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 mans child neither the employers or government had
empathy for them, there were no union also.

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

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

Definition of Worker
Definition of Worker- According to Factories Act,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, or in cleaning any part of
the machinery or premises used for a manufacturing process,
or in any other kind of work incidental to, or connected with
the manufacturing process, or the subject of the manufacturing
process but does not include any member of the armed forces
of the Union.

Concept and Definition of Industrial Relation

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

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, 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, workers,
and other organizations. The matter, therefore, includes
individual relations and shared consultation between
employers and workers at their work place, joint relations
between employers and trade unions; and the part played by
the State in regulating these relations.

According to ILO
The ILO aims to assist member States in establishing or
strengthening legal frameworks, 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, economic and social development, and good
governance. It supports the development of knowledge on global
industrial relations, in particular the actors and institutions involved
in cross-border social dialogue and agreements.
Industrial relations deals with either the relationships between the
state and employers and workers organizations or the relations
between the occupational organizations themselves.

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

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

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

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
employees
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.

 Institutional factors include items like state policy, labour

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

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

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

Scope Of Industrial Relation

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, 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

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

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

Objectives OF Industrial Relations

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

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

Contd.
To Create Participative environment- 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. In other words, complete unity of thought
and action is the main achievement of industrial peace.
To promote Equitable distribution of Income- Provide
better wages and living conditions to labor, so
misunderstandings between management and labor are
reduced to a minimum.

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

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

Poor Industrial Relation- Causes

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

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

Poor Industrial Relation- Effects

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 affect on
career.
Effect on Employers / Industrialists: (i) Less production,
(ii) Less Profit, (iii) Bad affect 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.
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.

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

Developing Sound IR
1. 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. Among others, there may be two most
effective ways to create trust between the IR parties:
To build competence in both labourers and managers,
and
To develop and practice right human resource practices
in the organisation. In fact, it is trust only that binds
labour and management together.

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

4. Make provisions for bipartite and tripartite committees:

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

6. Professional Approach: Understanding human behaviour has

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

Steps for sound and healthy labour relations

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

5. Both management and trade union should share the

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

13.Enhance functioning of the Joint Management Committees,

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

21. Organize workshops seminars and symposiums to make the

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

28. Believe in the principle of continuous improvement and

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

35. Begin with quality of work and participations than collective

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

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

 Good industrial relation increase production, improves quality

of work and products efficiency of workers increased. Cost of
production lowered. Bad Industrial Relations leads to
industrial unrest industrial dispute and a downward trend to
industries workers and the nation. Of course the first hit will
be on the employers, who have invested. Industrial worker and
the employers normally dont think, 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.