Topic 1 - The Study of Industrial Relations

Welcome to HRM602:
Management of Industrial
Relations
Topic one: The Study of Industrial

Relations
Copyright  2009 McGraw-Hill Australia Pty Ltd

PowerPoint Slides t/a Employment Relations: Theory and Practice by Bray, Waring and Cooper 1–1
Slides prepared by Chris Martin, University of South Australia
Learning Objectives
• Define what is industrial and employment relations.
• Why the change from industrial relations to employment
relations?
• Discuss why the study of industrial/employment relation is
important
• Discuss the growth of industrial relations
• Compare and contrast the various perspectives /theories of
Industrial relations
• Critically assess the strengths and weaknesses of different

approaches to the study of employment relationship.

Introduction
 Industrial relations constitutes one of the delicate and complex
problems of the modern industrial world, directly or indirectly
affecting all.
 Rising levels of unemployment, increasing foreign debt, declining

relative standards of living, globalization, technological changes,
and ever-increasing pressures of capitalism are creating much
more tensions in the field of employer-employee relations all over
the world.

What is Industrial Relations
•Industrial relations is about the behaviours and interaction of
employer-employees at work’.
IR assumes the employment relationship as conflictual – interest

and power relations at work.
It focused on ‘collective’ aspects of employment.
Its is concerned with the relationships which arise at and out of

the workplace (i.e., relationships between individual workers, the
relationships between them and their employer, the relationships
employers and workers have with the organisations formed to
promote and defend their respective interests, and the relations
between those organisations, at all levels).

Concept of Industrial Relations
 IR is a subject that covers various factors that affect people at
work:
 Institution – Trade Union, Union Federation, Employers
Association ,Industrial Court and Tribunals, Govt. Ministries and
many more.
 Procedures/Processes – such as collective bargaining; worker
involvement in decision-making; discipline, grievance & dispute
settlement; redundancies; dismissals; and the management of
conflict between employers, workers and the trade unions, when
it arises.
 The relationships and processes are influenced by the
government and its agencies through policies, laws, institutions
and programmes, and by the broader political, social, economic,
technological and cultural characteristics of each country.

Concept of Industrial Relations
 Characters- it involves characters like Trade Union, HR
officials, Officials of Employers Association, HR managers,
Company Directors, Conciliators, Mediators, Arbitrators,
Tribunal Judges, Ministers and Labour Officials, etc.
 Topics – it involves topics like pay, hours of work, conditions

of work, contract of employment, industrial policy, government
policy, union membership, discrimination, industrial action &
sanctions like striking, picketing, lock-out, etc.

Define HRM
 Unitarist approach that emphasises the links between individual
employees and the organisation, and views labour management
as a strategic variable that has an important influence on
organisational performance.
 The concept of HRM originated in the USA as early as the 1950s.
 During the 1960s & 1970s new labour legislation, greater market
competition, declining trade union density and broader structural
changes in the US economy contributed to its growth and by early
1980s the approach had become firmly established in the USA.
 Since early 1980s the concept of HRM emerged in Australia, UK
and other parts of the World.
 In order to meet the demands of an increasingly competitive
market, organisations recognise the need for more strategic
approach to labour management.
What is employment relations?
 The Concept of ER has developed in recent years in response
to the changes in the world of work and the inability of IR
and/or HRM to conceptualise these changes and the current
state of play within the confines of traditional disciplines.
 Although the exact nature and boundaries of “ER” are still
debatable, it is generally regarded as a legitimate bridging term
that reflects the overlapping concerns of HRM & IR
 ER is a bridging term that integrates IRs and HRM, and
broadens the boundaries of both disciplines to encompass
a wider range of stakeholders and environmental factors.
 Additional stakeholders include, customers, investors,
suppliers, the local and broader community, international
organisations, interest groups and future generations.

Why the change from industrial relations
to employment relations?
 The British scholar John Kelly (1994) has observed that IR
has faced three major challenges:
1. The rise of non – unionism
2. The emergence and growth of human resource management

(HRM) as a related field of study, and
3. The revival of quantitatively - oriented labour economies.

 It is important to go beyond the approach associated with
IR’s to a more considered and systematic definition of the
area that captures the breadth of real-world practice, rather
than the narrow perceptions of the subject held by many
people, and to confirm a broader theoretical approach.

