BINAYAK ACADEMY,
Gandhi Nagar 1st Line, Near NCC Office, Berhampur
Contact No: 9776486185, 8270407323
PERFORMANCE APPRAISAL
Performance appraisal or Performance evaluation is a method of evaluating the behaviour of employees in a
work place, normally including both the quantitative and qualitative aspect of job performance. Performance
here refers to the degree of accomplishment of the tasks that makeup an individual’s job. It indicates how
well an individual fulfilling the job demands. Performance is measured in terms of results. Thus,
Performance appraisal is the process of assessing the performance or progress of an employee, or a group of
employees on the given job, as well as his potential for future development. Thus, performance appraisal
comprises all formal procedures used in organisations to evaluate contributions, personality, and potential of
individual employees.
According to Edwin Flippo, “Performance appraisal is the systematic, periodic and an impartial rating of an
employee‘s excellence in matters pertaining to his present job and his potential for a better job.”
According to Cummings, “The overall objective of performance appraisal is to improve the efficiency of an
enterprise by attempting to mobilise the best possible efforts from individuals employed in it. Such
appraisals achieve our objectives including the salary reviews the development and training of individuals,
planning job rotation and assistance promotions.”
Characteristics of Performance Appraisal
1. A Process: Performance appraisal is not a one-act play. It is rather a process that involves several acts or
steps.
2. Systematic Assessment: Performance appraisal is a systematic assessment of an employee‘s strengths
and weakness in the context of the given job.
3. Main Objective: The main objective of it is to know how well an employee is going for the organisation
and what needs to be improved in him.
4. Scientific Evaluation: It is an objective, unbiased and scientific evaluation through similar measure
and procedures for all employees in a formal manner.
5. Periodic Evaluation : Although informal appraisals tend to take place in an unscheduled manner (on
continuous) basis with the enterprises a supervisors evaluate their subordinates work and as subordinates
appraise each other rand supervisors on a daily basis.
6. Continuous Process: In addition to being periodic performance usually is an ongoing process.
Purposes of Performance Appraisal
The following are the main purposes of performance appraisal:
1. Appraisal Procedure: It provides a common and unified measure of performance appraisal, so that all
employees are evaluated in the same manner. It gives an in discriminatory rating of all the employees.
2. Decision Making: Performance appraisal of the employees is extremely useful in the decision making
process of the organization. In selection, training, promotion, pay increment and in transfer, performance
appraisal is very useful tool.
3. Work Performance Records: Performance appraisal gives us complete information in the form of
records regarding every employee. In the case of industrial disputes even arbitrator accepts these records in
the course of grievance handling procedure.
4. Employees Development: Performance appraisal guides the employees in removing their defects and
improving their working. The weaknesses of the employee recorded in the performance appraisal provide the
basis for an individual development programme. If properly recorded and used, the performance appraisal
gives the fair opportunities to employees to correct and rectify their mistakes.
5. Enables Supervisors to be More Alert and Competent: Performance appraisal enables supervisor to
be more alert and competent and to improve the quality of supervision by giving him a complete record of
employee's performance. He can guide an employee, where he is prone to commit mistakes.
6. Merit Rating: Merit rating is another name of performance appraisal; it gives supervisors a more
effective tool for rating their personnel. It enables them to make more careful analysis of employee's
performance and make them more productive and useful.
7. Improves Employer Employee Relations: Performance appraisal is not only a useful guide for the
supervisors and employees but it improves the employer-employee relations by creating a more conductive
and amicable atmosphere in the organization. It also stimulates free exchange of thoughts and ideas
between the supervisor and his men. In this way performance appraisal bridges the emotional gap between
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BINAYAK ACADEMY,
Gandhi Nagar 1st Line, Near NCC Office, Berhampur
Contact No: 9776486185, 8270407323
the employer and employee by bringing them more close and by reducing man-to-man differences in the
organization.
Uses of Performance Appraisal
1. Help in Deciding Promotion: It is in the best interest of the management to promote the employees to
the positions where they can most effectively use their abilities. A well-organised, development and
administered performance appraisal programme may help the management in determining whether an
individual should be considered for promotion.
2. Help in Personnel Actions: Personnel actions such as lay-offs, demotions, transfers and discharges etc.
may be justified only if they are based on performance appraisal.
3. Help in Wage and Salary Administration: The wage increase given to some employees on the basis of
their performance may be justified by the performance appraisal results.
4. Help in Training and Development: An appropriate system of performance appraisal helps the
management in devising training and development programmes and in identifying the areas of skill or
knowledge in which several employees are not at par with the job requirements.
5. Aid to Personnel Research: Performance appraisal helps in conducting research in the field of
personnel management. Theories in personnel field are the outcome of efforts to find out the cause and effect
relationship between personnel and their performance. By studying the various problems which are faced by
the performance appraiser, new areas of research may be developed in personnel field.
6. Help in Self Evaluation: Performance appraisal helps the employee in another way also. Every
employee is anxious to know his performance on the job and his potentials for higher jobs so as to bring
himself to the level of that position.
Essentials of an Effective Performance Appraisal System
1. Mutual Trust: The existence of an atmosphere of confidence and trust so that both supervisor and
employee may discuss matters frankly and offer suggestions which may be beneficial for the organisation
and for an improvement of the employee. An atmosphere of mutual trust and confidence should be created in
the organisation before introducing the appraisal system.
2. Clear Objectives: The objectives and uses of performance appraisal should be made clear and specific.
The objectives should be relevant, timely and open.
3. Standardisation: Well-defined performance factors and criteria should be developed. These factors as
well as appraisal form, procedures and techniques should be standardised. It will help to ensure uniformity
and comparison of ratings.
4. Training: Evaluators should be given training in philosophy and techniques of appraisal. They should be
provided with knowledge and skills in documenting appraisals, conducting post appraisal interviews, rating
errors, etc.
5. Job Relatedness: The evaluators should focus attention on job-related behaviour and performance of
employees. The results of performance rather than personality traits should be given due weight.
6. Strength and Weaknesses: The rater’s should be required to justify their ratings. The supervisor should
try to analyse the strength and weaknesses of an employee and advise him on correcting die weakness.
7. Individual Differences: While designing the appraisal system, individual differences in organisations
should be recognised. Organisations differ in terms of size, nature, needs and environment. Therefore, the
appraisal system should be tailor-made for the particular organisation.
8. Feedback and Participation: Arrangements should be made to communicate the ratings to both the
employees and the raters. The employees should actively participate in managing performance and in the
ongoing process of evaluation. The superior should play the role of coach and counsellor.
9. Post Appraisal Interview: A post-appraisal interview should be arranged so that employees may be
supplied with feedback and the organisation may know the difficulties under which employees work, so that
their training needs may be discovered.
10. Review and Appeal: A mechanism for review of ratings should be provided. Which particular
technique is to be adopted for appraisal should be governed by such factors as the size, financial resources,
philosophy and objectives of an organisation?
Process of Performance Appraisal
Various steps in appraising performance of employees are as follows:
2
BINAYAK ACADEMY,
Gandhi Nagar 1st Line, Near NCC Office, Berhampur
Contact No: 9776486185, 8270407323
1. Establishing Performance Standard: The process of evaluation begins with the establishment of
Performance Standards. While designing a job and formulating a job description, performance standards are
usually developed for the position. This standard should be very clear and objective enough to be understood
and measured.
2. Communicating Performance Expectations to Employees: The next important step is to
communicate the aforesaid standards to the concerned employees. Their jobs and jobs-related behaviour
should be clearly explained to them.
3. Measuring Actual Performance: The third step is the measurement of actual performance. To
determine what actual performance is, it is necessary to acquire information about it we should be
concerned with how we measure and what we measure. Four sources of information are frequently used to
measure actual performance: personal observation, statistical reports, oral reports and written reports.
4. Comparing Actual Performance with Standards: The next step is comparison of actual performance
with the standards. By doing so the potentiality for growth and advancement of an employee can be
appraised and judged. Efforts are made to find out deviations between standard performance and actual
performance.
5. Discussing the Appraisal with the Employee: After comparing actual performance with standards,
the next step is to discuss periodically the appraisal with the employee. Under these discussion good points,
weak points, and difficulties are indicated and discussed so that performance is improved.
6. Initiating Corrective Action: The final step is the initiation of corrective action whenever necessary.
Immediate corrective action can be of two types. One is immediate and deals predominantly with symptoms.
The other is basic and delves into causes.
Methods or Techniques of Performance Appraisal
Several methods and techniques are used for evaluating employee performance. They may be classified into
two broad categories. They are Traditional Methods and Modern Methods.
Traditional Methods:
1. Ranking Method: Ranking method is the oldest and simplest method of rating. Here, each employee is
compared with all others performing the same job and then he is given a particular rank i.e. First Rank,
Second Rank etc. This method ranks all employees but it does not tell us the degree or extent of superiority.
In this method, the performance of individual employee is not compared with the standard performance.
Here, the best is given first rank and poorest gets the last rank.
2. Paired Comparison: In method is comparatively simpler as compared to ranking method. In this
method, the evaluator ranks employees by comparing one employee with all other employees in the group.
The rater is given slips where, each slip has a pair of names, the rater puts a tick mark next those employee
whom he considers to be the better of the two. This employee is compared number of times so as to
determine the final ranking.
3. Grading Method: Under this method of performance appraisal, different grades are developed for
evaluating the ability of different employees and then the employees are placed in these grades. These
grades may be as follows: (i) Excellent; (ii) very good; (iii) Good; (iv) Average; (v) Bad; (vi) Worst.
4. Man-to-Man Comparison Method: This method was first used in USA army during the 1st World War.
Under this method, few factors are selected for analysis purposes. These factors are: leadership,
dependability and initiative. After that a scale is designed by the rate for each factor. A scale of person is
also developed for each selected factor. Each person to be rated is compared with the person in the scale, and
certain scores for each factor are awarded to him/her. In other words, instead of comparing a whole man to a
whole man personnel are compared to the key man in respect of one factor at a time. We can use this method
in job evaluation. This method is also known as the Factor Comparison Method.
5. Graphic Rating Scale Method: This is the very popular, traditional method of performance appraisal.
Under this method, scales are established for a number of fairly specific factors. A printed form is supplied
to the rater. The form contains a number of factors to be rated.
Employee characteristics and contributions include qualities like quality of work, dependability, creative
ability and so on. These traits are then evaluated on a continuous scale, where the rater places a mark
somewhere along the scale. The scores are tabulated and a comparison of scores among the different
individuals is made. These scores indicate the work of every individual.
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BINAYAK ACADEMY,
Gandhi Nagar 1st Line, Near NCC Office, Berhampur
Contact No: 9776486185, 8270407323
6. Check-list Method: The main reason for using this method is to reduce the burden of evaluator. In this
method of evaluation the evaluator is provided with the appraisal report which consist of series of questions
which is related to the appraise. Such questions are prepared in a manner that reflects the behaviour of the
concerned appraise.
7. Critical Incidents Method: This method is very useful for finding out those employees who have the
highest potential to work in a critical situation. Such an incidence is very important for organization as they
get a sense, how a supervisor has handled a situation in the case of sudden trouble in an organization, which
gives an idea about his leadership qualities and handling of situation. It is also said to be a continuous
appraisal method where employees are appraised continuously by keeping in mind the critical situation. In
this method, only the case of sudden trouble and behaviour associated with these incidents or trouble are
taken for evaluation.
8. Essay Method: In this method, the rater writes a detailed description on an employee’s characteristics
and behaviour, Knowledge about organizational policies, procedures and rules, Knowledge about the job
Training and development needs of the employee, strengths, weakness, past performance, potential and
suggestions for improvement. It is said to be the encouraging and simple method to use. It does not need
difficult formats and specific training to complete it.
Modern Methods:
1. Management by Objective (MBO):
It was Peter F. Drucker who first gave the concept of MBO to the world in 1954 when his book The Practice
of Management was first published. Management by objective can be described as, a process whereby the
superior and subordinate managers of an organisation jointly identify its common goals, define each
individual‘s major areas of responsibility in terms of results expected of him and use these measures as
guides for operating the unit and assessing the contribution of each of its members.
2. Assessment Centres:
It is a method which was first implemented in German Army in 1930. With the passage of time industrial
houses and business started using this method. This is a system of assessment where individual employee is
assessed by many experts by using different technique of performance appraisal. The techniques which may
be used are role playing, case studies, simulation exercises, transactional analysis etc.
In this method employees from different departments are brought together for an assignment which they
are supposed to perform in a group, as if they are working for a higher post or promoted. Each employee is
ranked by the observer on the basis of merit .The basic purpose behind assessment is to recognize whether a
particular employee can be promoted, or is there any need for training or development. This method has
certain advantages such as it helps the observer in making correct decision in terms of which employee has
the capability of getting promoted, but it has certain disadvantages also it is costly and time consuming,
discourages the poor performers etc.
3. 360 Degree Performance Appraisals:
This method is also known as ‘multi-rater feedback’, it is the appraisal in a wider perspective where the
comment about the employees’ performance comes from all the possible sources that are directly or
indirectly related with the employee on his job. In 360 degree performance appraisal an employee can be
appraised by his peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors
- anyone who comes into direct or indirect contact with the employee and can provide necessary information
or feedback regarding performance of the employee the “on-the-job”.
The four major component of 360 degree performance appraisal are:
1. Employees Self Appraisal
2. Appraisal by Superior
3. Appraisal by Subordinate
4. Peer Appraisal.
Employee self appraisal gives an option to the employee to know his own strengths and weaknesses, his
achievements, and judge his own performance. Appraisal by superior forms the traditional part of the 360
degree performance appraisal where the employees’ responsibilities and actual performance is judged by the
superior. Appraisal by subordinate gives a chance to evaluate the employee on the basis of communication
and motivating abilities, superior’s ability to delegate the work, leadership qualities etc. It is also known as
4
BINAYAK ACADEMY,
Gandhi Nagar 1st Line, Near NCC Office, Berhampur
Contact No: 9776486185, 8270407323
internal customers; the correct opinion given by peers can aid to find employees’ who are co-operative,
employees who ready to work in a team and understanding towards others.
4. Cost Accounting Method:
In this method performance of an employee is evaluated on the basis of monetary returns the employee gives
to his or her organization. A relationship is recognized between the cost included in keeping the employee in
an organization and the benefit the organization gets from him or her. The evaluation is based on the
established relationship between the cost and the benefit. The following factors are considered while
evaluating an employee’s performance:
1. Interpersonal relationship with others.
2. Quality of product produced or service given to the organization.
3. Wastage, damage, accidents caused by the employee.
4. Average value of production or service by an employee.
5. Overhead cost incurred.
5. Behaviourally Anchored Rating Scales (BARS):
This method is a combination of traditional rating scales and critical incidents methods. It consists of preset
critical areas of job performance or sets of behavioural statements which describes the important job
performance qualities as good or bad (for e.g. the qualities like inter personal relationships, flexibility and
consistency, job knowledge etc). These statements are developed from critical incidents. These behavioural
examples are then again translated into appropriate performance dimensions. Those that are selected into
the dimension are retained. The final groups of behaviour incidents are then scaled numerically to a level of
performance that is perceived to represent. A rater must indicate which behaviour on each scale best
describes an employee’s performance. The results of the above processes are behavioural descriptions, such
as anticipate, plan, executes, solves immediate problems, carries out orders, and handles urgent situation
situations. This method has following advantages: a) It reduces rating errors) Behaviour is assessed over
traits. c) It gives an idea about the behaviour to the employee and the rater about which behaviours bring
good Performance and which bring bad performance.
Limitations of Performance Appraisal
The main limitations of Performance Appraisal are explained below:
1. Time Consuming: Performance appraisal is a time taking affair. It is a very lengthy process under
which different forms are to be filled in and various observations are required to be noted in a careful
manner.
2. Lack of Reliability: Reliability implies stability and consistency in the measurement. Lack of
consistency over time and among different raters may reduce the reliability of performance appraisal.
3. Incompetence: Raters may fail to evaluate performance accurately due to lack of knowledge and
experience. Post appraisal interview is often handled ineffectively.
4. No Uniform Standards: The standards used for appraisal purpose are not uniform within the same
organisation. This makes the rating unscientific. Similarly, the rating is done on the basis of an overall
impression, which is not proper.
5. Absence of Effective Participation of Employees: In performance appraisal effective participation of
concerned employee is essential. In many methods of appraisal he is given a passive role. He is evaluated
but his participation or self evaluation is rather absent.
6. Resistance of Employees to Appraisal: Employees oppose the system as they feel that the system is
only for showing their defects and for punishing them. The managers resist the system as they are not
willing to criticise their subordinates or have no capacity to guide them for self improvement or self
development.
7. Paperwork: Some supervisors feel that performance appraisal is paperwork. They make such complaints
because many a times, performance appraisal reports are found only in the files rather than rendering any
practical use.
8. Fear of Spoiling Relations: Performance appraisals may also affect superior-subordinate relations. As
appraisal makes the superior more of a judge rather than a coach, the subordinate may look upon the
superior with a feeling of a suspicion and mistrust.
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BINAYAK ACADEMY,
Gandhi Nagar 1st Line, Near NCC Office, Berhampur
Contact No: 9776486185, 8270407323
9. Stereotyping: This implies forming a mental picture of a person on the basis of his age, sex, caste or
religion. It results in an over-simplified view and blurs the assessment of job performance.
10. Negative Approach: Performance appraisal loses most of its value when the focus of management is on
punishment rather than on development of employees.
11. Multiple Objectives: Raters may get confused due to two many objectives or unclear objective of
performance appraisal.
12. Resistance: Trade unions may resist performance appraisal on the ground that it involves
discrimination among its members. Negative ratings may affect interpersonal relations and industrial
relations particularly when employees/unions do not have faith in the system of performance appraisal.
13. Halo Effect: Generally, there is the presence of a ‘halo’ effect which leads to a tendency to rate the same
individual first, which once have stood first.
14. Individual Differences: Some people are more distinct while some are very liberal in assigning the
factors, points or number to the employees. They are unable to maintain a fair distinction between two
individuals. It also nullifies the utility of this system.
JOB EVALUATION
Job evaluation is the process of analyzing and assessing various jobs systematically to ascertain their relative
worth in an organization.
Job evaluation is an assessment of the relative worth of various jobs on the basis of a consistent set of job and
personal factors, such as qualifications and skills required.
The objective of job evaluation is to determine which jobs should get more pay than others. Several methods
such as job ranking, job grading, and factor comparison are employed in job evaluation. Research indicates,
however, that each method is nearly as accurate and reliable as the other in ranking and pricing different jobs. Job
evaluation forms the basis for wage and salary negotiations.
Definitions of Job Evaluation
Below are given some important definitions of job analysis:
Job Evaluation involves determination of relative worth of each job for the purpose of establishing wage and
salary differentials. Relative worth is determined mainly on the basis of Job Description and Job Specification
only. Job Evaluation helps to determine wages and salary grades for all jobs. Employees need to be compensated
depending on the grades of jobs they perform. Remuneration must be based on the relative worth of each job.
Ignoring this basic principle results in inequitable compensation and attendant ill effects on employees’ morale. A
perception of inequity is a sure way of De-motivating an employee.

