Everything you need to know about industrial relations. The term ‘Industrial Relations’ comprises of two terms- ‘Industry’ and ‘Relations’.
“Industry” refers to “any productive activity in which an individual (or a group of individuals) is (are) engaged”. By “relations” we mean “the relationships that exist within the industry between the employer and his workmen.”
In the words of E.F.L. Breach, “Industrial Relations and personnel management are almost synonymous terms with the only difference that the former places emphasis on the aspect of employee relationship rather than on the executive policies and activities that are set up to foster good relations.”
1. Introduction to Industrial Relations 2. Definitions of Industrial Relations 3. Meaning of Industrial Relations 4. Scope 5. Aspects 6. Nature 7.Characteristics
8. Objectives 9. Principles 10. Factors Developing Industrial Relations 11. Steps for Building Good Industrial Relations 12. History 13. Essential Conditions for Effective Industrial Relations 14. Rise and Growth of Industrial Relations and Other Details.
Industrial Relations: Meaning, Definitions, Scope, Aspects, Objectives, Nature, Characteristics, Roles, Importance and Other Details
- Introduction to Industrial Relations
- Definitions of Industrial Relations
- Meaning of Industrial Relations
- Scope of Industrial Relations
- Aspects of Industrial Relations
- Nature of Industrial Relations
- Characteristics of Industrial Relations
- Objectives of Industrial Relations
- Principles of Industrial Relations
- Factors Developing Industrial Relations
- Steps for Building Good Industrial Relations
- History of Industrial Relations
- Essential Conditions for Effective Industrial Relations
- Rise and Growth of Industrial Relations
- Roles of Industrial Relations
- Effects of Bad Industrial Relations
- Industrial Relations and Five Year Plans
- Pre-Requisites for a Successful Industrial Relations Programme
- Conditions for Congenial Industrial Relations
- Importance of Industrial Relations
- Problems of Industrial Relations
- The Threats and Challenges to Industrial Relations
- Strategies to Improve Industrial Relations
- Development of Better Industrial Relations
Industrial Relations – Introduction
Industrial relation is the relationship between the employer and the individual worker and group of workers within the industry.
J. T. Dunlop defined industrial relations as “the complex interrelations among managers, workers and agencies of the governments”.
According to Dale Yoder “industrial relations is the process of management dealing with one or more unions with a view to negotiate and subsequently administer collective bargaining agreement or labour contract”.
Industrial relation aims at building a strong relation between the employees and the employer as well as among the employees themselves. A strong industrial relation ensures protection of employee’s interest and successful attainment of organisational objectives in smooth and efficient manner.
Armstrong defined industrial relation as “the systems and procedures used by unions and employers to determine the reward for effort and other conditions of employment, to protect the interests of the employed and their employers and to regulate the ways in which employers treat their employees”.
The definition of industrial relation provided by The Encyclopaedia Britannica “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”.
A good industrial relation indicates industrial discipline and peace. The basis of industrial relation is mutual understanding and cooperation.
Industrial relation involves maintenance of industrial discipline and peace, efficient handling of industrial unrest and effective participation of employees in goal setting, planning, management of organisational activities and management of industrial disputes.
Industrial Relations – Definitions by Some Eminent Authors: Dale Yoder, Tead and Metcalf, E.F.L. Breach, Bethal, Smith and John T. Dunlop
Important definitions of Industrial Relations are as under:
In the words of Dale Yoder, “The term ‘Industrial Relations’ refers to the relationship between management and employees or among employees and their organisations that arise out of employment.”
According to Tead and Metcalf, “Industrial Relation is the composite result of the attitudes and approaches of the employers and employees towards each other with regard to planning, supervision, direction and co-ordination of the activities of an organisation with a minimum of human effort and friction, with an animating spirit of co-operation and with proper regard for the genuine well-being of all the members of the organisation.”
In the words of E.F.L. Breach, “Industrial Relations and personnel management are almost synonymous terms with the only difference that the former places emphasis on the aspect of employee relationship rather than on the executive policies and activities that are set up to foster good relations.”
In the words of Bethal, Smith and others, “Industrial Relation is that part of management which is concerned with the manpower of the enterprise — whether machine operative, skilled worker or manager.”
John T. Dunlop defines Industrial Relations in these words, “Industrial Relation is the complex of inter-relation between workers, managers and state.”
Industrial Relations – Meaning
The term ‘Industrial Relations’ comprises of two terms- ‘Industry’ and ‘Relations’. “Industry” refers to “any productive activity in which an individual (or a group of individuals) is (are) engaged”. By “relations” we mean “the relationships that exist within the industry between the employer and his workmen.”
Hence it can be said that, the term industrial relations explain the relationship between employees and management which stem directly or indirectly from union-employer relationship.
Industrial relations are the relationships between employees and employers within the organizational settings. It looks at the relationship between management and workers, particularly groups of workers represented by a union. Industrial relations are basically the interactions between employers, employees and the government, and the institutions and associations through which such interactions are mediated.
The term industrial relations have a broad as well as a narrow outlook. Originally, industrial relations were broadly defined to include the relationships and interactions between employers and employees. From this perspective, industrial relations cover all aspects of the employment relationship, including human resource management, employee relations and union management (or labour) 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 labour management relations, while human resource management is a separate, largely distinct field that deals with non-union employment relationships and the personnel practices and policies of employers.
The relationships which arise at and out of the workplace generally include the relationships between individual workers, the relationships between workers and their employer, the relationships between employers, the relationships employers and workers have with the organizations formed to promote their respective interests, and the relations between those organizations, at all levels.
Industrial relations also includes the processes through which these relationships are expressed (such as, collective bargaining, workers’ participation in decision-making, and grievance and dispute settlement), and the management of conflict between employers workers and trade unions, when it arises.
Industrial Relations – Scope
Industrial Relations is a broad term. Different scholars have expressed their views on its scope. According to Dale Yoder, “Industrial relations include policies regarding recruitment, selection, training of workers, personnel management, and collective bargaining.” According to International Labour Organisation (ILO), industrial relations include relations between state and employers and relations between trade unions and employers associations.
Besides, these also include – freedom of co-operation among the workers and protection of the right to co-operate, enforcement of rules of the organisation, right of collective bargaining, collective settlement, mediation, arbitration and co-operation between officers and employers’ associations.
According to Richard A Lester, the scope of industrial relations is no longer confined only to trade unions and industrial management these days, rather it includes all aspects of labour; viz., wages, productivity, social security, management and employees policies. Trade Union policies also form part of it.
In a modern organisation, the function of industrial relations is performed by Industrial Relations Department. This function is performed under the supervision of Director, Industrial Relations. In the performance of this function assistance is rendered by different managers and assistants. Different important functions are performed by the staff of Industrial Relations Department.
Some of them are as under:
(i) Administration of policies and programmes of industrial relations,
(ii) Public Relations,
(iii) Labour Relations,
(iv) Recruitment, selection and placement of labourers,
(v) Formulation of rules relating to law and order situation within the organisation and their explanation,
(vi) Provision of recruitment test, intelligence test, ability test, skill test, etc.
(vii) Provision of training and education programme,
(viii) Preparing report on performance evaluation and ability evaluation,
(ix) To provide medical and health services,
(x) To advise in the solution of problems relating to education, trade, health and conduct of the employees,
(xi) To conduct survey on the attitude of the employees,
(xii) To complete record of employment of the employees,
(xiii) To conduct research on employees,
(xiv) To enforce labour legislations,
(xv) To provide for redressal of employees grievances,
(xvi) To provide for collective bargaining and dialogue to minimize labour disputes,
(xvii) To provide for retirement and pension programme,
(xviii) To prepare and enforce plan regarding compensation and evaluation of individual work performance, etc.
Industrial Relations – Aspects
In an industrial unit different people are working. They are employers, executives, supervisors and workers. They inter-act and create a relationship called industrial relations. Working at these people together affect not only labour relations but social, political and economic life.
But under industrial relations following aspects can be included:
(a) Promotion of development of healthy industrial relations at plant and industry level.
(b) Maintenance of industrial peace and avoidance of disputes.
(c) Promotion of industrial democracy through participation schemes.
(d) Group relations, i.e., relations between various groups of workmen.
(e) Community relations, i.e., relations between industry and society.
(f) Promotions and development of healthy labour-managements relations.
(g) Prevention of industrial disputes and maintenance of industrial peace and harmony.
There is no clear-cut boundary of each aspect; the areas of these are overlapping to a good extent.
Industrial Relations – Nature
Industrial relations are always a mixture of cooperation and conflict. However, much cooperation may be sought as an organizational objective, some conflict will always remain.
There are, at least, three reasons for this:
1. Both the groups (labour and management) develop different orientations and perceptions of their interests. They also develop generally negative images about each other.