Why the change from industrial relations
to employment relations? Cont’
 The broader approach in this context includes a change in
terminology from ‘Industrial relations’ to ‘employment
relations’.
 ER is defined as ‘the study of the formal and informal rules

which regulated the ER and the social processes which
create and enforce these rules’.

Why study IR/ER ?
 ‘Work’ is a fundamental feature of life
 Unproductive work practices can be costly to organisations and
countries
 Everyone who derives an income through work or who becomes
involved in the organization and management of employees at
work is engaged in the practice of employment relations.
 The overall quality of the employment relationship and changes in
employment relations can have an important effect on the overall
performance of the organization.
 The terms and conditions of employment directly affect the quality
of employee’s working lives and their wellbeing outside of work.

Why study IR/ER ? Cont’
 IR in the work place is important for many reasons :
1. If the relation between the work force and management are

good then they enterprise has a good chance of being
successful.
2. Good IR depends on so many factors like correct attitude,

Trust and confidence honest, good personal relationships,
sensible and workable agreement and above all willingness to
work and feeling of commitment and belongingness.
3. It is about setting up correct working climate in which

organisation can benefit.
4. By working towards good IR in all its contexts, the objective is

to MOTIVATE employee towards achieving a PRODUCTIVE
successful enterprise

Growth of IR
 Industrial Revolution – Industrialization first started in UK in
1800s
 Economy based on manual labour replaced by one dominated
by industry and the manufacture of machinery.
 IR has given into a subject in its own right, and it is evident in
many ways:
1. Colleges, universities and various institutions recognise it and

teach it.
2. Organisations have evolved separate depts. dealing with IR.
3. HR dept employ special people to deal with subjects like

Agreement, Interpretation of agreement, negotiation etc.

Growth of IR Cont’
4. IR has developed its own language like wild cat strikes, closed
shop, layoffs, picketing leap frogging, black legs etc.
5. Another reasons for growth is the increasing amount of law

relating to employer, employee relations. Now almost every
area of employer employee relations is governed by some
rule. There is a large amount of IR law governing Trade Union
Immunities, contract of employment, striking, picketing
dismissals, Redundancy and discrimination in employment
etc.

Theoretical Approaches to the study of the
Employment relationship
 IR/ER can be viewed from different angles. These range from
Political, Social, Economic, to Legal, Psychologies to
Organisational.
 No single perspective gives a perfect view, but each adds to our

understanding of the subject.
 IR/ER does not involve any fundamental objective inquiry (like

science) because it is an Electric system (meaning chosen from
various sources) made up of people and orgs holding different
views.
 Essentially IR is pragmatic, in that at the end of the day, the

system works and problems get resolved.

 There are two main ways to understand the uniqueness of
different theoretical approaches to the study of employment
relations:
– their ‘ideological perspective’ and
– ‘analytical tools’
 With respect to ideological positions, it needs to be

acknowledged that different people perceive the employment
relationship from different and competing positions about what is
valuable, and that those different positions usually reflect deeper
assumptions about the nature of the organisation and society as
a whole. Ideological perspectives are classified into three:
– Unitarist – Pluralist – Radical

 Different analytical tools used in three approaches to
the study of the employment relationship
– neo-institutionalism
– human resource management
– labour process

Pluralism: neo-institutionalism
 Philosophy
– Organisation comprises many different interests and aims
– Power is diffused
– No party dominates the other
 Nature of employment relationship

– Open-ended
– Indeterminate
– Creates structural antagonism
 Role of state
– Impartial guardian of the ‘public interest’
– Protects the weak
– Restrains the strong

Pluralism (cont.)
 Management
– Should not expect obedience
– Aims to reconcile conflicting opinions
– Keeps conflict within acceptable bounds
 Unions
– Seen as legitimate representatives of employee interests at work
– Right to challenge management
– Responsibility to seek compromise
 Industrial conflict
– Inevitable
– An outcome of the variety of interests
 Is a feature of this perspective
 It is necessary and is seen as a healthy and a normal part of the
organisation.

