Industrial Organizational Psychology 88
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Industrial/organizational (110) psychology is the application or extension of psychological methods and principles to the solution of organizational and workplace problems. Most commonly, 1/0 psychology is concerned with those problems caused by human performance and those which affect human performance within organizational contexts. Specifically, this entails, among other things,

I/0 psychologists employ psychological measurement and research findings related to human abilities, motivation, perception, and learning in seeking to improve the fit between the needs of the work organization and those of the people who populate it.

Normally training in I/O psychology requires a master's degree or Ph.D. Practitioners may also be affiliated with one or more professional associations for the field. The Society for Industrial-Organizational Psychology (STOP), the major professional organization which represents 1/0 psychologists and a division of the American Psychological Association, had about 2,000 members as of 1999.



I/O psychology has its roots in the late 19th century movement to study and measure human capabilities and motives. Some early psychologists, noting the practical nature of psychological research, sought to apply the findings to business problems. In response to the urging of some advertising executives, one such early psychologist, Walter Dill Scott, The Theory of Advertising (1903), generally considered to be the first book linking psychology and the business world. It was followed by The Psychology of Advertising (1908). Another founder of the field was Hugo Munsterberg (1863-1916), a German-born psychologist teaching at Harvard University who in 1913 published The Psychology of Industrial Efficiency. Muinsterberg's book was heavily influenced by the fascination with human efficiency so well represented in the work of Frank and Lillian Gilbreth and Frederick W. Taylor (1856-1915).

When the United States entered World War I in 1917, applied psychology truly came into its own. Committees of psychologists investigated soldier morale, motivation, and the prevalence of psychological impairment. Moreover, psychologists developed a group-administered intelligence test called the Army Alpha. While 1,726,000 enlisted men and officers were tested, little use was made of the results at the time since the war ended a mere three months after the testing program was authorized. However, research studies did show that the test scores were related to soldier performance.

After the war, in 1919, the first university-based center for studying the applications of psychology to business was established at the Carnegie Institute of Technology. Called the U.S. Bureau of Salesmanship Research, it was funded largely by the life insurance industry for the purpose of conducting research for the selection and development of clerical and executive personnel as well as sales people.


In 1924, a change in direction was heralded by the Hawthorne experiments, named after Western Electric Company's Hawthorne plant in Chicago where the studies were conducted. Originally conceived as a test of some aspects of Taylor's principles, the researchers sought the optimal level of illumination necessary for workers to produce telephone equipment. Instead of finding Taylor's assumed "one-best-way," the researchers found that productivity increased after each change in lighting no matter how bright or dim they made it. Eventually, they concluded that the workers were responding to the attention they were getting as part of the special research study and this phenomenon came to be known as the Hawthorne effect. Up to this point, thinking about work organizations had been dominated by classical (i.e., bureaucratic or machine) theory. Workers were viewed as extensions of the job and the aim was to arrange human activity to achieve maximum efficiency. Moreover, these classical views of organization assumed a top-down management point of view, emphasizing the authority structure of the organization. The object was to get top management's wishes translated into practice on the shop floor. So the task was to design the job according to scientific precepts and then provide an incentive (usually piecework) to get workers to comply with the will of management and the industrial engineers.

The Hawthorne researchers came to embrace a very different view of the business enterprise. They concluded that friendship patterns among the workers were the guts of the organization, and also that people would work harder for an organization that they believed was interested in their. The Hawthorne researchers eschewed economic incentives as the driving force behind work and painted a rich picture of the informal relationships (i.e., those not specified in the organizational chart or job specifications) among workers themselves, in addition to those among workers and the managers, which was the focus of the classical view. People, in other words, came to work not for money, but for the social rewards and satisfactions inherent in human organization.