2. There are no mutually accepted yardsticks or norms to tell to the two groups how far they should go in the pursuit of their objectives. In the absence of norms, both groups claim complete rationality for their demands.
3. There is no neutral field for the groups to meet on. This means that whenever the two groups meet each other for negotiations, they bring with them, some carryover from the post, besides their inherent distrust and suspicion for each other.
Essentially, industrial relations are concerned with the relationship between management and workers, and the role of regulatory mechanism in resolving any industrial dispute. A formal definition is-
“… concerned with the systems, rules and procedures used by unions and employers to determine the reward for effort and other conditions of employment, to protect the interests of the employed and their employers, and to regulate the ways in which employers treat their employees.”
Another related term is “Employee Relations” or “Human Relations”. This term is more comprehensive and includes all those aspects of HRM where employees are dealt with collectively. Human relations include, in addition to industrial relations, such aspects as participative management, employee welfare, employee development, employee remuneration, employee safety and health, and the like.
Industrial Relations – 5 Main Characteristics
Characteristics of industrial relations include:
(i) Industrial relations are outcome of employment relationship in an industrial enterprise.
(ii) Industrial relations develop the skills and methods of adjusting to and cooperating with each other.
(iii) Industrial relations system creates complex rules and regulations to maintain harmonious relations.
(iv) The Government involves shaping the industrial relations through laws, rules, agreements, awards etc.
(v) The important factors of industrial relations are- employees and their organisations, employer and their associations and Government.
Industrial Relations – History: Pre Independence Period and Post Independence Period
Healthy industrial relations is the backbone of the organisation. For this, the responsibility of the management is to look after the total well-being of each and every employee because a happy employee is an asset to the organisation. At this stage, it is relevant to put some light on the history of industrial relations in India.
For better understanding, it can be divided into two parts:
1. Pre Independence Period:
‘Hired and fired’ philosophy was adopted by employer because the principle of ‘supply and demand of labours’ was governed by industrial relations. In this system there was no scope of appeal against unjust decisions. It may produce temporarily results but in long run converted into violence. Only employers and workmen (Disputes) Act, 1860 was used to settle wage disputes between employers and employees because the conditions of employment and wages were very poor.
After the First World War, the government enacted the Trade Disputes Act, 1929 to enhance the settlement of industrial disputes. But the major drawback of this Act was that it did not provide any standing machinery for the settlement of disputes. In the year, 1936, the Payment of Wages Act, 1936 was enacted by government to stop the exploitation of workers by employers. After the Second World War, our country faced many problems which were created and increased industrial relations in turbulent situation.
The basic problems were:
(i) Rise in living cost.
(ii) Scar city of essential commodities.
(iii) Increase in rate of Unemployment and Population.
(iv) Political Interference.
(v) Increase in Inflation rates.
2. Post-Independence Period:
Industrial disputes need to be resolved in the interest of the employees, employers and the economy. Therefore, there is the need of developing healthy industrial relations. Healthy industrial relations would ensure uninterrupted production, promote work ethics and help in promoting healthy social relations in the society.
For prevention and settlement of industrial disputes and thereby improving industrial relations, just after independence a permanent machinery has been developed in the country was Industrial Disputes Act, 1947, which not only provides permanent machinery for the settlement of industrial disputes but also makes the awards so passed by the Courts under the Act, binding and legally-enforceable on the parties.
Another important development was the setting up of the Indian Labour Conference, a tripartite body to look into the industrial relations problems. The major objective of this conference was to establish cooperation and coordination between the government, the employers and the Trade Unions. Another major change was observed after post-independence was the change in the Government’s attitude towards employees and their problems.
A large number of labour laws were passed by government to protect the interest of workers. In the year 1958, the Code of Discipline was introduced, but it had a limited success because it was a moral guideline rather than as a legal enactment. The National Commission of Labour was appointed by government in the year 1966, to study into labour problems and make recommendations.
It submitted its report in year 1969. During emergency (1975-77), there was considerable tightening of discipline in the industrial as well as general environment. But after emergency, change in Political leadership, the Janta Government set up a number of committees to review industrial relations situations. In the late 1970s and early 1980s industrial relations in our country were characterised by violence, therefore, on 26th July 1981, the government issued an ordinance to ban strikes.
The law called the Essential Service Maintenance Act (ESMA) 1981. This Act empowers the government to ban strikes, Layoffs and Lockouts in what it seems to be an “essential services”.
Industrial Relations – 12 Main Objectives
The basic objective of industrial relations is to establish good relations between workers and management.
Objectives of Industrial Relations are as under:
(i) To establish Industrial peace,
(ii) To protect interests of workers and management,
(iii) To prevent industrial disputes,
(iv) To raise production capacity,
(v) To establish Industrial Democracy,
(vi) To create Full Employment situation,
(vii) To lower the rates of labour turn-over and absenteeism,
(viii) To minimise Strikes, Lock-outs, Gheraos, etc. by providing fair wages and good working conditions,
(ix) To protect workers’ economic and social interests,
(x) To establish government control over sick industrial units and units incurring losses in public interest,
(xi) Nationalisation and socialisation of Industries in public interest,
(xii) To contribute to the development of the country’s economy through high productivity.
Industrial Relations – 8 Important Principles
To establish good industrial relations following principles have been evolved:
(i) Frank and free exchange of views between Trade Unions and Employers’ associations.
(ii) Industrial disputes should be a resolved by collective bargaining between trade unions and employers’ associations. Legal methods be used only if all other measures fail.
(iii) In order to establish good industrial relations there should be desire for mutual co-operation between trade unions and management associations.
(iv) Sense of belonging to organisation is created among workers when they get opportunity of participation in management. Their morale is boosted. It leads to good industrial relations.
(v) There should be effective communication between workers and managements for good industrial relations. In this case, there will be minimum conflicts between them.
(vi) Workers should be given reasonable remuneration for their work. It will lead to contentment among them and contribute to industrial peace.
(vii) Human treatment be meted out to the workers. Such a treatment will go a long way to make good industrial relations.
(viii) All employees be treated equally in the organisation. No discrimination should be practised in enforcing the policies and rules of the organisation.
Industrial Relations – 4 Factors Developing Industrial Relations: Environment, Parties to IR, Industrial Relations Processes and Industrial Relations Outcomes
Industrial relations system operates within an overall system of the country in which a variety of factors operate to determine the IR system.
Industrial relations system operates in a given environment. This environment is dynamic and changes over the period of time. Therefore, IR system which is workable in a given environment may not be equally effective in the changed environment. Major environmental factors which impinge on an IR system are economic, technological, political, legal, and social.
While these environmental factors are quite broad and affect the total organizational processes, the more specific environmental factors affecting an IR system in an organization are as follows:
1. The level of economic development affecting employment and financial compensation nationally and locally.
2. The nature of technological development determining the job contents which may be interesting or uninteresting.
3. The interference of political system in IR system directly or indirectly, formally or informally.
4. The legal framework of the country governing employer-employee relations.
5. The social attitudes towards industry, employer-employee relations and their working.
6. The development of trade unions and their approach towards management and IR.
These environmental factors provide opportunities or constraints in developing IR system. To the extent these factors are positive; the IR system would be effective.
Factor # 2. Parties to IR:
Various parties to IR can be grouped into three categories — employees and their associations/ unions, employers and their associations, and government and is various agencies. These three parties perform different roles in IR and derive their power within the framework of environment.
Employees are a party to IR as they are affected most by the IR outcomes. In an IR system, employees may be grouped into two categories- those who have been defined as workers/workmen under the Industrial Disputes Act, 1947 and those who are not covered by this Act.
Various characteristics of employees such as their commitment to the organization, their level of education and social background, their attitudes towards the management and the organization, and their commitment to the work determine the extent to which they will-
i. Improve their conditions of employment;
ii. Voice any grievances;
iii. Exchange views and ideas with management; and
iv. Share in decision making.
Trade unions or other employees’ associations play crucial role in the effectiveness or otherwise of an IR system. The employees may have grievances, claims, and other demands on individual basis but they express these, often, on group basis. In order to strengthen their bargaining power, they form some kind of associations to voice their grievances.
According to Armstrong, trade unions/employees’ associations have the following broad objectives in relation to IR:
i. To increase the bargaining advantage of the individual worker vis-a-vis the individual employer by joint or collective action for the individual action.
ii. To secure improved terms and conditions of employment for their members, and the maximum degree of security to enjoy these terms and conditions.
iii. To obtain improved status for the worker in his work.
iv. To increase the extent to which unions can exercise democratic control over decisions that affect their interests by power sharing at the national, corporate, and plant levels.
The role of unions in determining the status of IR in an organization depends on their membership, attitudes towards management, inter-union rivalry, and the strengths at the national or local level.
