Industrial Psychology

Meaning and Definition of Industrial Psychology:

The term industrial psychology stands for the psychology applied to industry. It is the study of
people at work. It deals with the aptitudes, attitudes and interests of the people at work.

The term ‘Industrial Psychology’ is a combination of two words—‘industrial’ and ‘psychology’. By the
word ‘industrial’ we mean that part of social life which provides civilised man with the material
goods that his condition of life demands.

‘Psychology’ may be defined as the science of minds i.e. accurate and systematic knowledge of the
mind. Thus, Industrial Psychology is the systematic study of the state of mind of the people at work
so that several industrial problems may be solved without difficulty.

Industrial psychology is firstly the study of human behaviour and is concerned with the discovery of
information relating to human behaviour. Secondly, it is concerned with the application of
information about human behaviour to the various problems of human life. Industrial psychology is
the professional aspect of psychology.

DEFINITIONS:
According to J.R. Batlibai, “Industrial psychology resolves itself into an analytical study of the
intellect involved in the task of administration and organisation as also of the mental and physical
ability required for manual and operative labour. It further embodies a scientific research into the
relative efficiency of the varied methods of performing manual operations for the better utilisation
and least waste of efforts.”

According to Thomas W. Harrell, “Industrial psychology may be defined as the study of people as
individuals and in groups and of the relationship between individuals and groups.”

According to Blum and Naylor, “Industrial psychology is simply the application or extension of
psychological facts and principles to the problems concerning human beings operating within the
context of business and industry.”

Thus, Industrial Psychology is the study of human behaviour and is concerned with the discovery of
information relating to human behaviour at work. It is concerned with the application of information
about human behaviour to the various problems of industrial human life.

The main aim of industrial psychology is research rather than administration and the personnel
administration is the application of such research. It studies the varied methods of performing
manual operations for the better utilisation and the least waste of efforts through human
engineering.
History of Industrial Psychology:
The field of industrial psychology has developed largely since the beginning of this century. The early
industrial psychologists were concerned particularly with problems of personnel section, but their
interests also embraced other applied areas, such as advertising and selling, accidents and employer
rating processes.

But by the 1930’s, the field of industrial psychology had been established as a distinct phase of
psychology. Since then, major developments and expansions have taken place. The primary
development in this field took place in certain countries in Western Europe and in United States.

After that, the field has developed in countries all over the world. During the 1940s and 1950s
considerable interest was generated in the human relations aspects of personnel management, with
particular concern for group interaction, supervision and leadership processes, communications and
job satisfaction.

This increased emphasis on human relations in industry led to greater attention to human relations,
training of supervisory and management personnel and to management development programmes.

Interest in the social aspects of human work has led to the development of organisational
psychology. In organisational psychology, the main focus is on human motivation and efforts are
made to understand effects of the organisational setting on motivation, job satisfaction and work
effectiveness.

Foundations of Industrial Psychology:

The concept of Industrial Psychology is basically founded on three factors:

(i) Economic

(ii) Social

(iii) Psychological.

These factors may be called the basis or foundations of Industrial Psychology.

(i) Economic Foundation:

The main objective of every management is maximum production at minimum cost so as to earn
higher profits and to bring prosperity to the industry and the nation. Basically, in the initial years,
management was concerned mainly with the full and proper utilisation of physical factors of
production.

Human factor of organisation was paid little or no attention. It was not realised that the utilisation of
physical factors depends on the human factor. If the workers do not work willingly and in the best
interests of the organisation, the economic aim of getting the best results from the minimum efforts
cannot be achieved.
Peter F. Drucker observes “The resources capable of enlargement can only be human resources. All
other resources can be better utilised or worse utilised, but they can never have an output greater
than the sum of the inputs. Man alone, of all the resources available to the man, can grow and
develop. When we speak of growth and development, we imply the human being determines what
he contributes”.

The human resources available in the organisation can be motivated to work together and to
increase their output to an amazing extent.

Several psychological researches have been made in the field of motivation, job satisfaction, morale,
training etc. F.W. Taylor developed the time and motion study and contributed a lot in the field of
Industrial Psychology. A desired organisational result can be obtained only through proper human
behaviour.

(ii) Social Foundation:

The social industrial development such as evolution and development of trade union movement,
group activities, leadership, communication etc., has played an important role in the development of
Industrial Psychology. Since the beginning of Twentieth Century, the attitude of Government and
employers began to change.

