights and interests of both labor and management by enlisting their co-operation;

(iii) To avoid unhealthy atmosphere in the industry, especially work stoppages, go-slows, gheraos, strikes, lockouts; and

(iv) To establish and maintain industrial democracy;

(v) To achieve a sound, harmonious and mutually beneficial labor management relations.

(vi) To correct an imbalanced, disordered and maladjusted social and economic order with a view to reshape the complex socio-economic relationships following technological and economic progress;

(vii) To control and discipline and parties concerned and adjust their conflicting interests.

(viii) Improvement in the economic conditions of workers in the existing state of industrial management and political government;

(ix) To regulate production and promoting harmonious industrial relations;

(x) Socialization or rationalization of industries by making the state itself a major employer; and

(xi) Vesting of a proprietary interest of the workers in the industries in which they are employed.

Industrial RelationsNeed

Industrialisation has altered the lives of workers all over the globe quite dramatically. The worker with an original brain is made to work on a miniscule, negligible portion of a piece of operation endlessly, repeatedly and with frustrating regularity. Apart from loss of freedom to do things on his own, the worker is made to carry outwork that is totally monotonous and terribly boring. As the pressure of work increased, interactions between workers got reduced leaving very little space for the worker to breathe easily.

The killing routine increased tensions and turned the work spot into a hot bed of controversy. In fact, conflict and controversy have been essential elements of industrial work. The famous Hawthorne Experiments stressed the importance of turning the factory into a funny little world through constant interaction, meaningful exchange of opinions, thoughts and feelings between workers.

Going a step further, the Human Resources Philosophy stressed the need to motivate workers to give their best through appropriate rewards and incentives – granted in a congenial atmosphere of mutual trust and confidence. Instead of focusing attention on policing and supervising workers’ performance, management should try to concentrate on embellishing the work carried out by workers by making it interesting and challenging.

Human Resource Management emphasises the need to having a healthy dialogue, friendly interaction and mutual trust between labour and management at all times. A healthy industrial climate is essential for carrying out work smoothly and for laying a solid foundation for lasting peace. Good industrial relations help reduce tensions, conflicts and avoidable incidents of violence at the work spot.

When there is a conducive industrial climate, workers can put their best foot forward and take up work with zeal, enthusiasm and commitment. There is also a compelling need, nowadays, for management to realise that the fruits of progress must be shared with workers — if the intent is to grow bigger and bigger and survive in a terribly competitive global environment.

Such a step would rekindle the spirits of workers and make them realise the importance of moving hand in hand with management in order to realise their basic economic requirements on a long lasting basis. The feeling of having become a part owner of a growing enterprise would spur every worker to superior performance. Significant productivity gains could come through cooperative efforts.

In fact, the main objective of “industrial relations” is to bring about a radical transformation in the outlook of employees and employers — as one of partners in a collective effort meant to satisfy the inherent needs of both. Healthy industrial relations, thus, pave the way for increased efficiency, significant productivity gains and higher profits.

Industrial Relations – Parties: Workers, Employers and Government

Industrial growth and industrial peace both depend heavily on Industrial Relations. These relations arise as a result of employment of employees in an organisation. Basically, these relations are between two parties; labour class and employer class but state also plays an important role in regulating these relations.

In the words of John-Dunlop, “Industrial Societies necessarily create Industrial Relations, defined as the complex of inter-relations among workers, managers and Government.” Thus, in the process of Industrial Relations there are three important parties- Workers, Employers and Government.

(1) Workers and their Organisations:

Worker class and labour unions have an important role in establishing industrial relations. It pays attention to the individual qualities of the labourers, such as, their cultural level, education level, ability, skill, interest in work, etc. In the organisation, labourers are represented by Trade Unions.

These unions protect the economic and social interests of their members and put pressure on the employers to accede to their demands. Ordinarily, Trade Unions are affiliated to one political party or the other. Responsible and powerful trade unions co-operate with the management and play a significant role in establishing healthy industrial relations.

(2) Employers and their Organisations:

Employers have also an important role in maintaining good industrial relations. To increase their collective bargaining power, employers have well-knit organisations in different industries. These organisations fight with the government and the trade unions for their interest and participate in different committees constituted by the government for the purpose of good industrial relations.