In the words of Edwin B. Flippo. "Job evaluation is a systematic and orderly process of determining the worth of
a job in relation to other jobs."

According to Kimball and Kimball Jr., "Job evaluation represents an effort to determine the relative value of
every job in a plant and to determine what the fair basic wage for such a job should be."

In the words of Dale Yoder, "Job evaluation is a practice which seeks to provide a degree of objectivity in
measuring the comparative value of jobs within an organisation and among similar organisations."

According to Bureau of Labour Statistics, "Job evaluation is the evaluation or rating of job to determine their
position in job hierarchy. The evaluation may be achievement through assignment of points or the use of some other
systematic rating method for essential job requirements such as skill, experience and responsibility."
THE JOB EVALUATION PROCESS
Job analysis describes a job. Job evaluation develops a plan for comparing jobs in terms of those things the
organization considers important determinants of job worth. This process involves a number of steps that will be
briefly stated here and then discussed more fully.
1.
Job Analysis. The first step is a study of the jobs in the organization. Through job analysis, information
on job content is obtained, together with an appreciation of worker requirements for successful
performance of the job. This information is recorded in the precise, consistent language of a job
description. This was the topic of chapter 10.
2.
Compensable Factors. The next step is deciding what the organization "is paying for" -- that is, what
factor or factors place one job at a higher level in the job hierarchy than another. These compensable
factors are the yardsticks used to determine the relative position of jobs. In a sense, choosing
6
BINAYAK ACADEMY,
Gandhi Nagar 1st Line, Near NCC Office, Berhampur
Contact No: 9776486185, 8270407323
compensable factors is the heart of job evaluation. Not only do these factors place jobs in the
organization's job hierarchy, but they also serve to inform job incumbents which contributions are
rewarded.
3.
Developing the Method. The third step in job evaluation is to select a method of appraising the
organization's jobs according to the factor(s) chosen. The method should permit consistent placement of
the organization's jobs containing more of the factors higher in the job hierarchy, than those jobs lower in
the hierarchy.
4.
Job Structure. The fourth step is comparing jobs to develop a job structure. This involves choosing and
assigning decision makers, reaching and recording decisions, and setting up the job hierarchy.
5.
Wage Structure. The final step is pricing the job structure to arrive at a wage structure.
Features of Job Evaluation
The primary objective of job evaluation is to find out the value of work, but this is a value which varies from time
to time and from place to place under the influence of certain economic pressure, not least of which is the worth
of money itself. The main features of job evaluations are:

To supply bases for wage negotiation founded on facts rather than on vague intermediate ideas.

It attempts to assess jobs, not people.

Job evaluation is the output provided by job analysis.

Job evaluation does not design wage structure, it helps in rationalising the system by reducing number of
separate and different rates.

Job evaluation is not made by individuals rather it is done by group of experts.

Job evaluation determines the value of job. Further the value of each of the aspects such as skill and
responsibility levels are also related and studied in connection with the job.

Job evaluation helps the management to maintain high levels of employee productivity and employee
satisfaction.
The objectives of job evaluation

To establish an orderly, rational, systematic structure of jobs based on their worth to the organization.

To justify an existing pay rate structure or to develop one that provides for internal equity.

To assist in setting pay rates that is comparable to those of in similar jobs in other organizations to
compete in market place for best talent.

To provide a rational basis for negotiating pay rates when bargaining collectively with a recognized
union.

To ensure the fair and equitable compensation of employees in relation to their duties.

To ensure equity in pay for jobs of similar skill, effort, responsibility and working conditions by using a
system that consistently and accurately assesses differences in relative value among jobs and

To establish a framework of procedures to determine the grade levels and the consequent salary range for
new jobs or jobs which have evolved and changed.

To identify a ladder of progression for future movement to all employees interested in improving their
compensation.

To comply with equal pay legislation and regulations determining pay differences according to job
content.

To develop a base for merit or pay-for-performance.
Advantages of Job evaluation
Job evaluation is a process of determining the relative worth of a job. It is a process which is helpful even for
framing compensation plans by the personnel manager. Job evaluation as a process is advantageous to a
company in many ways:
1.
Reduction in inequalities in salary structure - It is found that people and their motivation is dependent
upon how well they are being paid. Therefore the main objective of job evaluation is to have external and
internal consistency in salary structure so that inequalities in salaries are reduced.
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BINAYAK ACADEMY,
Gandhi Nagar 1st Line, Near NCC Office, Berhampur
Contact No: 9776486185, 8270407323
2.
Specialization - Because of division of labour and thereby specialization, a large number of enterprises
have got hundred jobs and many employees to perform them. Therefore, an attempt should be made to
define a job and thereby fix salaries for it. This is possible only through job evaluation.
3.
Helps in selection of employees - The job evaluation information can be helpful at the time of selection
of candidates. The factors that are determined for job evaluation can be taken into account while selecting
the employees.
4.
Harmonious relationship between employees and manager - Through job evaluation, harmonious and
congenial relations can be maintained between employees and management, so that all kinds of salaries
controversies can be minimized.
5.
Standardization - The process of determining the salary differentials for different jobs become
standardized through job evaluation. This helps in bringing uniformity into salary structure.
6.
Relevance of new jobs - Through job evaluation, one can understand the relative value of new jobs in a
concern.
Limitations:
1.
Though there are many ways of applying job evaluation in a flexible manner, rapid changes in
technology and in the supply of and demand for particular skills, create problems of adjustment that may
need further study.
2.
When job evaluation results in substantial changes in the existing wage structure, the possibility of
implementing these changes in a relatively short period may be restricted by the financial limits within
which the firm has to operate.
3.
When there are a large proportion of incentive workers, it may be difficult to maintain a reasonable and
acceptable structure of relative earnings.
4.
The process of job rating is, to some extent, inexact because some of the factors and degrees can be
measured with accuracy.
5.
Job evaluation takes a long time to complete, requires specialized technical personnel and is quite
expensive.
JOB EVALUATION METHODS
After job analysis preparations of job descriptions comes the essential stage of job evaluation, namely, the
systematic comparison of jobs in order to establish a job hierarchy. The techniques which have been commonly
used tend to fall into one of the two main categories:
a) Analytical Methods