The second party to IR is employers. Since in the corporate form of organization, management represents the owners/employers, it can be treated as the second party to IR. The management is an organization is responsible to various stakeholders including the employees. Therefore, employer-employee relationship is also termed as management-labour relations.
Management tends to see employee relations in terms of the following activities:
i. Creating and maintaining employee motivation.
ii. Obtaining commitment from the workforce.
iii. Establishing mutually beneficial channels of communication throughout the organization.
iv. Achieving high level of efficiency.
v. Negotiating terms and conditions of employment with employees’ representatives.
vi. Sharing decision making with employees.
vii. Engaging in a power structure with trade unions.
Management’s role in determining the status of IR system is quite crucial.
The following factors related to the management are important for IR:
i. Attitudes of management towards the employees and their unions.
ii. The extent to which the management wants to exercise absolute authority to enforce decisions affecting the interests of the employees.
iii. The extent to which the management has designed the procedures for handling grievances, claims, and demands of the employees.
iv. The extent of the effectiveness of management in dealing with the problems and disputes related to IR.
v. The organization’s business strategy — stagnating, growing, or declining. In different situations, different IR strategy will be adopted.
Like employees’ associations, employers may also join associations at the local or national level. The major associations of employers at all-India level are Federation of Indian Chambers of Commerce and Industry (FICCI), Confederation of Indian Industry (CII), Associated Chambers of Commerce and Industry (ASSOCHAM), Federation of Indian Export Organizations (FIEO), etc.
Besides, there are associations at national level representing each major industrial sector and state/regional level associations.
The major functions of the employers’ associations with regard to IR are:
i. To represent employers in collective bargaining at the national or industry level.
ii. To develop machinery for the avoidance of disputes.
iii. To provide information on employee relations.
iv. To advise member organizations on the issues related to IR.
The role of the government has been changing from time to time in the matter of IR. Till 19th century, the governments throughout the world adopted a policy of laissez faire and left the IR matters to be settled by the employers and employees. However, with the increasing conflicts between them even on tiny matters, the governments’ attitudes changed to some kind of intervention in IR matters towards the end of 19th century.
In the present context, everywhere, governments intervene in the HR system in different ways. In India, government has prescribed various laws dealing with employer-employee relations and set machinery for resolving conflicts — labour courts, tribunals at state and national levels.
These courts and tribunals intervene in the solution of industrial disputes referred to these. While developing IR system, an organization has to take into account the role played by the government in IR activities.
There are different processes in IR system. Such processes may be completed through unilateral actions either by management or labour, or these may be completed through joint actions.
i. Unilateral Actions:
Unilateral actions may be taken by management or labour at the initial stage or as a response to the failure of joint actions. Various unilateral actions taken by management are in the form of decisions made regarding different activities of IR such as prescribing wages, benefits, work hours and schedules, working conditions, etc. or prescribing procedures for handling various grievances and conflicts arising at the workplace.
Unilateral actions that may emerge because of the failure of joint actions may be in the form of pressure tactics such as strikes, lockouts, etc.
ii. Joint Actions:
The management of an organization may provide platform for solving all IR problems through joint actions mutually decided by management and labour together. Such actions may be through collective bargaining, forms of management-labour cooperation — works committees, joint councils, mutual consultation on specific problems, and day-to-day personal interactions.
Usually, some kind of joint decision-making process is preferable as this approach creates a feeling of involvement among workers.
When IR processes are undertaken and completed, there are certain outcomes which affect both employers and employees. Such outcomes are in the forms of substantive rules and procedural rules. Substantive rules contain the subject matters of IR which often are the bone of contention between employers and employees.
These are wages/salaries, benefits, performance standards, work hours, work schedules, working conditions and facilities, etc. Procedural rules are related to prescribing processes and procedures for administering various IR activities which may include labour union recognition process, grievance procedure, disciplinary actions, determination of methods for establishing and measuring performance, and so on.
In an effective IR system, there must be provision for feedback so that effectiveness of the system can be evaluated. The feedback may be used to change the approaches of employers and employees towards IR, change the processes of IR to make these more effective.
The role of IR department in this context is very important. Based on this feedback, the department may suggest proactive actions to be undertaken for making IR system effective.
Industrial Relations – 5 Steps for Building Good Industrial Relations
Looking at the cost involved in poor industrial relations, the various parties involved should take constructive steps to bring good industrial relations. However, the organization is in a better position to initiate such steps.
The major steps in the direction of building good industrial relations are as follows:
Step # 1. Creating Trust between Management and Employees:
Trust between management and employees/trade unions is the most important single factor for good industrial relations. Purcell has observed that trust between IR parties can be created by building competencies in the management and the union on the one hand and developing right HR processes on the other hand.
i. Competencies Development:
Competencies in the parties can be developed through enhancing/changing knowledge, skills, and attitudes relevant to IR activities. Knowledge can be developed about the rules of the workplace, the legal framework of industrial relations, the commitments made in various settlements and awards, the emerging environmental scenario and practices, and workers’ sociology and their problems.
Skill development involves leadership skills, interpersonal skills, problem-solving skills, and negotiating skills. Attitudinal change reflects positive beliefs about each other, faith in participative mechanisms, and flexibility and resilience.
ii. Process Development:
For good industrial relations, processes are as important as contents. Processes relating to ‘how decisions are arrived at’, ‘how negotiations are conducted’, ‘how information is shared with the union’, and so on are important for the parties involved in industrial relations. Correct processes help in providing more honest and better understanding among the parties.
The possible HRD interventions to develop competencies and processes for good industrial relations are as follows:
IR Problems – Interventions:
a. Lack of knowledge about HR processes – Training in IR to all persons involved
b. Mistrust between union and management – Survey research and feedback, Information sharing, Union-management interface.
c. Lack of collaboration – Joint projects on employee welfare education, etc.
d. Delay in IR decision making – Diagnosis of causes, Reorganization of IR functions
e. Discipline problems – Training for discipline management, Counselling, Review of disciplinary mechanism
f. Employee’s alienation – Job redesign, Job enrichment, Training, Counselling
Step # 2. Top Management Support:
For maintaining good industrial relations, top management support is necessary. Top management support is required for several reasons- (i) to integrate HR strategy with business strategy of the organization which is the essence of strategic approach to industrial relations; (ii) industrial relations activities and their effectiveness depend on the organizational climate and the top management is responsible for developing suitable climate; and (iii) top management support is viewed by the employees and their unions that the organization has genuine concern for their cause; it sends positive signal to employees.
Step # 3. Sound Human Resource Management Policies:
The problem of industrial relations should not be seen in isolated context but in much wider context of total human resource management policies covering from the stage of recruitment to integration of employees with the organization.
In this text, we have seen that policies are required for different activities of human resource management as they provide guidelines for making decisions in advance rather than waiting for the emergencies to take place. To the extent various such policies are conducive, industrial relations will be good.
Step # 4. Continuous Feedback and Corrective Actions:
An industrial relations system has a feedback mechanism which provides information on the status of industrial relations in the organization. Based on such a feedback, proactive actions should be taken to sort out the problem before it goes out of proportion. Often, a small problem, if neglected, generates a much complex problem later on.
Step # 5. Professional Approach:
Industrial relations in an organization, particularly the large one, should be handled by the persons having professional competence and approach. These persons should be well versed with different aspects of industrial relations — legal as well as behavioural. Further, they should develop right approach in handling industrial relations in wider context and should not confine themselves in fault finding activities of trade union working.
Trade unions do not adopt wrong and adverse tactics always. These are mostly reactive actions in response to management’s actions. If industrial relations professionals proceed on this assumption, perhaps, they can do better. If unions prevail over management, it shows that union leaders and members have much more commitment to their activities as compared to managers.
This situation requires introspection on the part of the industrial relations professionals. If they wish that there should be a change in industrial relations from poor to good, they must be ready to change themselves and their approach.
Industrial Relations – Roles of Industrial Relations
The Industrial relations has various roles:
1. To develop a theoretical perspective as to what should be ideal relationship between the employer and the employee.
2. To develop an ethical climate that discourages commoditisation and exploitation of human element in the organization.
3. To develop a legal framework that defines the rules and conditions of employment.
4. To minimize industrial conflicts and work towards resolution.
5. To promote growth and industrial harmony.
Trade Union is an organization formed by employees or workers.
Various features of a trade union are:
1. It is formed on a continuous basis.
2. It is a permanent body and not a casual or temporary one.
3. It is formed to protect and promote all kinds of interests – economic, political and social-of its members, with economic interests being the dominant interest.
4. It achieves its objectives through collective action and group effort.
The formation and governance of trade unions comes under the Trade Unions Act, 1926. This act is important because other labour laws such as the Industrial Disputes Act, 1947 (IDA), and the Industrial Employment (Standing Orders) Act, 1946 (IESOA), define a labour union to mean a union that has been registered under the TU Act.
