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Learning Outcomes After reading this chapter, you should be able to

• Define I/O psychology.

• Explain the history and evolution of I/O psychology.

• Understand how positive psychology can influence I/O psychology practices.

• Identify ways in which I/O psychology can lead to quantifiable return on investment in human capital.

• Describe the different roles I/O psychologists play in organizations.

• Identify the major opportunities and challenges that I/O psychology can help organizations navigate.

What Is Industrial/ Organizational Psychology?

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Section 1.1 Defining I/O Psychology

1.1 Defining I/O Psychology According to the Society for Industrial and Organizational Psychology (SIOP), industrial/ organizational (I/O) psychology can be defined as the scientific study of working and the application of that science to workplace issues facing individuals, teams, and organizations. I/O psychology uses rigorous scientific methods to investigate issues of critical relevance to individuals, businesses, and society, including talent management, coaching, assessment, selection, training, organizational development, performance, and work–life balance. In other words, I/O psychology is a branch of psychology that uses methods, facts, and principles of psychology to enhance employee productivity.

I/O psychology originates from two distinct but related areas of study: industrial and orga- nizational psychology. Industrial psychology focuses on individual-level phenomena in the workplace. This includes assessing workers’ personalities, knowledge, skills, abilities, and other characteristics (KSAOs) in order to match them with the right jobs; measuring and man- aging employee attitudes and emotions; using the right working conditions and reward sys- tems to motivate employees; training and developing employees for their current and future roles; and ensuring that workers have healthy, safe, and balanced jobs and lives. Organiza- tional psychology focuses on group- and organizational-level phenomena, which may occur in both work and nonwork settings. Examples include communication, negotiation, conflict resolution, and team processes. The purpose of organizational psychology is to facilitate the understanding of interactions and relationships among individuals and collectives in order to achieve common goals.

I/O psychology is also related to several other fields, especially in the organizational sciences. For example, business scholars in the field of organizational behavior are interested in similar topics—especially at the individual and group levels—such as personality traits, motivation, and group dynamics. However, their approach tends to be more conceptual or theoretical. On the other hand, scholars and practitioners in the field of human resources (HR) are more interested in the practical applications of I/O psychologists’ and organizational behavior specialists’ methods and tools in organizational contexts. They apply these when making quality selection decisions; designing and administering effective compensation, benefits, training, devel- opment, and succession programs; and comply- ing with labor laws and regulations.

The Importance of People What is an organization’s most important asset? As you can imagine, chief executive officers (CEOs) and organizational leaders are asked this question all the time. Many factors influence an organization’s overall performance, including financial resources, technology, customer service, creative organizational strategies, innovative products, and superior logistics. However, there is one factor that ultimately influences all others and is consistently identified by organizational

Digital Vision/Thinkstock

An organization is only as good as the people it employs. It is therefore essential to hire and retain the highest quality team of personnel.

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Section 1.1 Defining I/O Psychology

leaders as most important: people. For example, Mary Kay Ash, founder of Mary Kay Inc., once stated, “People are definitely a company’s greatest asset. It doesn’t make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps.” Herb Kelleher, former CEO of Southwest Airlines, echoed this sentiment when he said:

If the employees come first, then they’re happy. . . . A motivated employee treats the customer well. The customer is happy so they keep coming back, which pleases the shareholders. It’s not one of the enduring . . . mysteries of all time; it is just the way it works.

What these business leaders know is that without high-quality, highly motivated employ- ees, companies have no one to execute strategies, satisfy customers, or develop new prod- ucts—and without these imperatives, they fail. Considering how important people are to an organization, managers naturally want to make sure they hire the right person for each job. However, the costs associated with finding, hiring, and retaining employees—called people costs—are consistently among the top operating costs for companies, and these expenses continue to rise. Examples of people costs include salaries, bonuses, health care costs, ben- efits, and retirement expenses.

Creating a working environment that most effectively promotes employee performance and efficiency is another top priority. Managers must not only hire the right people; they must keep them. In order to attract and retain employees, a manager must address many elements, including employee health and safety, group dynamics, leadership effectiveness, organizational communication, decision-making processes, organizational structure, and corporate culture.

As people costs rise, organizations are looking for the most effective and cost-efficient way to identify, develop, and retain quality personnel. The field of I/O psychology is uniquely suited to help with these challenges and to optimize organizations’ most important asset—their people.

The Nature of Work As you will learn in this course, I/O psychologists are scientists who systematically study human behavior in the context of a work environment. It is, however, impossible to study this behavior without first understanding the nature of the work and the environment in which it is performed.

So, then, what is work? At its most basic level, work can be described as being made up of tasks. A task is a cognitive and/or physical operation that is performed actively and with purpose. For example, tasks performed by a bank teller include greeting customers, count- ing money, and answering customer questions. To perform tasks, employees must use their knowledge, acquired skills, and innate abilities. A bank teller needs to understand bank pro- cesses (knowledge), have strong communication skills (skill), and possess a friendly disposi- tion (ability).

At a more advanced level, work can be organized into a job, which is a set of related tasks or activities that are performed by one or more people. People who work the same job perform tasks that are essentially the same. Our bank teller performs almost the same tasks and activ- ities as most other tellers in a given bank, regardless of where in the country its branches are located.

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Section 1.1 Defining I/O Psychology

Similar jobs can be grouped into a job family. At our hypothetical bank, a bank teller job family could be composed of three levels of tellers. The tellers at each level would all perform the same basic tasks, but at each level the tasks become more challenging and complex. The total work of an organization can be divided into a number of job families, with the number depending on the complexity of the organization.

Some work-related terms are general and are not associated with one specific organization. An occupation is a job that is, in essence, the same no matter where or for whom a person works; a person’s occupation does not depend on employment in a specific organization. In fact, a person could be unemployed and still have an occupation. Examples of occupations include law, medicine, nursing, teaching, auto repair, psychology, and computer program- ming. The term career has a developmental connotation and refers to changes in job or orga- nizational level over the course of a person’s work life. A person’s career, like his or her occu- pation, can develop at one or multiple organizations.

Tasks and jobs are not performed in a vacuum. They are embedded and develop within an organization, and many contextual factors can influence how work is performed. Some of these factors include culture, job design, and interpersonal relationships. People of different national cultures, for example, assign different value to individual and collective work. North American and western European cultures tend to place a higher value on individualistic goals, whereas Latin American, Asian, and African cultures tend to be more collectivist, placing a higher value on the needs, goals, and activities of the group (Hofstede, 1980; House, Hanges, Javidan, Dorfman, & Gupta, 2004; Triandis, 1989).

In addition to national culture, organizational culture can also affect tasks and jobs. Organi- zational culture has been defined as “a set of shared mental assumptions that guide inter- pretation and action in organizations by defining appropriate behavior for various situa- tions” (Ravasi & Schultz, 2006, p. 437). Dimensions of organizational culture include shared norms, beliefs, and values. Organizational culture has a direct impact on the more transient dimensions of the organization’s climate. Organizational climate has been defined as “beliefs about the organization’s environment that are shared among members and to which members attach psychological meaning to help them make sense of their environment” (Dickson, Resick, & Hanges, 2006), or simply “how things are supposed to be done around here.” At the individual employee level, orga- nizational climate influences psychological climate. Koys and DeCotiis (1991) define psychological climate as “an experiential- based, multi-dimensional, and enduring per- ceptual phenomenon that is widely shared by the members of a given organizational unit. Its primary function is to cue and shape indi- vidual behavior toward modes of behavior dictated by organizational demands” (p. 266). They identify eight specific dimensions for psychological climate: autonomy, cohesion, trust, pressure, support, recognition, fairness, and innovation. Dominique Deckmyn/CartoonStock

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Section 1.1 Defining I/O Psychology

Methods of I/O Psychology I/O psychology is by its very nature a science. Scientists use a systematic process of examina- tion. They are empirical, which means they rely on verifiable observations, experimentation, and experience rather than on opinions, hunches, or private prejudices. A science is objective and therefore deals with facts that can be seen, heard, touched, measured, and recorded. The sections below elaborate on the scientific method used in I/O psychology, as well as in the sciences in general.

Regarding its methods and procedures, I/O psychology attempts to be as scientific as physics or chemistry. When I/O psychologists observe how people act at work, they do so in the best traditions of science: objectively, dispassionately, and systematically. Much of the subject mat- ter of I/O psychology is observable, consisting of overt human behaviors such as movements, speech, writing, and other creative works. Observing and measuring these behaviors allows I/O psychologists to understand and draw conclusions about the people they are studying.