Point Ranking Methods

Factor Comparison Method
b) Non-analytical Methods

Ranking Method

Job-grading Method
a) Analytical Methods
These include the point-ranking method and the factor-comparison method
1. Point-Ranking Method: The system starts with the selection of job factors, construction of degrees for each
factor, and assignment of points to each degree. Different factors are selected for different jobs with
accompanying differences in degrees and points. The National Electrical Manufacturer’s Association (NEMA),
USA, has given the factors, degrees and points for hourly rated.
The range of score and grades is also predetermined-for example, from 210 to 230 points, the
5th grade; 231 to 251 points, the 6th grade; and so forth. A given job is placed in a particular grade, depending on
the number of points it scores.
The advantages of point system are:
1. A job is split into a number of factors. The worth of each job is determined on the basis of its factors and not by
considering the job as a whole.
2. The procedure adopted is systematic and can easily be explained to the employees.
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BINAYAK ACADEMY,
Gandhi Nagar 1st Line, Near NCC Office, Berhampur
Contact No: 9776486185, 8270407323
3. The method is simple to understand and easy to administer.
At least two defects are noticed in the point system. First, employees may disagree with the points allotted and
the factors and their degrees identified. Second, serious doubts are expressed about the range of points allotted
and matching them with the job grades. For example, a score range of 238 to 249 is grade seven and the next
range of 250 to 271 is grade six. A variation of one point makes all the difference.
2. Factor-Comparison Method: The factor-comparison method is yet another approach for job evaluation in the
analytical group. Under this method, one begins with the selection of factors, usually five of them: mental
requirements, skill requirements, and physical exertion, responsibility, and job conditions. These factors are
assumed to be constant for all the jobs. Each factor is ranked individually with other jobs.
For example, all the jobs may be compared first by the factor ‘mental requirements’. Then the skills factor,
physical requirements, responsibility, and working conditions are ranked. Thus, a job may rank near the top in
skills but low in physical requirements. Then total point values are then assigned to each factor. The worth of a
job is then obtained by adding together all the point values.
An advantage of the factor-comparison methods that jobs of unlike nature – for example, manual, clerical and
supervisory – may be evaluated with same set of factors. But the method is complicated and expensive.
b) Non-analytical Methods
Ranking and job-classification methods come under this category because they make no use of detailed job
factors. Each job is treated as a whole in determining its relative ranking.
1. Ranking Method: This is the simplest, the most inexpensive and the most expensive method of evaluation. The
evaluation committee assesses the worth of each job on the basis of its title or on its contents, if the latter are
available. But the job is not broken down into elements or factors. Each job is compared with others and its place
is determined.
The method has several drawbacks. Job evaluation may be subjective as the jobs are not broken into factors. It is
hard to measure whole jobs.
2. Job-grading Method: As in the ranking method, the job-grading method (or job-classification method) does not
call for a detailed or quantitative analysis of job factors. It is based on the job as a whole. The difference between
the two is that in the ranking method, there is no yardstick for evaluation, while in the classification method,
there is such a yardstick in the form of job classes or grades.
Under the classification method, the number of grades is first decided upon, and the factors corresponding to
these grades are then determined. Facts about jobs are collected and are matched with the grades which have
been established.
The essential requirement of the job-grading method is to frame grade descriptions to cover discernible
differences in degree of skill, responsibility and other job characteristics. Job grades are arranged in the order of
their importance in the form of a schedule. The lowest grade may cover jobs requiring greater physical work
under close supervision, but carrying little responsibility. Each succeeding grade reflects a higher level of skill
and responsibility, with less and less supervision.
The advantages of the job-classification method include its simplicity and inexpensiveness. Secondly, in
organizations where number of jobs is small, this method yields satisfactory results.
The disadvantages of the method are:
(i) Job grade descriptions are vague and are not quantified;
(ii) Difficulty in convincing employees about the inclusion of a job in a particular grade because of vagueness of
grade descriptions; and
(iii) More job classification schedules need to be prepared because the same schedule cannot be used for all types
of jobs.
UNIT 4
Promotion
Promotion is the transfer of an employee to a new position which commands higher pay, privileges or status
compared with the old position. It may be the recognition of his good work, behaviour or simply to keep up with
economic inflation. Contrary to it, a worker may be punished by demotion for inefficiency, destructiveness or
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absenteeism. Resignations and dismissals form part of separation. Transfers may be for utilizing one’s talents in
other areas. Labour turnover is detrimental to the growth of a company and needs to be controlled.
DEFINITION
According to Scott and Clothier, “A promotion is the transfer of an employee to a job which pays more money or
one that carries some preferred status.”
According to Prof Mamoria, “Promotion is a term which covers a change and calls for greater responsibilities,
and usually involves higher pay and better terms and conditions of service and, therefore, a higher status or
rank.”
According to Arun Monappa and Saiyadain, “Promotion is the upward reassignment of an individual in an
organization’s hierarchy, accompanied by increased responsibilities, enhanced status, and usually with increased
income, though not always so.”
From the above definitions, we can say that promotion usually implies several things to the person concerned—
higher status, both at work and in the community outside, more pay and fringe benefits, perhaps greater job
security and a more senior position from which a person renders better service to his organization. Employees
expect to be informed about ladders of promotion, how they can prepare themselves for advancement and what
will be expected of them from the higher rated jobs.
Types of Promotion
The different types of promotions are:
(a) Limited Promotion
Limited promotion is also known as upgrading. It is the movement of an employee to a more responsible job
within the same occupational unit and with a corresponding increase in pay. Thus, upgrading means an increase
of pay on the same job or moving to a higher scale without changing the job.
(b) Dry Promotion
Dry promotion is a promotion as a result of which there is no increase in the employee’s pay. Dry promotions are
those which are given in lieu of increases in compensation. It is usually made decorative by giving a new and
longer title to the employee.
(c) Multiple Chain Promotion
Multiple chain promotion provide for a systematic linking of each position to several other positions. Such
promotions identify multi-promotional opportunities through clearly defined avenues of approach to and exist
from each position in the organization.
(d) Up and Out Promotion
Up and Out Promotion often leads to termination of services. In this type of promotion, a person must either earn
a promotion or seek employment elsewhere.
Basis of Promotion
Different promotion systems are used in different organizations. Of them the following are considered the most
important:
(a) Promotion Based on Seniority
(b) Promotion Based on Merit
(c) Merit Cum Seniority Promotion
(d) Promotion by Selection
(e) Time Bound Promotion
(f) Temporary Promotion
(a) Promotion Based on Seniority
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Seniority based promotion systems are based on the length of service of an employee in an organization.
Seniority systems put a premium on length of service and job experience. In the case of promotion based on
seniority, the employees are promoted to higher positions purely based on their length of service irrespective of
their qualifications, experience, performance and track record. Trade unions prefer seniority as a basis of
promotion because by-offs, recalls and discharges are usually based on seniority. The seniority promotion plan is
as old as civilization itself. In business, however, it is not always dependable as a promotional policy. It survives
simply because no better system has been evolved. If the seniority principle is adopted, capable young men will
look for better prospects elsewhere. Normally, this method of promotion policy is seen in Government services
and in services of quasi Governmental organizations. Unless the official has a very poor and bad work record, he
is automatically promoted to higher position based on his service seniority.
Arguments for Promotion by Seniority
 All employees are assured of promotion which will come automatically when it is due.
 Seniority is a factor which can be measured quantitatively; it is easily explained and understood and
therefore, escapes charges of favouritism and discrimination.
 The management will have a known man. This reduces the risk associated with bringing an unknown
person from outside.
 Seniority as a criterion for promotion makes its impact on reduction in employee turnover.
 Seniority is considered to contribute to the employees’ ability on the assumption that the longer a person
does a job, the more he learns about it.
 Promotion by seniority satisfies the personal aspirations of the employees. This results in better morale of
the employees.
Arguments against Promotion by Seniority
If the seniority principle is adopted, capable young men are likely to become impatient and will look for better
prospects elsewhere.
The internal sources may be inadequate to meet the growing requirements of the organizations.
If the worth of an employee is not appreciated and given due recognition, it results in frustration and low morale
of the employees.
Promotions by seniority leads to capable young men looking for better prospects elsewhere. Consequently, the
organization comes to be run by second-grade people, who have stayed because they do not have sufficient
calibre to move elsewhere.
With the fast changing world of technology it is necessary to infuse new blood into the organization. This is
denied when the policy of promotion is by seniority.
(b) Promotion Based on Merit
Under promotion based on merit, employees are promoted to higher positions purely on their performance and
work record. Here, the management will look into the qualifications, experience, previous work record,
performance capability etc. The service seniority of the employee would not be considered for promotion. In
principle, it is felt that promotion should be based on merit. However, the use of merit as a basis for promotion
can cause problems because what management regards as merit, trade unions may see as favouritism. Therefore,
as far as possible, merit rating should be based on operating facts. Promotion by merit method is normally
followed in majority of commercial and industrial enterprises where the main consideration for assessment is
efficiency and work performance.
The argument in favour of using merit or ability as a criterion for promotion is that it enhances organizational
efficiency, and maximizes utilization of talent, since only deserving employees are promoted after a thorough
assessment of their abilities for the next job of higher responsibility and status.
Arguments for Promotion by Merit:
 Promotion by merit brings rewards for meritorious work. This encourages an employee to work hard and
advance in the organization.
 Promotion by merit enhances organizational efficiency and maximizes utilization of talent.
 Promotion by merit acts as a motivator. This leads to increased productivity.
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Arguments against Promotion by Merit:
 When management adopts merit as a basis for promotion, it must evolve controls to recognize merit
objectively which will refute the allegations of favouritism. This is very difficult to achieve.
 Trade unions regard merit as favouritism. They distrust the sincerity of management when it claims the
right to promote solely on merit.
 Efficiency in the present job does not necessarily predict ability to do well in a job with greater
responsibility.
 The devices used for judging ability such as performance appraisal ratings and confidential reports are not
above subjectivity. It is this problem of bias in judging merit that makes employees oppose merit as a base
for promotion.
(c) Merit cum Seniority Promotion
Promotion based on “Merit cum Seniority” would have a blend of the advantages of both the systems discussed
above. Both the service seniority and work efficiency will be taken into account in promoting an employee. These
two possibly conflicting factors – seniority and merit - frequently pose problems in considering employees for
promotion. From the point of view of organizational efficiency, merit seems to be the logical basis of promotion
and therefore, management would like it to be the only factor. Trade unions want seniority to be considered as
the basis for promotion since it is an objective and impartial method of judging employees for promotion. A
sound management will pursue a policy of properly balancing these two factors i.e., seniority and merit. An
employee who has service seniority with the desired level of merit and efficiency would be given priority in
promotion to the next cadre as compared to others having only one of them. Merit cum seniority method has
been considered as the best method of promotion as it gives due weightage to the skill efficiency and better
service record of the employee.
(d) Promotion by Selection
Promotion by selection is a process through which employees are promoted after undergoing rigorous test and
screening. The service records of all the employees due for promotion are screened and scrutinised by a
committee appointed for that purpose. The Committee will scrutinise the past records, merit, qualification and
experience of the employees due for promotion to a cadre. Under this system employees with service seniority or
better qualifications and experience need not be promoted automatically. The employees are put to various tests
and interviews before a final selection is made and some employees are promoted.
(e) Time Bound Promotion Scheme
Under this method, employees would be promoted according to standards of time set for promotions to higher
cadre subject to the condition that they possess the minimum qualifications required for entry into a higher
position. Neither seniority nor merit will be considered here. The employees may have to pass some
departmental examinations or tests for being considered for such a promotion.
(f) Temporary Promotion Scheme
Also known as officiating promotion scheme, under the temporary promotion scheme, officials are promoted
temporarily to higher positions in case there are vacancies and if they are due for promotion. Such temporary
promotion is no guarantee for a permanent promotion, though normally temporary promotions are automatically
made permanent if the service of the employee during the officiating period is satisfactory. It is like keeping the
employee under some sort of probation at the higher position before he is confirmed.
Promotion Policy
Whatever may be the type of promotion followed by the management, there should be a definite promotion
policy which should be effective and protect the interests of the employees due for promotion. A concrete,
comprehensive and realistic promotion policy should be evolved covering the following points:
(a) Promotion Policy Statement
A corporate policy on promotion helps to state formally the organization’s broad objectives, and to formulate
both the organization’s manpower and individual career plans.
(b) Ratio of Internal Promotion Vs External Recruitment
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A promotion policy statement must state the ratio of internal promotions to external recruitment at each level.
Such a statement will help manpower planners to project numbers of internally available candidates for
vacancies.
(c) Decide the Basis for Promotion
A promotion policy statement must decide the basis on which promotions are to be given. Usually promotions
are decided on the basis of performance appraisals.
(d) Decide the Routes for Promotion
We have to identify the network of related jobs. Such an exercise will help in succession planning and also help
aspirants to acquire the necessary formal qualifications or on-the-job training. This process would help in
identifying promotion channels. Once it is finalised, it should be made known to the employees concerned.
(e) Communicate the Promotion Policy
The organization should communicate its promotion policy to its employees. Such an exercise will help aspirants
to acquire the necessary formal qualifications, encourage them to attend suitable external development
programmes etc.
(f) Lack of Promotional Avenues
There may be some deserving candidates who will not get promoted due to lack of available positions. In such
cases where employees perform adequately in their present jobs, wage increments should be forthcoming.
(g) Determination of Seniority
A ticklish area in the formation of a promotional policy is the determination of an employee’s seniority. Should
the seniority be plant-wise, unit-wise or occupation-wise? Generally, seniority is unit wise.
(h) Relationship of Disciplinary Action to Promotion
Another area to look into while formulating a promotional policy is whether there is a relationship between any
disciplinary action taken against an employee and promotion.
Advantages of a Promotion Policy
The following are the benefits of a good promotional policy:
(i) A good promotion policy provides an incentive to work more effectively as it recognises an employee who
comes out with better work. It must however tell employees in advance what avenues exist for advancement.
(ii) It develops employee loyalty by rewarding him and placing him in a higher position in the organization for