Employers were assigned more responsibilities towards labour welfare and the employees
themselves awakened to their rights. These factors widened the field of Industrial Psychology. More
and more psychological researches were conducted for improving industrial relations.

Group studies were carried out to understand the group behaviour. The main aim of Industrial
Psychology became not only to achieve the maximum production but also to provide more and more
facilities to workers on job.

(iii) Psychological Foundation:

The psychological attitude of the labour and employer gave impetus to the development of
industrial psychology. Industrial psychology contributes to a large extent in improving the industrial
relations and to avoid the conflict between employers and employees. Researches in the field of
psychology and their application to the industry have helped in the development of industrial
psychology.

To conclude, we can say that economic, social and psychological foundations all have contributed to
a great extent in the development of industrial psychology.

Objectives of Industrial Psychology:

The main objective of industrial psychology is to give the worker greater physical and mental ease at
work. The aim of industrial psychology is research rather than administration. The researcher have
been conducted to study the human behaviour and to suggest various ways and means to improve
the efficiency of workers in the industry.
(i) Proper Man at Proper Place:

Industrial Psychology has developed a whole array of tests. By the use of systematic in-depth
interviews and psychological tests such as intelligence, aptitude, skills, abilities and interest tests, the
personnel characteristics of the persons are measured and proper man is selected and placed on the
job.

(ii) Proper Work Distribution:

The next aim of Industrial Psychology is the proper distribution of work according to the ability and
aptitude of the employees so that they feel satisfied and give maximum output at minimum costs.

(iii) Minimising the Wastage:

The Industrial Psychology also aims at minimising the wastage of manpower due to fatigue, illness,
accidents etc. It studies several psychological factors causing fatigue or accidents and suggests
measures for preventing the accidents or minimising fatigue. The techniques of motivation and
morale are used for this purpose.

(iv) Promotion of Labour Welfare:

Industrial Psychology aims to promote labour welfare through job satisfaction, increase in labour
efficiency, incentive provisions etc.

(v) Improvement in Human Relations:

The main aim of Industrial Psychology is to improve the human relations in the industry. Human
relation may be defined as the “relations or contracts among individuals in an organisation and the
group behaviour that emerges from these relations”.

Industrial Psychology has made significant contribution in the sphere of human relations by
developing concepts and techniques of leadership, supervision, and communication and employee
participation in management.

(vi) Improvement in Industrial Relations:

Industrial Psychology studies the attitude of employers and employees and offers suggestions to
improve the labour relations in industries. It assumes that all individuals differ from each other in
degree though not in kind and therefore, different measures are adopted in solving the problems
like promotions, transfers etc. relating to each individual.

(vii) Maximum Production:

The chief aim of organisation is to get the best results from the available resources. Industrial
Psychology helps in achieving this aim. The production is automatically increased if proper selection
is made, the work is distributed properly, industrial relations are improved and human relations are
promoted.
Scope of Industrial Psychology:
The aim of Industrial Psychology is to give the worker greater physical and mental ease at work. Its
aim is research rather than administration.

To achieve the aims and objectives of Industrial Psychology, the scope of work of the industrial
Psychologist can be described as follows:

(i) To investigate and analyse in an unbiased manner the ways in which the human psychological
problems are handled at present.

(ii) To develop new methods of problem solving and/or modify the existing methods which have
been tried and tested.

(iii) To formulate certain principles and guidelines which will help in the solution of new problems.

In other words, we can say, that the scope of Industrial Psychology is limited to material and social
environment to which an individual adapts himself while he is at work and by which his attitude is
modified. Industrial Psychology is the study of human behaviour at work; its scope is the entire
process of management’s dealings with people at work.

Routine administrative details are not included in the scope of Industrial Psychology as it lays
emphasis on scientific research aspects of people at work. It provides a useful aid to the
management by efficiently managing the people at work.

Applications of Industrial Psychology in Industry:

As Industrial psychology is the study of human behaviour at work, it applies to every field of industry
where human understanding is required. there is hardly a problem in business where human aspect
is not involved and hence, there is hardly any area where psychology cannot paly its role.

The principles, techniques and findings of Industrial Psychology may be applied usefully to the
following areas of management:

(i) Recruitment of Personnel:

Psychology may help in recruiting right man for the right job. Accurate job analysis, standardised
application forms, scientific screening of applications, use of psychological tests for vocational
fitness, final overall rating and continuous review and follow up of the entire programme are some
of the areas where the psychologists can make an important contribution.

Several psychological tests may be developed for the proper screening of the people.