Industrial Relations – 12 Essential Conditions for Effective Industrial Relations in the Organisation
Practically, it is very difficult to promote and maintain effective industrial relations in the organisation. But at the same it is necessary to understand that the effective industrial relations is the core activity for the success of the organisation.
The basic requirements on which the effective industrial relation is based are:
1. The implementation of sound HR Policies.
2. The full top management support.
3. The constructive attitude of management and union.
4. The existence of strong, well organised and democratic employees union.
5. The implementation of labour Acts in the right spirit.
6. The distribution of profits in an appropriate manner.
7. Welcome the culture of collective negotiations.
8. The uses of fair labour practices.
9. The proper, appropriate and require training to all levels.
10. The flow of two way communication channels.
11. The participation and empowerment of all the levels employees.
12. The constant review of an industrial relations programme.
Industrial Relations – Rise and Growth of Industrial Relations
Industrial relations refer to mutual relations between workers, management and government. They include joint relations between employers’ and their organisations and Trade Unions and the role of government in regulating these relations. In modern times, mutual conflicts between the workers and management occur on issues such as fair wage, good working conditions, bonus, etc.
These conflicts are as old as human civilisation. In olden times also industrial relations or employment relations played significant role but modern situations are quite distinct from them.
In ancient times, employers and workers used to have cordial relations in hunting and pastoral ages. In agricultural age, relations between employer and worker assumed the shape of master and slave or servant. Government did not intervene in these relations. In the initial years of Industrial Revolution trades at small level came into being and handicrafts, artisans, cottage industries, small-scale industries etc. were established. Subsequently, there developed factory system.
In this age, society was divided into two classes — capitalist class and labour class. Consequent upon industrialization a new class — manager class came on the scene. It ushered in a period of labour – management relations. In fact, problem of industrial relations owes its existence to industrial growth.
It is industrialization that has given rise to industrial problems like inadequate wages to workers, increase in industrial accidents, exploitation of women and children, housing problem of the labourers, etc.
As a result, to safeguard their respective interests labourers formed their trade unions and the employers organised themselves into employers’ associations. Industrial conflicts multiplied and industrial relations became a complex problem. Government has played a significant role in regulating these relations. In this way, industrial relations are the inevitable results of social, political and economic systems.
Industrial Relations – Effects of Bad Industrial Relations on Workers, Employers, Government, Consumers and Other Effects
Industrial Relations are of great importance in industrial life. These relations have great bearing on the economic, social and political spheres of our society. If in an organisation, relations between labour and management are cordial, there will be industrial peace and interests of both the parties will be automatically safeguarded.
However, organisations where industrial relations are strained, there the organisations have to face lot of problems. The atmosphere of such organisations is always surcharged with industrial unrest leading either to strikes or lockouts. Organisations which ignore the importance of industrial relations face high cost of production.
Adverse effect on efficiency, low-grade production, negligence in the execution of work, absenteeism among the workers, high rate of labour turn-over etc. are the evils that result from poor industrial relations. Lack of cordiality in industrial relations not only adversely affects the interests of the labourers and employers but also cause harm to different sections of society. They are faced with lot of difficulties and problems.
Demerits of bad industrial relations can be expressed as under:
(1) Effect on Workers:
(i) Loss of wages,
(ii) Physical injury or death on account of violence during labour unrest,
(iii) Excesses by employers,
(iv) Economic losses,
(v) Bitterness in relations,
(vi) Adverse effect on career.
(2) Effect on Employers/Industrialists:
(i) Less production,
(ii) Less Profit,
(iii) Bad effect on organisation,
(iv) Bad effect on human relations,
(v) Damage to machines and equipments,
(vi) Adverse effect on development of companies,
(vii) Burden of fixed expenses.
(3) Effect on Government:
(i) Loss of revenue (less recovery of income tax, sales tax, etc.),
(ii) Lack of order in society,
(iii) Blame by different parties.
(4) Effect on Consumers:
(i) Rise in prices,
(ii) Scarcity of goods,
(iii) Bad effect on quality of goods.
(5) Other Effects:
(i) Adverse effect on International Trade (fall in exports and rise in imports),
(ii) Hindrance in Economic Development of the country,
(iii) Uncertainty in economy.
To conclude, it can be said that almost all sections of the society suffer loss in one way or the other due to bad industrial relations. In order to maintain peace in industrial units it is of utmost importance that employers and workers should make constant endeavour to establish cordial human relations.
Industrial Relations – Industrial Relations and Five Year Plans
During the course of First Five Year Plan Planning Commission pointed out that to achieve the objective of industrial peace judicial machinery has not proved helpful. It took long before justice could be done. Industrial and Labour Courts did not settle the disputes expeditiously.
Planning Commission was also not in favour of appeals against the decisions of Appellate Tribunal, Industrial Courts or Tribunals. Planning Commission made recommendation to the Tribunals to bring about uniformity in standards determining and directing mutual relations.
Second Five Year Plan:
To achieve the objective of industrial peace, the Planning Commission emphasised recourse to Mutual Negotiation, Mediation, Voluntary and Compulsory Arbitration, etc. It also laid stress on the preventive measures to check industrial conflicts. Besides, it also suggested increasing use of Joint Consultative Machinery, Works Committees, Workers – Management Relations, in order to establish industrial peace.
Third Five Year Plan:
It was emphasised that industrial disputes be checked in their early stages. According to the Third Plan, growth of Industrial Relations depended on Code of Discipline. This code must be observed by all workers and employees. The plan also emphasised that Joint Management Councils will gradually be introduced in more and more new industrial units so that it could be a normal part of industrial organisation. Their development will give support to the concept of Workers Participation in Management.
Fourth Five Year Plan:
Referring to Industrial Disputes Act, the Planning Commission suggested the use of Mediation, Tribunal and Voluntary Arbitration for settlement of industrial disputes. The provisions of the Industrial Disputes Act be put to use as a last resort. This plan also emphasised on strengthening collective bargaining and trade union movement in the interest of establishing good labour management relations. It recommended Code of Discipline, setting up of Works Committees and use of Joint Management Councils for the betterment of Industrial Relations.
Fifth Five Year Plan:
In this plan, more emphasis was laid on employment and man-power. There was no mention of any change in labour policy.
Sixth Five Year Plan:
The plan drew attention to the fact that industrial peace was most essential for the economic development of a country. Healthy industrial relations on which rests industrial peace, are not a matter concerning the interests of workers and management alone. These parties should also keep the interests of the entire society in view.
In order to maintain good industrial relations both Consultative Machinery and Grievance Redressal Procedure should be made more effective. Weapons like strike and lock-out should be used only as a last resort.
Seventh Five Year Plan:
The focus of the Seventh Five Year Plan was on improvement in capacity utilisation, efficiency and productivity. The Plan emphasised on tackling industrial sickness in future. The seventh plan also envisaged to protect the interest of labour. There is considerable scope for improvement in industrial relations, which would obviate the need for strike and the justification for lockouts.
In the proper management of industrial relations the responsibility of unions and employees has to be identified and inter-union rivalry and intra-union divisions should be avoided.
Eight Five Year Plan:
According to the Eight Five Year Plan, labour participation in management is a means of bringing about a state of industrial democracy. Even since independence, the government has been stressing the need to introduce workers’ participation in management and various schemes were notified from time to time. However, the results have fallen far short of expectations. The need to bring forward a suitable legislation for effective implementation of the scheme has been felt.
Besides legislation, proper education and training of workers and co-operation from both employers and employees to overcome problems arising out of the existence of multiplicity of trade unions and inter-union rivalry will go a long way in promoting the system of participative management.
Ninth Five Year Plan:
The Ninth Five Year Plan attempted to create conditions for improvement in labour productivity and for provision of social security to supplement the operations of the labour market. The resources were directed through the plan programmes towards skill formation and development, exchange of information on job opportunities, monitoring of working conditions, creation of industrial harmony, and insurance against diseases and unemployment for the workers and their families.
The planning commission observed that the situation of surplus labour, coupled with the employment of most of the workers in the unorganised segments of the economy, has given rise to unhealthy social practices like bounded labour, child labour, and adverse working conditions faced by the migrant labour.
Tenth Five Year Plan:
One of the important features of the Tenth Plan was reforms in labour laws. The Tenth Plan emphasized on providing conducive policy environment including labour reforms. The Factories (Amendment) Bill 2005 was introduced in the Lok Sabha on 16th August 2005.
The Bill proposes to amend the Section 66 of the Factories Act 1948, so as to provide flexibility in the matter of employment of women during right shift with adequate safeguards for their safety, dignity, honour and transportation from the factory premises to their nearest point of their residence.