his efficiency.
(iii) It facilitates and increases job satisfaction.
(iv) It increases work effectiveness in the organization.
(v) It also attracts efficient employees to the organization.
(vi) It increases employee interest in training and self-development.
(vii) A promotion policy makes employees believe that their turn too will come and so they remain with the
company. This reduces labour turnover.
Transfer
Transfer is a type of mobility of employees which involves a change in the job, accompanied by a change in the
place of the job, without a change in responsibilities or remuneration.
Here ‘transfer’ and ‘promotion’ should not be confused to mean one and the same. Promotion involves a change
in which a significant increase in responsibility, status and income occurs whereas transfer involves a mere
change in the place of the job.
Transfer can be defined as “…the moving of an employee from one job to another.” It may involve a promotion,
demotion or no change in job status other than moving from one job to another.
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Transfer is “a lateral shift, causing movement of individuals from one position to another usually without
involving any marked change in duties, responsibilities, skills needed or compensation”.
Types of Transfers:
(i) Production Transfer: Transfers caused due to changes in production.
(ii) Replacement Transfer: Transfers caused due to initiation/replacement of a long standing employee in
the same job.
(iii) Rotation Transfers: Transfer initiated to increase the versatility of employees.
(iv) Shift Transfer: Transfer of an employee from one shift to another.
(v) Penal Transfer: Transfers initiated as a punishment to in disciplinary action of employees.
(vi) Remedial Transfer: Transfers initiated to correct the wrong placements.
Reason for Transfers:
(a) To meet the organisational requirement when there are changes in technology, volume of production, change
in organisational structure, fluctuation in market conditions etc.
(b) To satisfy employees’ needs and their desire to work in a friendly atmosphere, in a department where scope
for individual growth is high, in or near their native place or place of interest.
(c) To utilize employee’s skills and knowledge where it best suits or required.
(d) To improve interpersonal relationship and thereby reduce interpersonal conflicts.
(e) To give relief to the employees who are over burdened or doing complicated or risky work for a long period.
(f) To help the employees whose working hours or place of work is inconvenient to them.
(g) To punish employees for violating the disciplinary rules.
Transfers can be employee initiated i.e., primarily in the interest of the employee and his convenience. Transfers
are also at the initiative of the company. Transfers prove beneficial to both the employees and the organisation.
To an individual employee, transfers reduce monotony and boredom and increases job satisfaction and improve
employee morale.
They help the employees to prepare to meet the fluctuation in business and other organisational requirements
and thereby enhance the contribution of employees to the organisational effectiveness. Despite the benefits
transfers also have problems like— problem of adjustment, cost and inconvenience to the employee, loss of man
days, at times reduction in productivity.
UNIT 5
INDUSTRIAL RELATION
Industrial relations has become one of the most delicate and complex problems of modern industrial society.
Industrial progress is impossible without cooperation of labours and harmonious relationships. Therefore, it is in
the interest of all to create and maintain good relations between employees (labour) and employers
(management).
Concept of Industrial Relations:
The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and ‘Relations’. “Industry”
refers to “any productive activity in which an individual (or a group of individuals) is (are) engaged”. By
“relations” we mean “the relationships that exist within the industry between the employer and his workmen.”
The term industrial relations explains the relationship between employees and management which stem directly
or indirectly from union-employer relationship.
Definitions:
The term ‘industrial relations’ has been variously defined.
J.T. Dunlop defines industrial relations as “the complex interrelations among managers, workers and agencies of
the governments”.
According to Dale Yoder “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 labour contract”.
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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.
The School of Industrial and Labour Relations at Cornell University was the world's first school for college-level
study in HR located in Ithaca, New York, USA. ILR (Industrial and Labour Relations) specializes in the fields of
human resource management, labour relations, and dispute resolution.
The Centre for Human Resources at the University of Pennsylvania was founded in 1921. The Centre’s mission is
to foster research on the strategic role of HR management in such areas as employment, labour relations, public
policy, diversity, and training and education. The Centre supports its mission through research, regular meetings,
information bulletins, and conferences and public forums.
Importance of Industrial Relations:
The healthy industrial relations are key to the progress and success. Their significance may be discussed as under
 Uninterrupted production – The most important benefit of industrial relations is that this ensures
continuity of production. This means, continuous employment for all from manager to workers. The
resources are fully utilized, resulting in the maximum possible production. There is uninterrupted flow of
income for all. Smooth running of an industry is of vital importance for several other industries; to other
industries if the products are intermediaries or inputs; to exporters if these are export goods; to consumers
and workers, if these are goods of mass consumption.
 Reduction in Industrial Disputes – Good industrial relations reduce the industrial disputes. Disputes are
reflections of the failure of basic human urges or motivations to secure adequate satisfaction or expression
which are fully cured by good industrial relations. Strikes, lockouts, go-slow tactics, gherao and grievances
are some of the reflections of industrial unrest which do not spring up in an atmosphere of industrial
peace. It helps promoting co-operation and increasing production.
 High morale – Good industrial relations improve the morale of the employees. Employees work with great
zeal with the feeling in mind that the interest of employer and employees is one and the same, i.e. to
increase production. Every worker feels that he is a co-owner of the gains of industry. The employer in his
turn must realize that the gains of industry are not for him along but they should be shared equally and
generously with his workers. In other words, complete unity of thought and action is the main
achievement of industrial peace. It increases the place of workers in the society and their ego is satisfied. It
naturally affects production because mighty co-operative efforts alone can produce great results.
 Mental Revolution – The main object of industrial relation is a complete mental revolution of workers and
employees. The industrial peace lies ultimately in a transformed outlook on the part of both. It is the
business of leadership in the ranks of workers, employees and Government to work out a new relationship
in consonance with a spirit of true democracy. Both should think themselves as partners of the industry
and the role of workers in such a partnership should be recognized. On the other hand, workers must
recognize employer’s authority. It will naturally have impact on production because they recognize the
interest of each other.
 Reduced Wastage – Good industrial relations are maintained on the basis of cooperation and recognition
of each other. It will help increase production. Wastage of man, material and machines are reduced to the
minimum and thus national interest is protected.
Thus, it is evident that good industrial relations is the basis of higher production with minimum cost and higher
profits. It also results in increased efficiency of workers. New and new projects may be introduced for the welfare
of the workers and to promote the morale of the people at work. An economy organized for planned production
and distribution, aiming at the realization of social justice and welfare of the massage can function effectively
only in an atmosphere of industrial peace. If the twin objectives of rapid national development and increased
social justice are to be achieved, there must be harmonious relationship between management and labour.
Objectives of Industrial Relations:
The main objectives of industrial relations system are:1. To safeguard the interest of labour and management by securing the highest level of mutual understanding
and good-will among all those sections in the industry which participate in the process of production.
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2. To avoid industrial conflict or strife and develop harmonious relations, which are an essential factor in the
productivity of workers and the industrial progress of a country.
3. To raise productivity to a higher level in an era of full employment by lessening the tendency to high
turnover and frequency absenteeism.
4. To establish and promote the growth of an industrial democracy based on labour partnership in the
sharing of profits and of managerial decisions, so that ban individuals personality may grow its full stature
for the benefit of the industry and of the country as well.
5. To eliminate or minimize the number of strikes, lockouts and gheraos by providing reasonable wages,
improved living and working conditions, said fringe benefits.
6. To improve the economic conditions of workers in the existing state of industrial managements and
political government.
7. Socialization of industries by making the state itself a major employer
8. Vesting of a proprietary interest of the workers in the industries in which they are employed.
Need for Industrial Relation
Need of Industrial Relation has arisen to defend the interest of workers for adjusting the reasonable salary or
wages. It also helps the workers to seek perfect working condition for producing maximum output.
Workers/employees are concerned with social security measures through this. Industrial Relations are also
needed for achieving the democracy by allowing worker to take part in management, which helps to protect
human rights of individual. Salaries in India are much more attractive in Indian subcontinent. As India is having
flourishing economy, the job opportunities are emerging and there is huge scope of expansion. The salary pattern
of India is also growing. Even, the seventh pay commission is also spreading the way to coming soon. The
Salaries of private sector is also in the upswing mode with the increase of 11% annually. Although, Inflation is
one of the major factor which nullify the increase in the salary. But still, the inflation is lower than the increase in
the salary. So, this can be seen as increase in the salary.
The National Commission on Labour (NCL) also emphasize on the same concept. According to NCL, industrial
relations affect not merely the interests of the two participants- labour and management, but also the economic
and social goals to which the State addresses itself. To regulate these relations in socially desirable channels is a
function, which the State is in the best position to perform In fact; industrial relation encompasses all such factors
that influence behaviour of people at work. A few such important factors are below:
In fact, industrial relation encompasses all such factors that influence behaviour of people at work. A few such
important factors are below:
Characters
It aims to study the role of workers unions and employers€™ federations officials, shop stewards, industrial
relations officers/ manager, mediator/conciliators / arbitrator, judges of labour court, tribunal etc.
Institution
It includes government, employers, trade unions, union federations or associations, government bodies, labour
courts, tribunals and other organizations which have direct or indirect impact on the industrial relations systems.
Methods
Methods focus on collective bargaining, workers participation in the industrial relations schemes, discipline
procedure, grievance redressal machinery, dispute settlements machinery working of closed shops, union
reorganization, organizations of protests through methods like revisions of existing rules, regulations, policies,
procedures, hearing of labour courts, tribunals etc.
Contents
It includes matter pertaining to employment conditions like pay, hours of works, leave with wages, health, and
safety disciplinary actions, lay-off, dismissals retirements etc., laws relating to such activities, regulations
governing labour welfare, social security, industrial relations, issues concerning with workers participation in
management, collective bargaining, etc.
Industrial conflicts are the results of several socio-economic, psychological and political factors. Various lines of
thoughts have been expressed and approaches used to explain his complex phenomenon. One observer has
stated, “An economist tries to interpret industrial conflict in terms of impersonal markets forces and laws of
supply demand. To a politician, industrial conflict is a war of different ideologies – perhaps a class-war. To a
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psychologist, industrial conflict means the conflicting interests, aspirations, goals, motives and perceptions of
different groups of individuals, operating within and reacting to a given socio-economic and political
environment”.
Psychological approach
The problems of IR have their origin in the perceptions of the management, unions and the workers. The conflicts
between labour and management occur because every group negatively perceives the behaviour of the other i.e.
even the honest intention of the other party so looked at with suspicion. The problem is further aggravated by
various factors like the income, level of education, communication, values, beliefs, customs, goals of persons and
groups, prestige, power, status, recognition, security etc are host factors both economic and non-economic which
influence perceptions unions and management towards each other. Industrial peace is a result mainly of proper
attitudes and perception of the two parties.
Sociological approach
Industry is a social world in miniature. The management goals, workers’ attitudes, perception of change in
industry, are all, in turn, decided by broad social factors like the culture of the institutions, customs, structural
changes, status-symbols, rationality, acceptance or resistance to change, tolerance etc. Industry is, thus
inseparable from the society in which it functions. Through the main function of an industry is economic, its
social consequences are also important such as urbanization, social mobility, housing and transport problem in
industrial areas, disintegration of family structure, stress and strain, etc. As industries develop, a new industrialcum-social pattern emerges, which provides general new relationships, institutions and behavioural pattern and
new techniques of handling human resources. These do influence the development of industrial relations.
Human relations approach
Human resources are made up of living human beings. They want freedom of speech, of thought of expression,
of movement, etc. When employers treat them as inanimate objects, encroach on their expectations, throat-cuts,
conflicts and tensions arise. In fact major problems in industrial relations arise out of a tension which is created
because of the employer’s pressures and workers’ reactions, protests and resistance to these pressures through
protective mechanisms in the form of workers’ organization, associations and trade unions.
Through tension is more direct in work place; gradually it extends to the whole industry and sometimes affects
the entire economy of the country. Therefore, the management must realize that efforts are made to set right the
situation. Services of specialists in Behavioural Sciences (namely, psychologists, industrial engineers, and human
relations expert and personnel managers) are used to deal with such related problems. Assistance is also taken
from economists, anthropologists, psychiatrists, pedagogists, etc. In resolving conflicts, understanding of human
behaviour – both individual and groups – is a pre-requisite for the employers, the union leaders and the
government – more so for the management. Conflicts cannot be resolved unless the management must learn and
know what the basic what the basic needs of men are and how they can be motivated to work effectively.
It has now been increasingly recognized that much can be gained by the managers and the worker, if they
understand and apply the techniques of human relations approaches to industrial relations. The workers are
likely to attain greater job satisfaction, develop greater involvement in their work and achieve a measure of
identification of their objectives with the objectives of the organization; the manager, on their part, would
develop greater insight and effectiveness in their work.
Theoretical perspectives
Industrial relations scholars have described three major theoretical perspectives or frameworks, which contrast in
their understanding and analysis of workplace relations. The three views are generally known as unitary,
pluralist and radical. Each offers a particular perception of workplace relations and will therefore interpret such
events as workplace conflict, the role of unions and job regulation differently. The radical perspective is
sometimes referred to as the "conflict model", although this is somewhat ambiguous, as pluralism also tends to
see conflict as inherent in workplaces. Radical theories are strongly identified with Marxist theories, although
they are not limited to kosala.
Unitary Perspective
In unitary, the organization is perceived as an integrated and harmonious system, viewed as one happy family. A
core assumption of unitary approach is that management and staff, and all members of the organization share the
same objectives, interests and purposes; thus working together, hand-in-hand, towards the shared mutual goals.
Furthermore, unitary has a paternalistic approach where it demands loyalty of all employees. Trade unions are
deemed as unnecessary and conflict is perceived as disruptive.
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From employee point of view, unitary approach means that:

Working practices should be flexible. Individuals should be business process improvement oriented,
multi-skilled and ready to tackle with efficiency whatever tasks are required.

If a union is recognized, its role is that of a further means of communication between groups of staff and
the company.

The emphasis is on good relationships and sound terms and conditions of employment.

Employee participation in workplace decisions is enabled. This helps in empowering individuals in their
roles and emphasizes team work, innovation, creativity, discretion in problem-solving, quality and
improvement groups etc.

Employees should feel that the skills and expertise of managers supports their endeavors.
From employer point of view, unitary approach means that:

Staffing policies should try to unify effort, inspire and motivate employees.

The organization's wider objectives should be properly communicated and discussed with staff.

Reward systems should be so designed as to foster to secure loyalty and commitment.

Line managers should take ownership of their team/staffing responsibilities.

Staff-management conflicts - from the perspective of the unitary framework - are seen as arising from
lack of information, inadequate presentation of management's policies.

The personal objectives of every individual employed in the business should be discussed with them and
integrated with the organization’s needs.
Pluralistic-Perspective
In pluralism the organization is perceived as being made up of powerful and divergent sub-groups management and trade unions. This approach sees conflicts of interest and disagreements between managers and
workers over the distribution of profits as normal and inescapable. Consequently, the role of management would
lean less towards enforcing and controlling and more toward persuasion and co-ordination. Trade unions are
deemed as legitimate representatives of employees. Conflict is dealt by collective bargaining and is viewed not
necessarily as a bad thing and if managed could in fact be channelled towards evolution and positive change.
Realistic managers should accept conflict to occur. There is a greater propensity for conflict rather than harmony.
They should anticipate and resolve this by securing agreed procedures for settling disputes.
The implications of this approach include:

The firm should have industrial relations and personnel specialists who advise managers and provide
specialist services in respect of staffing and matters relating to union consultation and negotiation.

Independent external arbitrators should be used to assist in the resolution of disputes.

Union recognition should be encouraged and union representatives given scope to carry out their
representative duties