(3) Role of the Government:

Economic development of the country depends largely on industrial peace. It is the responsibility of the government to maintain industrial peace. Maintaining of industrial peace in a country depends on the political pattern of its government. Through legislative measures like fair wages, hours of work, conditions of work, bonus, etc. government makes significant contribution towards healthy industrial relations.

First two parties – workers and their organisations and employers and their organisations – are directly involved in industrial relations. To maintain discipline and order in the organisation and to issue directives is the responsibility of the employers. To carry them out is the responsibility of the labourers. Organisations of the labourers may be of formal or informal kind. In industrial relations the third party is government. Its functions is to formulate and enforce rules and regulations.

Ordinarily, government does not interfere in the internal activities of the first two parties. Establishing of good industrial relations is the joint responsibility of the workers, management and government. If there is complete harmony in the view point and approach of all the three concerned parties, the industrial relations will be cordial and comforting. In case, they differ in their opinion and approach, the possibility of instability in their relation cannot be ruled out.

Industrial Relations – Importance

The industrial relations in any country are very significant.

Good industrial relations are necessary for the following reasons:

(i) Good industrial relations help in the economic progress of a country. The problem of enhancing productivity is necessarily the problem of establishing and maintaining good industrial relation. Because of this, they form an important part of the economic development plan of every civilized nation.

(ii) Healthy industrial relations are also essential to help establish and maintain true industrial democracy which is a prerequisite for the establishment of a socialist society.

(iii) In order to help management both in the formulation of informed labor relations policies and in their translation into action.

(iv) Cordial industrial relations encourage collective bargaining as a means of self- regulation. They consider the negotiation as an educational opportunity, an opportunity both to learn and to teach.

(v) Peaceful industrial relations assist government in making laws forbidding unfair practices of unions and employers. In a climate of good industrial relations every part works for the solidarity of workers’ movement. Unions acquire more strength and vitality. Inter-union rivalry remains no more. Employees give unions their rightful recognition and encourage them to participate in all decision. Unions divert their efforts from righting to increasing the size of the whole pie and to making their members more informed on important issues relating to them.

(vi) Good industrial relations also help boost the discipline and morale of workers. Maintenance of discipline ensures orderliness, effectiveness and economy in the use of resources. On the other side, absence of discipline means indiscipline, accidents, wastes, loss and confusion.

Industrial RelationsFunctions

i. Communication is to be established between workers and the management in order to bridge the traditional gulf between the two.

ii. To establish a rapport between managers and the managed.

iii. To ensure creative contribution of trade unions to avoid industrial conflicts, to safeguard the interests of workers on the one hand and the management on the other hand, to avoid unhealthy, unethical atmosphere in an industry.

iv. To lay down such considerations that may promote understanding, creativity and co-operativeness to raise industrial productivity, to ensure better workers’ participation.

The industrial scene is tormented by lack of central values, class struggle, competition and unhealthy compromisers. Even in the latter part of the century, the management considers trade unions as a nuisance or a hurdle. The trade unions on the other hand, considered the management and managers as exploiters. Workers are misled by their trade union leaders on the one hand and they allow themselves to be exploited by management.

The trade unions are organs of political organisations and they follow the ideologies of those organisations even at the cost of their own interest in the industry. As a result, the collective bargaining ends in either aggressive bargaining or futile waste of time. These and many other considerations led the I.L.O. to formulate certain principles for promoting healthy industrial relations.

They are:

(i) Good labour-management relations depend on employer’s and trade union’s capacity to deal with their mutual problems freely, independently and responsibly.

(ii) The trade unions and the employers and their organisations should be interested in resolving their problems through collective bargaining and if necessary with the assistance of proper government agency.

(iii) Workers and employers’ organisations should be desirous of associating with government agencies taking into consideration the general, social, public and economic measures affecting employers and workers relations.

Industrial Relations – Factors: The Employer, Workman, Union, Government and the Consumer

The following the major factors of industrial relations:

1. The employer,

2. Workman,

3. Union,

4. Government, and

5. The Consumer

1. The Employer:

Employer is the main factor responsible for generating employment and for risking his capital and most of them management business. This category includes proprietors, partners, joint stock companies, state and central governments. The outlook of these employers varies proportionately to the stakes they have in the finances of the enterprise. A proprietor and a partner will more or less have identical approach towards industrial relations whereas the outlook of joint- stock company on industrial relations is altogether different.

