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MODULE -1

INDUSTRIAL RELATIONS: CONCEPT,
SCOPE AND OBJECTIVES

Learning Objectives This module begins with Concept of Industrial
Relations- Nature , scope and Objectives
 It throw some light on main parties involve in
Industrial Relation
 It covers Causes of poor Industrial relations and
Suggestions to improve it

Topics










covered

Introduction
Concept and Definition
Nature
Main Parties to IR
Nature
Scope
Importance
Objectives
Causes of Poor Industrial Relations
Effects of poor Industrial Relation
Summary

Introduction:
• Industrial Relations play a vital role in shaping the industrial
economy in the country. Smooth and cordial relations promote
congenial atmosphere for the industrial establishments to
flourish and progress, adding, thereby, to Net Domestic
Product of the country.
• At the time of Colonial rule, Zamindars came and workers
were their slaves and at their mercy. Later a heart less Hire and
fire system was established Industrial workers were treated as
no man’s child neither the employers or government had
empathy for them, there were no union also.

With the emergence of industrial development. industrial relations assume added importance and thus laid a sound and solid base for economic development. Gokale. Tilak. raja Ram Mohan Roy. • Gradually enlightened leaders came in action. • With industrial Revolution and massive developments in Science and technology lead to rise in Industrial democracies and consequent fall in International Communism. etc realized the need for Worker’s union. . Their efforts forced both governments and the employers to take necessary steps to think of workers. MK Gandhi.Contd.

consumer durables). “Industry” is a basic class of business activity. diligent. If a company performs various economic activities.g. semiconductors) or a more generic business activity (e. it is usually considered to be in the Industry in which most of its revenues are derived. .Definition of Industry • Definition of Industry-Industry in Latin it is called industries meaning industrious. The term industry is at times used to describe a very precise business activity (e.g.

or in any other kind of work incidental to.Definition of Worker • Definition of Worker. or the subject of the manufacturing process but does not include any member of the armed forces of the Union.According to Factories Act. . or in cleaning any part of the machinery or premises used for a manufacturing process. or connected with the manufacturing process.1948"worker" means a person employed directly or by or through any agency (including a contractor) with or without the knowledge of the principal employer whether for remuneration or not in any manufacturing process.

IR ranges from individual grievances to organized political action from work to lack of work in consideration to rules laid down by Nation.Concept and Definition of Industrial Relation • IR is simply about study of Man and Woman at work. actions. particularly as members of organized groups. . but also the economy. and reactions which affect not just company or an industry. Industrial relation in real sense is an interactions. Industrial relation is fundamentally concerned with the behavior of working people.

joint relations between employers and trade unions. . includes individual relations and shared consultation between employers and workers at their work place. to protect the interests of the employees and their employers and to control the means in which employers take care of their employees” • “The concept of industrial relations has been absolute to represent the relations of the state with employers.Definition • Armstrong has defined IR as “IR is concerned with the systems and procedures used by unions and employers to determine the reward for effort and other conditions of employment. therefore. workers. and other organizations. and the part played by the State in regulating these relations”. The matter.

• “Industrial relations deals with either the relationships between the state and employers’ and workers’ organizations or the relations between the occupational organizations themselves. It supports the development of knowledge on global industrial relations. institutions. machinery or processes for sound industrial relations and effective social dialogue in member States. It also aims to promote social dialogue among member States and regional or sub regional groupings as means of consensus building. in particular the actors and institutions involved in cross-border social dialogue and agreements. economic and social development.” . and good governance.According to ILO • The ILO aims to assist member States in establishing or strengthening legal frameworks.

Workers Employers Governmen t .

Main Parties in IR • Work ers • Empl oyers • Gove rnme nt • Industri al Relation s • Trade Union • Empl oyer Assoc iation s • Court s& Tribu nals .

. family background. activities etc. knowledge. Worker’s Association known as trade unions which play their role more importantly in trade unions.The workers play an vital role in industrial relations. investments. The main idea of trade unions is to protect the workmen’s economic interest through collective bargaining and by bringing force on management through economic and political diplomacy. education Qualification. Trade union factors consist of Leadership. The workers have work age. psychological factors.Workers • Workers at workplace: . skills and attitude towards other work etc. culture.