(ii) Selection and Placement:

To select the right person for the right job in the organisation, one should measure the candidate’s
aptitudes, intelligence, skills, abilities, interests and temperaments. Industrial Psychology helps in
this effort also. It develops various devices such as interviews and psychological tests in order to
achieve the objective of the selection; it also helps in the placement of employees at different jobs.

Job requirements and abilities must tally. Scientific assignment of job results in securing the
contentment and loyalty of the working force. This is possible only with the help of Industrial
Psychology. Proper placement reduces the problem of Indiscipline and Inefficiency in industries.

(iii) Training and Executive Development:

After careful selection of the executives using tests and interviews, the next step is training the
executives so that they can perform better at their present jobs.

In organising an executive development programme, the Industrial Psychologist keeps a range of

goals in mind to increase the effectiveness of the executive group. The technique of sensitivity
programme helps the executives to develop his areas of strengths and weaknesses while working in
groups is a clear example.

(iv) Promotional Schemes:

The promotion, demotion, transfer etc. of an employee should be based on abilities, usefulness and
seniority. Performance appraisal is one of the psychological techniques to recognise the people’s
ability. Mere seniority should not be considered as the guiding principle for promotions.

(v) Motivation:

The psychologists assume that the causes of different types of human behaviour in industry and
business are the needs or the motives that drive an individual to behave in a particular way.

Industrial Psychology probes into the behaviour of people at work to determine the conditions in
which an individual feels motivated and is willing to work wholeheartedly to maximise the
productivity. Industrial Psychology has identified the financial and non-financial incentives which are
used by the management to motivate the personnel.

(vi) Attitude and Morale:

To keep the morale of the personnel high is another significant problem of management industrial
psychologist can go into the cause of low morale of the employees and can determine the factors
influencing the relationship between attitudes of employees and their performance. It explains the
behaviour of people when they work in groups.

(vii) Wage and Salary Administration:

The psychologists have developed the techniques of job evaluation, merit rating and job analysis as
basis for rational wage and salary administration. Job analysis determines the job description and
worth of the job, whereas merit rating evaluates the man.

(viii) Public Relations:

Industrial Psychology helps the management to develop effective and systematic public relations
machinery in order to create a high image of the organisation. With the rapid expansion and growth
of industrial undertakings, the management is facing problems in effectively communicating its
policies, procedures and practices to its employees, shareholders, consumers and general public.

(ix) Human Engineering:

Human Engineering is designing and laying out equipment in order to get the greatest efficiency of
man machine system. The industrial psychologists working in human engineering provide data on
which management can decide to improve the design and the product for the comfort and to
increase the sale to the satisfaction of the customers.

It also helps in reducing machine breakdowns and wastage of raw materials; it helps in preventing
accidents and induces better performance and job satisfaction. Industrial Psychology has humanised
the management and opened the way to a much fuller utilisation of the human factor in industry.

(x) Accident Prevention:

The Psychological Studies show that 98% of the accidents in the industry are preventable. It means
personal or psychological factors play an important role in any programme of accident prevention.
Monotony and fatigue studies help in minimising the accidents.

Psychologists have made the contribution to the development of safety programmes and the
prevention of accidents in industry by analysing the factors that make man more accident prone
than others. They have also suggested certain positive measures for reducing accident problems.

(xi) Organisational Behaviour:

Managements in various public, private and even in other sectors, have been realising the
importance of team spirit in the organisation and redesigning their organisational structures and
policies based on research findings on organisation behaviour.

Thus, the Industrial Psychology can be used in every area of Industrial management. There is hardly
any field where Industrial Psychology is not being used or cannot be used.