The Cabinet had approved a proposal to amend the Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishment) Act, 1988 on 11.05.2005, which intends to introduce simplified forms of registers to be maintained by the employees under certain labour laws. The amendments proposed include applicability of the Act to the establishments employing up to 500 persons instead of 19 persons, as at present.
Eleventh Five Year Plan:
Eleventh five year plan was aimed at towards faster and inclusive growth. The broad vision of Eleventh plan included several interrelated components like rapid growth, reducing poverty and creating employment opportunities, access to essential services in health and education especially for the poor, extension in employment opportunities using National Rural Employment Guarantee Programmes etc. keeping in view all these area various target were fixed for each category separately.
The eleventh plan started well with the first year achieving a growth rate of 9.3 percent, however the growth rate decelerated to 6.7 percent rate in 2008-09. The economy recovered substantially to register growth rate of 8.6 percent and 9.3 percent in 2009-10 and 2010-11 respectively.
Further the second boot of global slowdown in 2011 due to the sovereign debt crisis in Europe coupled with domestic factors such as tight Monetary Policy and supply side bottlenecks resulted in deceleration of growth to 6.2 percent in 2011-12.
In the eleventh plan the strategies were also made to ensure the growth of employment while also ensuring the quality of employment. It also stressed on increase in the number of regular wage employment opportunities based on some form of a written contract between the employer and employee. This will lead to better industrial relations. It is generally said that one of the obstacles to growth of formal employment in the organised sector is the prevalence of excessively rigid labour laws which discourage such employment.
The plan made some efforts in the direction of flexibility in Labour Laws. It also reviewed some existing laws and regulations with a view to making changes which world create a better working atmosphere in the industrial sectors. It is also known fact that the changing labour laws is a sensitive issue so it is necessary to make a consensus.
So this plan also kept this in view in this plan efforts were also made to increase the quality of employment. The unorganised sector was especially for used. The rights of workers and their social security was also a major area of concern in this plan.
Twelfth Five Year Plan (2012-17):
The twelfth plan commenced at a time when the global economy was going through a financial crisis, precipitated by the sovereign debt problems of the Eurozone which erupted in the last year of the eleventh plan. This plan mainly focused that our priority must be to bring the economy back to rapid growth. The vision of this plan is reflected by in the subtitle- Faster, Sustainable and more inclusive growth.
Here inclusiveness is to be achieved through poverty reduction, prompting group equality and regional balance, empowering people etc. whereas sustainable development includes ensuring environmental sustain ability, development of human capital through improved health, education, skill development, nutrition, information technology etc. and development of institutional capabilities, infrastructure like power, telecommunication, roads, transports etc.
This plan aims at achieving the objective of vapid and inclusive growth. For then the plan also focused to review the various labour laws in order to create a better working environment.
Industrial Relations – Pre-Requisites for a Successful Industrial Relations Programme: Top Management Support, Constructive Attitude and a Few Others
The necessary prerequisites for establishing good industrial relations are as follows:
1. Top Management Support:
The industrial relations is basically a staff function, thus the managers in charge of industrial relations should derive authority from the line executive, i.e. president or vice-president as the case may be. For the success of industrial relations programme, support of top management is essential.
2. Constructive Attitude:
Both management and trade unions should develop constructive attitude towards each other. Mutual understanding and cooperation is necessary for the smooth conduct of industrial relations programme. On one hand, the management must recognize the union as the spokesperson of the workers’ grievances and as custodian of their interests.
It should accept workers as equal partners in the industry. On the other hand, the workers and their trade unions must also consider and understand the rights, authority and responsibility of the management.
3. Developing Sound Policies and Procedures:
The policies and procedures relating to industrial relations should be well-designed and revised timely for maintaining good industrial relations in an organization. All the policies and procedures should be clear to everybody in the organization, including union leaders.
4. Development of Effective Practices:
The implementation of various policies pertaining to management selection calls for developing effective practices so that various policies are translated into action.
5. Good Communication System:
There must be a good and prompt communication system in an organization in order to avoid any rumours, doubts and misunderstanding between both the parties. Efficient communication system removes distrust between management and union leaders. The HR manager should play a key role in bringing both the parties together.
6. Adequate Supervisory Training:
To a large extent the problem of industrial relations is a human problem. So, in order to deal with the human beings in the organization and also to ensure that organizational policies and procedures are properly implemented, it is necessary that all the supervisors and foremen are provided with sufficient training.
These are the people who come in direct contact with the employees and therefore they should be well trained in the techniques of human relations. Success of industrial relations programme is largely determined by the attitude and dealing of supervisors. Thus, they should be trained in motivation, communication and leadership.
7. Development of Right Kind of Union Leadership:
On the pattern of developing good supervisors, management should also encourage the development of right type of union leadership. Although the management should not interfere with the union activities, it can create conditions which would stimulate the growth of constructive and competent union leadership.
8. Follow-Up of Results:
This refers to the constant review of industrial relations so that existing practices may be evaluated and problems, if any, may be identified. Along with the regular follow-up of various industrial relations policies and procedures, special emphasis should be placed upon gathering relevant information related to absenteeism, employee turnover, morale, job satisfaction, grievances, disputes, accident rates, wage and salary administration, etc. so that corrective action may be taken if needed.
Industrial Relations – Conditions for Congenial Industrial Relations
It is very difficult to promote and maintain sound industrial relations. Certain conditions should exist for the maintenance of harmonious industrial relations.
Industrial relations will be sound only when the bargaining power of the employees’ unions is equal to that of management. A strong trade union can protect the employees’ interest relating to wages, benefits, job security, etc.
These associations are helpful for the promotion and maintenance of uniform personnel policies among various organizations and to protect the interest of weak employers.
The relationship between employee and employer will be congenial only when the differences between them are settled through mutual negotiation and consultation rather than through the intervention of the third party.
Collective bargaining is a process through which employee issues are settled through mutual discussions and negotiations through give and take approach. If the issues are not settled through collective bargaining they should be referred to voluntary arbitration but not to adjudication in order to maintain congenial relations.
Permanent industrial peace in an organization is most essential which can be ensured through the following measures:
(a) Machinery for prevention and settlement of industrial disputes. It includes legislative and non- legislative measures. Preventive measures include works committees, standing orders, welfare officers, shop councils, joint councils, and joint management councils. Settlement methods include voluntary arbitration, conciliation, and adjudication.
(b) Government should be provided with the authority of settling the industrial disputes when they are settled between the two parties and also by voluntary arbitration.
(c) Provision for the bipartite and tripartite committees in order to evolve personnel policies, code of conduct, code of discipline, etc.
(d) Provision for the various committees to implement and evaluate the collective bargaining agreements, court orders and judgments, awards of the voluntary arbitration, etc.
Industrial Relations – Benefits to Workers, Management and Society
1. Benefits to Workers:
Sound industrial relations may provide a lot of benefits to workers in an organization.
Some important benefits to workers include:
i. It makes the functioning of the industrial activities of organization smooth and effective and keeps workers’ deployment process uninterrupted / unaffected.
ii. It increases production and productivity as workers find congenial atmosphere to work.
iii. It creates a climate of cooperation where both labour and management come close, develop understanding, solve disputes and grievances mutually.
iv. It enhances workers’ wages and allowances, provides welfare amenities, introduces reward system and satiates the need, aspiration and expectation of workers.
v. It makes the employees contented, happy, committed, loyal through formulation of employee-oriented IR/HR policies, procedures and practices.
vi. Satisfaction of workers’ physiological and psychological needs is possible, as both workers and management personnel work for growth and development.
vii. It develops a sense of ‘we-feeling’ ‘togetherness’, ‘involvement’ amongst the employees which drive them to ensure perfection, completeness, accuracy in all sorts of functional activities and delivery of world class quality of products and services to customers.
viii. Level of job satisfaction and morale of employees is increased in a climate of harmonious industrial relations.
ix. Collective bargaining mechanism is accepted as a tool of settling disputes and grievances of the employees. Day to day grievances, problems are sorted out through direct negotiation, discussion and also through grievance procedure machinery. All this is possible when harmonious industrial relations exist.
x. In an atmosphere of sound industrial relations workers may find improvement in quality of work life (QWL), participative system in decision-making, introduction of quality circles, interest of management to solve their problems, design of career planning and development, unbiased evaluation of performance and action orientation by management.
2. Benefits to Management:
Management personnel may have an ample benefits from a healthy industrial relations system.