A unitarist perspective: HRM
 Distinguishing feature of unitarist ideology
assumption that each work organization is an integrated
entity with a common purpose and a shared goal
 Where industrial conflict exists
– seen as temporary or the product of aberrant behavior
– induced by troublemakers, poor management or bad
communications
 Trade unions
– seen as unwelcome intruders who upset the unified and
cooperative structure within the organization
– compete with management for the loyalty of employees
 Unitarists support strong leadership by
management to gain commitment of employees

Unitarist perspective: main features
 Every workplace is an integrated and harmonious entity that
exists for a common purpose
 Management’s role is to provide strong leadership and good
communications
 Role of employees is to be loyal to the organization and
management, recognizing their common objectives
 Unions compete for the loyalty and commitment of employees
 State: Plays a minimal role

 Reforms: Let the business dictate the economy.

Criticisms of unitarist ideological
perspective
 Takes a narrow view the nature of industrial conflict
 Avoids fundamental questions such as:
– Conflict over the distribution of power
– Security of employment
– Status of labour as a factor of production
– Issues of power and control in decision-making

Theoretical Perspectives: Unitary Perspective
 Neo-Unitarism
 This view is a market oriented philosophy where the whole org
is dedicated to success in its market place, with a commitment
to customer satisfaction and high standard of quality
 Another managerial development that underpins the Neo-
unitary perspective is that of Human Relations Management
 This development is based on the organisational change
achieved through the development of full potential of the
employee.
 It focus strongly on the individual (employee) and through
training and development plans opportunities for promotion
and performance related pay.

 Neo-Unitarism
 This goes counter to collective bargaining, which is based on

improving terms & conditions on a collective basis.
 These new strategies were also helped by political situation. It
is also supported by the thinking that market forces should be
allowed to determine everything like jobs, payments and other
terms and conditions.
 Formerly the government helped to regulate some elements in
the labour market through wages councils, income policies,
employment protection laws, and these run counter to market
forces determining the terms and conditions.

 Neo-Unitarism
 Periods of high unemployment increased in the power of

employers and the unions became weak.
 Management of org began to redesign their org without
having to accommodate the union views, which used to be
the traditional system.
 All these resulted in adherence to the unitary system.

Radicalism by Karl Marx
 Recognizes fundamental and inherent conflicts of
interest between workers and employers at the
workplace
 Radical writers see worker–management relations as

only one aspect of class conflict and believe that the
antagonism of interests between capital and labour
cannot be resolved without changing the underlying
social structures
 Workplace conflict is a reflection of class conflict that

permeate the whole of society

Radical perspective: main features
 General philosophy
– Fundamental conflict of interest between workers and employers
– Derives from unequal distribution of income and wealth in a
capitalist society
 Power
– Those who own the means of production have more
power than those who labour for wages
 The state
– Has an integral role in protecting the interests of those
who own the means of production
 Unions
– Employees are vulnerable as individuals
– This leads them to form worker collectives and unions
– Then they can challenge the control of management and
the distribution of national product

Some Main Perspectives: System Perspective
 The system model or perspective of J T Dunlop, is an

attempt to provide framework to IR.
 Its aim is to provide tools of analysis to interpret and gain an

understanding of IR
 Dunlop identified 3 main factors in a system of IR:
(i). Actors – these are people and organisation involved in IR,

which include employees and their organisations, employers
and their organisation, and the state and other Agencies.

(ii) Context – this includes the main elements of the
environment.
 This includes the technological aspects, budgetary
constraints, market constraints and the locus of power in
society. Technology has had profound effects on IR. Many
changes in the occupation and industrial structures have
taken place due to technological change.
 This has affected the context, within which our IR operates.
All organisations will have to work within an Economic
framework, and this affects the IR of a country.
 The system for the private sector employees is different from
those in the private sector as different budgetary and market
factors bear on the system.

 The locus of power is the power distribution outside the
system of IR. The nature of the national political system has
a direct bearing on the system of IR.
(iii) Ideology of the system

 Beliefs holds by the participants that allow the system to
operate. This is the body of common ideas that define the
role, and place of each actor.
 And ideas, which each actors holds towards the place and
function of others in the system

Summary
 Industrial Relations
- is the relationship between employer, employee and
the State
Employment Relations
– is the study and practice of the relationships and the
rules that govern those relationships in the workplace
– has largely replaced the term industrial relations, which
was associated with conflict and alleged over-regulation
 The study of employment relations is important because
work is important from a number of perspectives such as
unitary, pluralist, radical and system
 It has been said that employment relations is all about rules,
but it is about more than this