He expects the worker to pursue the rules. regulations and laws and also expects them to add their contribution to the maximum. policy and by enforcing labour laws. . Employer’s Associations protect the interest of the employer against ill acts of the trade unions and government. Employers employ worker. pays the wages and a range of allowances. and regulates the working r through various regulations.Employers • Employers and their organizations: -Employer is a decisive factor in industrial relations.

Government Government: .Government exerts its power on industrial relations by formulating and implementing its labour policy. industrial relations policy and labour laws. The process of conciliation and adjudication by playing the role of a mediator is the function of the government to maintain sound industrial relations. Also it tries to control the activities and behavior of both employee’s Association and employers' Association .

.Nature of industrial Relations: • Industrial relation do not function in a vacuity but multidimensional in character and are inculcate three determinants: (i) Institutional factors (ii) Economic factors (iii) Technological Factors.

communist. voluntary codes. laborers’ unions and employers’ Association. labour laws.• Institutional factors include items like state policy. collective agreements. • Under economic factors are included economic organisation (socialist. caste. . creed. etc. government ownership) power of labour and employers. company ownership. social institution like the community. attitudes of work. • Under technological factors come the techniques of production. capitalist. systems of power status. modernization and rationalisation schemes. capital structures etc. system of beliefs. relative nearness to the centers of power. individual ownership. the nature and composition of the labour force and the sources of supply and demand in the labour market. joint family. motivation and influence and industrial relations.

Good industrial relations result in increased efficiency and hence prosperity. reduced turnover and other concrete payback to the organization. labour and management. i. It is the industry which provides the setting for cordial relation at the workplace . Industrial relations cannot exist.It is the fundamental importance for the sustainable existence and development of the industrials enterprise.e.Importance – Safeguarding of harmonious industrials relations. – Involvement of 2 parties: Without the existence of two parties.

economical and political situation. agreements. traditions.Contd – IR comprises both conflict and cooperation: IR focuses on on study of attitudes. workers and employees. – Study of Rules and Regulations: IR involves the study of rules and regulations. . etc. relationships. nation’s labour policy. – Coordination and support: cordial relation between employer and workers play a vital role at workplace in issues like country’s social. practices and procedures developed by the parties involved resolving and minimizing conflicts. etc. laws. attitude of trade unions. customs.

Scope Of Industrial Relation .

so that ban individuals personality may grow its full stature for the benefit of the industry and of the country as well. – Development of Strong and healthy Labour-Management Relations-To safeguard the interest of labor and management by securing the highest level of mutual understanding and good-will among all those sections in the industry which participate in the process of production .Scope of Industrial Relation – Maintenance of Industrial Democracy-To establish and promote the growth of an industrial democracy based on labor partnership in the sharing of profits and of managerial decisions.

– Establishing Mutual Cooperation and Trust-To avoid industrial conflict or strife and develop harmonious relations.Industrial relations ensures continuity of production process which means continuous employment for all from manager to workers. – Promoting Productivity. . which are an essential factor in the productivity of workers and the industrial progress of a country.Contd.

Contd. said fringe benefits. gherao and grievances are some of the reflections of industrial unrest which do not spring up in an atmosphere of industrial peace. – Maintenance of Industrial peace and Harmony. To improve the economic conditions of workers in the existing state of industrial managements and political government. lockouts. improved living and working conditions. . go-slow tactics.Strikes. lockouts and gheraos by providing reasonable wages. It helps promoting co-operation and increasing production. – Better working Environment-To eliminate or minimize the number of strikes.

Objectives OF Industrial Relations .

It is the business of leadership in the ranks of workers. Both should think themselves as partners of the industry and the role of workers in such a partnership should be recognized. to other industries if the products are intermediaries or inputs. if these are goods of mass consumption. to exporters if these are export goods.Smooth running of an industry is of vital importance for several other industries. – To contribute in higher productivity and efficiency. .Objectives – To establish cordial relationship in Industry. to consumers and workers. employees and Government to work out a new relationship in consonance with a spirit of true democracy.

