Industrial Relations Management

Industrial Relations Management

This course contains the basics of Industrial Relations Management

Course introduction
Interview Questions
Pragnya Meter Exam

Industrial Relations Management


This lesson comprises three units. The first unit gives an account of worker’s development. Second unit deals with the concept, objectives and essential conditions for successful working of worker’s participation in management. The last unit explains worker’s participation in management in India adopting various practices and strategies for making participation work effectively.


HRD has become the key factor in India handling industrial relations to usher new industrial era. Managing men at work has been a most complex problem for management scientists. Some studies are:

  1. Scientific management – 1910,
  2. Time and Motion Studies – 1910,
  3. Human Relations Approach – 1920,
  4. Behaviour Science Movement – 1950,
  5. Human Resource Management (HRD) Movement – 1980.

As result of these studies coupled with emergence of strong trade union movement and labour legislation, man management has gone evolutionary change. Inspite of this evolution of management thought,it is still dilemma as to which approach is best in handling industrial relations.The two extreme trends are:

At One Extreme

  1. Trade Unions have become ‘second-line’ management. Managerial prerogatives are eroded.
  2. New generation of workers is more conscious of rights and privileges rather than duties and obligations towards the organization.
  3. Trade unions remain silent about workers’ obligations towards organization. Forthright leaders, if talk, they are dubbed as “management stooges”.
  4. Trade unions succeed in getting more through pressures and violence than by reasoning.
  5. Collective bargaining has become a pressure game. Unions are exploiting the emotions of workers.
  6. Only fear and force can restore discipline.
  7. Trade unions should be dealt with a heavy hand.(Authoritarian or hard approach)

At the Other Extreme

  1. Human beings are considered as assets not liabilities.
  2. Employees should be cared for, persuaded and motivated.
  3. It is felt forced disciplined is not enduring.
  4. Trade union’s through a pain-in-neck are a reality. They have role to play.
  5. Conflict and confrontation to be avoided. Win-lose strategy does not work for long.
  6. Manager’s should not spend much time on trade union wrangles but on preventive and proactive approaches and actions. Environment in the organization is creation of the management. An environment of conflict can be converted into cooperation and collaboration. (Humane and soft approach)

Human Resource Development (HRD) Approach

Balanced approach lies somewhere in between:

  1. Human Resource Development (HRD) generally covers some sub-systems, e.g. training and development, counseling, performance appraisal, career planning, etc. But HRD can extend to industrial relations (IR).
  2. HRD is new concept. It is a renaissance of traditional ways of man management. Due to new economic policy of liberalization, privatization and globalization (LPG), competition in the local market with MNC’s and changing technologies, there are fast changes in industrial relations scene. A number of practices are involved in organizations, e.g. restructuring of organizations, ERP, VRS, disinvestment of government shares, TQM, ISO 9000, Etc.

Companies are projecting certain views which are:

  1. There will never be job security.
  2. One will be employed as long as he adds value to the organization, Economic Value Addition (EVA).
  3. Employee should continuously find ways to add value by being innovative, risk-taking and committed to organization goals.

In turn employee has right to demand:

  1. Interesting and important work,
  2. Freedom and resources to perform it well,
  3. Proper pay
  4. Training.
  5. Employees become more responsible for their work and careers.

New deal in employee relationship calls for:

  1. Less control over employees and give more authority to work in teams.
  2. No more parent-child relationship, but adult to adult. Employees are to be treated as partners with management.
  3. Use of modern approaches to job design for better job satisfaction-such as job rotation, job enrichment, quality circles, flexi-time, compressed work week, to increase skill variety, task identity, task significance and autonomy and job feed-back. These will play positive role in employee satisfaction and make him feel his work is meaningful.
  4. Workers to be moved from one job category to another to enhance their exposure and employable skills.
  5. Management to encourage training as old jobs are getting extinct. This will provide job security.
  6. Management will explain to workers/unions importance of customer satisfaction, quality and low price to remain competitive.



Workers’ participation in management is an essential ingredient of Industrial democracy. The concept of workers’ participation in management is based on Human Relations approach to Management which brought about a new set of values to labour and management. Traditionally the concept of Workers’ Participation in Management (WPM) refers to participation of non-managerial employees in the decision-making process of the organization. Workers’ participation is also known as ‘labour participation’ or ‘employee participation’ in management.In Germany it is known as co-determination while in Yugoslavia it is known as self-management. The International Labour Organization has been encouraging member nations to promote the scheme of Workers’ Participation in Management. Workers’ participation in management implies mental and emotional involvement of workers in the management of Enterprise.It is considered as a mechanism where workers have a say in the decision-making.