Benefits are discussed below:
i. Industrial conflict becomes less/zero.
ii. Production and productivity tend to be on the higher side as workers participate in organizational activities as members of the team and intend to grow with the growth of the company.
iii. Since, workers co-operate spontaneously organization can compete with the competitors and can grow and develop.
iv. Customers’ delightment is possible through delivery of quality goods and personalised services.
v. Industrial peace prevails as mutual understanding, faith and confidence between labour and management is established and both the parties avoid conflict.
vi. Management can make the people dynamic through creation of change environment and application of OD mechanism to improve / develop core areas of human resources-skill, knowledge, competencies, talent, attitude, aptitudes, values, beliefs, perception etc. Such organizational environment creates a ground for workers to accept changes to show their worth, values in a state of dynamism.
vii. Organization can have a reservoir of talented, committed human resources.
i. Instances of lay off, retrenchment of workers are remote.
ii. No adverse behavioural activities are manifested by the employees in the society as they feel high degree of QWL.
iii. Production and distribution system remain uninterrupted. Supply of goods is ensured. Price is not increased, rather shows declining trend.
iv. Climate of lawlessness that arises out of industrial disputes viz. strike, dharna, closure, lockout does not prevail in the society.
v. Societal peace prevails.
It is observed that harmonious industrial relations benefit workers, employers (management) and society. Hence, importance of sound industrial relations cannot be exaggerated, particularly in the present changing scenario (i.e., change in economic policies, change in technology, change in job requirement, change in markets and the like.) which needs dynamic HR and dynamic organization to face competition against MNCs, TNCs, and this is possible if, a state of harmonious relations between labour and management exists.
Industrial Relations – Problems: Industrial Discipline, Industrial Disputes, Trade Unionism and Workers’ Participation in Management
The term ‘industrial relations’ is used to refer to the relations between the parties concerned with industry. Under the present-day factory system of industrial production, the two parties which come into direct contact with each other are the workers and the management representing the employer. Both the parties have a common interest in industry and yet numerous are the occasions when they may be found pulling in different directions.
Industrial relations are as old as industry itself, though with the passage of time the problems connected with the employer-employee relations have grown considerably in number and complexity. In the medieval society, when the relations between the master and journeymen were direct and personal, it was easy to secure the co-operation of work-people.
Misunderstanding could be removed promptly and complaints, if any, could be placed directly before the proprietor. Industrial relations under such a set-up were fairly simple. With the emergence of the present-day factory system of production the situation has undergone a marked change. The ownership of industry is divorced from management.
The management has also to devise special measures to win the co-operation of a large number of workers employed in industry. Misunderstandings and conflict of interests have assumed enormous dimensions and cannot be easily and promptly dealt with. The state of mutual trust and goodwill that was characteristic of the medieval industry has been replaced by mutual suspicion, hatred and antagonism.
The workers are no longer the weak and helpless individuals that they used to be; they are politically much more conscious, and much better organised than their medieval counterparts. The employer can no longer afford to adopt a dictatorial attitude towards workers; he has to invite the labour leaders to bargain with him. In short, industrial relations are much more involved, complicated and roundabout than they ever were.
This International Organisation aims at drawing up and overseeing the International labour standards. It is headquartered in Geneva, Switzerland. Its secretariat, where people from all over the world are employed is known as the International Labour Office. It is the only “tripartite” United Nations agency that brings together representatives of government, employers & workers to jointly shape programmes and policies.
It’s primary goal is to promote opportunities for men & women to obtain decent and productive work and where they can enjoy equity, freedom, human dignity & security.
The organization received the Nobel Prize for Peace in 1969. The 183 member states of ILO can openly and freely debate, brainstorm and elaborate the labour policies and standards. The three main bodies of ILO are- The International Labour Conference, the Governing body and the office and comprise of Governments, employers and workers’ representatives.
ILO also has great impact on labour legislations in India. The setting up of ILO saw an amendment of Factories Act, 1881. All these make provisions for the general welfare and protection of the labour.
The three strategic objectives of ILO are:
1. Promote and realize the standards and fundamental principles & rights at work.
2. Create greater opportunities for women and men to decent employment and income.
3. Enhance the coverage and effectiveness of social protection of all.
The above description of the changes which have taken place in industry and industrial relations brings out some of the important problems in these areas, e.g.- (i) the problem of winning workers’ co-operation, (ii) the problem of enforcing proper discipline among workmen, (iii) the problem of dealing with organised labour, and (iv) the problem of establishing a state of democracy in industry by associating workers with the management of industry.
An attempt is made to highlight these important problems under the following heads:
1. Industrial Discipline.
2. Industrial Unrest.
3. Trade Unionism.
4. Workers’ Participation in Management.
Discipline refers to the presence of order in any particular field of activity. It is the opposite of chaos, irregularity and disorder in human behaviour and action. Disciplined activity is basic to the successful operation of an industrial organisation. These essentials form the core of industrial discipline which consists in attempting to eliminate such practices or personal habits as make for group inefficiency and seeking to replace them by those that make effective co-operation possible in the organisation.
For a long time, discipline meant the kind of regimentation of thought and action that obtains in army. Naturally, such discipline was introduced and established mainly through penalties and punishments for offences committed by the workers. In modern times, however, the concept of discipline has undergone a considerable change.
In the modern sense of the term, industrial discipline provides a pattern of acceptable behaviour and performance. Fear is no longer accepted as the ideal means to the enforcement of discipline. Niles traces the origin of the word discipline to a root meaning ‘to learn’.
She, therefore, opines that the purpose of discipline is not to punish the worker but to help him learn proper conduct. To avoid offences on the part of the workers, therefore preventive measures may first be taken.
In extreme instances where the workers fail to recognise and obey the rules framed for the disciplined or well-ordered working of the organisation, such action should be taken as will help the employee and others to understand the relative seriousness of the offence and to avoid it in future.
But in an ideal situation, discipline should not have to be imposed upon people from above; it must, so to put it, arise from within. This may well be called the highest form of discipline. The spontaneous sense of discipline comes about in those organisations in which- (a) the rules laying down the ideal code of conduct in the work-place are absolutely clear and unequivocal and are well understood by all, (b) the morale is high, and (c) everybody understands his responsibility towards the organisation.
In such a situation, the members of the organisation identify their personal purposes with the objective of the organisation and work together in co-operation with one another for the realisation of these objectives.
The maintenance of discipline in the work-place with the object of attaining the maximum productivity is one of the important responsibilities of management. Since the supervisors including the foremen come into direct touch with the working people, they have to bear the primary responsibility of maintaining order in the workshop.
Their personal qualities and training, therefore, count a great deal in this regard. Also personnel policy of the management should contain the broad framework within which discipline may be fostered and maintained by the supervisors and others.
The following broad principles outline the personnel policy vis-a-vis discipline in the work-place:
(i) A code of rules and regulations embodying the ideal pattern of behaviour in the work-place should be drawn up. “Where the process of consultation is well developed as a genuine element in the practice of management, discipline is nearly always better.”
(ii) The code of discipline must lay down the same standards for everyone so that it does not give rise to controversies and become a cause of indiscipline.
(iii) There must be an occasional evaluation and re-appraisal of all rules so that only those which are sensible, useful and appropriate are kept in force.
(iv) The employees must be kept fully informed about the rules and conditions of work as also about the penalties prescribed for breach of such conditions and enforcement.
(v) The discipline policy should lay more emphasis on the prevention of the breach of discipline than on the administration of penalties.
(vi) The management should be extremely careful to ensure that the supervisors or the policies of the management do not encourage the breaking of rules.
(vii) The personnel manager should try to look deep into the causes that lead to the breach of a rule or the rules. This becomes absolutely necessary if the same rule is violated time and again by the employees.
(viii) The management should make provision for machinery for appeals against, and review of, all disciplinary action. Such machinery should, as far as possible, be internal to the organisation concerned. Provision of this type can be made in the employees’ handbook, collective agreements, etc.
It must be remembered that discipline will ultimately depend upon the soundness of relations within the organisation and on the capabilities and competence of the management at different levels on one side, and the approach and attitudes of the workers on the other. Industrial discipline is, therefore, both the cause and effect of sound industrial relations.
Problem # 2. Industrial Disputes:
Industrial disputes refer to differences that affect groups of employees and employers engaged in an industry. The differences of opinion may relate to employment or non- employment, terms of employment or with the conditions of labour where the contending parties are directly or substantially interested in maintaining their respective contentions.
Causes of Industrial Disputes:
The main causes of industrial disputes are as follows:
i. Wages and Allowances:
Low wages of industrial labourers constitute a major cause of industrial disputes in the country. There has been a sharp increase in prices over the past, but the wages of labourers have not increased proportionately. Consequently, the real wages of labourers have eroded considerably. The labourers have been resisting the evil consequences of price increases by demanding higher wages and allowances. This cause alone has accounted for about one-third of the total disputes in the country.
Over the years, industrial labourers have organised themselves into trade unions. The demand for higher wages in the wake of rising prices and rising cost of living has often been backed by trade union action. This has very frequently led to trade union activities like strikes, sit-ins, gheraos, work-to-rule, etc. This type of activities have led to prolonged industrial disputes.