For example, an I/O psychologist might examine how a factory worker puts together a machine, how many keystrokes a computer clerk makes per minute, how effectively a team works together, or how a manager interacts with employees. These behaviors are overt and observable, and they can be objectively measured and recorded. The I/O psychologist might then associate these behaviors with other measurable or observable workplace character- istics such as lighting, noise levels, working hours, available tools and equipment, training and development opportunities, leadership styles, or reward systems. Based on correlations

The way in which a job is designed can also have a notable impact on job performance. Typi- cally, employees who work in jobs that are more autonomous, complex, and offer control over decision making will be more motivated to perform their best. Studying work, then, involves more than simply learning an employee’s set of tasks. It also requires understanding the ways in which contextual factors affect how work is done.

Work is not only financially essential; it also has social and psychological importance. Have you noticed how much time and effort we spend becoming qualified for work, searching for work, and, after finding a job, working, thinking about, and talking about work—even when we don’t have to? A 2014 survey of time use by the U.S. Department of Labor (2015) found that the typical American aged 25 to 54 spent more than a third of his or her day at work.

Our work can influence life outside the workplace. You have probably been asked what you do. Perhaps you said you are a student pursuing a particular major or studying for a specific occupation. Or, if you already have a job or an established line of work by which you identify yourself, you might have talked about that. Most of us have been asked this question, and we ask it of others—because our answers provide insight into our identity. What we learn about someone’s work helps us determine our potential relationship with that person and indicates how we think we should behave toward one another.

Consider This: Work Identity Can you think of a time when you changed your perception of someone after learning what he or she does for a living?

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Section 1.1 Defining I/O Psychology

between workers’ behaviors and workplace characteristics, the I/O psychologist may con- clude that factory workers’ performance is higher when they are given a particular tool set, led through a particular management style, or rewarded in a certain way. Similar conclusions can be drawn about what works best for other kinds of jobs.

Additionally, based on these kinds of observations and associations, I/O psychologists may experimentally manipulate various workplace characteristics and observe how various behaviors increase or decrease in frequency. For example, employees’ behavioral changes can be monitored as different working conditions, tools, equipment, training methods, or rewards are applied. Finally, based on conclusions from such experiments, interventions can be implemented to enhance the workplace characteristics that most strongly relate to the desired work behaviors.

Of course, not all of human existence is directly observable. Sometimes, I/O psychologists must study intangible qualities such as motives, emotions, needs, perceptions, thoughts, and feelings. Fortunately, I/O psychologists have rigorous methodology to scientifically design and implement objective tools, techniques, and methods to accurately measure such quali- ties. For example, I/O psychologists have developed many tools and assessments to measure intangible characteristics such as personality traits and job attitudes; mental processes such as perceptions, interpretations, and judgments; and emotions such as various moods.

Consider This: I/O Psychology as a Science 1. What are some examples of mental processes needed in your job? 2. What are the behaviors that give evidence of these processes?

Find Out for Yourself: Psychological Assessment Two of the most important job attitudes I/O psychologists measure are organizational com- mitment and employee engagement. To become familiar with the types of psychological assessments that I/O psychologists design to evaluate employees for these qualities, visit the following links.

Organizational Commitment Scale

This article offers an example of the rigorous process typically used by I/O psychologists to design an objective measure of an intangible human quality. Although the details and methods are advanced and not required for this course, reading the abstract at the beginning of the article and skimming the rest of it should give you some appreciation for this elaborate scien- tific process.

1. Scroll down to Table 1: Items of the Organizational Commitment Questionnaire at the end of this article and attempt the assessment. Respond to each item in the first column on a 5-point scale (1 = totally disagree, 5 = totally agree).

2. Items denoted by (-) are reverse scored, which means that after you respond to them, a score of 1 should be converted to 5, 2 should be converted to 4, 4 to 2, and 5 to 1.

3. Calculate your average score for the 15 items, then answer the following questions.

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http://journal-bmp.de/2013/12/validation-of-the-organizational-commitment-questionnaire-ocq-in-six-languages/?lang=en

Section 1.2 A Brief History of I/O Psychology

1.2 A Brief History of I/O Psychology The field of I/O psychology formed out of circumstance and necessity. In the late 19th cen- tury, industrialism was on the rise. Businesses were facing challenges such as how to increase worker safety in factories, train workers on the new assembly lines, and optimize worker productivity. Additionally, as businesses grew larger, employers realized that they needed to find a way to identify and select qualified workers to fill the expanding workforce. Some early psychologists saw an opportunity to apply psychological concepts to these sorts of business problems.

Key Founders of I/O Psychology The initial foray of psychologists into industry was in advertising. American psychologist Walter Dill Scott (1869–1955) studied how human psychology could increase the effective- ness of businesses’ advertising efforts. Scott’s two books, The Theory of Advertising (1903) and The Psychology of Advertising (1908), were the first to identify advertising character- istics that stimulate people’s purchasing behaviors. Interestingly, Scott found that the real problem in sales did not pertain to advertising materials, but rather to the characteristics of those employed as salespeople. Scott thus proposed that organizations needed more rigorous selection methods when hiring salespeople. This led him to start the first consulting practice in 1919, which provided personnel selection services to many large organizations.

What Did You Learn?

1. As shown in Table 4, in this study the average level of organizational commitment in the United States and Canada was 3.4. Is your level of commitment to your organization higher, lower, or comparable to this score? Why do you think this is the case?

2. If you can speak one or more of the foreign languages in this study, to what extent do you consider the translation accurate? How would you have modified the items to make them more reflective of the characteristics being measured?

Gallup’s Q12 Employee Engagement Instrument

This report is a user-friendly version of a much more complex set of studies conducted by the Gallup Organization to design and refine this widely used instrument for measuring employee engagement. Again, the statistical details are beyond the scope of this course, so you only need to skim them to appreciate the scientific process involved. Afterward, go to pages 10 and 11 of the report and attempt the assessment. Respond to each item on a 6-point scale (1 = extremely dissatisfied, 5 = extremely satisfied, 0 for items to which you do not know how to respond or that do not apply to you). Then answer the following questions.

What Did You Learn?

1. How important are each of the 12 items to you personally? Explain. 2. Which of the 12 items did you score highest and lowest on? 3. What have you learned about organizational commitment and employee engagement in

general and about your own levels of each?

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http://strengths.gallup.com/private/Resources/Q12Meta-Analysis_Flyer_GEN_08 08_BP.pdf

Section 1.2 A Brief History of I/O Psychology

Hugo Munsterberg (1863–1916), a German-born Har- vard psychologist, is considered a founder of I/O psy- chology. He published the first book on industrial/ organizational psychology, The Psychology of Indus- trial Efficiency, in 1913. This work set forth the major research topics of employee selection, training, voca- tional guidance, and the social influence of work dur- ing the early years of I/O psychology. As one of the first psychologists to conduct psychological research in business settings, Munsterberg used psychological tests both to measure employee skills and to match people to jobs. Additionally, Munsterberg was respon- sible for organizing the International Congress of Arts and Science at the 1904 St. Louis World’s Fair, where visitors had the opportunity to experience new mental and physical tests (Brown, 1992).

Much early I/O psychology focused on worker produc- tivity and efficiency. Frederick Winslow Taylor (1856– 1915) is considered the father of scientific manage- ment, which is the use of scientific methods to design work that optimizes worker productivity. In his book

Scientific Management, Taylor (1911) outlined ways to improve both machinery and individ- ual worker performance after observing employees at work and then analyzing his data to determine optimal job performance. Despite the success of his methods, not everyone agreed with Taylor’s scientific management philosophy. Some thought his approach, which reduced jobs to specific tasks and the amount of time workers should spend on each, seemed to dehu- manize the worker (Hoxie, 1916).

Early I/O psychology principles became mainstream in 1915 when the first university-based program on the topic was founded. Walter Van Dyke Bingham (1880–1952) established a center at Carnegie Institute of Technology to study the applications of psychology to busi- ness. Called the U.S. Bureau of Salesmanship Research, the program focused on conducting research for the life insurance industry on how to select and develop salespeople, clerks, and executive personnel.

In the 1940s German scholar Kurt Lewin, now considered the father of social psychology, established several streams of applied research. Lewin developed well-recognized and widely referenced models of organizational research. For example, Lewin’s approach, which he called action research, focuses on practical applications of scientific theories and rigor- ous methods to solve everyday problems. Lewin also proposed that organizational change is a function of forces that both promote and hinder that change. According to Lewin, organi- zational change involves three stages: unfreezing, where the inertia of resisting change must be overcome and existing mind-sets challenged; actual change; and refreezing, where new mind-sets are established and the new status quo becomes the norm. Lewin also initiated the study of group dynamics, which emphasizes groups as unique entities that may exhibit char- acteristics that are distinct from and go beyond their individual members (in other words, the whole is greater than the sum of its parts). Although scholars and practitioners have built more elaborate models, Lewin’s models are foundational to many contemporary theories and areas of scientific research today.