Implications of Workers Participation in Management

The implications of workers’ participation in management have been summarized by the International Labour Organization thus:

  1. Workers have ideas which can be useful.
  2. Upward communication facilitates sound decision-making. Workers may accept decisions better if they participate in them.
  3. Workers may work more intelligently if they are informed about the reasons for and the intention of decisions that are taken in a participative atmosphere.
  4. Workers may work harder if they share in decisions that affect them.
  5. Workers participation may foster a more cooperative attitude amongst workers and management thus raising efficiency by improving team spirit and reducing the loss of efficiency arising from industrial disputes.
  6. Workers participation may act as a spur to managerial efficiency.


  • According to Keith Davis, Participation refers to the mental and emotional involvement of a person in a group situation which encourages him to contribute to group goals and share the responsibility of achievement.
  • According to Walpole, Participation in Management gives the worker a sense of importance, pride and accomplishment; it gives him the freedom of opportunity for self-expression; a feeling of belongingness with the place of work and a sense of workmanship and creativity.

The concept of workers’ participation in management encompasses the following:

  • It provides scope for employees in decision-making of the organization.
  • The participation may be at the shop level, departmental level or at the top level.
  • The participation includes the willingness to share the responsibility of the organization by the workers

Need of Workers’ Participation

Worker’s participation in management has assumed great importance these days because of the following advantages:

  1. Reduced industrial unrest: Industrial conflict is a struggle between two organized groups which are motivated by the belief that their respective interests are endangered by the self-interested behavior of the other. Participation cuts at this very root of industrial conflict. It tries to remove or at least minimize the diverse and conflicting interests between the parties, by substituting in their place, cooperation, homogeneity of objects and common interests. Both sides are integrated and decisions arrived at becomes “ours” rather than “theirs”.
  2. Reduced misunderstanding: Participation helps dispelling employee’s misunderstanding about the outlook of management in industry.
  3. Increased organization balance: If worker are invited to share in organizational problems, and to work towards common solutions, a greater degree of organizational balance occurs because of decreased misunderstanding of individual and group conflict. Participation leads to increased understanding throughout the organization. People learn that others have problems beside themselves.
  4. Higher productivity: Increased productivity is possible only when there exists fullest co-operation between labor and management. It has been empirically tested that poor ‘labor management relations’ do not encourage the workers to contribute anything more than the minimum desirable to retain their jobs. Thus, participation of workers in management is essential to increase industrial productivity.
  5. Increased Commitment: An important prerequisite for forging greater commitment is the individual’s involvement and opportunity to express himself. Participation allows individuals to express themselves at the work place rather than being absorbed into a complex system of rules, procedures and systems. If an individual knows that he can express his opinion and ideas, a personal sense of gratification and involvement takes place within him. This, in turn, fortifies his identification with the organization resulting in greater commitment.
  6. Industrial democracy: Participation helps to usher in an era of democracy in industry. It is based on the principle of recognition of the human factor. It tends to reduce class conflict between capital and labor. It also serves as a support to political democracy.
  7. Development of Individuals: Participation enhances individual creativity and response to job challenges. Individuals are given an opportunity to direct their initiative and creativity towards the objectives of the group. This facilitates individual growth.
  8. Less resistance to change: when changes are arbitrarily introduced from above without explanation, subordinates tend to feel insecure and take counter measures aimed at sabotage of innovations. But when they have participated in the decision making process, they have had an opportunity to be heard. They know what to expect and why. Their resistance to change is reduced

The realization of workers’ need for participation in the management is influenced by the following factors:

  1. Technology adoption leading to complexity in production process calls for increased worker cooperation.
  2. Employees are no longer treated as subservient but are treated as equals.
  3. Growing influence of union prevents exploitation of employees by management.
  4. There are regulations and legislations that facilitate increased workers participation in management.
  5. Higher levels of productivity and efficiency can only come through motivated and committed employees.

Objectives of Workers’ Participation in Management:

The main objectives of workers’ participation in management include:

  1. To establish Industrial Democracy.
  2. To build the most dynamic Human Resources.
  3. To satisfy the workers’ social and esteem needs.
  4. To strengthen labour-management co-operation and thus maintain Industrial peace and harmony.
  5. To promote increased productivity for the advantage of the organization, workers and the society at large.
  6. Its psychological objective is to secure full recognition of the workers.
Essential Conditions for Successful Working of WPM

The success of workers portion in management depends upon the following conditions.