Management was no longer the controlling force for the Hawthorne researchers (also called neoclassical theorists). Rather, they argued that management can govern only with consent of the workers and that workers actually influence management decisions by controlling the impression that management had of a proper day's work. For example, workers might slow up the pace when the time-motion man (the one with the stopwatch) came into view. The Hawthorne researchers became convinced that job performance could be influenced in ways that could not be achieved with either money or job design. They proposed motivating workers with a set of techniques called human relations, which involved providing considerate supervision and management as a means of persuading the workers to conform to management's expectations by convincing them that the company was indeed concerned about them. In other words, the goal was to change employee attitudes rather than job design or pay. In return, productivity and reliable job performance would presumably increase. Thus, motivation was seen as a function of the satisfaction of social needs for acceptance, status within one's group, and humane supervision. They recognized that workers may not be performing effectively, not because they are immoral, but because they perceive that they are being treated indifferently or even shabbily by management. To motivate workers, therefore, one changes those perceptions.

Contemporary I/0 psychologists no longer feel they have to choose between classical bureaucratic theory or scientific management on the one hand and neoclassical human relations on the other. The common view today is that taken together, they provide a comprehensive picture of organizational functioning. Environmental forces such as management directives, human capabilities, the state of technology, and economic considerations are potent forces on worker performance and cannot be denied. Likewise, human motivation, perceptions, and job attitudes are influential as well and are ignored at management's peril.

I/0 psychologists recognize that there is an inherent conflict between the needs of organizations and the needs of individuals. Organizations seek regularity and so attempt to reduce human behavior to predictable patterns. That's what organizing is. Humans, on the other hand, do not take well to having their behavior reduced to only those acts required by the job, preferring instead to add spontaneity and expression to the equation. This conflict will never be eliminated, only alleviated. It requires constant, ongoing effort and vigilance to contain the unnatural arrangement we call social organization.


During World War II, psychologists contributed heavily to the military by developing the Army General Classification Test for the assessment and placement of draftees, as well as specific skills and ability tests, and leadership potential tests. Psychologists also conducted studies of accidents and plane crashes (which led to the field of engineering psychology), morale, and soldier attitudes.

Following World War II, I/O psychology emerged as a specifically recognized specialty area within the broader discipline of psychology. And even within 110 psychology, subspecialties emerged such as personnel psychology, engineering psychology, and organizational psychology. In the late 1950s and into the 1960s, a renewed thrust toward studying organizations with psychological precepts emerged as social psychologists and I/O psychologists gained the conceptual tools needed to model and understand large, task oriented groups including work organizations. From this line of inquiry came the work of I/O psychologists in assessing the effects of organizational structure and functioning on employees. Related applications appeared under the rubric of organization development (e.g., participative management, socio-technical systems, self-managing work groups, team building, survey feedback, and related approaches).


Contemporary I/0 psychologists no longer feel they have to choose between classical bureaucratic theory or scientific management and neoclassical human relations. The common view today is that taken together, they provide a comprehensive picture of organizational functioning. Environmental forces such as management directives, human capabilities, the state of technology, and economic considerations are potent forces on worker performance and cannot be denied. Likewise, human motivation, perceptions, and job attitudes are influential and are ignored at management's peril.

I/0 psychologists recognize that there is an inherent conflict between the needs of organizations and the needs of individuals. Organizations seek regularity and so attempt to reduce human behavior to predictable patterns. Humans, on the other hand, do not take well to having their behavior reduced to the acts required by a job, preferring to add spontaneity and expression to the equation. This conflict will never be eliminated, only alleviated. It requires constant, on-going effort and vigilance to contain the unnatural arrangement we call social organization.

The most recent major thrust in I/O psychology began in the 1970s following court decisions interpreting the 1964 Civil Rights Act. The courts placed a heavy burden on employers to defend the validity (i.e., job relevance) of their recruiting, selection, and promotional procedures. Many employers concluded that complying with this and subsequent anti-discrimination legislation required the skills of 1U0 psychologists as their best defense against lawsuits brought by employees who claimed they were victims of illegal employment discrimination. Evidence of the validity of selection criteria as provided by 110 psychologists is often essential in defending against charges of civil rights violations brought by government or employees against employers.