Major Problems Faced by Industrial Psychology

Some of the major problems faced by industrial psychology are as follows: 1. The Consultant and the
Staff Psychologist 2. Communication 3. Resistance to Change.
1. The Consultant and the Staff Psychologist:
As was pointed out earlier, the industrial psychologist is likely to obtain his liveli¬hood through one
of three major sources of employment. He is either a consultant, an employee of a company or the
government, or a university teacher. Very often he combines two of the three roles, but whether he
does or not depends upon his interests, opportunities, degree of identification, and tempo.
A psychologist directly employed full time by a company or by a government agency is often refined
to as a “staff” psychologist. Generally speaking, the duties and tasks of the consultant and the staff
psychologist overlap. There is no clear-cut difference insofar as type of assignment is concerned. The
major difference is that the consultant may be concurrently working for a number of clients or
employers, whereas the staff psychologist fills a more specific role in the organization chart for a
single employer.
Although a schism between the staff psychologist and the consultant is unde¬sirable if the
profession is to be advanced in industry, the answers given m Canters study (1948) to the question
“What do you think of consulting firms as the best solution to industrial psychological problems?”
pose a serious future problem. One- half of the staff psychologist group was unfavourable toward
such firms; the consulting group was generally favourable. This situation demands attention and
should be cleared up.
A note of optimism is reflected toward the field in general since 80 percent of the respondents
reported that executives were becoming more “psychological minded” A further indication of the
increased acceptance of the psychologist by leaders in industry comes from a 1962 survey
conducted by Feinberg and Lefkowitz (1962).
They administered a questionnaire to 89 executives who were attending a seminar sponsored by the
American Management Association. When asked whether they would be interested in hiring an
industrial psychologist, over two thirds replied favourably.
These “yes” respondents felt the industrial psychologist could be of great¬est benefit in the areas of
employee motivation, employee selection and training, executive selection and training, human
engineering, consumer research, production efficiency, and accident control.
2. Communication:
One of the difficulties of any profession is that its language and technique some¬times become so
involved that the outsider is really left out. If industrial psychology is to gain an important place in
industry, psychologists must learn to talk and write in a fashion that is clearly understandable to
others who are equally interested in the mutual problems and who sometimes have an even greater
stake in a solution. Not only must the industrial psychologist learn to communicate adequately with
the non-psychologist, but even the problem of communication within the field itself is becoming a
problem.
The ever-increasing complexity of industrial psychology and the specialization of interest of the
psychologists working on different problems in different settings has created many barriers to the
flow and dissemination of knowl¬edge among researchers and practitioners. While such problems
may be the in¬evitable corollary of a dynamic discipline, the authors feel that the communication
problem is one of the most critical in industrial psychology today.
3. Resistance to Change:
Research findings as well as research itself can ordinarily be expected to meet with resistance on the
part of employees and, in many instances, employers. The successful practitioner of industrial
psychology must be immediately and forever aware of this phenomenon. It would be purely
academic if one anticipated that industry is waiting with open arms to apply the knowledge of
industrial psychology.
Attempts at change, no matter how well-intentioned, produce threats and will be resisted. This
resistance may take the form of hostility and aggression against the change itself or against the
administrator of the projected change. Often the em¬ployee imagines the nature of the change well
in advance of the possibility of a change.
The unreality of the imagination only makes the resistance stronger. When changes are associated
with speedups or layoffs, the resistance to any contemplated change is even more intense. It is not
enough to state that no detrimental action to the employee’s welfare is contemplated.
The claim must be proved. Anything that is not clearly understood can be an insecurity-producing
factor. Change often upsets established pattern. People are not easily corrected, nor are they able to
give up habits freely. Research often intends to change behaviour that has become routine and thus
can be expected to be resisted.
Resistance comes not only from the employee but from all levels of management and the employer.
The naive employer often wants research to prove his point or position. Such a guarantee is not
possible. The conclusions of research depend upon the data and cannot be established by
manipulation of data to conform to a pre-established outcome.
All, however, is not hopeless provided at least four fundamentals are recognized. First, the reasons
for the contemplated change should be clearly explained. Second, those who will be involved in the
change should have ample opportunity for participation in the implementation of that change. Third,
change should be a two-way affair rather than an attempt to force all to agree to a one-sided
decision. Fourth, the administrator of the change should recognize at all times that change is a real,
imagined, or potential threat, and that he must do all he can to eliminate or reduce the possible
threat regardless of the form it assumes.
Use of Scientific Methods in Industrial Psychology
Use of Scientific Methods in Industrial Psychology!
The massive growth and expansion of industry is the most important development enabling man to
extend his control over nature.
There have been rapid developments in the invention of changes in production processes and in the
discovery of psychological factors that contribute to effective production. Industrial progress has
resulted due to the advancement of the technical processes which have reduced the costs of
production.
With the rapid development of industry, the importance of the role played by the worker emerged
highlighting the necessity of studying the human problems of production and applying scientific
principles and methods to find their solutions.
Facts are the backbone of scientific method. All judgments and evaluations predicted by any
Scientist are based on facts. Scientific method emphasizes objective observation in a highly
systematic manner by investigating comprehensively. Scientific method gives a lot of importance to
setting an experimental control while studying any factor. Quantitative description by measurement
is another essential feature of scientific method.
Scientific Method:
In the scientific method, the subject matter of a limited sphere is studied systematically i.e., by the
following steps:
(i) Observation:
This involves careful and detailed observation of the subject matter by using accurate and reliable
apparatus.
(ii) Recording:
In this step, all the observed facts are carefully and systematically recorded.
(iii) Classification:
In this step, all the recorded information is classified and organized in such a logical and coherent
manner that a pattern or relationship ‘becomes apparent in the observed facts. According to Karl
Pearson, “The classification of facts, the recognition of their sequence and relative significance is the
function of science.”
(iv) Generalization:
In this step, general laws are derived on the basis of patterns observed in the organized subject
matter. Laws derived in such a manner are known as ‘scientific laws.’
(v) Verification:
The scientific method concludes with the verification of the truth of the derived law so that it
becomes a universal law. Only after validity, a universal law can be called a ‘scientific law’. Industrial
Psychology uses the scientific method as it makes maximum use of the experimental method. All the
subject matter is first placed in predetermined conditions and then studied.
An industrial psychologist observes carefully and then records all the observed facts. After logical
classification of these facts, the universal laws are derived by generalization. The Principles of
industrial Psychology are made up with these very universal laws.
As the principles of industrial Psychology are valid, they are used in Industries in order to discover
the causal relations underlying human relations, development etc. and thereby make predictions
about it. The predictions made by industrial psychologists by using the scientific method, are taken
into account by the industrialists for solving industrial disputes and other industrial problems.
INTRODUCTION OF INDUSTRIAL PSCYOLOGY
IP is also known as occupational psychology or work psychology. Industrial and organizational
psychology is the study of the behaviour of people in the workplace. Industrial and organizational
psychology attempts to apply psychological results and methods to aid workers and organizations.
Industrial and organizational psychologists use psychological testing to measure the knowledge,
skills, abilities, and other characteristics of people for a variety of employment-related purposes,
such as selection for hiring or promotion, training and development, or measuring employee
satisfaction. Historically, the job analysis has been the traditional means by which the essential
characteristics associated with any particular position are identified. It is a fairly diverse field
incorporating aspects of fields such as clinical psychology, social psychology, and psychometrics as
well as broader social studies such as organizational theory, law, and gender issues.

