The Importance of Industrial Psychology in the Workplace

Why is Industrial-Organizational Psychology Important?

A person considering a degree or career in psychology may wonder, “Why is industrial-organizational psychology important?” While other specialties of psychology delve into a particular person’s personality and mental health issues that they are facing, industrial and organizational psychology (IO) takes a somewhat different approach.  IO psychology professionals assess and improve individual, group, and organizational dynamics in the work environment. They can recommend strategies to improve organizational structure and human relations.  They use their training in psychological principles to create:

  • a healthy work environment
  • increase employee satisfaction
  • develop new employee training

Having an I O psychology professional in the organization can also improve employee productivity.  When you learn what industrial organizational psychologists study, you’ll understand why this branch of psychology is important.  You might even decide to choose this specialty when earning your psychology degree or choosing a job!

What is Industrial Psychology?

Industrial-organizational psychology is the study of individual, group and organizational dynamics in a work environment.  Industrial and organizational psychology also goes by other names including:

  • business psychology
  • employment psychology
  • industrial psychology
  • management psychology
  • occupational psychology
  • organizational psychology
  • work psychology

What do Industrial Organizational Psychologists Do?

By using human psychology principles to study behavior in a place of work, industrial psychology professionals can determine:

  • how well teams communicate
  • whether or not workers are invested in the company
  • overall job satisfaction
  • improve employee productivity

All these factors contribute to an employee’s productivity, efficiency, and absenteeism rate.  These are important because they directly impact an organization’s bottom line and its ability to meet deliverables.   The importance of industrial psychology is largely rooted in these practitioners’ ability to:

  • quickly assess a company
  • identify barriers to productivity and efficiency
  • develop a plan to remedy those problems

Industrial psychology also uses psychological principles to develop evidence-based procedures for:

  • hiring
  • training employees
  • retention

Essentially, the field consists of conducting research into workplace dynamics and applying research findings to optimize business efficiency and employee satisfaction in the work environment.

It’s important to note that the one-on-one work that an industrial-organizational psychologist may do is very different from the one-on-one work done by a traditional psychologist. IO psychologists are not trained in diagnosing mental disorders, and they don’t dig deep into the psyche of a worker or manager. Rather, they evaluate personality traits and human behavior as they pertain to the person’s work.

While most industrial-organizational psychologists focus on the work environment, the specialty of industrial psychology doesn’t necessarily have to be connected to work in the traditional sense — it can be applied to any type of purpose-driven activity. An industrial psychologist can be very helpful to sports teams and volunteer efforts as well.

Where do Industrial Psychologists Work?

People who choose industrial psychology may find themselves working in many different areas. Some industrial psychologists:

  • hold research or teaching positions at universities
  • work with branches of the military
  • help sports teams and organizations

And when it comes to work environments, industrial psychologists can support human resources departments in a variety of settings including factories and Fortune 500 companies!

According to the Bureau of Labor Statistics, the scientific research and development services industry has the highest concentration of employees who are industrial-organizational psychologists. This industry is followed by the management, scientific, and technical consulting services industry. State governments have the third-highest concentration of industrial-organizational psychologist employees, and the management industry (specifically, management of companies and enterprises) has the fourth highest. These numbers do not count self-employed industrial-organizational psychologists.  It’s important to remember that many industrial psychology experts work for themselves on a freelance basis.

How Does an Industrial Psychologist Solve Workplace Problems?

Why is Industrial-Organizational Psychology Important?

Every workplace has problems. Some of those could be unique to the people who work there, and others could be common based on the type of work that is done. Every problem will be somewhat different based on the people and place involved. An industrial-organizational psychologist uses psychological principles to assess group and individual employee characteristics in a place of work as well as the:

  • policies
  • procedures
  • environment of the workplace

They also work in the area of organizational development by improving the organizational structure.  Industrial psychologists identify problems and use research to choose and implement solutions. Industrial psychology solutions are designed to improve employee performance in the workplace.