Stock Montage/Contributor/Getty Images

When Hugo Munsterberg published the first book on I/O psychology in 1913, he set the foundation for future research.

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Section 1.2 A Brief History of I/O Psychology

Contributions to the War Efforts When the United States entered World War I in 1917, many psychologists were commissioned to identify ways to increase soldiers’ effectiveness. Their research goal was to understand sol- dier morale and enhance their overall motivation. For the first time, psychological tests such as the Army Alpha—a group-administered cognitive ability test—were designed to identify and place enlisted soldiers. Although the war ended before the Army Alpha test data could be implemented, after the war, researchers discovered a strong relationship between soldiers’ scores on the Army Alpha and their subsequent job performance. Additionally, tests such as the Personal Data Sheet (a precursor to the modern personality test) were used throughout the war to place officers and other specialized personnel. After the war ended, psychologists were able to use their experiences with the army to help businesses screen employees.

During World War II psychologists again worked closely with the military, developing more sophisticated assessments. For example, the Army General Classification Test was designed to evaluate and place new draftees. Other screening tests included specific skill and ability tests as well as leadership-potential tests. The Office of Strategic Services, predecessor to the Central Intelligence Agency, commissioned psychologists to design screening tests that iden- tified candidates who were well suited for sensitive services (e.g., espionage). These assess- ments evaluated candidates as they completed multiple job-related exercises over the course of several days. Eventually, such screening tests evolved into the assessment centers used in the business world today.

The Hawthorne Studies: A Precursor to Human Relations In 1924 Elton Mayo and researchers from Harvard University conducted a series of extensive studies at the Western Electric Company’s industrial plant in Hawthorne, Illinois. The Haw- thorne studies, as they became known, began as straightforward studies based on scientific management principles. Researchers were commissioned to study the optimal physical and

Find Out for Yourself: Scientific Management at a Fast-Food Restaurant

Set aside about 30 minutes this week to visit your favorite fast-food restaurant. You may want to bring along a notebook and writing utensil or some other convenient way to record your observations.

1. While there, observe the processes that the workers engage in: taking and queuing orders; division of labor; cooking and preparing the food; wrapping and bagging each item; compiling each order; adding napkins, utensils, and condiments; and delivering the order to the customer.

2. Take note of the workers’ physical movements, eye–hand coordination, and speed.

What Did You Learn?

1. What are some ways this work might be performed more efficiently? 2. To what extent does working at a fast-food restaurant resemble working on a factory

assembly line?

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Section 1.2 A Brief History of I/O Psychology

social environment needed to produce maximum employee efficiency. For example, in one study, management was interested in optimizing the lighting levels for workers producing telephone equipment. Another study of a group of telephone-relay assemblers investigated the effects of allowing workers to choose their team members, varying break frequencies and lengths, providing food during breaks, varying the length of the workday, and having the workers discuss their preferences regarding these issues with their supervisors.

The results of the Hawthorne studies were unexpected, for both the researchers and the managers. The researchers found that productivity gains were unrelated to the changes researchers made to the physical environment. For example, in the illumination studies, even when lights were so dim that workers could barely see, productivity increased. In the relay- assembly experiments, every change resulted in an increase in productivity, even when the change was back to the original condition.

Researchers concluded that the physical work environment did not affect worker productiv- ity as much as the extra attention they received during the research, which increased work- ers’ perception that management cared about them as individuals. Additionally, as evidenced by the relay-assembly experiments, human dimensions such as supervisory style and team dynamics were discovered to be more important than physical working conditions. Another plausible interpretation is that workers may have been concerned that management had intentions behind the experiments. For example, in another set of studies in a bank-wiring room, introducing financial incentives actually resulted in a decrease in productivity because workers were concerned that increasing their productivity might lead management to fire some of them. Moreover, established group norms for productivity exerted a stronger influ- ence on the workers’ behaviors than the newly introduced incentives. In all cases the phys- ical environment was not the major influencing factor. Rather, the human dimensions and interpretations (positive or negative) were the key contributors to productivity changes. This notion is now often referred to as the Hawthorne effect.

The results of the Hawthorne studies changed how organizations would attempt to moti- vate workers. Prior to the studies, organizations designed jobs according to both scientific principles and the will of management and then used incentives to get workers to comply. The Hawthorne studies made it clear that employees rejected management practices based on economic incentives. Instead, workers were motivated by feeling that they were accepted socially, held status within their work group, and would receive compassionate supervision. Out of the Hawthorne studies emerged the field of human relations, which studies the fac- tors that produce motivated and satisfied employees. I/O psychologists began to explore top- ics such as effective leadership, quality communication, group formation, employee attitudes, and other factors that improve worker efficiency and job satisfaction.

Consider This: The Hawthorne Effect Can you think of a time when the Hawthorne effect occurred in your work setting?

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Section 1.3 Emerging 21st-Century Perspectives

1.3 Emerging 21st-Century Perspectives The changing business landscape continuously presents opportunities and challenges regard- ing an organization’s most important asset—its people. As discussed earlier, the science of I/O psychology can help managers and organizations formulate new theoretical frameworks and methods for effectively navigating these uncharted territories. Two emerging perspectives

Postwar, 20th-Century Approaches Following World War II large organizations began to leverage I/O psychologists’ capabilities. I/O psychologists began to focus on different aspects of worker effectiveness, which resulted in a number of subspecialties, including personnel psychology, human factors psychology, and organizational psychology. During the 1960s and 1970s, organizations began using groups to accomplish work, and I/O psychologists were instrumental in developing tools and techniques needed to understand and deploy large, task-orientated groups. Addition- ally, I/O psychologists began to assess how an organization’s structure and operation affects its employees. These and related inquiries grew into the study of organizational develop- ment, a systematic approach to organizational-level change and improvement. At the time, it included such topics as participative management, self-managing teams, employee empower- ment, and employee feedback, but has since evolved to include a variety of other areas as well.

A number of work-related laws have passed since the 1960s that have increased organiza- tions’ need for I/O psychologists. With the passage of the Civil Rights Act of 1964 and other civil rights legislation, the courts have required employers to develop recruiting, selection, and promotion procedures that are job relevant and antidiscriminatory. Many employers have concluded that to comply with this and subsequent antidiscrimination legislation, and to successfully defend themselves against employment discrimination lawsuits, they need I/O psychologists to help them validate their hiring and promotional practices. Today I/O psychologists are often used as expert witnesses in trials about civil rights violations because of their ability to prove the validity of an organization’s selection practices.

Find Out for Yourself: The Civil Rights Act and Discrimination The Our Documents website provides free access to historic American documents. Visit the website to access a transcript of the Civil Rights Act of 1964.

1964 Civil Rights Act

What Did You Learn?

1. Against which protected classes does the act prohibit discrimination? 2. What are some of the implications of Title VII—which is specific to employment—for

organizations in terms of recruitment, selection, training, promotion, and termination processes?

3. Why is it important for an I/O psychologist to understand Title VII?

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http://www.ourdocuments.gov/doc.php?doc=97&page=transcript

Section 1.3 Emerging 21st-Century Perspectives

that are particularly pertinent for I/O psychologists are positive psychology and quantifying the return on investment (ROI) in human capital. These two topics are introduced in this sec- tion and will be revisited throughout the text.

Positive Psychology One of the major challenges I/O psychologists face today is mainstream psychological train- ing’s focus on curing mental illness and dealing with dysfunctional thoughts, emotions, and behaviors. Before World War II psychology was believed to have three missions: healing men- tal illness, helping healthy people become happier and more productive, and achieving full human potential. However, by the end of the war, healing mental illness had received the majority of resources and attention due to the tremendous amount of psychological damage caused by the war. In the meantime, psychology’s other two missions had been nearly forgot- ten. As a result, by the end of the 20th century, psychologists had made significant strides in diagnosing and treating hundreds of mental problems but only limited progress in under- standing and capitalizing on human strengths (Keyes & Haidt, 2003; Seligman & Csikszent- mihalyi, 2000).

Problems With the Disease Model Although important for the good of society, healing mental illness follows what has been referred to as a “disease model.” There are two problems with this. The first is that the disease model is problem focused; it seeks to bring troubled individuals and low performers back to average. However, in the highly competitive business world, employers need employees who can deliver superior performance and execute the organization’s strategic initiatives with excellence. Freedom from pathological symptoms such as depression is not enough in itself to lead to this type of exceptional performance (Keyes & Haidt, 2003).