In these companies the employer is not visible and if at all, in the form of directors. In such cases it is professional manager who guides and moderates the industrial relations policy. Similar is the case in the public sector organization where the Government is the owner of the enterprise. The destinies of the industrial relations are moderated by the professional manager but to a certain extent constantly guided by the government in power.

2. Workman:

Workmen are the other important factor that influences the industrial relation. As they get in to an organization they get along with them individual work ethos, political hues, ideological nuances, temperamental tantrums and learning towards virtue, good behavior, good culture or criminal tendencies. The workmen are the constituents of the unions and associations and are accountable and responsible to their family for earning a living. Naturally, since the work-wage is the only source of income it is in their interest to earn as much as possible and demand as big a share as possible from the profits of the organization.

3. Union:

The Union is the collective expression of the workmen in the organization and many a time the objective of the union does not identify with that of workmen. It is necessary that we differentiate the union from the rank and file of the workmen. The unions are institutions and organizations while the workers are individuals. The unions many a time are headed by politicians and act as pressure groups in legislating and in decision-making. Unions have been given legal existence under the Trade Union Act to negotiate and act as pressure groups to bring the employers to settlement on financial and non-financial issues concerning the workman. Unions are also organized at the National level.

4. Government:

Government in our country has been playing a very major role in regulating and guiding the destinies of the Industrial relations. The rationale behind such a role of the state is that ours is a developing economy and in such a situation, community who is the consumer of the joint product of management and labor cannot divert itself from the responsibility of directing and controlling the factors, i.e., the employer and the worker who are responsible for the development of the economy of the country.

The government by and large controls the industrial relations for:

(i) Ensuring the community essential goods and services at reasonable cost;

(ii) Avoiding dislocation of public utility services;

(iii) Saving the workman from exploitation especially the unions are weak and are not in a position to negotiate their demands with the employers;

(iv) Ensuring planned economic growth of the country and saving its limited resources from being frittered away by strikes and lockouts.

5. Consumer:

Consumer is a much neglected person in Society but in some place he has vital say. In essential services, specially, consumer brings about pressure on both the employer as well as the workmen for a speedy solution of industrial problems.

Industrial Relations Approaches Explaining the Multidimensional Nature of Industrial Relations

Industrial relations are the result of several socio-economic, psychological and political factors.

Various approaches have, therefore, been used to explain the multidimensional nature of industrial relations:

I. Psychological Approach:

According to psychologists, the problems of industrial relations are attributable to the differences in the perceptions of labour and management. Both parties tend to look at factors influ­encing their relations – i.e. wages, benefits, working conditions etc. – in different ways. Dissatisfaction with pay, benefits, services, conditions of work compel workers to turn aggressive and resort to strikes, gheraos etc.

Employers adopt rigid postures and draw the shutters down when they find the regulatory framework to be restrictive, workers to be highly demanding and market forces to be unmanageable. Apart from economic issues, motives such as the need to gain prestige, power, status, recognition also compel people to go in different directions, sacrificing the broader organisational interests.

II. Sociological Approach:

A number of sociological factors such as the value system, customs, and traditions affect the relations between labour and management. Problems such as urban congestion, chronic shortage of affordable dwelling units, convenient transportation system, pollution, disintegration of joint family system, etc., add misery to the lives of workers.

Accepted societal norms, traditions and customs are pushed to the wall in such a scenario. Culture pollution sets in, rubbing workers the wrong way. Such sociological changes impact industrial life significantly, forcing parties to assess, analyse and find solutions to conflictful situations on a continuous basis.

III. Human Relations Approach:

According to the human relations approach, individuals are motivated by a variety of social and psychological factors, not just earnings. Human behaviour is influenced by feelings, sentiments, and attitudes. Informal work groups play an important role in shaping the attitudes and performance of individual workers. People do not like the idea of being treated as machines. To reduce friction and conflict in the workplace, managers need to possess effective social skills.

They must explain why a particular job is important, allow workers to partici­pate in work processes fully, encourage work groups to flourish and try their best to keep workers happy. Economic and non-economic rewards must be used to meet the physiological and psychological requirements of workers from time to time. Every attempt must be made to integrate the individual objectives with overall organisational objectives to avoid conflict and controversy in industrial life.

