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Updated Nov 10, 2023

What Is Industrial-Organizational Psychology?

I/O psychology analyzes how individual behavior impacts the workplace and how companies can improve their performance.

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Max Freedman, Business Operations Insider and Senior Analyst
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This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

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Industrial-organizational (I/O) psychology focuses on individual behaviors and needs in the workplace and offers solutions to many employee concerns. While the two sides of this field study have similar topics, they offer different perspectives and specialized insights to help employers get the most out of their teams.

With the help of I/O psychologists or qualified consultants, employers can improve their workers’ well-being, increase efficiency, and boost productivity in the workplace. Here’s everything you need to know about this field of study.

What is industrial-organizational psychology?

I/O psychology uses psychological sciences, principles, and research tactics to solve workplace problems and improve workers’ experiences. I/O psychologists perform these tasks: 

  • Study the working styles of managers and employees.
  • Observe and analyze workplace productivity.
  • Acclimate themselves to the company environment.
  • Collaborate with management teams to devise new company policies.
  • Organize training sessions.
  • Devise long-term business plans.

What does an industrial-organizational psychologist do?

To achieve their goals, I/O psychologists may take some or all of these actions:

How to become an industrial-organizational psychologist

Although requirements vary a little by state, you generally need a master’s degree in psychology to be an I/O psychologist. Alternatively, a person with a bachelor’s degree in psychology can complete a master’s program in social work and still work as an I/O psychologist. 

Many industrial-organizational psychologists pursue a Ph.D. in psychology, and others acquire a certification from the American Board of Organizational and Business Consulting Psychology.

If you think industrial psychology might benefit your company, identify business development goals – such as leadership improvement and company culture improvement – before consulting an I/O professional.

What is industrial psychology?

The industrial side of I/O psychology “examines specific problems and issues that companies have to deal with,” said J. Michael Crant, professor of management and organization in the Mendoza College of Business at the University of Notre Dame.

Industrial psychologists can help organizations with the following tasks.

  • Hiring: Industrial psychologists study a company’s culture and work processes to pinpoint an employee type who would fit into the business’s current framework. Industrial psychologists help with many aspects of the hiring process, including creating interview questions that help hiring managers identify the best candidates for specific positions. When using industrial psychology for hiring, Amy Cooper Hakim, founder of the Cooper Strategic Group, suggested considering the applicant’s values, personality and motivation. 
  • Training: To keep things running smoothly, businesses must ensure employees have the career skills and knowledge to do their jobs. Industrial psychologists can identify missing skills among employees and create effective training to help fill these gaps.
  • Employee efficiency: By studying human behavior at all company levels, industrial psychologists can identify ways to make jobs more efficient and employees more productive.
Did You Know?Did you know
Identifying ways to boost efficiency and productivity is a significant component of many popular management theories, some of which continue to influence modern management practices.

What is organizational psychology?

According to Crant, organizational psychology generally addresses bigger-picture issues. Psychologists in this field aim to motivate the workforce and create stronger teamwork.

If you don’t feel you’re getting everything you can out of your employees, organizational psychologists may be able to help in the following areas.

  • Employee satisfaction: Organizational psychologists study employee behaviors and attitudes to gauge overall employee satisfaction. Using their findings, psychologists suggest changes to improve employees’ well-being and happiness at work, creating more engaged and productive employees.
  • Work-life balance: If organizational psychologists find that employees are stressed or unhappy, they may suggest implementing work-life balance programs. Improving employees’ work-life balance helps them produce more and better work. Successful work-life balance programs decrease turnover rates and workplace burnout while increasing motivation and commitment.
  • Decreased job stress: A significant difference between industrial and organizational psychology concerns their focus. The industrial side examines the organization at all levels and focuses on leadership. Organizational psychology studies how employees function and how businesses operate. Organizational psychologists aim to provide helpful suggestions on managerial practices, company organization and other elements that might be the source of job stress.

Implementing I/O psychology in your business

If you own a small business and have five to 10 employees, hiring an I/O psychologist might not be worth the investment. However, for midsize and large businesses, these professionals are a valuable asset if you want to increase employee satisfaction and productivity.

In-house psychologists vs. consultants

Depending on your company’s scale and the work that needs to be done, a consultant might be a better fit for you than someone in-house. Here are some guidelines on which to hire.

  • In-house I/O psychologists: In-house psychologists are the better choice if you have a large or global organization, want to develop ongoing training programs, or need to do long-lasting studies of workplace culture in multiple locations.
  • I/O consultants: I/O consultants are the better choice if you have a smaller organization, only want to study one particular area or department, or need only limited information.

Personality assessments

You don’t need an on-staff professional to implement I/O psychology at your organization. By conducting personality assessments, you can learn how to work best with your team based on individual preferences, work styles and behaviors.

Hakim advises using personality assessments to help screen applicants as a multiple-hurdle approach to hiring or to help develop employees.

Here are six common personality tests.

  • DiSC assessment: A DiSC assessment identifies communication styles in the workplace and helps employees understand how to work together and communicate more effectively.
  • Myers-Briggs: Also known as the MBTI, this test categorizes someone as one of 16 personality types to help them understand how they perceive the world and why they make decisions. Though this is a popular test, Crant said there is some controversy surrounding it, since it doesn’t always produce the same results when a person takes the test multiple times.
  • Predictive Index: The Predictive Index, or PI, is a short, simple test that helps you understand your employees’ behaviors at work. This test can help you align goals and improve efficiency.
  • Five-Factor Model of Personality: The FFM separates people into the “big five” traits – extraversion, agreeableness, conscientiousness, neuroticism and openness to experience.
  • Occupational interest inventories: OIIs identify employees’ interests in the workplace, which will help you understand their preferred assignments and roles. This aids in task delegation and employee retention.
  • Situational judgment tests: SJTs use simulated situations to test how workers would react in a given circumstance. Based on their response, you can gauge their customer service skills and confront any possible flaws in their approach.

These tests aren’t suitable for every organization, and attempting to analyze the results of any personality tests on your own, without the help of a professional, can lead to controversy and misunderstandings. Consult a professional psychologist before administering or sharing the results of any personality tests in your workforce.

You can learn more about I/O psychology and find qualified professionals on the Society for Industrial and Organizational Psychology website

David Cotriss and Sammi Caramela contributed to the reporting and writing in this article. Source interviews were conducted for a previous version of this article.

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Max Freedman, Business Operations Insider and Senior Analyst
Max Freedman has spent nearly a decade providing entrepreneurs and business operators with actionable advice they can use to launch and grow their businesses. Max has direct experience helping run a small business, performs hands-on reviews and has real-world experience with the categories he covers, such as accounting software and digital payroll solutions, as well as leading small business lenders and employee retirement providers. Max has written hundreds of articles for Business News Daily on a range of valuable topics, including small business funding, time and attendance, marketing and human resources.
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