  • The attitude and outlook of the parties should be enlightened and impartial so that a free and frank exchange of thoughts and opinions could be possible. Where a right kind of attitude exists and proper atmosphere prevails the process of participation is greatly stimulated.
  • Both parties should have a genuine faith in the system and in each other and be willing to work together. The management must give the participating institution its right place in the managerial organization of the undertaking and implementing the policies of the undertaking. The labor, on the other hand, must also whole heartedly co-operate with the management through its trade unions. The foremen and supervisory cadre must also lend their full support so that the accepted policies could be implemented without any resentment on either side.
  • Participation should be real. The issues related to increase in production and productivity, evaluation of costs, development of personnel, and expansion of markets should also be brought under the jurisdiction of the participating bodies. These bodies should meet frequently and their decisions should be timely implemented and strictly adhered to. Further,
  • Participation must work as complementary body to help collective bargaining, which creates conditions of work and also creates legal relations.
  • There should be a strong trade union, which has learnt the virtues of unit and self-reliance so that they may effectively take part in collective bargaining or participation.
  • A peaceful atmosphere should be there wherein there are no strikes and lock-outs, for their presence ruins the employees, harms the interest of the society, and puts the employees to financial losses.
  • Authority should be centralized through democratic management process. The participation should be at the two or at the most three levels.
  • Programs for training and education should be developed comprehensively. For this purpose, Labor is to be given education not to the head alone, not to the heart alone, not to the hands alone, but it is dedicated to the three; to make the workers think, feel and act. Labor is to be educated to enable him to think clearly, rationally and logically; to enable him to feel deeply and emotionally; and to enable him to act in a responsible way.



Workers’ participation in Management in India was given importance only after Independence. Industrial Disputes Act,1947 was the first step in this direction, which recommended for the setting up of works committees. The joint management councils were established in 1950 which increased the labour participation in management. Since July 1975 the two-tier participation called shop councils at shop level and Joint councils were introduced. Workers’participation in Management Bill, 1990 was introduced in Parliament which provided scope for up liftment of workers.

Reasons for failure of Workers participation Movement in India:

  1. Employers resist the participation of workers in decision-making. This is because they feel that workers are not competent enough to take decisions.
  2. Workers’ representatives who participate in management have to perform the dual roles of workers’ spokesman and a co-manager. Very few representatives are competent enough to assume the two incompatible roles.
  3. Generally Trade Unions’ leaders who represent workers are also active members of various political parties. While participating in management they tend to give priority to political interests rather than the workers’ cause.
  4. Schemes of workers’ participation have been initiated and sponsored by the Government.However, there has been a lack of interest and initiative on the part of both the trade unions and employers.
  5. In India, labour laws regulate virtually all terms and conditions of employment at the workplace. Workers do not feel the urge to participate in management, having an innate feeling that they are born to serve and not to rule.
  6. The focus has always been on participation at the higher levels, lower levels have never been allowed to participate much in the decision-making in the organizations.
  7. The unwillingness of the employer to share powers with the workers’ representatives, the disinterest of the workers and the perfunctory attitude of the government towards participation in management act as stumbling blocks in the way of promotion of participative management.

Measures for making Participation effective:

  1. Employer should adopt a progressive outlook. They should consider the industry as a joint endeavor in which workers have an equal say. Workers should be provided and enlightened about the benefits of their participation in the management.
  2. Employers and workers should agree on the objectives of the industry. They should recognize and respect the rights of each other.
  3. Workers and their representatives should be provided education and training in the philosophy and process of participative management. Workers should be made aware of the benefits of participative management.
  4. There should be effective communication between workers and management and effective consultation of workers by the management in decisions that have an impact on them.
  5. Participation should be a continuous process. To begin with, participation should start at the operating level of management.
  6. A mutual co-operation and commitment to participation must be developed by both management and labour.

Modern scholars are of the mind that the old adage “a worker is a worker, a manager is a manager; never the twain shall meet” should be replaced by “managers and workers are partners in the progress of business”

Forms of workers’ participation in management

The various forms of workers’ participation in management currently prevalent in the country are:

  1. Suggestion schemes: Participation of workers can take place through suggestion scheme. Under this method workers are invited and encouraged to offer suggestions for improving the working of the enterprise. A suggestion box is installed and any worker can write his suggestions and drop them in the box. Periodically all the suggestions are scrutinized by the suggestion committee or suggestion screening committee. The committee is constituted by equal representation from the management and the workers. The committee screens various suggestions received from the workers. Good suggestions are accepted for implementation and suitable awards are given to the concerned workers. Suggestion schemes encourage workers’ interest in the functioning of an enterprise.
  2. Works committee: Under the Industrial Disputes Act, 1947, every establishment employing 100 or more workers is required to constitute a works committee. Such a committee consists of equal number of representatives from the employer and the employees. The main purpose of this committee is to provide measures for securing and preserving amity and good relations between the employer and the employees.
    Functions: Works committee deals with matters of day-to-day functioning at the shop floor level. Works committees are concerned with:
    • Conditions of work such as ventilation, lighting and sanitation.
    • Amenities such as drinking water,canteens, dining rooms, medical and health services.
    • Educational and recreational activities.
    • Safety measures, accident prevention mechanisms etc.
    • Works committees function actively in some organizations like Tata Steel, HLL, etc but the progress of Works Committees in many organizations has not been very satisfactory due to the following reasons:
    • Lack of competence and interest on the part of workers’ representatives.
    • Employees consider it below their dignity and status to sit alongside blue-collar workers.
    • Lack of feedback on performance of Works Committee.
    • Undue delay and problems in implementation due to advisory nature of recommendations.
  3. Joint Management Councils: Under this system Joint Management Councils are constituted at the plant level. These councils were setup as early as 1958. These councils consist of equal number of representatives of the employers and employees, not exceeding 12 at the plant level. The plant should employ at least500 workers. The council discusses various matters relating to the working of the industry. This council is entrusted with the responsibility of administering welfare measures, supervision of safety and health schemes, scheduling of working hours, rewards for suggestions etc.

    Wages, bonus, personal problems of the workers are outside the scope of Joint management councils. The council is to take up issues related to accident prevention, management of canteens,water, meals, revision of work rules, absenteeism, indiscipline etc. the performance of Joint Management Councils have not been satisfactory due to the following reasons:

    • Workers’ representatives feel dissatisfied as the council’s functions are concerned with only the welfare activities.
    • Trade unions fear that these councils will weaken their strength as workers come under the direct influence of these councils.
  4. Work directors: Under this method, one or two representatives of workers are nominated or elected to the Board of Directors. This is the full-fledged and highest form of workers’ participation in management. The basic idea behind this method is that the representation of workers at the top-level would usher Industrial Democracy, congenial employee-employer relations and safeguard the workers’ interests. The Government of India introduced this scheme in several public sector enterprises such as Hindustan Antibiotics, Hindustan Organic Chemicals Ltd etc. However the scheme of appointment of such a director from among the employees failed miserably and the scheme was subsequently dropped.
  5. Co-partnership: Co-partnership involves employees’ participation in the share capital of a company in which they are employed. By virtue of their being shareholders, they have the right to participate in the management of the company. Shares of the company can be acquired by workers making cash payment or by way of stock options scheme. The basic objective of stock options is not to pass on control in the hands of employees but providing better financial incentives for industrial productivity. But in developed countries, WPM through co-partnership is limited.
  6. Joint Councils: The joint councils are constituted for the whole unit, in every Industrial Unit employing 500 or more workers; there should be a Joint Council for the whole unit. Only such persons who are actually engaged in the unit shall be the members of Joint Council. A joint council shall meet at least once in a quarter. The chief executive of the unit shall be the chairperson of the joint council. The vice-chairman of the joint council will be nominated by the worker members of the council. The decisions of the Joint Council shall be based on the consensus and not on the basis of voting.
  7. In 1977 the above scheme was extended to the PSUs like commercial and service sector organizations employing 100 or more persons. The organizations include hotels, hospitals, railway and road transport, post and telegraph offices, state electricity boards.

  8. Shop councils: Government of India on the 30th of October 1975 announced a new scheme in WPM. In every Industrial establishment employing 500 or more workmen, the employer shall constitute a shop council. Shop council represents each department or a shop in a unit. Each shop council consists of an equal number of representatives from both employer and employees. The employers’ representatives will be nominated by the management and must consist of persons within the establishment. The workers’ representatives will be from among the workers of the department or shop concerned. The total number of employees may not exceed 12.
  9. Functions of Shop Councils:

    1. Assist management in achieving monthly production targets.
    2. Improve production and efficiency, including elimination of wastage of man power.
    3. Study absenteeism in the shop or department and recommend steps to reduce it.
    4. Suggest health, safety and welfare measures to be adopted for smooth functioning of staff.
    5. Look after physical conditions of working such as lighting, ventilation, noise and dust.
    6. Ensure proper flow of adequate two way communication between management and workers.

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