Summary (cont.)
 Two keys distinguishing theoretical approaches to
the study of employment relations are:
– their ideological perspective
– the tools they use
 Ideological perspectives are classified into three:
– Unitarist – Pluralist – Radical
 Analytical tools means the sets of concepts used
by each approach to analyse employment relations
 The theoretical approach used in this class is
characterised by a pluralist perspective and the use
of rules and rule making as the key tool for
understanding the employment relationship

Summary (cont.)
 HRM offers a unitarist perspective that is a mix of

concepts, usually about organisation structure and
the psychological contract of employee with the
organisation
 The Marxist or labour process school uses a
radical approach of class conflict and control as its
analytical tool
 There are other approaches but the three outlined
are valuable to deepen our understanding


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Welcome to HRM602:

Topic one: The Study of Industrial

Copyright  2009 McGraw-Hill Australia Pty Ltd

• Critically assess the strengths and weaknesses of different

Copyright  2009 McGraw-Hill Australia Pty Ltd

 Rising levels of unemployment, increasing foreign debt, declining

Copyright  2009 McGraw-Hill Australia Pty Ltd

IR assumes the employment relationship as conflictual – interest

It focused on ‘collective’ aspects of employment.

Its is concerned with the relationships which arise at and out of

Copyright  2009 McGraw-Hill Australia Pty Ltd

Copyright  2009 McGraw-Hill Australia Pty Ltd

 Topics – it involves topics like pay, hours of work, conditions

Copyright  2009 McGraw-Hill Australia Pty Ltd

Copyright  2009 McGraw-Hill Australia Pty Ltd

1. The rise of non – unionism

2. The emergence and growth of human resource management

3. The revival of quantitatively - oriented labour economies.

Copyright  2009 McGraw-Hill Australia Pty Ltd

 ER is defined as ‘the study of the formal and informal rules

Copyright  2009 McGraw-Hill Australia Pty Ltd

Copyright  2009 McGraw-Hill Australia Pty Ltd

1. If the relation between the work force and management are

2. Good IR depends on so many factors like correct attitude,

3. It is about setting up correct working climate in which

4. By working towards good IR in all its contexts, the objective is

Copyright  2009 McGraw-Hill Australia Pty Ltd

1. Colleges, universities and various institutions recognise it and

2. Organisations have evolved separate depts. dealing with IR.

3. HR dept employ special people to deal with subjects like

Copyright  2009 McGraw-Hill Australia Pty Ltd

5. Another reasons for growth is the increasing amount of law

Copyright  2009 McGraw-Hill Australia Pty Ltd

 No single perspective gives a perfect view, but each adds to our

 IR/ER does not involve any fundamental objective inquiry (like

 Essentially IR is pragmatic, in that at the end of the day, the

Copyright  2009 McGraw-Hill Australia Pty Ltd

 With respect to ideological positions, it needs to be

– Unitarist – Pluralist – Radical

Copyright  2009 McGraw-Hill Australia Pty Ltd

Copyright  2009 McGraw-Hill Australia Pty Ltd

 Nature of employment relationship

Copyright  2009 McGraw-Hill Australia Pty Ltd

Copyright  2009 McGraw-Hill Australia Pty Ltd

Copyright  2009 McGraw-Hill Australia Pty Ltd

 State: Plays a minimal role

Copyright  2009 McGraw-Hill Australia Pty Ltd

Copyright  2009 McGraw-Hill Australia Pty Ltd

Copyright  2009 McGraw-Hill Australia Pty Ltd

 This goes counter to collective bargaining, which is based on

Copyright  2009 McGraw-Hill Australia Pty Ltd

 Periods of high unemployment increased in the power of

Copyright  2009 McGraw-Hill Australia Pty Ltd

 Radical writers see worker–management relations as

 Workplace conflict is a reflection of class conflict that

Copyright  2009 McGraw-Hill Australia Pty Ltd

Copyright  2009 McGraw-Hill Australia Pty Ltd

 The system model or perspective of J T Dunlop, is an

 Its aim is to provide tools of analysis to interpret and gain an

(i). Actors – these are people and organisation involved in IR,

Copyright  2009 McGraw-Hill Australia Pty Ltd

Copyright  2009 McGraw-Hill Australia Pty Ltd

(iii) Ideology of the system