IV. Giri Approach:

According to V.V. Giri (Former President of India), collective bargaining and joint negotiations be used to settle disputes between labour and management. Outside interference must be avoided at all costs while resolving differences between the parties. Trade unions should use voluntary arbitration in place of compulsory adjudication to resolve disputes.

Giri observed that ‘there should be a bipartite machin­ery in every industry and every unit of the industry to settle differences from time to time with active encouragement of government. Outside interference should not encroach upon industrial peace’.

V. Gandhian Approach:

Gandhi ji accepted the worker’s right to strike but cautioned that this right be exercised in just cause and in a peaceful, non-violent fashion. The trusteeship theory advocated by him highlights the fact that wealth belongs to society and not to the owners of an enter­prise. Owners are there to serve the interests of society. If they fail to pay minimum wages to workers, workers must appeal to their conscience.

If this does not produce results, they should resort to non-violent non-cooperation (Satyagraha). Before adopting this strategy, workers must believe in their collective strength and note the crucial point that without their active cooperation, capitalists cannot achieve results. The capitalist, in his own self-interest, is expected to hold industry in trust for the society, treating workers as partners and co-trustees in a progressive venture.

Industrial Relation – Three Types of Perspectives: Unitary Perspective, Pluralistic-Perspective and Marxist Perspective

IR has three types of perspectives, namely:

1. Unitary Perspective:

In unitarism, the organization is perceived as an integrated and harmonious system. A core assumption of unitary approach is that management and staff, and all members of the organization share the common objectives, interests and purposes; thus working together, hand-in-hand, towards the achievement of the shared mutual goals.

Furthermore, unitarism has a paternalistic approach where it demands loyalty of all employees towards the organization and the management as a whole. Trade unions are deemed as unnecessary and conflict is perceived as disruptive.

From employee point of view, unitary approach means that:

i. Working practices should be flexible. Employees should be business process improvement oriented, multi-skilled and ready to tackle with efficiency whatever tasks are required.

ii. If a union is recognized, its role is that of a further means of communication between groups of staff and the company. The union if exists should contribute to enhance the working conditions in the organization and should encourage the employees in the achievement of the same.

iii. The emphasis is on establishing good relationships and sound terms and conditions of employment between the management and the employees.

iv. The management should help in terms of empowering individuals in their roles and emphasizes team work, innovation, creativity, discretion in problem-solving, quality and improvement groups etc.

v. Employees should feel that the skills and expertise of managers supports their endeavours in productivity and creative inputs.

From employer point of view, unitary approach means that:

i. Staffing policies should try to unify effort, inspire and motivate employees.

ii. The organization’s wider objectives should be properly communicated and discussed with staff.

iii. Reward systems should be so designed as to foster to secure loyalty and commitment.

iv. Line managers should take ownership of their team/staffing responsibilities.

v. Staff-management conflicts—from the perspective of the unitary framework—are seen as arising from lack of information, inadequate presentation of management’s policies.

vi. The personal objectives of every individual employed in the business should be discussed with them and integrated with the organization’s needs.

2. Pluralistic-Perspective:

In pluralism the organization is perceived as being made up of powerful and divergent subgroups – management and trade unions. This approach sees conflicts of interest and disagreements between managers and workers over the distribution of profits as normal and inescapable.

Consequently, the role of management would lean less towards enforcing and controlling and more toward persuasion and coordination. Trade unions are deemed as legitimate representatives of employees.

Conflict is dealt by collective bargaining and is viewed not necessarily as a bad thing and if managed could infact be channelled towards evolution and positive change. Realistic managers should accept conflict to occur. There is a greater propensity for conflict rather than harmony. They should anticipate and resolve this by securing agreed procedures for settling disputes.

The implications of this approach include:

a. The firm should have industrial relations and personnel specialists who advise managers and provide specialist services in respect of staffing and matters relating to union consultation and negotiation.

b. Independent external arbitrators should be used to assist in the resolution of disputes.

c. Union recognition should be encouraged and union representatives given scope to carry out their representative duties.

d. Comprehensive collective agreements should be negotiated with unions.

3. Marxist Perspective:

This view of industrial relations is a by product of a theory of capitalist society and social change.