According to a 1997 membership survey of the Society for Industrial-Organizational Psychology, nearly two-thirds of U.S. 1/0 psychologists are employed by academic institutions and consulting firms. Employment at consulting firms has been the growth category in the profession, while the percentage of 1/0 psychologists employed by academia and private organizations has declined somewhat. About 15 percent work for private companies, and the rest work at government agencies or other organizations.

Large organizations are the primary users of UO psychological methods, either directly by employing an 1/0 psychologist's services or indirectly by using information from the field (e.g., published articles, books, seminars). Numerous large American corporations such as AT&T, IBM, Unisys Corp., General Motors Corp., Ford Motor Co., PepsiCo, Inc., to name just a few, maintain a staff of 1/0 psychologists. Many other companies regularly use 1/0 psychologists as consultants on an as-needed basis. 1/0 psychologists are also employed by government. The federal Office of Personnel Management has an active test development program for civil service test construction, and all branches of the military employ I/O psychologists to conduct research and applications in leadership, personnel placement testing, human factors, and for improving motivation and morale. The U.S. Army Research Institute is an example of one such military agency. State and municipal governments also employ psychologists, especially for personnel selection purposes in the context of local civil service requirements. Abroad, 1/0 psychology is widely employed in England, Australia, Germany, Japan, and China.

In these various settings, the most common activities of 1/0 psychologists are in the areas of personnel selection and performance appraisal; management, leadership, and organizational psychology; motivation and employee satisfaction; and training and development.


In the process of diagnosing an organization's problems, recommending or implementing changes, and evaluating the consequences of those changes, contemporary 1/0 psychologists employ one or more of four non-mutually exclusive emphases in addressing:

  1. Personnel psychology. Personnel psychology is concerned with individual differences and therefore deals with all aspects of recruiting and selecting personnel.
  2. Training. Training is applying the principles of human learning to teaching employees skills, techniques, strategies, and ideas for improving their performance.
  3. Motivation and leadership. This deals with incumbent employees and seeks to create an environment that provides employees with a clear view of what they are supposed to accomplish and promotes the creation of conditions conducive to encouraging people to give their best.
  4. Engineering psychology. The engineering psychologist addresses the human problems of organization through the design of machinery and tools that take human limitations specifically into account.


Personnel psychology is the most distinctive and potent approach available to 1/0 psychologists in alleviating the person-organization dilemma (i.e., the resistance of humans to have their behavior artificially reduced to recurring predictable patterns). Simply put, personnel psychology attempts to identify the best candidate for an available position using rigorous methods that have been shown to be accurate in the past. The thrust of personnel psychology is to study a job and the traits of individuals who hold the job, and then use this information to predict what kinds of individuals would do well in the future. Personnel psychology is based on the psychology of individual differences (i.e., that people vary in their interests, skills, and abilities). Since various jobs require different combinations of these human qualities, matching the person to the job involves assessing human characteristics and job characteristics alike in an objective manner in order to achieve a satisfactory person-job fit.


Job analysis refers to a set of techniques for describing (a) the actual tasks, activities, arrangements, and working conditions a job involves; (b) the employee traits (knowledge, skills, other qualifications) needed to perform the job effectively; and (c) the procedures used to hire the existing employees. Job analysis yields a job description that portrays the actual job as it is done, not as management wants it to be done or as management imagines it is done.

There are a variety of methods and data sources available for uncovering the knowledge, skills, and abilities necessary to perform a job. Chief among these are observation (when the job activities are observable), interviews, and/or questionnaires administered to employees performing the job, their supervisors, as well as subject matter experts (SMEs) who are individuals carefully chosen because of their expertise in the target job. Other methods are activity logs, examination of training manuals, personnel records, and performance reviews. Choosing among these will obviously be influenced by such factors as whether the job is largely observable (i.e., manual) or not readily observable (i.e., primarily knowledge work).