The second major cause of industrial disputes in the recent years has been related to the question of payment of bonus to industrial workers. Over the years, bonus has come to be accepted as a right of the labour. Disputes frequently arise over the question of bonus, its amount, time and mode of payment. The Government too has not been adhering to any consistent policy over this matter.
iii. Victimisation of Employees:
Disputes also arise from the victimisation of employees by managements. Workers unite to resort to strikes and other forms of direct action until victimised employees are reinstated.
iv. Other Causes:
Among the other causes that lead to disputes the following may be mentioned:
First, despite the Factories Act, 1948, many unscrupulous factory owners try to evade the legal provisions relating to safety, hours of work, etc. The labourers press for the implementation of these provisions.
Secondly, labour disputes also arise when employees oppose retrenchment following the introduction of rationalisation schemes in factories.
Thirdly, labourers demand improvement in service conditions relating to security of jobs, hours of work, leave, gratuity and other facilities.
Fourthly, in recent years, trade unions have become strong and try to increase their influence over large sections of workers in a factory. But sometimes factory owners do not like the trade union activities of workers and even refuse to recognise the representative trade unions. This attitude of employers creates resentment and discontentment among employees, resulting in friction and disputes.
Fifthly, at times labour unions have asked for rights to participate in the management of factories. This has been denied by managements, which results in disputes.
Finally, mention may also be made of causes like sympathetic strikes with fellow- employees in other establishments, general discontent and sense of frustration among labourers, political issues, opposition to lay-off, ill-conduct of employer, etc.
It is to be observed that industrial disputes arise primarily because of various economic reasons. At times, these reasons get ignited by current political environment; nevertheless, it is necessary that industrial relations are improved, so that industrial peace could be established in the country.
The Government has been well aware of this problem and has undertaken a number of measures in this direction; some of these are as follows:
(i) Enacting the Factories Act, 1948, and other labour laws, regulating conditions of work in factories regarding hours of work, leave, safety of workers, etc.;
(ii) The introduction of schemes like profit-sharing, workers’ participation in management, subsidised industrial housing in some selected industrial establishments;
(iii) Framing of industrial employment standing orders for defining conditions of employment and for framing model service rules;
(iv) The introduction of the bonus scheme, making it compulsory for all establishments to pay a minimum of 8-33 per cent bonus to all employees;
(v) Arrangement for the settlement of industrial disputes under the Industrial Disputes Act, 1947;
(vi) The adoption of a ‘Code of Discipline’ (1958) by both employers and workmen for utilising the existing machinery for the settlement of disputes and avoiding direct action,
(vii) The provisions for social security benefits for industrial labourers under the various laws like the Employees’ State Insurance Act, 1948, the Employees’ Provident Fund and Family Pension Act, 1952, the Payment of Gratuity Act, 1972, etc.
(viii) Fixation of minimum wages under the Minimum Wages Act, 1948, and the Government’s efforts to get fair wages for labourers, etc.; and
(ix) The introduction of the scheme for workers’ participation in management.
Workers as individuals are usually too weak to influence the decisions of management in regard to wages and other terms and conditions of work. This places the employer or the management in a position of strength as against the individual workers. In the initial period of modern industrial development along the lines of mass production in large industrial units, the employer was quite often tempted to use this strength to dictate his own terms regarding conditions of work and wages.
The workers were, therefore, compelled by the force of circumstances to sell their labour cheap and the employer was free to exploit the labour and boost up his own profits. As an answer to this challenge, the workers, in mere self-defense and more so on grounds of expediency were forced to combine and defend themselves against the employers.
In the beginning, the workers formed temporary organisations which were disbanded as soon as their objects were achieved. With the passage of time, however, the workers realised the need for permanent organisations which could stand at par with the employers and bargain effectively with them to secure better wages and improved working conditions for their members.
Trade unions are the representative spokesmen of organised labour and may be organised to achieve several objects to further the cause of their members.
Usually, trade unions are organised to achieve the following objectives:
1. To secure better wages for the workers in keeping with the prevailing standards of living and cost of living in the country.
2. To secure a part of the increased prosperity of industry for their members in the form of bonus.
3. To strive for better working conditions for the workers in the form of shorter working hours, leave with pay, social security benefits and other welfare facilities.
4. To ensure stable employment for workmen by fighting against retrenchment of workers and other schemes (say, rationalisation) which reduce the number of workers required by an industry.
5. To create class-consciousness and fearlessness among the workers so as to make them stronger in comparison with the employers.
6. To work for welfare and development of their members by organising educational facilities and group benefit schemes for them.
7. To safeguard the interests of the trade or industry concerned through active participation in, or association with, the management of industrial units.
Keeping the above mentioned aims and objects of trade unions in view, Dr. Punekar has defined a trade union as “a continuous association of persons in industry, whether employers, employees or independent workers—formed primarily for the purpose of the pursuit of the interests of its members and of the trade they represent.” It follows that both the employers and employees may organise trade unions to further their interests.
Intimately connected with the rise and growth of trade unions is the device of collective bargaining which serves as a means to the achievement of their basic aims and objects. A strong trade union enhances the bargaining power of the workers in an industry or geographical area.
With this increased strength, however, it is necessary that unions should try to secure a better deal for its members as far as possible through negotiations with the employers rather than through the use of direct methods like strikes. It is this process of negotiations which forms the subject-matter of collective bargaining.
Simply stated, collective bargaining is the procedure by which an employer or employers and a group of employees agree to the conditions of work. It refers to “the dealings regarding the terms and conditions of employment under oral or written agreement with labour organisations in which are banded together the workers of a trade or industry in a given geographical area.”
The outcome of negotiations between the labour union and employers usually takes the form of a collective agreement which deals with such important matters as- (i) wages; (ii) hours of work; (iii) overtime work and rates of pay for it; (iv) employment injuries; (v) leave rules; (vi) status of the union and its members; (vii) dismissal and retrenchment; (viii) bonus based on profits; and (ix) procedure for the settlement of disputes between the employers and labour unions, etc.
Effective collective bargaining requires the following essential prerequisites:
(а) Existence of a strong representative trade union that believes in constitutional means.
(b) Existence of strong and enlightened management.
(c) Agreement on the basic objectives.
(d) Existence of a fact-finding approach and willingness to use new methods and tools for the solution of industrial problems.
It may be emphasised here that the institution of collective bargaining represents a fair and democratic attempt at resolving mutual disputes. Where it becomes the normal mode of settling outstanding issues, industrial unrest with all its unpleasant consequences is minimised. To a great extent, this has been achieved in countries like the U.S.A.
So long as labour has to depend upon the Government for adjudication and conciliation, it remains weak and dependent. However, collective bargaining succeeds best with healthy and well-organised unions and enlightened managements. Adjudication may be all right in cases where these prerequisites do not obtain but in the long run and as a general practice, collective bargaining is the only lasting solution to the complex problem of industrial relations.
For higher productivity and sound industrial relations, it is extremely important to give the workers the place of partners in industry. The workers must be increasingly associated
with the management of industrial undertakings so that they develop an awareness of the problems of industry and begin to feel that they have a positive contribution to make to the operation of their units.
Such association with management should gradually give place to labour participation in management. The principle of participation seeks to meet the psychological needs of the workers, brings them closer to the management, promotes their interest in self-education, gives them an insight into the economic and technical conditions and the purposes of the undertaking where they work, and serves to bridge the gulf between the management and the workers.
“For the peaceful evolution of the economic system on a democratic basis, it is essential that workers’ participation in management should be accepted as a fundamental principle and an urgent need.”
Industrial Relations and Strategic HRM:
Word ‘strategy’ is derived from the Latin word ‘strategic’ which means art and science of directing the military force. It is a game plan which directs what to do and how to do to achieve the objective. Here industrial relation strategy is to be formulated to maintain good relation. In an industrial unit, managers generally do not feel the need to act before the problem develops.
But due to stiff competition, changing economic environment, low productivity and increasing production costs, management must plan proactive strategy to deal with industrial relations. The corporate objectives can be achieved by getting the maximum cooperation from workers and reducing industrial unrest.
HR manager should have the proper knowledge of the working environment inside and the emerging trends in the economy. The impact of globalization should be visualized on the business of the company. The employees should be considered as the most important resource of the company.
Industrial Relations – The Threats and Challenges
1. Globalisation has brought about internationalisation of employees – transnational, multi-location employees with cross cultural characteristics.
2. International labour standards, their importance and implications.
3. WTO, IMF, WB and their influence
4. Manpower diversities – multi-racial, multinational, multicultural, multi-lingual and multi-ethnic manpower requires different system/mind set to deal with.