Carl Marx argued that:

a. Weakness and contradiction inherent in the capitalist system would result in revolution and the ascendancy of socialism over capitalism.

b. Capitalism would foster monopolies.

c. Wages (costs to the capitalist) would be minimized to a subsistence level.

d. Capitalists and workers would compete/be in contention to win ground and establish their constant win-lose struggles would be evident.

This perspective focuses on the fundamental division of interest between capital and labour, and sees workplace relations against this background. It is concerned with the structure and nature of society and assumes that the conflict in employment relationship is reflective of the structure of the society. Conflict is therefore seen as inevitable and trade unions are a natural response of workers to their exploitation by capital.

Industrial Relations – Models: Dunlop’s Model and IILS’ Model

Quite a few models of industrial relations have been developed by scholars at different intervals of time. Of these models, the models developed by John T. Dunlop and the International Institute of Labour Studies (IILS), which have received universal recognition, have been explained as under-

I. Dunlop’s Model of Industrial Relations System:

John T. Dunlop has an advanced “system” approach to industrial relations. He holds that the central task of industrial relations is to explain “why any particular rules are established in particular industrial relations systems and how and why they change in response to changes affecting the system.” Dunlop lays emphasis on the formulation of rules in regard to work-place along with the role of the community in which they are framed. Dunlop holds that these rules are established as a result of certain distinct factors.

These factors are the following:

(1) Actors,

(2) Environmental context and

(3) Ideology.

The process may be explained through the following equation:

R = f (A, E, I)

R = Rules

A = Actors

E = Environmental context

I = Ideology.


Rules in industrial relations may be in various forms such as collective agreements; labour laws and regulations; industrial awards and court decisions; policies and decisions of the management; decisions of joint bodies of management and workers and customary practices.

These rules may be of three types, namely – (i) substantive rules, (ii) procedural rules and (iii) rules related to enforcement. Substantive rules cover a wide variety of subjects related to the terms and conditions of employment such as wages, cash allowances, fringe benefits, physical working conditions, disciplinary rules and so on. The procedural rules lay down the procedures through which substantive rules are made. There are also rules which are concerned with the enforcement of substantive and procedural rules.

(1) Actors:

According to Dunlop, the actors in the system are the following – (i) management and hierarchy of managers, (ii) workers and hierarchy of their organisations and (iii) specialised governmental and mutually agreed non-governmental agencies. There may be variations in each category of actors.

(2) Environmental Context:

Environmental contexts in which the actors interact comprise the following:

(i) Technological characteristics of the work-place and work-community,

(ii) Market and budgetary constraints and

(iii) Locus and distribution of power in a larger society.

(i) Technological Characteristics of Work-Place and Work-Community:

Dunlop has specified certain distinct types of work-places. These include the following – fixed or variable work-place; relation of work-place to residence; stable or variable workforce and work-operations; size of the work-group and job contents; locus of attention of actors at work-place and hours of operation at work-place. Differences in technological characteristics have marked an impact on the roles of actors, structure of their organisational hierarchy and contents of rules.

(ii) Market and Budgetary Constraints:

Variations in product markets and budgetary situations in enterprises at various levels have their impact on industrial relations systems of particular enterprises and also on the roles of actors and the contents of rules.

(iii) Locus and Distribution of Power in a Larger Society:

Dunlop holds that locus and distribution of power in the larger society is a significant factor in determining the status of actors and the nature of rules. The status of workers and their organisations may be influenced by the network of interrelations with managerial hierarchy, among workers themselves, within their own organisations and those of rival unions and governmental agencies.

Similarly, the status of management may be influenced by a network of interrelations with workers and their organisations, its own or rival management hierarchy and governmental specialised agencies. The approach of the management towards workers or their organisations may be dictatorial, paternalistic, constitutional or worker-participative.

The status of the governmental agencies exercises a potent influence on the roles of other actors and also the contents of rules. The rules prescribed by the Government may be of different types such as those embodied in legislation and administrative orders, industrial awards, permissible rules which could be incorporated in collective agreements and rules framed jointly by the managers and workers and approved by the Government.

(3) Ideology:

Ideology in industrial relations refers to a set of ideas and beliefs held by the actors in the system together as an entity. It comprises a body of ideas which define the role and perception of each actor in regard to the place and functions of others in the system. Differences in ideology are not conducive to the establishment of a stable industrial relations system.


