Industrial Relations as a strategy for enhancing organizational productivity & performance.

AuthorRaju, B.S.N.

Industrial Relations is a sign of congenial relations. When good understanding prevails between employee and management each party "tries to serve the other to the best of their ability. Employee tries to improve productivity when grievances and conflicts are resolved in an amicable manner. In this case study of Rashtriya Ispat Nigam Limited, Visakhapatnam, the author examines how IR affects productivity.


It is commonly held that the field of industrial relations deals with the people at work place. In industries, collaboration of men having diverse interests often leads to tensions and conflicts. Each interest group tries to maximize its share from the enterprise. Their orientation towards work is also bound to be different from another. Establishment and maintenance of harmonious relations between employee and management is a pre-requisite for the organization's performance. When good understanding prevails between them, each party tries to serve the other to the best of their ability. Employee tries to improve productivity. In a realistic sense, complete harmony can be elusive. Trade unions, to safeguard their interests, would try to register protest in an organized way. In the absence of sound industrial relations in an organization, it is reasonable to expect employees to face many serious disputes. Employment conditions in industry are not regulated merely by employees and employers, though both have a major role in it. State intervention in the regulation of employee- management relations has been on the increase and therefore, the role-played by the state and its interaction with employers and employees legitimately forms part of industrial relations.

Need & Significance

The most important benefit of industrial relations i$ that this ensures continuity of production and also the resources can be fully utilized, resulting in the maximum possible production. It reduces the industrial disputes. Strikes, lockouts, and grievances are some of the reflections of industrial unrest which do not spring up in an atmosphere of industrial peace. Good industrial relations improve the morale of the employees leading to enhancement in productivity. Wastages of men, materials and machines are reduced to the minimum. Do industrial relations influence organizational performance? Literature has explored the industrial relations impact on organizational performance, especially on the productivity dimension of performance. More recent studies state that performance is determined by IR practices. This study examines the impact of industrial relations strategies on organizational productivity and performance. The effects of trade unions, grievances, collective bargaining & participative management on Rashtriya Ispat Nigam Ltd performance are tested here.

Literature Review

First, we refer to the studies on industrial relations effects. The ways in which industrial relations can impede economic performance of a firm are by imposing restrictive work practices or by impeding the introduction of new technology. There is some evidence from the 1970s showing that such practices had harmful effects (Elbaum and Wilkinson, 1979). Such practices were common in India in that period until the mid and late 1980s, but were mostly removed by the new industrial relations system. Then began restructuring for nearly two decades of enterprise bargaining through strategic industrial relations. As to whether industrial relations restrict the introduction of new technology, while there were some cases of this, the evidence even from the 1980s was that, in general, industrial relations did not substantially restrict new technology. Still, it was generally thought amongst conventional economists that industrial relations had a negative impact on economic variables until the emergence of the 1980s (Freeman & Medoff, 1984). This showed that industrial relations could have a positive effect on the performance through two mechanisms. One was the 'bargaining' effect: higher wages lead employers to resort to labor-saving technology. This leads to higher labor productivity. The...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT