Industrial Relations

Industrial Relations is a term signifying both an academic field of study and a functional area of business practice. The focus of industrial relations (IR) in both the academic and business arenas is on the employer‐employee relationship. In particular, IR specialists examine the causes of various kinds of employment problems and maladjustments and seek to discover and implement new ideas, institutions, policies, and practices that can resolve or ameliorate these problems. IR is thus a field of both study and practice, involving economic, political, legal, social, and psychological aspects of employment. Historically, IR specialists have emphasized applied problem‐solving and concern for employee rights and interests.

Origins.

IR emerged at the beginning of the twentieth century with the widespread growth and development of a modern industry and a wage‐earning labor force. First and foremost as a source of public concern was labor‐management conflict, epitomized by violent strikes, riots, bombings, and destruction of property. Other labor problems also gained increasing attention. Several of these particularly affected employers, including high employee turnover, sporadic work effort, and wasteful production. Workers, meanwhile, suffered from poverty‐level wages, long hours, and unsafe working conditions. Many of these problems also imposed large costs on society, as when children's health and education were stunted by long work hours in mills and mines. Public and business concern about labor‐management problems coalesced during the World War I period, giving rise to IR as a field of study and practice.

Development through World War II.

In the 1920s, a consensus emerged concerning three distinct approaches to solving labor problems and, thus, improving IR. The first, sometimes called the “workers' solution,” relied on trade unionism and collective bargaining. The second, known as the “community's solution,” advocated protective labor legislation (for example, laws on minimum wages and child labor) and social insurance programs (e.g., unemployment compensation and old‐age insurance). The third, designated the “employers' solution,” involved the practice of personnel management and human‐relations in the workplace.

The post–1920 history of IR is a chronicle of the changing nature of labor problems in the workplace and of the attempts to redress them using one or more of the three approaches described above.

During the prosperous and politically conservative 1920s, employers held the upper hand and dealt with labor problems through new practices of personnel management. Progressive companies trained foremen in human relations, provided health insurance and paid vacations, codified employment policies, and promoted from within on the basis of internal job ladders. Companies also introduced employee‐representation plans, which they characterized as a form of industrial democracy or citizenship. Labor unions and government labor legislation, by contrast, lacked broad‐based public, governmental, or business support between 1919 and 1929.

The Great Depression of the 1930s brought radical changes in IR. The depression forced most firms to resort to repeated rounds of employee layoffs, wage cuts, and work speedups. By 1932–1933, mass unemployment and the collapse of welfare capitalism had created a growing sense of disillusionment, demoralization and injustice among masses of workers. The New Deal labor policies of the Franklin Delano Roosevelt administration, most particularly the National Labor Relations Act (NLRA) of 1935, stimulated the growth of unions across the economy, especially in the mass‐production industries. The NLRA, a wave of militant strikes, the rejuvenation of the American Federation of Labor (AFL), and the birth of a new labor federation, the Congress of Industrial Organizations (CIO), all stimulated unionization.

Although less than 10 percent of the nonagricultural workforce was unionized in 1932, by 1940 the proportion had risen to 27 percent. During World War II, union membership and coverage spread further, buoyed by a full‐employment economy and government pressure on employers to avoid strikes and labor unrest. When the war ended in 1945, union membership had quadrupled over the 1932 level and encompassed more than one‐third of all nonagricultural employees.

Post–World War II.

The Great Depression and World War II fundamentally changed the IR landscape, as unions organized most employees in the mass‐production industries. Whereas employers had pioneered innovative employment practices in the 1920s, now unions more often performed this role. Through collective bargaining, unions negotiated for cost‐of‐living adjustment clauses in their contracts, formal grievance systems, and extensive health and retirement benefit programs.

In the academic world, the rise of organized labor and the newfound importance of labor‐management relations led to the establishment of several dozen IR centers and programs in major public and private universities. Although these programs recruited faculty and offered courses covering each of the three solutions to labor problems described above, most stressed trade unionism and collective bargaining as the preferred means to improve IR.

