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What Is Industrial-Organizational Psychology?

M.S. in Business Psychology

On the surface, business may seem to be all about logic and numbers – but at its core, it’s a human endeavor. The same psychological patterns and challenges that impact us outside of work affect everyone, from interns to CEOs, in business settings. Applying psychological research to organizations can help reduce conflict, resolve common human resources issues and create highly functioning workplaces.

Demand for expertise in this field, known as industrial-organizational psychology, is rising as research continues to show that companies with functional teams, engaged employees and effective managers perform better than their competition. According to Lightcast Analytics, a leading labor market research firm, job openings for industrial-organizational psychologists will increase by 9.1% by 2032. So what is industrial-organizational psychology, and what do careers in this profession look like?

What Does Industrial-Organizational Psychology Mean?

Industrial-organizational psychology (often referred to as I/O psychology) is the study of human behavior in an organizational or workplace environment. The field dates back to the early 20th century and applies psychological theories like small group theory and decision theory to work-specific situations. I/O psychology researchers use quantitative and qualitative data to find the causes of organizational dysfunction and identify strategies to improve everything from employee morale to corporate profitability.

Industrial-organizational psychology has significant overlap with business psychology. However, while I/O psychology tends to focus more on creating conditions for interpersonal success within the workplace, business psychology combines advanced business practices with the study of human behavior to improve productivity, efficiency and culture.

“Industrial-organizational psychology studies organizations and how they function,” explains Dr. Jeffrey Ferezan, a faculty member in Franklin University’s M.S. in Business Psychology program. “Business psychology studies people in the context of organizations and approaches situations from the lens of the individual. For example, when you learn to understand the worldview of an accountant, you can communicate and work with your accounting department more effectively.”

What matters most when choosing a master’s program? Compare features, benefits and cost to find the right school for you.

What Do Industrial-Organizational Psychologists Do?

Industrial-organizational psychologists use the science and principles of psychology to solve business challenges and help employees work together more effectively. Specific examples of tasks that an industrial-organizational psychologist might perform include the following:

Conducting surveys and interviews to identify issues in the work environment.
Managing organizational development initiatives, such as restructuring teams or departments.
Coaching employees, especially leaders, to help them develop as individuals and as members of the company.
Creating, implementing and refining performance appraisal systems.
Driving organizational culture initiatives, such as those related to employee well-being and work-life balance.
Creating new hiring and assessment practices to better identify talent with the specific skills and temperament needed to succeed in each role.
Creating and implementing training and professional development programs.
Developing and implementing initiatives that support diversity and inclusion in the workplace.

Where Do Industrial-Organizational Psychologists Work?

Industrial-organizational psychologists work in nearly every setting, including corporations of all sizes, government agencies, nonprofits, education institutions and unions. Many industrial-organizational psychologists also choose to pursue self-employment as consultants.

These professionals work in roles with a wide range of titles – many of which do not include the word “psychologist.” The skills you learn from a degree in industrial-organizational psychology are particularly applicable to people-centric functions like human resources, market research, management consulting, or team leadership.

What are the Requirements to Become an Industrial-Organizational Psychologist?

While some entry-level positions related to industrial-organizational psychology only require an undergraduate degree, advancement within business settings usually demands a master’s. While you’ll need a bachelor’s degree to enroll in a master’s program, most schools do not require prior study of psychology.

If you are interested in conducting academic research or teaching, you might choose to go on to earn a doctorate. Some organizational psychologists might also choose to earn a PsyD if they want to dive deeper into individual psychology and mental health.

It’s important to note that most I/O psychology positions within organizations do not involve the practice of clinical psychology or counseling at an individual level. For that reason, they don’t usually require licensure. If you choose to pursue licensure as a psychologist, you’ll need to complete a terminal degree in psychology and meet state licensing requirements, including a supervised internship and examination.

Empower Employees and Organizations as an Industrial-Organizational Psychologist

Industrial-organizational psychology could be a good fit if you’re looking for a career that helps people make the most of their work lives while improving business outcomes. You may also wish to consider programs in business psychology, like Franklin University’s M.S. in Business Psychology.

Franklin’s program is taught by leading practitioners in the field and pays significant attention to personal and professional development. Its theory-to-practice approach allows you to leverage your new understanding of human behavior from day one. You’ll learn 100% online and can graduate in as few as 14 months.

“We give students the tools they need to lead and the confidence to know which tool to use,” says Dr. Ferezan. “Our program is truly student-centered, and the level of personalization and support we provide is unmatched.”

Learn more about Franklin’s master’s degree in business psychology.