The second problem with the disease model is that even if psychology’s greatest contribution is in healing mental illness, most psychological theories and practices cannot be applied to the business context. Struggling organizations are not sick people. Organizations are made up of diverse individuals who have varying interests, motivations, strengths, and vulnerabilities. These organizational characteristics are to be appreciated and leveraged. They are not prob- lems to be solved (Cooperrider & Whitney, 2005).

Via the popular press, thousands of positively oriented self-improvement and management best-sellers became available in the absence of a widely recognized method of positive orga- nizational psychology. Some of that literature, such as Gallup’s strengths-based approach (Rath, 2007) and the Q12 measure of engagement (Wagner & Harter, 2006), is based on the scientific methods discussed earlier. Both of these methods have shown success in predicting superior performance at work and in many other areas of life such as academics and relation- ships, as well as in increasing business-unit profitability (Harter, Schmidt, & Hayes, 2002). However, the majority of self-improvement and management literature is speculative, anec- dotal, and based more on folk psychology than on rigorous scientific research.

Business consultants have found that positive approaches appeal to their clients and consti- tute a great source of revenue for their consultancies, which has led to the popularity of many unfounded management fads by those who are less discerning or familiar with scientific

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Section 1.3 Emerging 21st-Century Perspectives

methods. In their seminal book Hard Facts, Dangerous Half-Truths and Total Nonsense (2006), Stanford professors Jeffrey Pfeffer and Robert Sutton uncover many of those lies that man- agers believe and act on, to the detriment of their organizations. Pfeffer and Sutton call for what is known as evidence-based management—practices that are based on rigorous scien- tific research and consistently deliver real results. Evidence-based management has become an important way to bridge the gap between rigorous scientific research and organizational practice (Latham, 2009a; Rousseau, 2012).

Seligman Calls for a Positive Approach Fortunately, around the turn of the 21st century, former president of the American Psycho- logical Association Martin Seligman called for a “positive psychology” that brings back psy- chology’s two forgotten missions: helping healthy people become happier and more produc- tive, and achieving full human potential. His call was well received, and positive psychological research and practice has grown exponentially over the past decade. Examples can be found in seminal references such as Handbook of Positive Psychology (Lopez & Snyder, 2016) and Char- acter Strengths and Virtues: A Handbook and Classification (Peterson & Seligman, 2004). This is not to say that psychology was a negative science prior to the positive psychology move- ment. However, negativity was widespread, and it was time for a more balanced perspective.

The positive psychology movement triggered a ripple effect across the business world. Orga- nizational research and practice is generally positive, because organizations deal primarily with healthy and productive people. Extremely dysfunctional or disturbed individuals are unlikely to hold a job. Thus, positive psychology is appropriate for the target population of I/O psychology.

Two Approaches: POS and POB Specifically, two approaches have developed in organizational science over the past decade. The first is positive organizational scholarship (POS), which focuses on positive organi- zations as a whole. Cameron and Caza (2004) define POS as a “movement in organizational science that focuses on the dynamics leading to exceptional individual and organizational performance such as developing human strength, producing resilience and restoration, and fostering vitality” (p. 731). POS is making significant strides in the scientific understanding of positive dynamics such as positive individual attributes, positive emotions, strengths and virtues, positive relationships, positive HR practices, positive organizational practices, and positive leadership and change (Cameron & Spreitzer, 2012).

The second approach is positive organizational behavior (POB), which focuses on the pos- itivity of individual managers and employees. Luthans (2002b) defines POB as “the study and application of positively oriented human resource strengths and psychological capacities that can be measured, developed, and effectively managed for performance improvement in today’s workplace” (p. 59). POB emphasizes the scientific criteria of theory, application, mea- surement, and development. In other words, for a psychological capacity to be included in POB, it has to be positive, scientifically testable, applicable to the workplace, measurable, and developmental. Four specific psychological capacities have been found to fit these criteria: confidence, hope, optimism, and resilience. These capacities have been integrated into what has been termed “psychological capital.”

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Section 1.3 Emerging 21st-Century Perspectives

Psychological Capital Psychological capital (PsyCap) has been defined as:

an individual’s positive psychological state of development that is character- ized by: (1) having confidence (self-efficacy) to take on and put in the neces- sary effort to succeed at challenging tasks; (2) making a positive attribution (optimism) about succeeding now and in the future; (3) persevering toward goals and, when necessary, redirecting paths to goals (hope) in order to suc- ceed; and (4) when beset by problems and adversity, sustaining and bouncing back and even beyond (resiliency) to attain success. (Luthans, Youssef-Morgan, & Avolio, 2015, p. 2)

Unlike many positive but unfounded management fads, PsyCap has been shown to relate to many of the outcomes that I/O psychologists wish to help their organizations realize: higher productivity, job satisfaction, organizational commitment, and employee well-being; more frequent organizational citizenship behaviors; lower cynicism, stress, anxiety, and turnover intentions; and less frequent counterproductive work behaviors (Avey, Reichard, Luthans, & Mhatre, 2011). Positivity and positive interventions have been applied in many organiza- tions around the world, including manufacturing, hospitality, franchise, banking, insurance, marketing, health care, telecommunications, aviation, aerospace, military, police, sports, oil and gas, education, government, nongovernmental organizations, and nonprofits. A notable example is the Comprehensive Sol- dier and Family Fitness training program, established in 2008 by the U.S. Army to proactively build resil- ience in soldiers and their families as a preventative measure and a positive alternative to the prevailing reactive treatment programs (Selig- man & Matthews, 2011). The U.S. military made large investments in developing and evaluating this program, and empirical studies pro- vide evidence to support the effi- cacy of these initiatives in building positivity, buffering negativity, and promoting well-being among those serving in stressful and mission- critical roles (Krasikova, Lester, & Harms, 2015; Schaubroeck, Riolli, Peng, & Spain, 2011).

Lifesize/Thinkstock

Psychological capital increases a person’s confidence, optimism, hope, and resiliency, which can lead to increased performance at work.

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One’s belief (confidence) in being able to successfully execute a specific task in a given context.

One who sets goals, figures out how to achieve them (identify pathways) and is self-motivated to accomplish them, that is, willpower and “waypower.”

Positive outcome expectancy and/or a positive causal attribution, but is still emotional and linked with happiness, perseverance, and success.

When beset by problems and adversity, sustaining and bouncing back and even beyond (resiliency) to attain success.

Confidence/self-efficacy

Hope

Optimism

Resiliency

Section 1.3 Emerging 21st-Century Perspectives

It is important to acknowledge that positivity and negativity are not opposite sides of the same coin; they operate very differently. Cameron (2008) notes a paradox: On the one hand, humans are attracted to what is positive and pleasant. On the other hand, there is a prev- alent bias toward negativity. Negativity tends to grasp more of our attention and physical, mental, and emotional resources. This is because negativity indicates an urgent deficiency to be addressed and resolved. Positivity implies “business as usual,” which provides limited

Figure 1.1: Psychological capital

Many people use a variety of social networking sites to stay connected with friends, family, former classmates, and colleagues.

One’s belief (confidence) in being able to successfully execute a specific task in a given context.

One who sets goals, figures out how to achieve them (identify pathways) and is self-motivated to accomplish them, that is, willpower and “waypower.”

Positive outcome expectancy and/or a positive causal attribution, but is still emotional and linked with happiness, perseverance, and success.

When beset by problems and adversity, sustaining and bouncing back and even beyond (resiliency) to attain success.

Confidence/self-efficacy

Hope

Optimism

Resiliency

Consider This: Positivity and Negativity 1. Describe an instance in which you received positive feedback. 2. Recall and describe your thoughts, feelings, attitudes, and behaviors after receiving the

positive feedback. What were some of the outcomes of positivity? 3. Describe an instance in which you received negative feedback. 4. Recall and describe your thoughts, feelings, attitudes, and behaviors after receiving the

negative feedback. What were some of the outcomes of negativity?

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Section 1.3 Emerging 21st-Century Perspectives

motivation for change. That is why balancing positivity and negativity requires intentional effort. In other words, both positivity and negativity are necessary, and while positivity is more appealing, negativity can be necessary for change.

Quantifying the ROI in Human Capital Beyond positive psychology, there is an increasing emphasis in business practice on employee well-being, not only as a valuable and worthwhile pursuit in its own right but also as a stra- tegic opportunity to earn significant returns on investment in terms of reduced health care costs, increased engagement and commitment, and enhanced productivity (Cascio & Bou- dreau, 2011). In other words, human resources are increasingly being recognized as assets and a form of capital rather than just an expense.

However, quantifying the ROI in human capital is another area that I/O psychologists struggle with as they find themselves increasingly expected to link psychological measures to finan- cial outcomes, especially in today’s tight economy. Strategic investments in human assets can yield quantifiable returns on practices such as effective selection, training, and perfor- mance management. When I/O psychologists understand the methods of quantifying such returns, they are in a better position to effectively influence financial and HR allocations in their organizations.

As discussed earlier, both the popular psychology and business literatures include significant amounts of unsubstantiated advice. I/O psychologists strive to correct many of these mis- conceptions and educate managers and organizational decision makers. Unfortunately, many managers believe that managing is more of an art than a science, which can lead them to make subjective decisions based on hunches, personal opinions, or politics and ignore the research that can lead to effective, evidence-based management (Latham, 2009a; Rousseau, 2012).

Furthermore, many managers believe that people are impossible to measure, quantify, predict, and explain. The problem with this notion is that no matter how important you believe people are, if you cannot quantify the ROI in them, they will be viewed as an expense. Resources and attention will then be allocated to more tangible assets that have quantifiable returns on investment, and it may no longer be desirable to invest in people. When people are viewed as only an expense, they are often considered expendable, especially in tough economic condi- tions, as evidenced by the massive layoffs and high unemployment rates that characterized the Great Recession.

Jeffery Pfeffer and Robert Sutton (2000) refer to this thinking as the knowing–doing gap. Pfeffer’s (1998) earlier book, The Human Equation, built a convincing case for the quantifi- able ROI in human assets. He showed that about half of all organizations believe that people are their most important asset. Within this half, about half act on their belief. They imple- ment systems and policies that show they value their people. Then within that quarter, about half stick to their beliefs and actions, even under business pressures to abandon their beliefs in order to cut costs or reallocate their investments. Interestingly, over the years, this one eighth has shown superior results on every measure of profitability, efficiency, and effective- ness when compared to the other seven eighths. The lesson: People do matter, and with the right measures, their value is quantifiable. Latham (2009a) offers specific areas for evidence- based management, such as using the right tools to hire high-performing employees, train- ing and development to create high-performing teams, and motivating employees to be high

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Section 1.4 The Role of I/O Psychologists

1.4 The Role of I/O Psychologists As previously discussed, I/O psychologists use psychological principles to improve employee performance. They do this by using a variety of methods that span various stages of an employee’s relationship with an organization, also referred to as the employee life cycle. These stages are introduced in this section and will be covered throughout the text.

Employee Selection Tools and Practices Selecting employees requires tools that help identify the most qualified job candidates in a fair and unbiased manner. I/O psychologists study a job’s requirements and then develop job- specific interviews and psychological tests that meet strict scientific criteria. These topics are discussed in detail in Chapters 2 and 3.

Employee Performance Evaluations Most organizations use some method to evaluate employee job performance, and they often base promotions, pay increases, transfers, and dismissals on these appraisals. Naturally, it is extremely important that performance evaluations be based on data that is as fair and objective as possible and not on a supervisor’s individual likes and dislikes. I/O psychologists design evaluations that avoid the potential pitfalls of subjectivity and personal preference. Designing and implementing high-quality performance evaluations are covered in detail in Chapter 4.

performers. I/O psychology uses rigorous scientific methods such as experimental designs and statistical analyses to help employers develop and use the right measures to quantify the ROI in people.

Find Out for Yourself: Human Assets and Human Costs Every year, Fortune magazine publishes a list of America’s largest corporations. Visit the web- site to find out which corporations are on the current Fortune 500 list.

Fortune 500

What Did You Learn?

1. According to Fortune’s methodology, what are the selection criteria and some indicators of these organizations’ performance?

2. Visit the websites of several Fortune 500 companies of your choosing. Read their mission, vision, and values statements. How many of them refer to people as one of their assets?

3. Take a look at the financial statements of those companies that are publicly traded. How much did they spend last year on people costs? Look for payroll, benefits, training and development, and similar expenses.

4. How do these expenses compare to other expenses and investments for each company?

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http://beta.fortune.com/fortune500

Recruitment/selection • Create a sta�ng plan • Assess compensation/benefits • Develop interview and psychological test standards • Interview and recruit talent

Transition • Employees leave due to retirement, new employment, etc. • Create a separation plan that provides the

smoothest transition for both the employee(s) and the company

Onboarding

• Welcome and prepare new hires for their role(s) • Can include trainings and orientations

Development • Assess employee skills and training needs • Provide internal and external training opportunities for employees

Retention

• Ensure employees are happy and challenged in their roles

Recruitment/selection • Create a sta�ng plan • Assess compensation/benefits • Develop interview and psychological test standards • Interview and recruit talent

Transition • Employees leave due to retirement, new employment, etc. • Create a separation plan that provides the

smoothest transition for both the employee(s) and the company

Onboarding

• Welcome and prepare new hires for their role(s) • Can include trainings and orientations

Development • Assess employee skills and training needs • Provide internal and external training opportunities for employees

Retention

• Ensure employees are happy and challenged in their roles

Section 1.4 The Role of I/O Psychologists

Employee Training and Development One of the constants in the working world is that things are constantly changing. Technology, products, strategies, services—so much about a job can change so rapidly that all employees must continue to learn, rookies and veterans alike. I/O psychologists research and develop the most effective ways to train employees and maximize transfer of knowledge to the learner. You will learn about these topics in Chapter 5.

Employee Motivation Many aspects of the work environment affect employee motivation, such as pay, benefits, rec- ognition, job security, the quality of leadership, and the physical and psychological work cli- mate. I/O psychologists work to identify and modify these conditions and others in order to provide motivating jobs and work environment. Chapter 6 addresses work motivation.

Find Out for Yourself: The Employee Life Cycle Figure 1.2 provides an example of the employee life cycle. While each of these stages is dis- cussed in detail in one or more chapters of this book, it will be helpful to familiarize yourself with them early on. Keep in mind that there are similarities and differences in employee life cycles across various jobs and industries. While the cycle is largely the same, the specific pro- cesses have subtle but important differences.

Figure 1.2: The employee life cycle model

Recruitment/selection • Create a sta�ng plan • Assess compensation/benefits • Develop interview and psychological test standards • Interview and recruit talent

Transition • Employees leave due to retirement, new employment, etc. • Create a separation plan that provides the

smoothest transition for both the employee(s) and the company

Onboarding

• Welcome and prepare new hires for their role(s) • Can include trainings and orientations

Development • Assess employee skills and training needs • Provide internal and external training opportunities for employees

Retention

• Ensure employees are happy and challenged in their roles

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Section 1.4 The Role of I/O Psychologists

Organizational Processes I/O psychologists are concerned with studying, understanding, facilitating, and increasing the effectiveness of organizational processes such as leadership, communication, decision making, problem solving, creativity, and group dynamics. Chapters 7, 8, and 9 focus on these critical organizational processes.

Employee Safety and Wellness Managers are constantly searching for ways to increase worker productivity. Workers who feel safe, have an appropriate work–life balance, and are healthy tend to be the most produc- tive. I/O psychologists help organizations create work environments that support employee health and wellness and reduce the damaging effects of physical hazards as well as the psy- chological risks of excessive stress and burnout. These topics are covered in Chapter 10.

Organizational Outcomes The principles and methodology of I/O psychology can be an organization’s most important tool as it attempts to achieve the greatest return on its most important asset—its people. I/O psychologists recognize that profit and financial performance are valuable indicators of an organization’s success, even in not-for-profit enterprises. Even if financial success were an organization’s only reason for hiring an I/O psychologist, the organization’s managers would soon discover that they had made a good investment. The following section offers some ways in which I/O psychologists can contribute to an organization’s bottom line.

Reducing Employee Turnover Consider the costly problem of employee turnover. Whenever an employee quits, the com- pany loses the investment it made in recruiting, selecting, and training that person. The com- pany must then spend additional money to hire and train a replacement, during which time the company is short an employee. The ultimate cost of turnover can reach three times the original employee’s salary (Cascio, 2000). Programs devised and applied by I/O psychologists can improve retention and reduce turnover. For example, at Mutual of Omaha, a Fortune 500 company that provides insurance and financial services, a successful turnover reduction pro- gram reduced turnover by 15%, which in turn yielded $250,000 in savings for 3 consecutive years (Noon, 2004). Even in minimum wage jobs, replacing an employee has been found to cost as much as $5,000 (Mushrush, 2016).

Reducing Absenteeism Another costly problem organizations face is absenteeism. Organizations lose a large amount of money when their employees don’t show up for work: projects stall, customers can’t be helped, and products can’t be made or sold. According to a study by the Society for Human Resource Management (SHRM) and Kronos Inc., U.S. companies spent over 20% of their pay- roll in 2013 on costs associated with absenteeism. European companies spent almost dou- ble that percentage (Lacapo, 2014). Examples of these expenses include the cost of hiring temporary workers or paying overtime to existing workers. Temporary workers cost about 15% more than permanent workers, and overtime can cost 30% to 40% more than the regu- lar rate. Also keep in mind that replacement workers are only 70% to 80% as efficient as

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Section 1.4 The Role of I/O Psychologists

permanent workers and that absenteeism slows down the productivity of coworkers by about 20% (Bass & Fleury, 2011).

I/O psychologists can devise and apply techniques that reduce absenteeism, resulting in substantial sav- ings for a business. For example, a nonprofit hospital with 3,000 employees estimated that it saved $50,000 in 1 year simply by heeding a consulting psychologist’s advice to implement a positive incentive program to control absenteeism. In this program, employees were allowed to convert some of their unused paid sick leave into additional pay or paid vacation time (Schlotzhauer & Rose, 1985). The original use-it-or- lose-it policy may have triggered excessive sick leave and an entitlement mentality in which employees used their sick-leave days whether they were sick or not.

In another study, contingent rewards such as public feedback and financial incentives were shown to successfully reduce unplanned absences among grocery store employees (Camden, Prince, & Ludwig, 2011).

In times of economic instability, however, many employees do not use their paid time off in order to cash it in, or even forfeit much-needed sick leave and vacation time for fear of losing their jobs, which can be detrimental to health and well-being. For example, much like how sleep is necessary for optimal functioning, vacations have a similar positive impact on physi- cal, mental, and psychological health (de Bloom, Radstaak, & Geurts, 2014). Thus, a balance is needed between strict attendance policies and flexibility to allow workers to stay healthy, recover from illness, and attend to personal matters.

Improving Employee Attitudes Research also shows that positive employee attitudes such as job satisfaction, engagement, and organizational commitment can reduce grievances and other labor disputes as well as decrease absenteeism, turnover, work slowdowns, faulty products, and accidents. These are major financial concerns for businesses today. Research by the Gallup Organization, such as the Q12 employee engagement report you reviewed earlier, strongly supports that organiza- tions with high employee-engagement scores have 3.9 times the earnings per share growth rate of organizations with lower employee engagement scores (Harter et al., 2002). Thus, cor- porate leaders call on I/O psychologists to improve employees’ attitudes toward both their jobs and their organization as a whole.

Bradford Veley/CartoonStock

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Section 1.4 The Role of I/O Psychologists

Maintaining Employee Rights and Dignity Creating jobs and work environments that maintain workers’ human rights and dignity is a critical mission within I/O psychology. I/O psychologists help organizations maintain their employees’ legal rights by complying with labor laws that pertain to various aspects of the workplace, such as hiring and firing, compensation and benefits, training and development, promotions and discipline, and others that you will learn about throughout this text.

However, legal compliance is not sufficient to show workers respect and dignity. A person’s work life is critical for his or her self-identity and self-esteem (Gioia, Patvardhan, Hamilton, & Corley, 2013). Employees perceive themselves to be treated with dignity when their employ- ers go beyond the letter of the law to provide jobs that offer additional dimensions such as meaningful work, personal accountability, and respectful treatment from those who super- vise and lead them (Rucci, 2008).

What can I/O psychologists do to enhance employee dignity? One factor they can help improve is employees’ feeling that they have contributed to the organization’s success, which stud- ies have shown influences job satisfaction. I/O psychologists can work with organizations to establish a closer fit between workers’ skills and key job requirements so that workers are able to use their skills and abilities to perform their jobs successfully. As discussed earlier, these factors have been shown to increase organizational commitment and employee engage- ment, with notable impact on the organization’s bottom line.

Employee dignity is also enhanced by employee-centered leaders. I/O psychologists have dis- covered that leaders who show an interest in their employees’ development, empower and challenge their employees, and encourage creative work can enhance employee dignity by creating a compelling, purposeful organizational environment. Employee-centered leaders

Consider This: Your Dream Job Imagine that you have the opportunity to design your dream job. Make a list of all the char- acteristics this job would have: title, duties and responsibilities, salary, benefits, incentives, working conditions, performance standards, promotion criteria, who you will report to, and how many employees you will manage (if any).

Questions to Consider

1. What KSAOs can you bring to this job? What should be the selection criteria for the right candidate for this job?

2. What do you expect your attitudes to be toward your job and your organization? Will you be satisfied? Engaged? Motivated? Happy? Committed?

3. What do you expect your behaviors to be if you get this job? Will you go above and beyond your direct responsibilities to give better service to your customers? Will you volunteer for additional projects that help your organization grow, even if you do not receive additional compensation for them? Will you consider leaving the organization for a better offer?

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Section 1.5 I/O Psychology as a Profession

1.5 I/O Psychology as a Profession I/O psychology is a diverse field with a variety of professional opportunities. Many I/O psy- chologists work in business positions that deal with worker productivity, employee training and assessment, and HR. Others work in research or hold academic positions. For the experi- enced I/O psychologist, consulting is another option. But regardless of which position an I/O psychologist decides to pursue, the first step is to obtain the appropriate experience.

Educational, Licensing, and Certification Requirements I/O psychologists actively contribute to the workplace with both their research and applica- tions. However, to be able to contribute effectively, they need to be appropriately educated and trained. Based on the results of the SIOP 2016 Income & Employment Survey (Poteet, Parker, Herman, DuVernet, & Conley, 2017), there is a strong emphasis in the field of I/O psychology on completing higher education. For example, most SIOP members have at least a master’s degree, and the majority have a doctorate. This trend is reflective of the psychol- ogy profession in general. Most psychologists find it necessary to earn graduate degrees and professional certifications in order to advance their careers or further the scope of their prac- tices. Therefore, education and experience are highly valued in this profession.

Although there is no specific licensure for I/O professionals and the current licensure tests are weighted heavily in the clinical domain, I/O psychologists who are licensed in specific fields are in higher demand than nonlicensed ones, and they earn significantly more (Poteet et al., 2017). Examples of licenses and certifications pursued by I/O psychologists include licenses in clinical, counseling, and school psychology; HR professional certifications granted through the SHRM or the Human Resource Certification Institute; training and development certifications granted through the Association for Talent Development (ATD; formerly the American Society for Training and Development); and nonpsychology certifications such as Project Management and Lean Six Sigma (quality management and continuous improve- ment). Each of these licenses and certifications requires a preset number of examinations and professional development hours. Finally, many of the licenses are state governed and may vary from state to state.

Consider This: Employee-Centered Leaders 1. Who is or was your favorite leader or mentor? What characteristics did you value in this

person? 2. Think about the way this leader related to you or others. What made the strongest

impact on you, and why? 3. Who is or was the worst leader you have ever had? Why?

not only elicit greater performance from their workers that translates into company prof- its (Colbert, Kristof-Brown, Bradley, & Barrick, 2008); they also have more productive, satis- fied, and committed employees, as well as high-performing teams and organizations (Banks, McCauley, Gardner, & Guler, 2016).

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Section 1.5 I/O Psychology as a Profession

Career Paths for I/O Psychologists According to the SIOP 2016 Income & Employment Survey (Poteet et al., 2017), about 51% of I/O psychologists work in the private sector, with the majority of this group working for con- sulting firms. Another 28.8% hold academic positions in educational institutions. Only 8.8% work for the public sector, and another 5.5% work for nonprofits. The majority of I/O psy- chologists influence business organizations directly through their employment or consulting, or indirectly by teaching future generations of I/O psychologists or conducting research that can benefit the practice of I/O psychology in organizations.

Business Organizations Many private sector business organizations now hire I/O psychologists, including manufac- turing, health care, pharmaceuticals, retail, transportation, banking, insurance, energy, and information technology (see Table 1.1). An I/O psychologist’s role depends on the job site. For example, in manufacturing and health care, roles may relate more to safety and well- ness. In high-volume retail and mass transportation, emphasis may be placed on logistics and

Find Out for Yourself: State- and Domain-Specific Licensures The American Counseling Association website provides links to various state licensing boards. Visit the website to research licensure requirements in your own state or for any state you would consider working in.

American Counseling Association: Licensure & Certification

Table 1.1: I/O psychology job types and hiring organizations

Job types Hiring organizations

Management Consultant AppleOne

Organizational Development Consultant FedEx Office and Print Services, Inc.

Compensation Analyst GM Financial

Project Manager Bio-Rad Laboratories

Leadership Selection and Assessment Specialist Cisco

Research Manager J.D. Power and Associates

Senior User Experience Researcher Macy’s

Human Resources Analyst Vertafore

Talent Acquisition Recruiter ACCO Brands

Executive Compensation Consultant Allstate

Operational Psychologist Booz Allen Hamilton Inc.

Manager, Talent Acquisition Comcast

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http://www.counseling.org/knowledge-center/licensure-requirements/state-professional-counselor-licensure-boards

Section 1.5 I/O Psychology as a Profession

business process efficiencies, such as increasing productivity and quality and reducing waste. Banking and insurance may emphasize mainstream HR functions such as employee selection, training, and performance appraisal.

Most Fortune 100 companies maintain in-house I/O psychologists. I/O psychologists may occupy positions in the HR department, such as vice president of HR, HR director, and HR manager; or they may specialize in selection, compensation, training, benefits, performance appraisal, safety, or wellness. They can also hold consultative, research, or project-based posi- tions such as organizational development specialist, personnel psychologist, compensation analyst, project manager, behavioral scientist, or senior researcher.

Consulting Firms I/O psychologists can be the sole owners of consulting firms. They can also have partners with whom they jointly own the consulting practice. Some I/O psychologists may also be employed by consulting firms without having any ownership interest in those firms. They may occupy senior leadership, middle management, or entry-level positions in these firms.

Typically, consulting firms that employ I/O psychologists provide the same types of services discussed earlier (selection, training, performance management, and organizational change) for organizations that prefer to outsource these services to external consultants rather than hiring I/O psychologists to perform these services in-house. An organization that has full- time I/O psychologists and other HR professionals on its payroll may also seek the services of a consulting firm for highly specialized or complex business needs. Furthermore, an external consulting firm may be hired to back up and enhance the credibility of the initiatives pio- neered in-house. Small companies that cannot afford to staff in-house I/O psychologists full time may hire consultants for specific projects, such as to design a performance appraisal system or a training program.

Academic Institutions Similar to those in most positions within higher education, I/O psychologists typically have a doctorate degree, and most often progress through the academic titles of assistant professor, associate professor, full professor, emeritus professor, and department chair. Some academ- ics also occupy the nonpermanent roles of lecturer or adjunct professor, often in conjunction with other employment or during career transitions. Others progress to administrative roles in academic institutions such as college dean, provost, vice president, or president.

Like many academics, I/O psychologists who work in academia have three primary roles: teaching, research, and service. Although teaching is the most visible role, academically ori- ented I/O psychologists spend a substantial portion of their time and energy conducting research to further knowledge in their fields. They also serve in many capacities within and outside their employing organizations. For example, they can serve on expert panels in aca- demic, professional, industry, community, and political settings and as editors and reviewers of academic and popular publications.

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Section 1.5 I/O Psychology as a Profession

Government, Public, and Nonprofit Organizations I/O psychologists are frequently hired in federal and local government organizations. The U.S. Office of Personnel Management, which is responsible for placement, training, and conduct- ing background checks for government jobs, develops and implements all selection tests for civil service jobs (e.g., Postal Service, air traffic control, Border Patrol). I/O psychologists also play an important role for state and municipal governments. Because these entities are held to a high standard when selecting state and local civil servants such as police and firefighters, I/O psychologists are tasked with selecting personnel who meet state and local civil service requirements.

Similarly, the U.S. military uses I/O psychologists to execute its extensive testing program, and the U.S. Army Research Institute employs some of the top I/O psychology researchers. Their mission is to apply research related to leadership, motivation, personnel replacement, and human–machine interaction to create the most competent military in the world. The U.S. Army, U.S. Air Force, U.S. Navy, and other armed forces also employ I/O psychologists to design and assess training and to monitor important well-being indicators such as post-traumatic stress disorder. I/O psychologists who work or consult for the military often need to obtain and maintain security clearances and are given permission to access classified information only after completing a thorough background check.

Find Out for Yourself: I/O Psychology as a Career Review the following websites, then answer the questions that follow.

What Do I/O Psychologists Really Do?

Society for Industrial and Organizational Psychology JobNet

Society for Human Resource Management Jobs

What Did You Learn?

1. Which industries are currently hiring I/O psychologists? 2. What are some common themes? What do you think it takes to land a job as an I/O

psychologist? 3. If you were to choose I/O psychology as a career, what are some of the tasks you might

perform? 4. How could you as an I/O psychologist help a past, current, or future employer achieve

his or her financial objectives? What specific activities would you perform for this organization?

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http://www.siop.org/psychatwork.aspx

http://www.siop.org/jobnet/default.aspx

http://jobs.shrm.org/

Section 1.6 Organization Challenges and Opportunities for I/O Psychology

1.6 Organization Challenges and Opportunities for I/O Psychology Today’s organizations face a greater rate of change than ever before, in terms of economic and demographic factors, technology, and leadership. These realities pose a number of challenges and opportunities.

Economic Factors The collapse of the dot-com bubble in the late 1990s and early 2000s left many technology workers displaced or underemployed. The current economy has led to instability among organizations and their employees, and the 2008 economic crisis and slow recovery have forced many companies to rethink their business strategies. The ever-expanding global mar- ketplace has not only challenged domestic companies to create innovative products faster and bring them to market sooner, it has also led U.S. jobs to be increasingly outsourced to countries where labor is less expensive. The oil and gas industry is facing unprecedented competitive challenges, leading to across-the-board layoffs and economic problems in states such as Texas. Massive federal student loans and limited employment prospects are antici- pated to lead to another economic downturn as the default rate increases, expanding the already ballooning government debt.

I/O psychologists have an important role to play in such hard economic times. They can serve members of the workforce by facilitating their placement, onboarding, and continuous devel- opment. Examples of an I/O psychologist’s work in these areas include redesigning jobs to increase efficiency, effectiveness, productivity, and global competitiveness; retraining dis- placed employees; redesigning jobs to capitalize on existing skill sets; and rethinking training and development to emphasize transferable competencies rather than narrow skills.

Demographic Factors Within the United States the demographic makeup of the workforce is rapidly chang- ing. For example, in 2011, for the first time in American history, there were 1 million more female than male college graduates, meaning more women are expected to enter the workforce (Francese, 2011). Moreover, for the first time in history, the workplace includes five generations working side by side: the traditionalists, born before 1946; the baby boomers, born from 1946 to 1964; Generation X, born from 1965 to 1976; Generation Y, also referred to as millenni- als, born from 1977 to 1997; and now Gen- eration Z, born after 1997 and just entering the workforce (Meister & Willyerd, 2010). Many traditionalists and baby boomers

Hemera/Thinkstock

The U.S. workforce is becoming increasingly diverse, with more women and minorities seeking employment. This offers organizations the opportunity to leverage the skills of a diverse workforce in ways that benefit the company.

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Section 1.6 Organization Challenges and Opportunities for I/O Psychology

In addition to gender and age changes, workforce demographics are becoming more ethni- cally diverse. The 2010 census shows that persons of color, including African Americans, His- panics, and Asian Americans, account for 35% of the population. By 2042 this number will climb even higher, with Caucasians predicted to constitute only 42% of the population. These demographic changes also influence the levels of education in the workforce, which, although increasing across the board, tend to be substantially lower among ethnic minorities (National Center for Education Statistics, 2016).

delayed their retirement due to increased life expectancy, better health, and depleted savings as a result of the 2008 economic recession. However, many are now retiring or will be retiring soon, and the millennial generation is replacing them at record pace. With 80 million millen- nials, 1 in every 2 employees in today’s workforce belongs to this group, which is predicted to constitute 75% of the global workforce by 2025 (Schawbel, 2013). In a few years, similar trends are anticipated for Generation Z.

These demographic changes are resulting in two trends. First, as the traditionalists and baby boomers leave the workforce, organizations experience a “brain drain.” Potential replace- ments must go through a steep learning curve to acquire the same levels of knowledge, skills, and experience needed to adequately replace baby boomer and traditionalist retirees. Sec- ond, millennials and Generation Z differ in their mind-sets, priorities, and work expectations, which will likely result in notable changes in jobs and organizational structures, cultures, and processes to fit these generations’ workstyle, attitudes, and motivations. For example, millennials are independent, creative, and technologically savvy. They do not trust or defer to authority as readily as previous generations did. They have higher expectations of their employers that go beyond pay and benefits, including being socially responsible and making a difference in the world. They view work as a means to an end, with the end being personal fulfillment and a meaningful, balanced life. Generation Z is even more technologically savvy, but more calculating and financially minded. These changes are strongly aligned with I/O psychologists’ training in job and organizational design, workforce development, and perfor- mance management, which can facilitate the necessary adaptations of jobs and organizations to meet millennials’ needs and aspirations.

Find Out for Yourself: Millennials and Generation Z Watch the following two videos for additional insights about millennials and Generation Z.

Millennials Now Biggest Part of Workforce

Gen-Z Matters More Than Millennials

What Did You Learn?

1. Are these videos reflective of you or of members of these two generations that you know?

2. Do you find it easier/harder to work with one particular generation than the others? In what ways?

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http://www.cbsnews.com/videos/millennials-now-biggest-part-of-workforce/

https://www.youtube.com/channel/UCyz6-taovlaOkPsPtK4KNEg?v=Y8mZx4o32vs

Section 1.6 Organization Challenges and Opportunities for I/O Psychology

Although attainment of higher levels of education is on the rise, the quality and competitive- ness of U.S. education is declining rapidly. When compared to the Organisation for Economic Co-operation and Development averages, U.S. high school students rank as average or below average in math, science, and reading, behind China, Korea, Singapore, Hong Kong, Japan, Canada, and a number of western and eastern European countries (Ryan, 2013). As attain- ment of higher education levels increases while quality decreases, wages and job-related edu- cational requirements have to be adjusted accordingly, as do training needs to fill knowledge gaps. I/O psychologists are well positioned to help equip future generations of employees with the competencies they need to be successful despite educational deficiencies. Collabora- tion between employers and educational institutions is also growing in an attempt to improve the rigor and relevance of education, which opens doors for I/O psychologists to contribute to the quality and competitiveness of education.

Technology With the help of portable technology and instant telecommunications, organizations are increasingly hiring employees who work off-site, whether across town or across the globe. These workers can telecommute from a home office, e-mail and text message from a coffee shop, telephone from an airport while traveling, or teleconference from a hotel room. This dramatic shift in where and how people work is an outgrowth of the information age, and I/O psychologists must help organizations transition to a virtual work environment by creating effective tools for selecting people who will be successful in it. They must also train manag- ers how to effectively coach, manage, and communicate with employees they may never meet face-to-face.

Moreover, social media has become a primary source of attracting, hiring, and retaining tal- ent. For example, companies such as Google use social media to create “alumni networks” in order to stay in touch with former employees. Using social media to recruit, select, and retain employees is a prime area for I/O psychology research and application.

Leadership Challenges Leaders in today’s organizations are faced with a number of challenges, many of which I/O psychologists can help overcome. For example, unethical behavior is on the rise and has become widespread at many levels in corporate America. I/O psychologists now face the chal- lenge and opportunity of studying why some people, especially leaders, engage in unethical behaviors while others resist the temptation to do so. New selection tools and development programs are emerging from this research and becoming more commonly used to effectively develop and manage organizational ethics. Related areas receiving much emphasis and media attention include corporate social responsibility, sustainability, and environmental issues. As mentioned earlier, these are important concerns for the millennial generation. As millennials rise through the ranks and begin to dominate leadership positions, these areas are likely to be prioritized in terms of job and organizational design, hiring, motivation, and retention, all of which are within the scope of I/O psychologists’ roles within organizations.

Unfortunately, many of the scientific and evidence-based tools and methods created by I/O psychologists may be overlooked by managers and decision makers who tend to favor intu- ition and instincts. For example, when making hiring decisions, some managers still say

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Summary and Conclusion

things like, “I know a great employee when I see one.” However, as you will learn in upcoming chapters, without accurate selection tools, a manager’s chances of making a successful hire may be no better than a coin flip. Erroneous hires are not only detrimental to productivity, they may also expose the organization to substantial litigation costs and negative publicity. I/O psychologists can help develop assessments that identify which people will work best in a variety of positions across different job sectors. Although managers are gradually becom- ing more aware of the importance of evidence-based practices, there is a long way to go. I/O psychologists thus have a critical role to play in promoting application and bridging the gap between science and practice.

I/O psychologists can also play an important role in helping managers assess and improve employee engagement. The ongoing economic recession has taken a toll on workers. The stress of continued layoffs and, for those who still have jobs, burnout from increased work- loads has often resulted in disengagement. In 2010 Aon Hewitt Associates consulting firm found that since the start of the 2008 recession, employee engagement slipped dramatically. In fact, up to 60% of the employee population was thinking about changing jobs once the labor market improved. Although I/O psychologists cannot change the economic situation, they can help managers understand what makes employees feel engaged and help them maintain their engagement in spite of the economy. As this chapter has shown, employees want leaders who value employees. Managers can formally show their appreciation by introducing pro- grams such as profit sharing and flextime and by providing clear advancement opportunities. However, managers should also act in more informal, non-work-related ways to convey their appreciation for employees; this can be as simple as engaging an employee in a conversation that has nothing to do with his or her job. In the end, however, the thing that leads to true satisfaction for most employees is timely recognition for a job well done.

Summary and Conclusion

There is significant support for the notion that people are an organization’s most important asset. They are not just an expense or cost of doing business; rather, they are an investment that can realize quantifiable returns and determine an organization’s success or failure. I/O psychology is a science that uses the methods, facts, and principles of psychology to enhance employee productivity, satisfaction, engagement, and well-being, and it has been shown to increase organizational efficiency, effectiveness, and competitive advantage.

Whether working in academia or for the private sector, the government, the military, a nonprofit organization, or as a consultant, I/O psychologists help organizations make criti- cal human capital decisions. Examples include designing motivating jobs, selecting the right candidates, training employees, accurately evaluating job performance, managing absentee- ism and turnover, developing effective leaders, and avoiding discriminatory litigation.

The business world is rapidly changing, and I/O psychology can help address many issues that management fads cannot. This book introduces the interesting world of I/O psychology. It provides an overview of the established knowledge in the field as well as new and emerg- ing approaches that will significantly impact the way organizations do business. There are plenty of opportunities to apply I/O psychology principles to everyday thinking and activi- ties. Even for those who do not intend to specialize in I/O psychology, the information in this course is foundational for becoming an effective contributor to any organization.

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Summary and Conclusion

action research An approach that focuses on the practical applications of scientific theories and rigorous methods to solve everyday problems.

career Changes in job or organizational level over the course of a person’s work life.

employee life cycle Stages of an employ- ee’s relationship with an organization.

Hawthorne effect The notion that human dimensions and interpretations (positive or negative) are more significant contributors to behavior than the physical environment.

human relations A field that studies the factors that produce motivated and satisfied employees.

industrial/organizational (I/O) psychol- ogy The scientific study of the workplace that applies the rigorous methods of psy- chology to issues of critical relevance to business, including talent management, coaching, assessment, selection, training, organizational development, performance, and work–life balance.

industrial psychology The study of individual-level phenomena in the work- place, such as assessing workers’ personali- ties, knowledge, skills, and abilities in order to match them with the right jobs; measur- ing and managing employee attitudes and emotions; motivating workers through the right working conditions and reward sys- tems; training and developing employees for their current and future roles; and ensuring that workers have healthy, safe, and bal- anced jobs and lives.

job A set of related tasks or activities that are performed by one or more people.

job family A group of similar jobs.

occupation A job that is essentially the same across organizations and locations.

organizational climate Shared beliefs about an organization’s environment to which members attach psychological meaning to help them make sense of their environment.

organizational culture Shared assump- tions that guide employees’ interpretations of and actions in an organization by defining appropriate behavior for various situations.

organizational development A systematic approach to organizational-level change and improvement.

organizational psychology The study of group- and organizational-level phenomena in order to understand the interactions and relationships among individuals and collec- tives working toward the achievement of common goals.

people costs The costs associated with finding, hiring, and retaining employees.

positive organizational behavior (POB) The study and application of positively oriented HR strengths and psychological capacities in order to improve performance in the workplace.

positive organizational scholarship (POS) A movement in organizational science that focuses on the dynamics that lead to excep- tional individual and organizational perfor- mance, such as developing human strength, producing resilience and restoration, and fostering vitality.

Key Terms

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Summary and Conclusion

psychological capital (PsyCap) A posi- tive psychological state of development that is characterized by confidence, optimism, hope, and resiliency.

psychological climate A lasting, mul- tidimensional phenomenon that shapes how individuals within an organizational unit behave in response to organizational demands. This phenomenon is based on experience or observation of the given environment.

scientific management The use of scien- tific methods to design work that optimizes worker productivity.

task A cognitive and/or physical operation that is performed actively and with purpose.

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