In the twentieth century's concluding decades, IR again underwent fundamental changes. As organized labor suffered a substantial long‐term decline in membership and power, both human‐resource management, the new name for personnel management, and government legislation assumed more influence. Although most unions proved unable or unwilling to combat racial, gender, and other forms of discrimination in the workplace, for example, the federal government addressed these issues through legislation and regulations. Also, because unions now represented a much smaller proportion of the workforce, many workers lacked protection against such abuses as pension fraud and unsafe working conditions. Again the government stepped in to enact legislation to protect workers against these abuses. A third area of new legislation treated such social issues in the workplace as family and medical leave for employees.

Beginning in the late 1960s, employers also regained power and prestige in IR. The renaming of personnel management to “human‐resource management” (HRM) carried with it a stronger rhetorical emphasis on employees as valuable assets rather than as an expense to be minimized. Companies developed new HRM practices aimed at increasing organizational efficiency, enhancing workers' satisfaction, and reducing employees' desire for union representation. Managements instituted self‐managed work teams, alternative methods of dispute resolution (for example, peer‐review panels), profit‐sharing plans, and employee involvement programs.

By the mid‐1990s, the union share of the workforce had fallen to 16 percent. Unions had substantially increased their representation among public‐sector employees since the 1960s, but in the private sector union membership fell to only 10 percent—a level not seen since the early 1930s. A number of factors underlay this trend, especially increased domestic and global competition, sophisticated union‐avoidance practices by employers, overaggressive bargaining demands by some unions, and improved working conditions and management practices.

A similar decline affected IR as an academic field. After 1960, the field of personnel/human‐resource management gradually broke away from IR and established itself as a separate and competing area of study located in university business schools. IR programs in academia thus became increasingly associated with the two remaining approaches to solving labor problems, government legislation and collective bargaining. But as labor unions' size and power declined, so did interest in IR, while the HRM side of the field grew commensurately.

Summary.

Industrial relations as a topic of study and area of business practice began as a Progressive Era reform‐oriented movement to improve workplace efficiency, equity, and human well‐being through some combination of improved management practices, collective bargaining, and legislation. The emphasis given to each solution changed markedly over the years in response to new events and ideas. Between 1933 and 1973, industrial relations became increasingly associated with trade unionism and collective bargaining. After 1973, the human‐resource management approach became more popular. But whatever the name given to the field, or however it is subdivided, the study of the employment relationship, the problems that grow out of it, and the resolution of these problems remained high on the academic and social agenda as the twenty–first century began.
See also Business; Civil Rights; Depressions, Economic; Global Economy, America and the; Haymarket Affair; Homestead Lockout; Industrialization; Industrial Disease and Hazards; Labor Markets; Labor Movements; New Deal Era, The; Post–Cold War Era; Pullman Strike and Boycott; Scientific Management; Strikes and Industrial Conflict; Twenties, The.

Bibliography

Thomas Kochan,, Harry Katz,, and and Robert McKerzie , The Transformation of American Industrial Relations, 1984.
Sanford Jacoby , Employing Bureaucracy: Managers, Unions and the Transformation of Work in American Industry, 1900–1945, 1985.
Lizabeth Cohen , Making a New Deal: Industrial Workers in Chicago, 1919–1939, 1990.
Bruce Kaufman , The Origins and Evolution of the Field of Industrial Relations in the United States, 1993.
J. Dulebon,, Gerald Ferris,, and and J. Stodd , The History and Evolution of Human Resource Management, in Handbook of Human Resource Management, ed. G. Ferris, S. Rosen, and D. Barnum, 1995.
Bruce Kaufman, ed., Government Regulation of the Employment Relationship, 1997.
David Lewin, Daniel Mitchell, and Mamood Zaidi, eds., Handbook of Human Resource Management, 1997.
Daniel Nelson , Shifting Fortunes: The Rise and Decline of American Labor, from the 1820s to the Present, 1997.

Bruce E. Kaufman