Comprehensive collective agreements should be negotiated with unions
Marxist Perspective
The Marxist approach looks at industrial relations from a societal perspective. It views industrial relations as a
microcosm of the wider capitalist society. The basic assumption of this approach is that industrial relations under
capitalism are an everlasting and unavoidable source of conflict According to this approach, industrial conflicts
are the central reality of industrial relations, but open conflicts are uncommon. The Marxist approach views
industrial disputes as a class struggle and industrial relations as a politicized concept and an element of the class
struggle. As per the Marxist approach, the understanding of industrial relations requires an understanding of the
capitalized society, the social relations of production and the mechanism of capital accumulation.
The Marxist approach views the power relationship between the two classes, namely, the employer (capital) and
the employee (labour), as the crux of the industrial relations. Both classes struggle hard to consolidate their
respective positions so that they can have a greater leverage over the other in the process of bargaining. The
proponents of this approach perceive that the employers can survive longer without labour than the employees
can without work. As far as theory is concerned, the compensation payable to the employees is an outcome of the
power struggle. For instance, the employers seek to maximize their profits by paying less compensation to the
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BINAYAK ACADEMY,
Gandhi Nagar 1st Line, Near NCC Office, Berhampur
Contact No: 9776486185, 8270407323
employees, while the latter resist such attempts, and this resistance results in industrial conflicts. However, the
weakness of this theory is that it is narrow in approach as it views industrial relations as a product or outcome of
the industrial conflict.
The System Approach
The system approach was developed by J. P. Dunlop of Harvard University in 1958. According to this approach,
individuals are part of an ongoing but independent social system. The behaviour, actions and role of the
individuals are shaped by the cultures of the society. The three elements of the system approach are input,
process and output. Society provides the cue (signal) to the individuals about how one should act in a situation.
The institutions, the value system and other characteristics of the society influence the process and determine the
outcome or response of the individuals. The basis of this theory is that group cohesiveness is provided by the
common ideology shaped by the societal factors.
According to Dunlop, the industrial relations system comprises certain actors, certain contexts, and an ideology,
which binds them together and a body of rules created to govern the actors at the workplace and work
community. The actors in the system are the managers, the workers and their representatives, and the
government agencies. The rules in the system are classified into two categories:
Substantive rules and Procedural rules.
The substantive rules determine the conditions under which people are employed. Such rules are normally
derived from the implied terms and conditions of employment, legislations, agreements, practices and
managerial policies and directives.
The procedural rules govern how substantive rules are to be made and understood. Ultimately, the introduction
of new rules and regulations and revisions of the existing rules for improving the industrial relations are the
major outputs of the industrial relations system. These may be substantive rules as well as procedural rules." The
context in the system approach refers to the environment of the system which is normally determined by the
technological nature of the organization, the financial and other constraints that restrict the actors of industrial
relations, and the nature of power sharing in the macro environment, namely, the society.
TRADE UNION
“A trade union is a combination of persons. Whether temporary or permanent, primarily for the purpose of
regulating the relations between workers and employers or between workers for imposing restrictive conditions
on the conduct of any trade or business and includes the federations of two or more trade unions as per Sec. 2 (6)
Trade Unions Act, 1926.
“A Trade Union is an organisation of workers, acting collectively, who seek to protect and promote their mutual
interests through collective bargaining”.
Objectives:
Following are the objectives of trade unions:
1. Ensure Security of Workers:
This involves continued employment of workers, prevent retrenchment, lay off or lock-outs. Restrict application
of “fire” or dismissal or discharge and VRS.
2. Obtain Better Economic Returns:
This involves wages hike at periodic intervals, bonus at higher rate, other admissible allowances, subsidized
canteen and transport facilities.
3. Secure Power To Influence Management:
This involves workers’ participation in management, decision making, role of union in policy decisions affecting
workers, and staff members.
4. Secure Power To Influence Government:
This involves influence on government to pass labour legislation which improves working conditions, safety,
welfare, security and retirement benefits of workers and their dependents, seek redressal of grievances as and
when needed.
Functions of a Trade Union:
The important basic functions of unions listed by National Commission on labour are:
(i) To secure fair wages to workers.
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BINAYAK ACADEMY,
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Contact No: 9776486185, 8270407323
(ii) To safeguard security of tenure and improve conditions of service.
(iii) To enlarge opportunities for promotion and training.
(iv) To improve working and living conditions.
(v) To provide for educational, cultural and recreational facilities.
(vi) To co-operate in and facilitate technological advance by broadening the understanding of workers on its
underlying issues.
(vii) To promote identity of interests of workers with their industry.
(viii) To offer responsive co-operation in improving levels of production and productivity, discipline and high
standards of quality and
(ix) To promote individual and collective welfare.
Trade Union as an Organisation:
Most of the workers are members of any one of the trade unions.
There are many reasons of membership and some of which are given below:
(a) Security of employment and protection against calamity of accident, death and secure social security cover
after retirement.
(b) Meeting companionship and affiliation need and improve one’s influence with management.
(c) To get a common platform—to air one’s views, aims ideas and feelings and obtain recognition and status
among fellow workers.
(d) Make use of the “principle of unity” for the purpose of securing good working conditions, high economic
compensations, better career prospects and welfare needs.
(e) Restrict management actions which are against the interest of workers.
Formation and Registration of Trade Union:
The following steps are involved in the registration of trade union:
Appointment of Registrars:
(a) The appropriate government shall appoint a person to be the registrar of trade unions for each state. The
appropriate government may appoint as many additional and deputy registrars of trade unions as it thinks fit for
the purpose of exercising and discharging under the superintendence and direction of the registrar.
Such powers and functions of the registrar under this Act as it may, by order, specify and define the local limits
within which any such additional or deputy registrar shall exercise and discharge the powers and functions so
specified.
(b) (i) Mode of Registration:
Any seven or more members of a trade union may, by subscribing their names to the rules of the trade union and
by otherwise complying with the provision of this Act with respect to registration, apply for registration of the
trade union under this Act.
(ii) Where an application has been made under subsection (i) for the registration of a trade union, such
application shall not be deemed to have become invalid merely by reason of the fact that, at any time after the
date of the application, but before the registration of the trade union, some of the applicants, but not exceeding
half of the total number of persons who made the application, have ceased to be members of the trade union or
have given notice in writing to the registrar dissociating themselves from the application.
(c) Application for Registration:
(i) Every application for registration of a trade union shall be made to the registrar and shall be accompanied by a
copy of the rules of the trade union and a statement of the following particulars, namely—
1. The names, occupations and addresses of the members making application.
2. The name of the trade union and the address of its head office.
3. The titles, names, age, addresses and occupations of the office bearers of the trade union.
(ii) Where a trade union has been in existence for more than one year before the making of an application for its
registration, these shall be delivered to the registrar, together with the application, a general statement of the
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BINAYAK ACADEMY,
Gandhi Nagar 1st Line, Near NCC Office, Berhampur
Contact No: 9776486185, 8270407323
assets and liabilities of the trade union prepared in such form and containing such particulars as may be
prescribed.
(d) Provisions to Be Contained In the Rules of a Trade Union:
A trade union shall not be entitled to registration under this Act, unless the executive thereof is constituted in
accordance with the provisions of this Act.
(e) Power to Call For Further Particulars and To Require Alterations of Names:
(i) The registrar may call for further information or the purpose of satisfying himself that any application
complies with the provisions of Section 5, or that the trade union is entitled to registration under Section 6, and
may refuse to register the trade union until such information is supplied.
(ii) If the name under which a trade union is proposed to be registered is identical with that by which any other
existing trade union has been registered or, in the opinion of the registrar, so nearly resembles such name as to be
likely to deceive the public or the members of either trade union, the registrar shall require the persons applying
for registration to alter the name of the trade union stated in the application, and shall refuse to register the union
until such alteration has been made.
(f) Registration:
The registrar, on being satisfied that the trade union has complied with all the requirements of the Act in regard
to registration shall register the trade union by entering in a register, to be maintained in such form as may be
prescribed, the particulars relating to the trade union contained in the statement accompanying the application
for registration.
(g) Certificate of Registration:
The registrar, on registering a trade union under section and, shall issue a certificate of registration in the
prescribed form which shall be conclusive evidence that the trade union has been duly registered under this Act.
(h) Cancellation of Registration:
A certificate of registration of a trade union may be withdrawn or cancelled by the registrar on the application of
the trade union to be verified in such manner as may be prescribed in if the registrar is satisfied that the certificate
has been obtained by fraud or mistake or that the trade union has ceased to exist.
It has to provide not less than two months’ previous notice in writing specifying the ground on which it is
proposed to withdraw or cancel the certificate shall be given by the registrar to the trade union before the
certificate is withdrawn or cancelled otherwise than on the application of the trade union.
(i) Registered Office:
All communications and notices to a registered trade union may be addressed to its registered office. Notice of
any change in the address of the head office shall be given within fourteen days of such change to the registrar in
writing, and the changed address shall be recorded in the register referred to in Section-8 of the Companies Act.
(j) Incorporation of Registered Trade Union:
Every registered trade union shall be a body corporate by the name under which it is registered and shall have
perpetual succession and a common seal with power to acquire and hold both movable and immovable property
and to contract, and shall by the said name sue and be sued.
Rights and Liabilities of Registered Trade Unions:
1. Objects on Which General Funds May Be Spent:
The general funds of a registered trade union shall not be spent on any other objects than the payment of salaries,
allowances and expenses to the office bearers of the trade unions; expenses for the administration of the trade
union; the presentation or defiance of any legal proceeding to which the trade union of any member thereof is a
party; the conduct of trade disputes and compensation of members for loss arising out of trade disputes;
provision of education, social or religious benefits for members; upkeep of a periodical published.
2. Constitution of a Separate Fund for Political Purposes:
A registered trade union may constitute a separate fund, from contributions separately levied for or made to that
fund, from which payments may be made for the promotion of the civic and political interests of its members, in
furtherance of any of the objects such as the payment of any expenses incurred, either directly or indirectly; the
holding of any meeting or the distribution of any literature/documents in support of any such candidate; the
registration of electors of the selection of a candidate for any legislative body constituted under or for any local
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BINAYAK ACADEMY,
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Contact No: 9776486185, 8270407323
authority; the registration of electors or the selection of a candidate for any legislative body constituted under/or
for any local authority; holding of political meetings of any kind.
3. Criminal Conspiracy in Trade Disputes:
No office bearer or member of a registered trade union shall be liable to punishment under sub-section (2) of
Section 120 B of the Indian Penal Code, 1860 in respect of any agreement made between the members for the
purpose of furthering any such object of the trade union as is specified in section its unless the agreement is an
agreement to commit an offence.
4. Immunity from Civil Suit in Certain Cases:
(i) No suit or other legal proceeding shall be maintainable in any civil court against any registered trade union or