Some of the limitations and deficiencies of the model may be listed as follows:

(i) The model does not cover adequately the conflict aspect in industrial relations.

(ii) Dunlop has emphasised the roles of all the three actors in combination in the formulation of rules. In many instances, rules may be laid down unilaterally by only one actor.

(iii) The model has little significance for small and unorganised establishments.

(iv) Dunlop has not given due attention to the situations generated by extraordinary and abnormal conditions such as wars, economic crises and political turmoil.

In spite of certain limitations, Dunlop’s system approach has explained in a vivid manner the industrial relations systems in a modern industrial setting. His approach has, more or less, a general applicability and has been acknowledged worldwide as a potential contribution to the study of industrial relations.

II. IILS’ Model:

The International Institute of Labour Studies (IILS), functioning closely with the ILO, has also developed a model of industrial relations. The model is similar to that suggested by Dunlop. The model has laid emphasis on four elements in industrial relations.

These are as follows:

(1) Parties,

(2) Environment,

(3) Processes and

(4) Rules.

(1) Parties:

Parties in industrial relations comprise the following – the state, workers’ organisations or trade unions and managerial hierarchies. The model has furnished the details in respect to the status and basic features of each party.

(2) Environment:

Environment in the model refers to the conditions under which industrial establishments operate. It may be economic, political, social or cultural in nature. The model has specified the details in each area and also the manner in which they influence the role of the parties and the nature of rules framed.

(3) Processes:

Processes involved in rule-making include the following – negotiation, collaboration and resolution of conflict. In negotiation, the workers and employers jointly deliberate over the establishment of rules. In this process, workers are generally represented by unions. Collaboration involves joint determination of issues of common interest. This process serves as a method to prevent industrial disputes from arising. In the process of resolution of conflict, the contentious issues are resolved and the terms are usually recorded in the form of agreement or settlement.

(4) Rules:

Rules in industrial relations relate mainly to the terms and conditions of employment. The model mentions three types of authorities involved in making them. These authorities are monopolistic, dualistic and pluralistic. Under the monopolistic type of authority, rules are unilaterally laid down by the employer. Under the dualistic type of authority, the power of making rules vests jointly in the employer and the trade union, or in the employer and the state or in the trade union and the state.

Under the pluralistic type of authority, the representatives of the employer, workers and the state establish rules on the basis of mutual discussions and consensus.

The model specifies two types of rules in industrial relations. These are procedural rules and substantive rules. Procedural rules are related to the procedural aspects in collective bargaining such as determination and certification of a bargaining agent and bargaining unit, certification of representative union, recognition of representative union, legal status of collective agreements, manner of referring industrial disputes to adjudication authorities, conduct of strike ballot and so on.

Substantive rules are related to terms and conditions of employment, rights and obligations of workers and their organisations, rights and obligations of employers, compensation and benefits and similar matters.


Some of the major limitations of the model are as follows:

(i) The model does not give adequate attention to conflict aspects in industrial relations, particularly those emanating from union rivalries, multiplicity of unions and uncongenial political environment.

(ii) The model has limited applicability in small-sized unorganised establishments.

(iii) It does not provide a convincing explanation for the impact of extraordinary or abnormal situations such as war, economic crises and fluctuations in business activities.

(iv) It also does not sufficiently cover the strategic aspects in industrial relations and human resource management.

In spite of these limitations, the model has contributed much towards setting the direction of further in-depth studies in the field.

Industrial Relations –  Causes of Poor Industrial Relations

1. Nature of Work:

Discontent amongst industrial workers revolves round the question of wages. Low wages figure prominently both in industrial and the agricultural sectors.

2. Political Nature of Labor Unions:

The politicization of labor unions by outside political leaders has tended to deteriorate the industrial relations. Politicization of labour unions leads to multiple unions on the one hand and increased inter- union rivalry on the other. Inter-union rivalry depresses both a union’s membership and its finances. Consequently, a union finds itself unable to carry out constructive activities or play an effective role in collective bargaining.

3. Level of Wages:

Wage demands are on an increase because of the rising prices and increase in the cost of living. The real earnings of the workers gradually erode due to the high rate of inflation. The high rate of inflation is largely responsible for the deteriorating industrial relations. A wage rise in one unit of an industry creates a chain reaction. Many times, weak employers succumb to the union pressure and given an exorbitant increase in wages. Divergent compensation systems have created a lot of confusion in the organizations, more dissatisfaction among the employees and serious conflicts in the employee-employee relation.

4. Occupational Instability:

Occupational instability sometimes adversely affects good industrial relations. Occupational stability makes workers feel secure on their jobs. It produces an enervating effect on them. Workers who have held a job for several years generally win a confidence on that job and do not like any change.

5. Unhealthy Behavioral Climate:

The behavioral climate of an organization consists of its culture, tradition and methods of action favorable to the worker. A favorable behavioral climate assists him meet his economic, social and psychological needs. It creates good image of the enterprise in his mind. On the other hand, an unfavorable climate obstructs him from meeting his different types of needs and projects in his mind a poor image of the enterprise. This eventually directs him to seek membership of a militant labor organization where he can express his exhausted feelings. This becomes a cause of poor industrial relations.

6. Unfair Practices:

Unfair practices on the part of labor and management vitiate the industrial relations climate of an organization. Sometimes, both the parties take recourse to undue and coercive methods to undermine each other.

7. Outdated and Outmoded Laws:

The outdated and outmoded laws regulating industrial relations are quite insufficient and incapable to deal with the dynamic industrial relations situations. For instance, delay involved in adjudication proceedings and consequent litigation in industrial relations has become too cumbersome and time-consuming, often resulting in ill-will between management and unions.

Industrial Relations – Effects of Poor Industrial Relations

Poor industrial relations create highly turbulent effects on the economic life of the country. They leave behind a lot of privation for the workers, reduction in output and profits for industries, high prices and inconvenience for the general public and an atmosphere of mutual distrust and suspicion for the workers and the employers.

We are discussing below ill effects of poor industrial relations:

1. Multiplier Effect

2. Resistance to Change

3. Decline in normal working

4. Frustration and social cost

1. Multiplier Effect:

Modern economy to a certain extent depends on the modern industry. Hence although the direct loss caused due to industrial conflicts in any one plant may not be very great, the total loss caused due to its multiplier effect on the total economy is always very great.

2. Resistance to Change:

Industrial dynamism requires for change more or less continuously. Methods, processes and techniques have to be improved. Economies of scale and scope have to be effected. New technologies have to be introduced. New products have to be designed, produced and launched in the market. Each of these tasks involves a whole chain of changes. Workers tend to resist changes if the industrial relations are poor. Good industrial relations tend to reduce resistance to change.

3. Decline in Normal Working:

Strained industrial relations affect adversely the normal working of the organizations. This leads to rise in costs, absenteeism and labor turnover. Plant discipline breaks down and both the quantity and quality of production suffer.

4. Frustration and Social Cost:

Everybody comes to the place of work not only to earn a living but also to satisfy his social and higher needs. When a worker finds that adequate satisfaction of his needs is difficult, he gets frustrated. Disputes take a heavy toll in terms of human frustration. They reduce cordiality increase social tension.

Industrial Relations – Suggestions to Improve

1. Constructive Attitudes:

In order to maintain peaceful industrial relations both management and union must fully accept each other. Management must accept workers as equal partners of a joint venture. It must recognize their union as the spokesman of their grievances and as custodian of their interests.

2. Policies and Procedures:

The HR manager must ensure that the line people well understand and agree with personnel policies and procedures. Failure to follow the spirit and letter of these policies can result in unnecessary misunderstanding and a deterioration of industrial relations.

3. Mutual Trust and Confidence:

The management and the union must have mutual trust and confidence. The HR manager must try to remove any distrust by convincing the union of the company’s integrity and his own sincerity and honesty. Suspicions, rumors and doubts should all be put to rest.

4. Right Kind of Union Leadership:

Though it is not for the management to interfere with union activities, or choose the union leadership, yet its action and attitude can go a long way in developing the right kind of union leadership. Management should create conditions that would stimulate growth of competent and constructive leadership.

5. Administration of Collective Bargaining Agreement:

Once a collective bargain agreement is signed, it is the responsibility of the management that the agreement is administered in letter and spirit. This involves the application, interpretation, and enforcement of the terms and conditions which the parties have agreed to both in letter as well in spirit.