An industrial psychologist looks at particular questions to solve workplace problems. For example, they might ask how decisions are made. The industrial-organizational psychologist might also ask how effective the communications are between colleagues or between workers and the management team.

Because of their extensive training in human behavior and in managing workplace problems, industrial psychology professionals may sometimes need to help a workplace identify an issue before developing a strategy to manage it. For example, a manager may find that their employees all seem to be disinterested in work and very unfocused.  They may not be able to figure out what’s causing the issue. In this case, a psychologist would be able to evaluate the workplace as a whole and speak with individual employees. Based on those findings, the psychologist could develop a plan to help increase job satisfaction and motivation.

What Types of Research do Industrial Psychology Professionals Do?

The types of research used in industrial psychology vary widely.  Industrial psychology professionals may:

  • primarily conduct observational research
  • design and carry out studies
  • use surveys

Most use a combination of different research methods. Because industrial psychologists are trained as both researchers and practitioners, most people in this field both conduct research and apply it. However, some industrial psychology experts (mostly those working in academia) may focus purely on research. Others focus purely on the application of that research.

IO psychologists conduct research to draw conclusions that allow them to better help businesses achieve their goals. Some examples include:

  • developing personality assessments that help businesses select the most suitable employees
  • evaluating employee training programs to ensure they meet company objectives
  • conducting observational research where they monitor several different businesses to see which management strategies work best and why

Some research is very specific — for example, it may involve looking into how both negative humor and positive humor impact human behavior and the work environment as a whole. Other research may examine the effects that diversity has on a workforce.

An industrial-organizational psychologist can also conduct research related to interactions in the workplace. They use their data to analyze findings and find out which problem-solving methods work and which ones do not. These industrial psychology activities can result in a business that is better for workers and more profitable.

Applications of Industrial-Organizational Psychology Research

Why is Industrial-Organizational Psychology Important?

There are many applications for the work of an industrial-organizational psychologist, explains the American Psychological Association. Often, industrial-organizational psychologists identify areas in need of more training programs or organizational development in a particular workplace. They can:

  • optimize the quality of the day-to-day work environment
  • evaluate the effectiveness of training programs
  • make suggestions for changes

The beauty of industrial psychology is its ability to not only find the reasoning behind workplace problems but also to use that knowledge to create a solution.

Depending on a business’s needs, an industrial-organizational psychologist may work with employees on an individual level. Industrial-organizational psychologists can:

  • coach workers as well as managers on how to improve workplace dynamics and employee performance
  • conduct leadership training

In high-level companies working toward maximum efficiency, these psychologists may:

  • counsel each employee one-on-one to assess their attitudes toward their job
  • discover any factors that may compromise their productivity and workplace satisfaction
  • recommend solutions to keep all employees fulfilled and focused

In some cases, psychologists may work one-on-one with CEOs to help them improve the way they relate to other people.

Many of these psychologists primarily focus on creating and maintaining harmony and productivity in the workplace.  Some can apply their knowledge to improve a company’s marketing tactics. For example, they may conduct research into a given company’s customers to evaluate customer needs and customer satisfaction. From there, they can help companies revise their marketing strategies to be more effective. Because industrial-organizational psychologists have a nuanced understanding of human behavior, they are well equipped to be able to predict how customers will respond to a new marketing strategy.

Some industrial psychology professionals are asked to apply their knowledge to specific procedures. For instance, a company’s hiring practices are vital to its success, but there is a wide range of laws that apply to the process. If a company is looking to change its hiring procedures, it may ask an industrial-occupational psychologist to review the new procedure for effectiveness and ensure that the process won’t violate any existing hiring laws.

Depending on the population that an industrial-organizational psychologist works with, both the research and its application may be very specific. For example, astronauts who work at NASA have to face psychological challenges that the vast majority of people do not. When in outer space, they are in very close quarters, and they have to deal with the psychological impact of being very far from home. Being in a drastically different environment — like one with very little gravity — can also cause psychological issues. These issues can be personally damaging, but they also can compromise the safety of everyone involved in the mission.