Following the job analysis is the establishment of job performance criteria for the target job. The object is to set measurable standards that include a complete representation of demonstrably relevant job facets (criterion sufficiency) and exclude those not essential to proper performance (criterion contamination). Performance criteria may be objective or subjective. Examples of objective criteria are numbers of units produced, amount of scrap, number of errors made, and similar objectively measurable criteria. Subjective criteria consist of methods such as supervisory ratings, peer ratings, and sometimes subordinate ratings. The challenge in developing useful performance criteria is to resist the temptation to try to force objective performance criteria on jobs that are not amenable to such criteria.

I/0 psychologists, moreover, recognize that setting performance standards means making sure that apples are being compared with apples. If the same standards apply to several employees, even if their job titles are the same, it is critical they are doing precisely the same job under the same conditions—another reason why the job analysis is so important. If some workers are using old model machine tools while others are using newer models, it could make a performance difference that has nothing to do with the individual worker.


Once performance criteria are established, the next step is the process of evaluating the performance of existing employees. Performance evaluation may be used for two purposes: personnel decisions and feedback to the employee to help improve performance (i.e., performance appraisal ). In the former instance, performance evaluations are used in making decisions about promotions, transfers, pay increases, layoffs, granting performance awards, evaluating recruiting procedures, and validating personnel selection devices.


For selection devices to be useful they have to be related to the job. While the point is obvious, it is often overlooked or distorted in practice. Commonly used selection devices include personal interviews, application blanks, paper and pencil tests, situational tests (such as incorporated in assessment centers and work samples), biographical inventories. For any given job, a selection device can be validated by showing that performance on the device is statistically related to subsequent job performance (empirical validity) or logically related to job performance based on the results of the job analysis itself (job content validity). Generally, validity studies of some of the most popular selection devices reveal the following:


The unstructured personal interview is usually an unreliable selection device because research has shown, with few exceptions, that different interviewers draw different conclusions about the same candidate. Without adequate reliability, a selection device cannot be valid. The commonly used unstructured personal interview is based on the assumption that one person can size up another in a brief and unsystematic chat. For most selection purposes, there is no evidence that humans have that ability. Studies of the unstructured interview reveal that different candidates are often asked different questions, or the order of questioning varies from candidate to candidate. Often questions are asked for which the answers are usually uninterpretable with regard to the job (e.g., "Why do you want to work here?"). It should be no surprise, then, that some studies have actually found the unstructured interview to be a negative selector. That is, it increases the probability of picking the wrong candidate for the job. Most of the information garnered from the personal interview can be obtained by other means.

For employers who want to use interviews, the structured or standardized interview is preferred. In the structured interview all candidates are asked the same questions in the same order. Newer developments in structured interviewing include the situational interview and experience interview where candidate are presented with situations and then are asked how they would (or actually did) respond to them. The situations presented are derived from job analyses and the answers are scored based on validated coding schemes.


Paper-and-pencil tests are used to measure human skills, interests, abilities, and personality attributes. Such tests are economical to administer and, when judiciously chosen and validated, are an objective and efficient aid in the selection of employees. Evidence collected over many decades indicates that cognitive ability (intelligence) tests generalize across many different jobs and predict performance for a substantial variety of jobs. This is because virtually all human endeavor requires at least some logical reasoning and problem solving ability. The more reasoning ability a job requires, the more valid will be cognitive ability tests. Other tests measure such abilities as perceptual speed and accuracy which is essential to effective clerical work, perception in three dimensions necessary for certain technical jobs, reading and vocabulary skills, numerical ability, interests, specialized aptitudes, and knowledge.

Biographical inventory questionnaires tap applicants' background and experiences and have proven highly valid in many settings. Additionally, if properly designed and validated, the application blank can also serve as a useful selection device. A relative newcomer to personnel selection is the integrity or honesty test, which has come to replace the polygraph. In 1988, polygraph testing became illegal for use in personnel testing by private employers, but not by government agencies. Preliminary validation studies of paper-and-pencil integrity tests that have come to replace the polygraph show they have promise in identifying employees prone to theft, absenteeism, drug abuse, and malingering. Honesty tests are relatively inexpensive to administer and perhaps 15 million employees a year are asked to take such tests.