This results in banning of the unfair practices being used by employers or trade unions.Contd.Industrial relations involve setting up machinery to solve problems confronted by management and employees through mutual agreement to which both these parties are bound.Good industrial relations reduce the industrial disputes. . – To discourage unfair practices of management. – To reduce Industrial Dispute. Disputes are reflections of the failure of basic human urges or motivations to secure adequate satisfaction or expression which are fully cured by good industrial relations.

complete unity of thought and action is the main achievement of industrial peace.The employer in his turn must realize that the gains of industry are not for him along but they should be shared equally and generously with his workers. so misunderstandings between management and labor are reduced to a minimum. – To promote Equitable distribution of Income. In other words.Contd.Provide better wages and living conditions to labor. – To Create Participative environment. .

to increase production. Wastages of man. – To reduce Wastage in Production. It will help increase production. i. Employees work with great zeal with the feeling in mind that the interest of employer and employees is one and the same.e. The industrial peace lies ultimately in a transformed outlook on the part of both.Contd.Good industrial relations are maintained on the basis of cooperation and recognition of each other. – To act as a Change agent-The main object of industrial relation is a complete mental revolution of workers and employees. – To improve morale. material and machines are reduced to the minimum and thus national interest is protected. .Good industrial relations improve the morale of the employees.

. There is uninterrupted flow of income for all. there must be harmonious relationship between management and labor. – To contribute towards economic growth and developmentAn economy organized for planned production and distribution.The resources are fully utilized. aiming at the realization of social justice and welfare of the massage can function effectively only in an atmosphere of industrial peace. – To ensure optimum use of scarce Resources.Contd. If the twin objectives of rapid national development and increased social justice are to be achieved. resulting in the maximum possible production.

.Causes • Behaviour towards the workers on the part of the management. wages or daily benefits and allowances. • Disruptive behavior • Detrimental working conditions at the place of work.Poor Industrial Relation.When managers do not accept the union equal partners • Inequality or Inadequate determination of wages or inappropriate wage structure. • Desire of employers to pay as low as possible to its workers. • Need of workers for higher bonus. • Lack of human dealings skills on the part of supervisors and managers.

. • Mental inactivity on the part of the management. • Retrenchment. • Dispute on allocation the gains of output. • Inter-union Disputes. • Scarce welfare facilities.Contd. • Strikes by the workers. dismissal and lockouts by the management.

(ii) Less Profit. (iii) Bad affect on organisation. (v) Bitterness in relations. etc.) (ii) Lack of order in society. . (ii) Physical injury or death on account of violence during labour unrest. (iv) Bad effect on human relations. (iii) Blame by different parties. (iv) Economic losses.Effects • Effect on Workers: (i) Loss of wages. • Effect on Government: (i) Loss of revenue (less recovery of income tax. (v) Damage to machines and equipments. (vi) Adverse effect on development of companies. (iii) Excesses by employers. (vi) Adverse affect on career. (vii) Burden of fixed expenses.Poor Industrial Relation. • Effect on Employers / Industrialists: (i) Less production. sales tax.

• Effect on Consumers: (i) Rise in prices. . (ii) Hindrance in Economic Development of the country. (iii) Uncertainty in economy. (ii) Scarcity of goods. (iii) Bad affect on quality of goods.Contd. • Other Effects: (i) Adverse affect on International Trade (Fall in exports and rise in imports).

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and • To develop and practice right human resource practices in the organisation. there may be two most effective ways to create trust between the IR parties: • To build competence in both labourers and managers.Developing Sound IR 1. Among others. In fact. Developing Trust between Labour and Management: Research studies report that trust between labourers and managers serves as a foundation for developing sound IR in an organisation. . it is trust only that binds labour and management together.

benefits. Arm the Government with appropriate powers to settle the industrial disputes wherever necessary. 3. Existence of Sound and Democratic Trade Unions: One another prerequisite for a sound IR is the existence of sound and democratic trade unions to bargain with management. job security and so on. 2. To mention a few.Contd. Such machinery should include both legislative and non-legislative measures. establish machinery for the prevention and settlement of industrial disputes. It is the sound and democratic trade union that can protect the employee’s interest in terms of wages. peace can be established through several ways. working conditions. . Maintenance of Industrial Peace: Peace promotes prosperity and prosperity supports happiness. In an industrial organisation. These make employees satisfied and satisfaction permits no alibis and grievance.

court orders and judgments and violations of statutory provisions of the various laws 5. . then. etc. Create implementation and evaluation committees for looking into collective bargaining agreements. take proactive actions to solve the problems before these assume alarming proportions. A properly devised feedback mechanism enables the HR managers to spot the grey areas in IR system and. Nipping the problems at the bud is better because. a seemingly small problem if not solved culminates to a complex and serious one later on.4. Make provisions for bipartite and tripartite committees: For evolving personnel policies. code of conduct. sometimes. code of discipline. Continuous Feedback and Monitoring: Feedback serves as an input for improvement in all types of activities and so in IR as well.