any office bearer or member thereof in respect of any act done in contemplation or furtherance of a trade dispute
to which a member of the trade union is a party on the ground only that such act induces some other person to
break a contract of employment, or that is in interference with the trade, business or employment of some other
person or with the right of some other person to dispose of his capital or of his labour as he wills.
A registered trade union shall not be liable in any suit or other legal proceeding in any civil court in respect of
any fortuitous act done in contemplation or furtherance of a trade dispute by an agent of the trade union if it is
proved that such person acted without the knowledge of, or contrary to express instructions given by the
executive of the trade unions.
5. Enforceability of Agreements:
Notwithstanding anything contained in any other law for the time being in force, an agreement between the
members of a registered trade union shall not be void or voidable merely by reason of the fact that any to the
subjects of the agreement are in restraint of the trade.
6. Right to Inspect Books of Trade Unions:
The account books of a registered trade union and the list of members thereof shall be open to inspection by an
office bearer or member of the trade union at such times as may be provided for in the rules of the trade union.
7. Right of Minors to Membership of Trade Unions:
Any person who has attained the age of 18 years may be a member of a registered trade union subject to any rules
of the trade union to the contrary, and may subject as aforesaid, enjoy all the rights of a member and execute all
instruments and give all acquaintances necessary to be executed or given under the rules.
8. Effects of Change of Name and of Amalgamation:
The change in the name of a registered trade union shall not affect any rights or obligations of the trade union or
render defective any legal proceeding by or against the trade union. An amalgamation of 2 or more registered
trade unions shall not prejudice any right of any of such trade unions or any right of a creditor of any of them.
Shortcomings of Trade Unions:
Trade union movement in our country suffers from the following weaknesses:
1. Uneven Growth:
Trade unions are concentrated in large scale industry sector and in big industrial centers. There is very little trade
union activity in small sector, agricultural labour and domestic sector. Trade unionism has touched only a
portion of the working class in India.
2. Small Size:
Most of the unions have low membership though the number of unions and union membership are increasing,
average membership is inadequate.
3. Weak Financial Position:
The average yearly income of unions is very low and inadequate. The subscription rates are low and many
members do not pay the subscription in time. Due to their financial weakness, most of the unions are not in a
position to undertake welfare programmes for workers.
4. Political Leadership:
Trade unions are under the leadership and control of political parties and outsiders. Politicians exploit unions
and workers for their personal and political gains. Thus, the political leadership is very harmful to the trade
union movement in India.
5. Multiplicity of Unions:
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BINAYAK ACADEMY,
Gandhi Nagar 1st Line, Near NCC Office, Berhampur
Contact No: 9776486185, 8270407323
There exist several unions in the same establishment or industry. The existence of rival unions with conflicting
ideology is greatly responsible for unhealthy growth of trade union movement. In some cases employers
encourage split in unions to undermine their bargaining power.
6. Problem of Recognition:
Employers are under no obligation to give recognition to any union.
7. Absence of Paid Office-Bearers:
Most of the unions do not have Hill-time paid office-bearers. Union activists working on honorary basis devote
only limited time and energy to union activities. Union officers lack adequate knowledge and skill due to lack of
proper training, weak financial position and political leadership are the main reasons for this state of affairs.
8. Apathy of Members:
Majority of workers do not take keen interest in union activities. The attendance at the general meetings of unions
is very poor.
9. Opposition from Employers:
Trade unions in India have to face opposition from employers. Many employers try to intimidate or victimise
labour leaders, start rival union and bribe union officials.
10. Inter-Union Rivalry:
Multiple unions create rivalry. Unions try to play down each other in order to gain greater influence among
workers. Employers take advantage of infighting. Inter-union rivalry weakens the power of collective bargaining
and reduces the effectiveness of workers in securing their legitimate rights.
Employer’s Organisations:
Under the trade union Act the term trade unions also includes employer’s organisations. But strictly speaking, an
employer’s association means formal body of employers only.
According to Mr. Naval Tata, the objectives of an employer’s association are:
(i) To promote collective bargaining.
(ii) To develop healthy and stable industrial relations.
(iii) To bring employer’s viewpoint to the notice of the Govt, and
(iv) To represent employers at national and international forums.
There are at present more than 800 registered associations of employers in India. These are of three types:
1. Local associations to promote the interests of employers in a particular industry or city, e.g., Indian Jute Mills
Association.
2. Regional associations such as the Southern India’s Mill Owners’ Association which serve the needs of
employers in a particular region.
3. National or apex associations which co-ordinate the efforts of local and regional associations. These are
federations to which local and regional associations are affiliated. FICCI, CII, are examples of these federations.
These federations perform several functions such as advice, education, communication, representation.
Organisation Structure:
Organisational structure of National Trade Unions consists of 4 levels as given below:
1. Conventions/sessions
2. General council (President, VP, Secretary-General, etc.)
3. Provincial bodies (at state level chairman, secretariats)
4. Local bodies (affiliated unions)
National convention/conferences are hold at periodic intervals, say annually or bi-annually. This is the highest
policymaking body. This is presided over by the president of the union attended by the delegates such as
chairmen of state units, representatives of specialized services, legal experts and delegates from international
bodies and special invitees. Office bearers are also elected by this conference.
General council consists of president, vice-president, secretary and other office bearers. It carries out policy
decisions taken by convention. Various standing committees are set up on rendering study, analysis and
23
BINAYAK ACADEMY,
Gandhi Nagar 1st Line, Near NCC Office, Berhampur
Contact No: 9776486185, 8270407323
recommendations on various aspects like legislative measure, Research and publications, international services
etc.
State units are headed by chairman of state/regional areas. State units also liaise with National Headquarters;
keep a close watch of faithful implementation of labour legislation and practices. It assists/influence state
government to pass labour friendly legislation and executive/administration actions.
It is also responsible for membership of various unions representing workers in industrial undertakings (units)
and/or representing trade and industrial units affiliated to the central trade union. These state units get
themselves attached to State/Provincial/HQ/Regional unions/Units.
Headquarters (HQ) unions are responsible for welfare of its members and membership drive. As bargaining
agents they are involved in collective bargaining with Central Government/ and or State government and assist
passing legislative measures.
How Trade Union Objectives are Achieved?
The objectives of a trade union are achieved by a pursuit of traditional methods. These are:
(i) The organisation of a trade union on the basis of the craft or industry in which its members are employed, such
as general unions and professional employee’s organisations.
(ii) Collective bargaining, which is the essence of industrial relations, for it is through collective bargaining that
the terms and conditions of employment are determined and under which work is performed’ satisfactorily.
(iii) Grievance processing and handling procedures, under which grievances are redressed or dealt with by a
correction of situation or by channelling up of these “up the line”.
(iv) Arbitration, by which unsettled or unresolved disputes can be settled by an outside agency.
(v) Political pressure exercised through legislators who are capable of bringing about changes in labour laws; and
(vi) Mutual insurance through common contributions to meet the financial needs of workers when there are
stoppages of work.
Characteristics of Trade Union:
1. A union normally represents members in many companies throughout the industry or occupation.
2. A union is fundamentally an employer regulating device. It sharpens management efficiency and performance
while protecting the interests of the members.
3. A union is a part of the working class movement.
4. A union is a pressure organisation originating in the desire on the part of a group with relatively little power to
influence the action of a group with relatively more power.
5. A union is a political institution in its internal structure and procedures.
Trade Union Movement in India:
Trade union movement in our country has a century-long history. The first quarter of the present century saw the
birth of the trade union movement, but the seeds of the movement were sown much earlier.
In the twenties, soon after the World War I, working class in our country realised the effectiveness of labour
strike as a means of obtaining concessions, higher wages and better working conditions. Many strikes were
declared consequently and most of them were successful. This success led to the formation of several unions.
The AITUC was set up in 1920 with the objectives of representing worker’s interests, to co-ordinate the activities
of all labour organisations in the country, and to spread the message about the need for union movement.
Hundreds of unions came into being in big and small industries. Their number, as well as membership, increased
considerably.
A landmark in the history of labour movement was the enactment of the Trade Unions Act 1926. The Act gave a
legal status to the registered trade unions and conferred on them and their members a measure of immunity from
civil suits and criminal presentation. Registration of union gave them respectability before employers and the
general public.
Towards the end of 1920s, there was a split in the union movement, the split being caused by the leader’s
ideological differences. The AITUC was captured by the communists. The moderates formed a new organisation,
called All India Trade Union Federation. Ideological differences and splits had their effect on strikes too. Majority
of the strikes failed.
24
BINAYAK ACADEMY,
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Contact No: 9776486185, 8270407323
Unlike 1920s, the 1930s were not favourable to the trade union movement. The presentation of the communists
involved in the Meerut conspiracy case and the failure of the Bombay textile strike of 1929 brought a lull in trade
union activities.
Economic depression of the period also added to the dull phase of union movement. Retrenchments and strikes
were common, the latter being mostly ineffective. There were further splits in the movement, but just before the
World War II some unity was achieved.
The unity was shattered during the World War II because of ideological differences and mounting cost of living.
Industrial unrest increased and the Govt, banned strikes and lockouts invoking the Defence of India Rules.
Luckily workers realized the need for an organized movement to secure relief. This realisation led to an increase
in the number of unions.
The aftermath of independence was not good for unions. The hopes of workers to secure better facilities and
wages from the national government were not realized. There was large scale unrest and strikes and lock outs
multiplied.
The disunity in the trade union ranks was aggravated by the starting of three central labour organisations,
namely the INTUC in 1947, the Hind Mazdoor Sabha (HMS) in 1948, and the United Trade Union Congress
(UTUC) in 1949.
As years went by, more unions and central organisations came into being the movement became deeply
entrenched as of today, there are 50,000 registered unions and most of them are affiliated to one or the other
central trade union.
Trade Union Formation:
Trade unions are formed on different criteria.
Some of the criteria are:
(1) Craft basis, (2) Industrial Unions, (3) General grouping based on place and (4) Federations.
1. Craft Unions:
In this organisation the labour class is grouped based on particular trade or occupation. This category is mainly
amongst the white collared employees. The measures are mostly in horizontal system and craft conscious rather
than class conscious.
This will have lot of commonality in thinking and approach to problems resolution. The bank employees’ union,
doctors’ union, lawyers’ association, teachers’ association come under this category.
2. Industrial Unions:
A particular category of industry will have their own unions. All crafts and trades coming under that industry are
part of the union. Textile mill unions, steel industry unions, mill mazdoor sangh, grini kamgar unions are some of
the examples of industrial unions in India.
They form a strong force in collective bargaining. They cover all welfare of similar industry workers in a city or
industrial town. Industrial unions are more vocal, volatile and indulge in agitation and strikes. Similarly these
industries face more lockouts and arbitration for disputes redressal.
3. General Union:
This is a conglomerate group of different industry employees forming a union. This happens normally in
industrial towns, ancillary units, and SSI units in a city or suburb. Examples are Peenya industrial workers’
union, Thane industry employees’ unions and Jamshedpur labour union.
4. Federations:
These are apex bodies at national level. All trade unions like craft union, industrial unions and general union
become members of federations to have bigger identity. Central trade unions as federations help smaller unions
and support at national level to address their cause.
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