Another set of methods for assessing job applicants is the use of tests which attempt to sample or simulate situations that the employee might encounter on the job. For some jobs, such as word processing, it is often only necessary for the applicant to demonstrate the ability to create a document meeting certain requirements using a word processing program. On a more elaborate scale one of the most widely used examples of this type of test is the assessment center method, which requires candidates for a job or promotion to perform exercises before observers who rate their performance. Originally, developed by the Office of Strategic Services, forerunner of the Central Intelligence Agency (CIA), assessment centers are used to identify leadership talent. In the private sector their use was pioneered beginning in the 1950s by AT&T. They are currently used by over 2,000 organizations for identifying managerial talent as well as for training and feedback.


Letters of recommendation are usually poor indicators of future job performance, and many organizations refuse to write them for departing employees for fear of legal reprisal if the employee discovers the letter contains uncomplimentary statements. Letters of recommendation are somewhat like unstructured personal interviews in that, without a specific guide for the writers, they are non-comparable. Letters also suffer from a leniency bias in that writers are usually too eager to say good things about the candidate whether or not they are accurate.


Finding satisfactory employees can be simplified by identifying recruiting sources that yield the most successful employees. Research by 1/0 psychologists has shown that, in general, rehires and recommendations of existing employees are the best sources, while employment agencies, college placement offices, walk-ins, and replies to newspaper ads have the least chance of working out. This varies with the nature of the job, however.


I/O psychologists are keenly interested in employee training for a number of reasons. For one, new employees often need instruction about the job or the organization's particular rules, procedures, or facilities. Another reason is that training involves the application of theories and techniques of human learning developed mainly by experimental and cognitive psychologists over the years and in which all psychologists, including 1/0 psychologists, are well versed as part of their education. Thus, applying learning principles such as reinforcement, feedback, knowledge of results, and learner motivation in an organizational context are all within the purview of 1/0 psychology.

One of the major concerns of I/0 psychologists has to do with training outcomes. While no one is sure how much American organizations spend on training employees every year, there is wide agreement that the amount is probably in the tens of billions. Very little money or time, however, is spent evaluating the training to see what the organization is getting for its money and effort. This is especially true of management training. It would seem that for most organizations, training is a ritual: it's something they feel they are supposed to do and questions of results are irrelevant

I/0 psychologists are rarely trainers, but they can be heavily involved in establishing training needs through the job analysis and performance evaluation processes as well as employee attitude surveys. They are, moreover, well placed to judge if an organizational problem can be alleviated by training. Knowing that training does not reliably overcome differences in ability, 1/0 psychologists address questions such as "who, if anyone, needs training?" and "are the present employees likely to improve with training or would an improved selection or motivational program be more fruitful?" Once the I/O psychologist determines that training is the appropriate course, he or she then attempts to define the best content and format for the training, where it should be held, and what measures will be used to evaluate its effectiveness.


Despite the best efforts of 1/0 psychologists to design recruitment, selection, and training programs to reduce the inherent conflict between the needs of people and those of organizations, problems still arise. Just because people can do the job and know how to do the job does not mean they will do it as required. At this point it becomes necessary to motivate employees not merely to do management's bidding, but, in many cases, to take responsibility themselves for improving the way the work is done and creating satisfying work experiences. 1/0 psychologists influence this process by identifying to what degree employees are satisfied and motivated, what factors contribute most to this status, and what the company might to do improve the situation.

There are four major approaches I/O psychologists employ to assist organizations in creating conditions conducive to high effort and effective performance:

  1. Motivation. Creating organizational conditions conducive to bringing out the best in employees requires making assumptions about what motivates employees or why people work. One of the 1/0 psychologist's tasks, therefore, is to apply theories of work motivation in the development of working conditions and a reward structure that will motivate good performance. A number of such theories have been found useful for these purposes which can be classified as psychodynamic theories (which emphasize common human attributes), job content theories, and job context theories.
  2. Job satisfaction. Related to motivation is the matter of employee job satisfaction. Since there is no necessary relationship between job satisfaction and productivity, and since job satisfaction is only weakly related to employee turnover and absenteeism, assessing satisfaction reflects a general assumption that since so many people spend a third or more of their waking hours at work, it ought to be satisfying rather than a noxious experience. Studies may consider overall satisfaction or, increasingly, task satisfaction. Satisfaction levels can provide a rich picture of the mood of employees which management can use as a guide to improving reward, benefit, and motivational conditions.
  3. Leadership. The task of creating working conditions through administration and policy-making rests with management and supervisors. As a consequence, the study of leadership and leader behavior is of keen concern to 1/0 psychologists. Discovering what leaders do, how people come to be leaders, and how to prepare employees for leadership positions are all topics addressed by 1/0 psychologists.
  4. Organization development. Finally, many I/O psychologists work in the area known as organization development, which is defined as the various activities, including job design, to help employees work better together as a group. This includes team building, leadership exercises, socio-technical approaches, quality of work life, self-managing work groups, survey feedback, and related techniques for enhancing group cohesiveness and effectiveness.


The last of the major specializations within I/O psychology is engineering psychology, also known as human engineering, human factors, or ergonomics. In a number of important ways engineering psychology is the opposite of personnel psychology. While personnel psychologists concentrate on the measurement of individual differences to improve the fit between people and jobs, engineering psychologists largely assume that people are the same.

Bearing much in common with industrial engineering, engineering psychology focuses traditionally on person-machine systems but has branched into other aspects of the workplace as well. It has two prominent thrusts. One focuses on the design of machinery and workspaces to be compatible with human limitations and capabilities. It includes the design of controls, displays, furniture, and related aspects of work environments. Applications of human factors principles can be found in the design of aircraft cockpits, automobiles, punch presses, kitchen ranges, computer keyboards and displays, just to name a few examples.

The other thrust is the allocation of decision-making between the machine and the operator. The object is to design machines, tools, and equipment to reduce the number of decisions the operator needs to make; engineering psychologists assume that when people are confronted with choices, they will make the wrong decision. When a human makes an error operating a machine or performing a task, the engineering psychologist is likely to blame the machine or the work layout, not the operator. The goal then is to design foolproof, fail-safe machinery and work spaces that inhibit error commission and transfer as many decisions from the operator to the machine as the current state of technology allows. Anti-lock brakes on automobiles are an example of such a transfer of decision making from the person to the machine. With conventional brakes the operator must decide when to pump the brake pedal when driving on a slippery surface to prevent wheel lockup, skidding, and loss of steering ability. Anti-lock brakes reassign the decision on when the brakes need pumping to the machine itself. It is a "fly-by-wire" type of system where the operator's action (applying the brakes) is relayed directly to a computer, which takes over the rest of the decisions necessary to avoid a lockup.

Designing such easy-to-use, safe, and error-proof machinery requires a thorough knowledge of human perceptual and sensory processes, human physical limitations, and human physical proportions and capabilities. Additionally, engineering psychologists concentrate on the causes of machine-related accidents (preventable human error is often the cause) to create working environments that remain within the boundaries of human abilities to see, hear, feel, move, and remain alert. Additional elements of study are noise, light, human attention span, fatigue, the effects of shift work, the placement and height of machinery and furniture, and the efficacy of feedback systems that tell the operator when an error has been made or a problem is occurring or impending.

SEE ALSO : Employee Motivation ; Employment Services ; Hiring Practices ; Industrial Safety ; Leadership ; Organizational Behavior ; Organizational Growth ; Training and Development

[ Cary M. Lichtman ]


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Lawson, Robert B., and Zheng Shen. Organizational Psychology: Foundations and Applications. New York: Oxford University Press, 1998.

Muchinsky, Paul M. Psychology Applied to Work. 6th ed. Belmont, CA: Wadsworth, 1999.

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Schultz, Duane P., and Sydney Ellen Schultz. Psychology and Work Today. 7th ed. Upper Saddle River, NJ: Prentice Hall, 1998.

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Stone, Philip, and Mark Cannon. Organizational Psychology. Brookfield, VT: Ashgate Publishing Co., 1997.

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