The term "industrial relations" has developed a broad as well as a narrow meaning. The original broad definition of industrial relations included the totality of relationships and interactions between employers and employees. From this perspective, industrial relations encompasses all aspects of the employment relationship, such as human resource (or personnel) management, employee relations and union-management (or labor) relations.
However, since the middle of the twentieth century, industrial relations have taken on a narrower, more restricted definition, according to which it is largely equal with the unionized employment relationships. From this perspective, industrial relations pertain to the study and practice of collective bargaining, labor-management relations and trade unionism. In this view, human resource management remains a separate, largely distinct field, dealing with nonunion employment relationships and employers' personnel practices and policies. In the twenty-first century, both meanings of the term coexist, but the latter is more common.
The term industrial relations became commonly used in the 1910s, in particular in 1912 when President William Taft appointed an investigate committee called the Commission on Industrial Relations. The commission was in charge of investigating the causes of widespread, often violent labor conflict and making recommendations regarding methods to promote greater cooperation and harmony among employers and employees. The term became even more salient in the public mind amid the wave of strikes, labor unrest and agitations for "industrial democracy", accompanying the economic and political disturbances related to World War I (1914-1918).
However, the term's roots extend back at least to the beginning of the 1870s when the industrialization process started in earnest in the United States. Conditions resulting from this process led to a wave of strikes, revolutionary economic and political movements, as well as demands for social and economic reform. The conflict between employers and employees came to be known as "the Labor Problem". When industrial relations emerged as an academic field of study and area of business practice in the 1910s, it was intimately associated with the rise of the Labor Problem.
During this period, industrial relations came to be widely defined as the study of labor problems and alternative methods to resolve such problems. Later, during the prosperous 1920s, the major line of advance in the field was the employer's solution of personnel management. Personnel departments were established at numerous firms which in various ways looked to reduce the most serious causes of labor turnover and unrest. As numerous labor problems reemerged and as a result of different events and developments in the economic, legislative and trade unions worlds in the 1930s, there was a great shift in industrial relations practices and policies, with employers' power declining and unions flourishing.
During the 1940s, the industrial relations system that had evolved in the previous decade was largely intact, but the public opinion was that union power needed to be reined in and made more responsible. While the National Labor Relations Act was amended in 1947 and prohibited certain practices of unions, organized labor continued to expand its influence and membership for about a decade. A new industrial relations system emerged in the early 1960, where collective bargaining had a much smaller role while personnel management, now called human resource management, along with direct government regulation of employment conditions, expanded their role.
The new system, which was consolidated in the 1980s and 1990s, was established as the size and influence of the union sector in the economy slowly but significantly shrank. However, between the 1960s and 1990s, there were also positive developments for unions, the most positive of which was the spread of collective bargaining to the public sector. As the union sector of the economy declined, personnel/human resource management managed to reassert itself as a leading force in industrial relations. As a result of new employment practices, in the 1970s companies developed the so-called "high-performance" work system, which has spread widely ever since as it boosted productivity and typically increased employee job satisfaction.
The spread of greater government regulation of employment conditions also helped the emergence of the new system and undermined the earlier industrial relations system. Since the beginning of the 1960s, the government passed laws and regulations pertaining to discrimination as well as laws relating to other employment areas, including pension plans, family and medical leave, along with the portability of health insurance. These laws, as well as attendant agencies, courts and attorneys, have been widely considered to have served as a substitute for unions to some extent, partly explaining the union decline at the end of the twentieth century.