6. These persons need to be well versed with whole gamut of employee/human behaviour at work. And the same has become more so in case of modem knowledge workers. IR by the persons having professional competence and approach in the subject. or say. This underlines the need for handling with employees. . Professional Approach: Understanding human behaviour has ever been a complex phenomenon.

following approaches should be taken into account. Management should develop better relationship with the workers and develop good image within the organization. Trade union should develop credibility by developing good image within the organization. 3. .Steps for sound and healthy labour relations • To develop a culture of industrial peace and harmony between management and union organisations. Avoid blind confrontations and believe in rationale cooperation between members and management within] the organisation. Both management and union should concern towards customer relations and customer services. 4. 1. 2.

Avoid decisions that affect employee's stability of employment. Encourage open communication between the two parties. 12. Never manipulate rewards to deserving employees. Arrive at medium and long-term agreements 10. 9. Avoid practice of victimization and marginalization of employees. 8. 11.5. 6. 7. The union and management should develop mutual trust and confidence between two parties. Both management and trade union should share the responsibilities to lead the organization towards goal attainment. . Ensure participative decision-making.

Give freedom to point out mistakes of each other. Quality Circles and Shop Councils. Ensure transparency in information sharing and communication process. Encourage teamwork to reduce the gap between workers and managers within the organisation.13. 20. 14. 16. Believe in work ethics. Encourage the feeling of equanimity than superior and inferior complex. 17. 18. 19. 15.Arrive at settlement of disputes through mediation than arbitration. Arrive at common objective programs between two parties. professional ethics and managerial ethics. .Enhance functioning of the Joint Management Committees.

Use skill development and reward as a strategy to make employees to take decisions independently. .21. 25. Open up different channels of communication to reduce the trade unions involvement in conflict handling purposes. Give opportunity to trade union leaders to visit organizations where there are strong union management relationships. 22. 24. 23. Ensure more power sharing and delegation of authority at unit level. Get detached from unrealistic demands and objectives. Organize workshops seminars and symposiums to make the working population and trade unions learn about the changes at global and local level. 26. Maintain the negotiation with trade unions and improve the relationship with workers. 27.

33. Recognition of employees as a partner in the organizational achievements and advancement.28. Opportunity for training to employees in order to ensure their growth and development within the organisation. Trade unions should concentrate more on quality of membership than quantity for better bargaining . Believe in the principle of continuous improvement and committed to learning. 31. Avoid hasty decisions to avoid union intervention in handling individual members problem. 32. Concentrate on job requirement capability match to avoid job stress and dissatisfaction among workers. 34. 30. 29. Take suggestions from employees to design the type and kind of decisions they expected to undergo within their functional level.

39. Workers should practice efficient use of materials and consumables. Restrain from unnecessary strike and lockouts. Do share over all objectives of the organization with working population in its true spirit and cooperation. 43. 40. 41.35. . Make use of games and role-plays to understand each other's position and avoid misunderstandings. 36. Avoid interventions of legal system to resolve organizational crisis. Begin with quality of work and participations than collective bargaining. 38. 42. Management and trade unions should arrive at agreements on total quality management and reactivation of joint ventures. Avoid play politics by management to attain short-term goals. 37. Avoid play politics by trade unions using workers life.

Conclusion • The essence of good industrial relation lie in the bringing up of good labour relations which gives a forum to understand each other (employer. . Profit are shared. This progressive ways when designed with their mutual interest and consent develops many incentive propositions. A good Industrial Relations increases the morale of employers and goods them to give their maximum. developments and leading to adoption of modern technology. effective participators forum is created in management. employee) creates co-operative thinking and working to achieve the goal of the organization. workers get their dues in the organization leading to job satisfaction-which is needed for good relations. each think of their mutual interest which paves way for introduction of new methods.

improves quality of work and products efficiency of workers increased. Of course the first hit will be on the employers. Bad Industrial Relations leads to industrial unrest industrial dispute and a downward trend to industries workers and the nation.• Good industrial relation increase production. Cost of production lowered. Industrial worker and the employers normally don’t think. . who have invested. feel or act in precisely the same way and because each starts from a different point conflict of some fort can mover be eliminated completely.