John Dunlop’s analysis and study of the concepts, structure, function, practices, outcome and the institution that are constitutive of the employment relationship have paved the way in the establishment of the main framework of an industrial relations system.
According to Dunlop, the system is composed of three main actors and their organizations, the context or setting in which they interact, the common ideology held by the actors and the body of rules that govern the system. These are the fundamental components that shape or outline the industrial relations system in which they belong to.
The actors - hierarchy of managers, the hierarchy of workers and the specialized government agencies are the central personas in an industrial system. The interaction and relationship within the three creates the set of rules of the workplace or the principles of the system. Establishment (and development) of the set of rules is the focus of an industrial relations system. The body of rules in the system administers the actors in the place of work. The function of experts and professionals are very crucial in order to establish and govern the body of rules in the system. This are organized and consists of (a) procedure and authority for making rules (b) substantive rules - related to market or budgetary constraints and related to distribution of power in larger society such as compensation, duties and discipline as well as the rules of discipline and (c) administration of rules governing work place and the work community which involves policies of management hierarchy, laws of worker hierarchy, regulations / decisions/ orders by government agencies, collective bargaining agreements and the customs and traditions of work place and work community.
The entire industrial relations system becomes (or mandated to be) stable because of the common ideology or beliefs shared by the three actors of the industrial relations system. It should be fitting and consistent to allow a mutual set of ideas that identifies an acceptable role for each actor. This also characterizes and delineates both the position and function of each in the entire system or their relationship with the rest of the actors. These set of ideas or beliefs are the factors that integrate the system as a unit. Displacement of the existing ideological equilibrium takes place when a belief has a significant modification. Accordingly, this will create a new position or set of rules within the entire system.
The system operates within or prescribed by technology, product markets as well as the locus and distribution or power in society. These are the contexts or environments in which the main actors interact. The technological characteristics of the place of work may influence the type of management of a particular work community as well as the organization of its workers. Moreover, this may also dictate the required labor force of the organization, the requirement for supervision and possible regulation of the government or government agencies. Product markets for the most part affect management group, however, this is dependent on the type of system in which it operates. The distribution of power is not within the confine of the industrial relations system. This operates outside of the system yet influences the key actors of the system itself. These are types of power orientation or authority that has direct influence over the key actors.
The industrial relations system necessitates unison, interdependency and equilibrium of the components. Even if the balance in the system is displaced, it would be re-established on condition that no major alteration would occur in the actors, contexts and shared ideology.