The Industrial Relations In An Organization Business Essay

1881 words (8 pages) Essay in Business

5/12/16 Business Reference this

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This topic discusses about the industrial relations in an organization and various approaches to the study of employment relationship. Managers determine the analytical categories and perceive the formal and informal relationship among the employees. They are derived as unitarism and pluralism. This also explained about the adaptions of HRM and neo-institutionalism. These concepts are used to avoid the conflicts and provide possible solutions when any conflicts occur in the organization. Neo-institutionalism is a set of rules which followed by the employees of the organization so that everyone follows and committed to the rules which helps to create value.


In developing a theory of industrial relations various approaches or perspectives have been identified. It is important to remember that these are analytical categories and not predictive models. No single perspective is “correct”, they all emphasise a different aspect of IR.

How industrial relations are conducted within a particular organization is determined by the frame of reference through which its top managers perceive the formal relationship with individuals and/or their representatives. Alan Fox (1966) suggested that managers may adopt one of two basic views: the unitary and the pluralist perspectives.

The unitary perspective

Unitarism emphasis the organization as a coherent team united by a common purpose. Managers who take this view regard themselves as the only legitimate source of power and authority which they value and protect. They see their role as one of controlling the activities of the workforce and assume that all employees share the common goals of the organization, are loyal to the `management team’ and totally committed to the purposes of the organization. Armstrong (1999) says that the philosophy of HRM with its emphasis on commitment and mutuality is based on the unitary perspective.

The pluralistic perspective

Pluralism sees the organisation as an amalgamation of separate homogeneous groups within some kind of dynamic equilibrium. Here, managers may allow and actively foster freedom of expression and the development of groups, which establish their own norms and elect their own informal leaders. In this way, power and control arise in several areas of the organization and loyalty is commanded by the leaders of the groups, which are often in competition with each other for resources. The managers achieve results by joining the groups, encouraging participation, motivating employees and coordinating their work efforts. This, it is said, represents good leadership, although sometimes it can be difficult to achieve the necessary balance, in which the interests of all stakeholders have to be taken into account.. However, according to Rensis Likert, when employees become involved in solving work-related problems and making decisions, they become involved in what they are doing and committed to the achievement of successful outcomes (Likert, 1961).

Pluralism sees the organisation as an amalgamation of separate homogeneous groups within some kind of dynamic equilibrium.

The analytical tools of HRM:

The tools of Human Resource management involve the study of the managers:

Plan for their Human resource requirements

Recruit and select employees

Train for, and manage the performance of the employees

Reward employees

Dismiss or retire their employees

This focus and study of this approach is still in the relationship with the employee and the organizational policy. This approach is well suited on the diversity of management strategies and affects on strategic choices. The approach to HRM is similar to strategic theory or management theory and also closer to neo-institutionalism because it acknowledges and investigate empirical diversity and inter relationship between the management and employee.

HRM and pluralism

There are aspects of HRM, such as individual commitment and mutuality of interest in the success of the organization, which seem to be in sympathy with the unitary concept and, therefore, in conflict with a pluralistic philosophy. But can HRM incorporate any of the aspects of pluralism? According to Armstrong, one of the `prescriptions which constitute the HRM model for employee relations is the organization of complementary forms of communication, such as team briefing, alongside traditional collective bargaining – i.e. approaching employees directly as individuals or in groups rather than through their representatives’ (Armstrong, 1999); an approach, of course, which excludes trade unions.


Neo-institutionalism is a set of analytical tools among the industrial relations on the formal and informal rules regulate the employment and the social processes which create and enforce these rules. The assumption by the scholars is that these rules are the prime determinate of social relations at work. According to the Oxford school in Britain (Flanders 1970) and (Dunlop 1958) stated that: “Every industrial relations create a complex of rules to govern the work place and the work community. This rules had a variety of forms in different systems. The form of rule doesn’t change its character: to define the status of the actor and the conduct of the actors at the work place and work community.

These rules are necessary to build the employee relationship with cooperative and mainly to avoid the conflict when occurs or subsequently resolved. Understanding the concept and value of institutionalism helps to explain several theoretical and methodological features of research in industrial relations. The rules between the parties of employment allow the conflict to be accommodated. It is better to have the rules that lead to genuine results and compromise and agreement between the parties, because all the employees follow and committed to the rules that helped to create.

Pluralistic and neo-institutionalism:

Institutional pluralism is a situation that operates by an organization within multiple institutional spheres. If institutions are broadly understood as “the rules of the game” that direct and circumscribe organizational behaviour, then the organization confronting institutional pluralism plays in two or more games at the same time. Such an organization is subject to multiple regulatory regimes, embedded within multiple normative orders, and/or constituted by more than one cultural logic.

Modern HR Context:

Modern HRM is an extension of the human relations and neo-human relations approaches, and it represents a specific approach to the day-to-day functions of the administration of employees.

Modern Human Resource Management is widely viewed as Unitary Perspective. The unitarist commences from the assumption that organizations-and all of its members-are inherently concerned with the achievement of the organization’s goals. The unitarist perspective assumes there is no ‘real’ difference in interests between the employer and the employed.

As a result of these assumptions, it is assumed that the natural state of the organisation is productivity and harmony, in the course set by management. Conflict is, thus, an aberration, which is the temporary result of a lack of fit between the employer and the employee.

Conflict can arise from a failure of employees to understand the direction of the organisation-poor communication-enabling employees to substitute alternative agendas instead of the organisation’s agenda.

Conflict can also arise from poor management, and merely requires management to refocus itself. For example, following the approach of the human relations and neo-human relations schools, workers have basic needs that need to be met. A failure by management to identify and meet these needs can result in a lack of fit. In other cases, management may have been tardy in removing areas of worker inefficiency: Taylor and scientific management, for example, were concerned with removing the possibility of poor performance by redesigning the work process.

From this perspective, trade unions are irrelevant, illogical and an intrusion into the behaviour of the organisation. Trade unions exist either as the result of wickedness or perverseness of individual employees, or because of a failure of management to anticipate and incorporate worker needs and concerns. In this approach, management dominates all activities. The task of labour is to fit within this framework.

Human Resource Approach:

Human relations (Mayo/the Hawthorne experiments):

emphasis on work groups and social relations at work

Less importance given to economic incentives.

Human resource management:

emphasis on the management of commitment

Integration of employees into organisational strategy.

The analytical tools of Modern HRM

The two main schools within the HRM approach are 1) ‘soft’ HRM 2) ‘hard’ HRM. Two perspectives to HRM can also be seen. The ‘best practice’ approach assumes there is a set of specific practices that contribute to increased performance. The ‘contingency’ approach contends that each organization faces specific circumstances, and the HR approach employed by these organizations needs to reflect these circumstances.

Soft HRM

focuses on individual employees and the management strategies needed to increase employee satisfaction, organisational commitment, motivation and work performance

employees have universal needs, best identified and met using techniques drawn from psychology and organisational behaviour

The techniques of management, aimed at achieving these goals, are considered to be ‘best practice’, the ‘best’ ways to develop employees towards organisational goals.

Hard HRM

focuses on the better integration of HR strategies into business strategy

employees are seen as a commodity to be better allocated, in order to assist the achievement of business strategies

Decisions about the adoption of specific HRM policy becomes increasingly about cost-benefit analysis.

Management’s aims are to achieve ‘best fit’ between HR strategy and business strategy.

Criticisms of HRM approaches:

Both ‘hard’ and ‘soft’ HRM lack empirical evidence confirming prescriptions.

soft’ HRM has fundamental contradictions:

individual performance and development, and team-based cooperation

implementing organisational flexibility can undermine the stability, trust and long-term development needed to achieve organisational goals

HR’s championing of organisational culture can conflict with the desire for flexibility.


In conclusion, the development of industrial relation in the organization is identified by various approaches and perspectives. The knowledge of unitarism and Pluralism and their adoptions of HRM and neo-institutionalism are explained and implemented in the organization. This built the relation between employee and management. Formal and informal leaders encourage the groups, make to participate in the work and coordinate them in achieving the desired goal. Some of the concepts are used to avoid the conflicts and provides possible solutions when the problem occurs in an organization. Thus, industrial relations is competing ideas of various employees and stands on single opinion by working unitedly.


Bary. D.,(2005), “Industrial relations: A contemporary approach” retrieved on 17th August 2010.”

“Unitarism, pluralism, and human resource management in Germany.” Published n 24th july 2009.

Edwards, P., (2003), “Industrial relations: Theory and practice” 2nd ed. retrieved on 17th August, 2010

ALAN FOX(1966), GREAT BRITAIN. ROYAL COMMISSION ON TRADE, U. & EMPLOYERS, A. Industrial sociology and industrial relations : an assessment of the contribution which industrial sociology can make towards understanding and resolving some of the problems now being considered by the Royal Commission / by Alan Fox, London :, H.M.S.O.

ARMSTRONG, P (1999). The costs of activity-based management. Accounting, Organizations and Society, 27, 99-120.

(Likert, 1961), The Human Organization: Its Management and Value, McGrawHill.

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