In a 1903 Board of Directors meeting, the NAM first truly took a stand on the open shop movement. However, it would not be until 1920 that an Open Shop Committee at the Board level would be formed and have its first meeting on September 17, 1920. In October of that same year, the Open Shop Department was created for the purpose of promoting the recognition and observance of open shop principles in American industry and a better understanding of such principles on the part of employer, employee, and general public.

The department broadly defined their work as educational, centering on two branches of the public — the schools and the clergy. Their efforts included speeches, research, newspaper publicity, pamphlets, and other means, but restricted funds due to the economic downturn of 1920-1921 inhibited the work. Following World War I, the department was devoted exclusively to worker issues, conditions surrounding the workplace, and related human resource functions. In 1928, to better reflect its work, the department changed its name to the Industrial Relations Department.