For these reasons, NASA works with industrial-organizational psychologists. These psychologists determine what future research needs to be done to reduce the risk of psychological harm to astronauts and ensure that the mission goals are met. Of course, most industrial-organizational psychologists probably won’t be working with missions to outer space, but the NASA example is an illustration of one of many diverse applications of industrial-organizational psychology research.

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Why Industrial Psychology Is Essential for Business

At first glance, uninitiated people may not see the need for an industrial psychologist in the workplace. After all, in theory, managers are supposed to identify issues in the workforce and then do their best to solve them.

Most managers don’t have a deep understanding of psychology or human behavior though.  They often aren’t well-equipped to solve issues in the workplace. Industrial-organizational psychologists, on the other hand, have several years of intensive training. Most start with a bachelor’s degree in psychology or human resources, as very few schools offer undergraduate psychology degrees with a focus on I O psychology. After earning their degree, candidates then earn a master’s degree in industrial-organizational psychology. A master’s degree is enough to start a career, but many people in the field pursue a doctorate.

Additionally, most workplace problems can benefit from an outside perspective. Since managers are closer to the daily goings-on of a workplace, they often are too close to a given situation to be able to strategize a way to fix it. But an industrial-organizational psychologist can bring both their training and a new perspective to solve workplace issues.

Sometimes, these psychologists work in a company’s human resources department. This is more common in very large companies. But in many cases, industrial-organizational psychologists work either as independent consultants or as part of a management consulting firm. They are often hired by different organizations to solve existing problems. Since they have a vast knowledge of current research methods on workplace dynamics, an industrial psychologist can often quickly strategize a way to get a business back on track.

Every businessperson knows that dysfunctional organizational dynamics, low employee morale, and high turnover rates lead to loss of profit over time. With the services of an industrial-organizational psychologist, a business is likely to see increased focus and employee productivity. And since employees will likely be happier, they are likely to stick around.  Businesses will be less likely to need to spend money on human resources efforts to:

  • interview applicants
  • hire new staff
  • train those staff

The Growing Importance of Industrial Psychology

Why is Industrial-Organizational Psychology Important?

As more and more businesses begin to realize the important role industrial psychology plays in the workplace, jobs in the field will grow at a faster than average pace. This is especially true in the private sector of the economy. In fact, in 2014, the Bureau of Labor Statistics called industrial psychology the fastest-growing occupation in the United States. Between 2019 and 2029, it’s estimated that employment in the field will grow by 2.5%. As a growing field, industrial psychology offers some very exciting opportunities.

Surprisingly, many people know very little about it or have not heard of it at all. Most high-value companies and larger corporations already know about the field or work with industrial-organizational psychologists. Unfortunately, there are smaller companies that haven’t discovered the benefits of hiring or consulting with someone with an education in industrial psychology.

Companies that use an IO psychologist understand the value they provide to their organization.  As a result, people in this field are generally paid fairly well. As of 2019, the median salary was $92,880. The relatively high pay is likely to draw more people to industrial psychology as it continues to grow.


If you want a career that makes a positive difference in human behavior in the workplace, IO psychology might be right for you!  The industrial organizational psychologists definition according to the APA is a psychologist whose role is to study “human behavior in the work environment and applies general psychological principles to work-related issues and problems.”  As an IO psychologist, you’ll strive to improve areas like:

  • Personnel selection
  • Personnel training
  • Employee evaluation
  • Working conditions
  • Accident prevention
  • Job analysis
  • Job satisfaction
  • Leadership
  • Team effectiveness
  • Work motivation

These are the rewarding job functions of an industrial psychology professional.  Knowing, “Why is industrial-organizational psychology important?” could also help a person promote the profession and explain to others exactly what it is that they do in their job.

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