5. Consumer forums, environment activists, citizens forum at time clash with TUs.
6. New management practices like Casualism, contracting, off-locating, out-sourcing part time/home based work/flextime, Team working/Quality Circles/Total Quality Management.
7. IT revolution has changed the complexion of workplaces – lesser manpower, multi-skilled and committed to profession.
8. Highly educated, careerist, ambitious manpower.
9. Individual/decentralised bargaining is replacing collective bargaining.
10. Performance linked packages are the order of the day.
They should be treated properly. The old approach is outdated now. They should be treated like a human being. The industrial strategy should be prepared in such way, they are treated well, maintain good
industrial relations and maintain industrial peace and harmony.
Industrial Relations – Strategies to Improve Industrial Relations: Employee Assistance Programmes, Collective Bargaining and the Grievance System
Human resource strategies play a major role in improving the industrial relations.
Some of them are discussed below:
Strategy # 1. Employee Assistance Programmes (EAP):
Organisations need employee assistance programmes to create a productive work environment. These programmes help strengthen relations between the management and the workers. EAP attempts to solve the personal problems of the employees, which helps them improve their performance and retain them.
Given below are some types of EAP:
i. Stress management, weight control, blood pressure control, and smoking cessation programmes.
ii. Marital counselling, family counselling and alcoholism treatment.
iii. Financial counselling and legal advice.
The different stages in establishing an employee assistance programme are:
i. Problem Identification
ii. Programme Development
iii. Programme Implementation
iv. Programme Evaluation
i. Problem Identification:
This step identifies problems that affect employees. For example, family relationships and marital problems account for 40-50% of the EAP referrals. These problems affect the job performance of the employees to a great extent. It is important to identify the number of employees who are afflicted by similar problems. If the number is significant enough, the EAP will be cost- effective. An isolated problem can be solved with the help of an external agency or through personal counselling.
The next step is to decide whether the programme should be conducted within the organisation premises or at an external venue. Programmes conducted within the organisation premises may be expensive, but they have their own advantages. In-house programmes illustrate the commitment of the management towards employee welfare. The management can also have total control over the programme.
Management should also determine the appropriate time to conduct the programme. Programmes conducted during work hours are more likely to be attended by the employees. It is important to communicate the benefits of employee assistance programmes to the employees to ensure employee commitment to these programmes.
In most organisations, employers initiate the EAP. The supervisor identifies workers who are afflicted with problems and recommends them to EAP.
Therefore, subscribes should be trained to recognise workers with problems and approach a troubled workers. A trained subscribes help build better labour relations.
EAP can be evaluated by counting the number of employees who use the programmes and the feedback received from them. EAP evaluation should focus on five performance standards- effort, outcomes, adequacy, efficiency, and process.
Some organisations use the utility approach to assess the cost-benefits associated with EAP. In this approach, average annual costs are determined first. This figure is multiplied by the estimated percentage of employees afflicted with the problems. If the company assumes that the job performance of the workers is affected by the personal problems, then 25 five percent of the resulting figure represents the loss due to troubled employees. The net benefit of EAP is calculated by subtracting costs from estimated savings.
Strategy # 2. Collective Bargaining:
Collective bargaining is a negotiation technique in which the workers and employers try to collectively resolve their differences with or without the assistance of a third party. This technique was used by Mahatma Gandhi to improve labour-management relations in the textile industry in Ahmedabad. In India, companies like the Indian Aluminium Company, and the Tata Iron and Steel Company entered into long-term collective bargaining agreements with their unions in the 1950s.
Collective bargaining is used by the management and unions to compromise on conflicting interests by arriving at a consensus.
Collective bargaining can be used by organisations to safeguard the interests of the workers. Since, it involves discussions and interactions, the conflicting parties can learn more about each other and remove misunderstandings.
Collective bargaining plays a major role in improving industrial relations because it:
i. Resolves conflicts and differences
ii. Guarantees rights and responsibilities to the workers
iii. Brings social change through acceptable solutions
iv. Formulates terms and conditions under which labour and management will work together
Strategy # 3. The Grievance System:
Sometimes, there might be disagreements between the conflicting parties even after settling their dispute. As a result, employees may feel that their rights under the union contract are violated and they may file a grievance.
Dale S. Beach in his, “Handbook of Personnel Management and Industrial Relations”, defines grievance as, “dissatisfaction or feeling of injustice in connection with one’s employment situation that is brought to the notice of the management.”
In a grievance system, the aggrieved worker approaches the immediate superior and informs him about his grievances and seeks redressal. If the aggrieved worker feels that his grievance is not redressed, he can approach the supervisor again. The supervisor must address the worker’s grievance within 48 hours.
If the supervisor’s answer is not satisfactory or if he is not able to answer within 48 hours, the worker can approach the departmental head who has three days to answer the worker. If the departmental head is not able to answer within three days or gives an unsatisfactory answer, the aggrieved worker can approach the grievance committee that is constituted by the representatives of employers and employees.
The worker can approach the manager if he receives an unsatisfactory response from the committee. If the manager provides an unsatisfactory answer, the worker can approach the management for revision. He can also take a union official along with him to facilitate discussions with the management.
If an agreement is still not possible, the union and the management may refer the grievance to voluntary arbitration within a week of the receipt of the management’s decision by the employee.
Industrial Relations – Suggested Ways of Developing and Maintaining Good Industrial Relations
Now that we understand that in most organizations there are large number of employees whose employment contracts are necessarily negotiated with a collective body and this negotiation holds the key to companies competitive advantage, what could one do to change the present pathetic conditions of industrial relations in general and industrial relations of manufacturing organizations in particular.
Some of the suggested ways of developing and maintaining good industrial relations are discussed below:
Availability of a right leader is one of the essential requirements for success of collective bargaining. In the existing practice the trade union leaders are just chosen by workers. Even if they are elected by the workers, their expertise in the area of bargaining with the managers may not be sufficient. Many of them lack certain minimum understanding of how a modern corporation works and how change in economic and social environments could affect its fortunes.
This lack of common knowledge between a manager and a trade union leader is the root cause of poor communication and low trust between them. A manager may present certain serious problems that the company is facing but due to lack of prior exposure a trade union leader may take it as an attempt to obfuscate the main issue of dispute. A good and productive negotiation and dialogue is possible when both the negotiators have similar understanding of the organization and the problems faced by it.
The business understanding of trade union negotiators can be improved by developing and nurturing them from among the workers similar to the way a manager is developed by placing him/her under the direction of a good manager and by giving various challenging assignment and off-the job learning programmes. Most organizations consider trade union leaders as adversaries and never bother to invest on their development.
Just like the success of a good judicial process depends on the presence of good and honest lawyers both at the prosecution and at the defense side, a good collective bargaining would demand equally good and credible trade union leaders and line managers at home in negotiating with a collective body. A manager’s strength comes from the backing of the shareholders and promoters, and from his/her own expertise of business world.
A trade union negotiator’s strength originates from the backing of the employees he/she represents and his/her expertise about the changing condition of business and labour market.
Many line heads do not believe in collective bargaining way of dealing with workers issues. This belief also affects their interest in developing skills in the area of negotiation. There is considerable room for developing the line managers in this area. Most line managers acquire different technical and business-related skills because that is what is recognized by the company performance management system.
Their expertise in the area of negotiation can be developed only by making necessary changes in their career system and providing opportunities both through early exposure in collective bargaining and through off-the job learning programme from academic institutes as complementary inputs.
Much of the distrust between management and trade unions can be traced to managerial reluctance to share information about problems faced by an organization. Managers refuse to share information because they do not have to share this information by any rule of the company. Information is power and because a collective bargaining is nothing but a game of power, a manager would try to hoard as much power as he/she can before reaching a negotiation table.
This propensity towards power accumulation can be overcome if there is institutional rule for sharing all required information with members of the negotiating teams of both sides.
Line managers often refuse to share this information because of their apprehension of losing valuable information to Competitors. The best way to prevent diffusion of information to third parties is by creating a feeling of belongingness among the negotiators. Besides, sometimes our apprehension about losing information to competitors could be just due to our excessive sensitivity to our weakness.
Most information that is required for collective bargaining is publicly available information by way of annual report. As such any sharing of such information cannot provide any additional advantage to any of the competitors.
Who could participate in collective bargaining process? What is the frequency of meeting? Which things could be discussed in which forum? In the existing process of collective bargaining, most of these things are left entirely to the discretion of the management. Given that most managers do not believe in sharing power with others, such discretionary power is a source of much friction and distrust.
A company could design a collective bargaining structure which will provide clear rule on what things could be discussed at what forum, at what frequency, and who could participate in the negotiation. This would eliminate much of the uncertainty and energy that goes into deciding the time, topic and members for a collective bargaining.