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Personnel management and industrial relations are two related concepts that deal with various aspects of the relationship between the management of organizations and their employees as well as the relationship between other parties with a vested interest, such as labor unions. The main difference between personnel management and industrial relations is that while personnel management is more focused on the recruitment, training and proper relations with employees, industrial relations is more concerned with trade unions and other forms of organized labor, in relation to employment issues. In that sense, it can be said that the relationship between personnel management and industrial relations is the shared concern for the welfare of employees and other forms of labor.
Organizations are well aware that the human capital invested in labor is the main engine that drives the organization since no company can function without some of form of input by its workers. It is this realization that makes it imperative for organizations to actively look for means of engaging the type of human capital required by the organization, a duty that falls within the ambit of the functions of personnel management. The concern of personnel management is not only to identify such labor requirements, but they must also recruit the needed labor by fitting the right employees to the jobs.
It is here that another link between personnel management and industrial relations can be seen, because management must also introduce standards to ensure that the welfare of employees are met. Failure to do so may lead to actions against the management of the company, either by the employees on their own or by the various trade unions or labor unions as part of industrial relations. Where the management and labor are able to successfully resolve the issue by coming to a mutually beneficial understanding, then the cordial industrial relationship is restored. Assuming the company and the labor unions cannot come to some sort of understanding or compromise, then there is a situation that is referred to as a break down in industrial relations.
Usually, the personnel management will be the main department to handle the dispute with labor or unions. Personnel management will also be the department to take proactive steps to ensure that such situations do not come up, and also to try and make certain that any such incidence that does occur is attended to so as to prevent any form of escalation. Part of the process of making sure that such rifts do not arise include ensuring that the organization adheres to the applicable labor laws for that industry and also that they treat their employees in an equitable manner.