What is Industrial-organizational Psychology?

Industrial-organizational psychology is the study and application of psychological concepts and practices to a company or organization and its workforce. In practical terms, that means industrial-organizational psychologists help companies maximize their efficiency by improving hiring and promotion strategies, training and development, employee motivation programs and much more.

“I would say it is using scientific study to look at employee-employer relationships as they relate to productivity, morale, engagement, job satisfaction and attitudes,” said Dr. Thomas MacCarty, associate dean of psychology programs at Southern New Hampshire University (SNHU).

Essentially, industrial-organizational psychologists can help businesses recruit and hire the right people, help develop training and development programs to improve employee performance and create incentives and organizational structures, so employees are happier and more productive at the job and maintain work-life balance.

What Does an Industrial-organizational Psychologist Do?

The Society for Industrial and Organizational Psychology (SIOP) identifies 6 key areas industrial-organizational psychologists (IOPs) focus on that are of “critical relevance” to employees and businesses:

• Change Management – Work as a consultant during periods of downsizing or acquisitions, manage a company’s culture and create fair and efficient hiring methods.
• Employee Attitude and Satisfaction – Build employee empowerment and job satisfaction programs and educational efforts to reduce stress, burnout and voluntary turnover.
• Organization Development - Identify and train future organizational leaders, develop fair and legal compensation practices and promotion policies.
• Performance Management – Design job performance measurement systems to improve employee performance.
• Staffing – Recruit candidates that best fit positions in an organization and develop programs to train and retain the company’s best employees.
• Testing – Develop tests and assessments to measure employees and potential employees’ job knowledge and skills, personality and other factors that influence performance.

In the real world, that means someone trained in industrial-organizational psychology can have an impact on nearly every part of an organization. 

“There really is no part of the workplace that is not focused on,” MacCarty said. “If there is any issue that may be hampering an organization from moving forward, an IOP can help alleviate the issue, or at least mitigate it.”

To have an impact on so many parts of a company or organization, IOPs use psychological principles in their everyday work, MacCarty said. To develop training programs, an IOP uses their understanding of cognition and learning, interpersonal relationships and the impact of employees’ prior learning. By understanding intrinsic and extrinsic motivation, employees’ expectations can help a company keep employees satisfied and productive.

MacCarty offered an example of a company whose revenues dipped and had to eliminate annual raises, causing a productivity decline and financial hardships for some employees. An IOP can assess that climate and develop other incentives to employees, such as flex-time programs, recognition awards or 4-day week schedules.

“An IOP can look at the situation and come up with some concrete ideas, ways to improve employee motivation and overcome the disappointment felt by employees because they did not get raises," MacCarty said.

What is an Example of Industrial-organizational Psychology? 

SIOP conducted a case study as a way to illustrate how the principles of industrial-organizational psychology can impact a business. It describes some of the challenges the automotive parts chain Advance Auto Parts encountered at its nationwide network of 9 distribution centers and more than 3,000 retail stores (SIOP PDF Source).

The company’s “material handler” positions worked in a fast-paced and physically demanding environment. The company was experiencing high turnover, was relying too much on on-the-job training and wasn’t ensuring the individuals they hired as material handlers were well-suited for the job, according to the SIOP case study.

Industrial-organizational psychologists were able to design an online assessment that evaluated potential hires for key traits, including attention to detail and adaptability, among other factors. Once fully implemented, supervisors ranked new employees who scored well on the assessment as more effective employees, and the system was credited with:

• Improving retention at 90 days by 87%
• Increased job performance by 23%
• Improved work speed by 8%

What Kind of Job Can I Get with an I-O Psychology Degree?

You might not have worked at a company that employed an IOP, but it’s very possible you’ve had co-workers trained in industrial-organizational psychology and simply have another job title. Industrial-organizational psychology doesn’t exactly roll off the tongue, but companies still rely on the expertise of IOPs. IOP's work in many sectors, including:

• Academia
• Consulting
• Government 
• Industry 

The U.S. Bureau of Labor Statistics (BLS) reported in 2021 that industrial-organizational psychologists earned a median income of about $105,310, and through 2031 the field is expected to grow by 4%.

According to a 2021 SIOP survey of its own membership, the median income for IOP professionals with a master’s degree was $121,729 and it was over $300,000 for IOPs with a doctorate (Survey PDF source).

Industrial-organizational psychologists most often work in the scientific research and development services, according to BLS, followed by:

• Colleges, universities and professional schools
• Management, scientific and technical consulting services
• Private companies and enterprises
• State government (not including schools and hospitals)

How to Become an Industrial-organizational Psychologist

The first step to becoming an industrial-organizational psychologist is to earn a bachelor’s degree in business psychology, and while IOP jobs with only a bachelor's degree do exist, they are hard to find.

Jackie Lancaster '21G held a bachelor's in I-O psychology but knew that if she wanted to can new opportunities in her field she would need a master's degree. And it paid off.

"My program was worth every minute I spent working to obtain my degree," said Lancaster. "It has opened new avenues that I was not able to explore before."

Most people interested in industrial-organizational psychology earn a master’s degree, according to the American Psychology Association, but even more opportunities are available with a doctorate.

Gaining a master's degree in industrial-organizational psychology gave Lancaster the tools she needed to feel more confident in her work.

"I learned more than I ever thought I could and I feel as if I received a great education that pertained to what I wanted and needed," she said. "I feel as if I can speak the language of my profession proficiently and I have gained a tremendous amount of self-esteem over the process."

Discover more about SNHU’s industrial-organizational (IO) psychology program: Find out what courses you'll take, skills you’ll learn and how to request information about the program. 

Joe Cote is a staff writer at Southern New Hampshire University. Follow him on Twitter @JoeCo2323.