What is Industrial Relation? Meaning, Definition, Scope, Importance

Industrial relation is the relationship between employer and employees that is considered of core importance for a business’s success and operation. Here in this article, we have shared what is industrial relation and their importance.

The term industrial relations in HRM deal with effectively and successfully managing the relationship between employers and employees in the industry.

Generally, in industrial relations, two parties employees and management are involved in the process of establishing cordial relations. However, the role of government is to facilitate, regulate and maintain industrial relations.

After reading this article, we will provide you with a complete overview about; What is industrial relations in HRM, what is Its meaning, what Different definitions of Industrial relations are given by different authors, what Objective of industrial relation, Scope of industrial relations, Importance of industrial relations, Approaches of industrial relations and the factors of industrial relations?

► What is Industrial Relation in HRM?

The term industrial relations may be defined as the relationship between employees and management which comes directly or indirectly from the union-employer relationship.

This relation determines the working condition of employment, protection of interest of both employer and employees, financial and social benefits, and day-to-day working of an organization.

Industrial relations refer to the result of the employment relationship between employers and employees.

Meaning of Industrial Relation

Industrial relations term concerned with the relations or interactions of labor and management during the period of employment which directly and indirectly emerge from the management-workers relationship.

As a result of composite attitudes and approaches of industrial relations which help in effective and successful management of the business, financial, and social affairs of the industry, for the betterment of not only the management and the workers but also of the industry and the economy as a whole.

Definition of Industrial Relation

“Industrial relations as “the complex interrelations among managers, workers, and agencies of the governments”. – J.T. Dunlop 

“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 labor contract”. – Dale Yoder

The HR Employee Relations Manager directs the organization’s employee relations function. They develop employee relations policies and ensure consistent application of company policies and procedures.

In addition, they are responsible for employee dispute resolution procedures, performing internal audits, and taking appropriate action to correct any employee relations issues

We can have three parties or participants or actors in an industrial unit:

  1. The workers and their unions,
  2. Employees and their associations, and
  3. Government.

► Objectives of Industrial Relation

Industrial relations play a significant role in the smooth functioning of industrial operations so it becomes very crucial to understand the objectives of industrial relations.

The main objectives of industrial relations are as given below-

  • To protect the interest of all participants of the industrial unit i.e employees, labor management, and trade unions.
  • To secure the highest level of mutual understanding and trust among different stakeholders in the industry.
  • To avoid industrial conflict and develop harmonious relations.
  • To increase the productivity of workers and management.
  • To reduce high turnover and frequency absenteeism.
  • To promote industrial democracy.
  • To reduce or eliminate strikes, lockouts, and gheraos in the organization.
  • To provide reasonable and fair wages, and improved living and working conditions to employees.
  • To improve the economic and social conditions of workers in the existing state of industrial management and political government.

► Importance of Industrial Relation

  • It ensures the protection of all the parties that are part of Industrial activities.
  • It promotes cordial relations and interaction with all the stakeholders of the industry i.e supervisors, workers’ trade unions, management, trade union leaders, and employers’ associations.
  • It plays a key role in the promotion of industrial democracy and propounds the basic constitutional values that are enshrined in the Indian constitution.
  • It also provides room for government intervention to influence industrial relations situations through its activities as a facilitator, guide, and counselor for both parties in the industry.
  • It acknowledges the role of trade unions to regulate and promote the perception, and attitudes of workers towards management.
  • It ensures an effective human resource planning system through its fair and transparent policies which help in the identification and selection of the right kind of candidate.
  • It promotes two-way communication which is important for the establishment of a healthy work culture environment in the organization.
  • It also provides many methods and technics to settle workers’ grievances and disputes through bilateral negotiation.
  •  It always emphasizes mutual talk, sharing responsibility, collaboration, partnership dealing, and mutual trust.
  • In the process changes in workers’ attitudes, behavior and thought patterns are likely to occur which affect industrial relations.
  • It is also crucial for increasing production both in terms of quantity and quality and reducing wastage, accident rate, productivity, labor turnover rate, and absenteeism rate.
  • It uplifts the company’s corporate image which directly reflects in the growth and development of the industry.

► Approaches of Industrial Relation

The important approaches to industrial relations are as follows-

  1. Unitary Approach
  2. Pluralistic Approach
  3. Marxist Approach
  4. Systems Approach
  5. Gandhian Approach
  6. Human Relations Approach
  7. Action Theory Approach
  8. Social Action Approach

► Scope of Industrial Relations

Industrial relations have a very high significance in HRM and the scope of industrial relations are as given below.

  • Employees and Employer Rights Protection
  • Handling Grievance
  • Mental Revolution
  • Contract Interpretation
  • Boosting Morale
  • Collective Bargaining or negotiation
  • Increasing Productivity

Employees and Employer Rights Protection

Industrial relations through various acts, regulations, and associations provide many safeguards which ensure justice and protect the rights and interests of both employees and employers.

Handling Grievance

One of the aims of Industrial relations is to maintain a friendly and trustworthy relationship between the management and the employees by setting up a method to resolve the grievances of both parties.

Mental Revolution

It means transforming or changing the way in which both the management and the workers think or perceived things.

Contract Interpretation

Industrial relations emphasizes providing proper training to the supervisors and managers on labor law contracts to clarify any misunderstanding.

Boosting Morale

Industrial relations always focus on building employees’ confidence and boosting their morale so that they can perform better than before.

Collective Bargaining or Negotiation

The worker’s representative or trade union leaders and the management communicate openly and freely with each other and put up their proposals in front of each other and try to negotiate over the same to reach a consumer which is fruitful for both parties.

Increasing Productivity

Industrial relations have great scope in improving the efficiency and productivity of the organization by ensuring long-term and cordial relationships between employees and employers.

► Factors Affecting Industrial Relation

The various factors that affect the relationship between the management and the employees in an organization are as follows:

  • Individual Behavior
  • Psychological Factors
  • Organizational Structure
  • Leadership Style
  • Economic Factors
  • Technical Factors
  • Legal Factors
  • Political Factors

✔ Individual Behavior

An industry consists of different types of people and every person has his or her own perception, skills, knowledge, expertise, experience, strengths, and weakness which directly influences industrial relationships.

✔ Psychological Factors

These factors are one of the most valuable factors that influence industrial relations. The kind of attitude, morale, interest, motivation, and mentality of workers towards the employer and their task evoke positive or negative feelings and emotions.

✔ Organizational Structure

It includes the degree of centralization and decentralization, organization hierarchy, the flow of information, span to control, work culture, etc. are very detrimental to establishing a sound industrial relationship.

✔ Leadership Style

The kind of relationship that exists between employees and the employer is determined by the leadership traits and leadership styles adopted by the manager.

✔ Economic Factors

Economic factors like demand and supply, investment, liberalization, privatization and globalization, ease of doing business, demographic dividend, unemployment, etc play a vital role in deciding the industrial relation.

✔ Technical Factors

These include the type of technology used, degree of automation, mechanization, and computerization, frequent innovation, and adaptation of technology affect the level of industrial relations.

✔ Legal Factors

These include all the legal frameworks or acts or rules that regulate work duration, working conditions, wages, insurance, social security and trade unions, etc.

✔ Political Factors

Political factors influence industrial relations in many ways. It determines the government system, political ideologies, organizational structure, etc.