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What Is Industrial-Organizational Psychology?

Max Freedman
Max Freedman

Industrial-organizational psychology analyzes how individual behavior impacts the workplace and how companies can improve their performance. Here's what you need to know about I/O psychology.

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 similar topics, they offer different perspectives and specialized insight to help employers get the most out of their team.

With the help of I/O psychologists or qualified consultants, employers can improve their workers' well-being, and increase efficiency and productivity in the workplace.

Here's everything you need to know about this field of study.

What is industrial-organizational psychology?

I/O psychology is the use of psychological sciences, principles and research tactics to solve workplace and business problems, and improve workers' experiences. I/O psychologists study the working styles of managers and employees, observe and analyze workplace productivity, acclimate themselves with the company environment in question, and collaborate with management teams to devise new company policies, organize training sessions, and come up with a long-term business plan.

What does an industrial-organizational psychologist do?

To achieve their many goals, I/O psychologists may do some or all of the following actions:

  • Collaborate with company human resource teams
  • Work with hiring and management teams to find additional qualified employees
  • Encourage and train company workers
  • Analyze workers' job performance
  • Improve company efficiency and internal hierarchy
  • Achieve high workplace quality and optimal work-life balance for management and employees
  • Assist in company transitions, including corporate mergers and sales
  • Analyze consumer patterns for better sales results

How to become an industrial-organizational psychologist

Although requirements vary to a small degree by state, a person interested in becoming an I/O psychologist needs a master's degree in psychology to enter the field. 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 (ABOBCP).

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.


Industrial psychologists study a company's culture and work processes, and have a well-educated idea of the type of employee that can work best with the way the business already functions. Industrial psychologists help with many aspects of the hiring process, including creating interview questions that help hiring managers identify the best candidates for certain positions. When using industrial psychology for hiring, Amy Cooper Hakim, founder of the Cooper Strategic Group, suggested considering the values, personality and motivation of the applicant. 


To keep things running smoothly, businesses need to make sure their employees have the skills and knowledge they need 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 levels of the company, industrial psychologists can identify ways to make jobs more efficient and employees more productive for the overall good of the company. This is a major component of many popular management theories from the early 1900s, some of which continue to influence modern management practices.

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, he said.

If you don't feel you're getting everything you could 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, which makes for more productive employees.

Work-life balance 

If organizational psychologists find that employees are stressed or unhappy, they may suggest implementing work-life balance programs to ease stress on employees, thereby helping them to produce not just more work, but better work. Successful work-life balance programs decrease turnover rates and burnout while increasing motivation and commitment. [Read related story: 5 Ways to Improve Your Work-Life Balance Today] 

Decreased job stress

A major difference between industrial and organizational psychology concerns the focus of the psychologist.

The industrial side examines the organization in question from management to employees. It is focused on leadership.

Organizational psychology focuses on how employees function and how businesses operate from employees up to management. Organizational psychologists aim to provide helpful suggestions on managerial practices, company organization and other elements that might be creating job stress.

Implementing I/O psychology into your business

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

Depending on the scale of your company and the work that you feel needs to be done, a consultant might be a better fit for you.

  • In-house psychologists are the better choice if you have a large, global organization, want to develop ongoing training programs, or need to do long-lasting studies of workplace culture in multiple locations. 
  • 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.

You don't need an on-staff professional to implement I/O psychology into 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 said personality assessments can be used to help screen applicants as a "multiple-hurdle approach" to hiring, or to help develop employees.

Here are six common personality tests you can utilize:

  • DiSC Assessment: This test identifies communication styles in the workplace, and helps employees understand how to more effectively work together and communicate. Learn more about using the DiSC model in this Business News Daily article.

  • Myers-Briggs: Also known as the MBTI, this test categorizes you as one of 16 personality types to help you understand how you perceive the world and why you make decisions. Though this is a popular test, there is some controversy surrounding it, according to Crant, since it doesn't always produce the same results when someone 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): OIIs identify employees' interests in the workplace, helping you understand their preferred assignments and roles. This aids in task delegation and employee retention.

  • Situational judgment tests (SJTs): SJTs use stimulated 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 suited 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 you administer or share the results of any personality tests in your workforce.

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

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

Image Credit: Rido / Shutterstock
Max Freedman
Max Freedman
Business News Daily Contributing Writer
Max Freedman is a content writer who has written hundreds of articles about small business strategy and operations, with a focus on finance and HR topics. He's also published articles on payroll, small business funding, and content marketing. In addition to covering these business fundamentals, Max also writes about improving company culture, optimizing business social media pages, and choosing appropriate organizational structures for small businesses.