Specialization Areas for Industrial Psychologists

Many industrial and organizational psychologists specialize in aspects (e.g., psychometrics; time and
motion studies; labor law; personnel selection; training) aspects (e.g., leadership selection, coaching
and development; organizational design and change). Some I/O psychologists are academic (working
in both business and psychology departments) or non-academic researchers, while many others are
engaged in practice, holding positions such as:

 Executive coach

 diversity consultant

 legislative compliance officer

 labor relations specialist

 human resources specialist

 process improvement consultant

 manager: Selection and training. Industrial psychology is the psychology of individuals in the
workplace. It covers areas of workplace behavior and attitudes such as job satisfaction, leadership
and the selection and evaluation of employees. An understanding of industrial psychology can help
an individual to better understand and communicate with co-workers and deal with conflict. People
have studied psychology and the human mind for centuries, but the specialty of industrial
psychology did not appear until the early 1900s. ORIGIN AND HISTORY OF INDUSTRIAL PSYCHOLOGY
Industrial psychology is a relatively recent subfield of psychology. In fact it did not become fully
productive until about the late 1920's. The industrial side of industrial psychology has its historical
origins in research on individual differences, assessment, and the prediction of performance. This
branch of the field crystallized during World War I, in response to the need to rapidly assign new
troops to duty stations. After the War the growing industrial base in the U.S. added impetus to
industrial psychology. Walter Dill Scott, who was elected President of the American Psychological
Association (APA) in 1919, was arguably the most prominent I-O psychologist of his time, although
James McKeen Cattell (elected APA President in 1895) and Hugo Münsterberg (1898) was influential
in the early development of the field. Organizational psychology gained prominence after World War
II, influenced by the Hawthorne studies and the work of researchers Industrial psychology in
companies began in the 1920s as the companies looked for ways to keep their employees happy and
motivated. From 1927 to 1932, Elton Mayo of the Western Electric Co. studied job satisfaction
among employees and found that the social aspects of work are just as important as the work itself.
This research, known as the Hawthorne Studies, concluded that employees need to be actively
involved in what goes on at their jobs to be happy.

Paragraph on Industrial Psychology

Industrial psychology draws upon the facts, generalizations, and principles of psychology. It uses the
method prescribed in the parent body. Because it applies the techniques of psychology to the
industrial scene and the problems confronting it, industrial psychology formulates and modifies
procedures to meet the conditions found in business rather than in the laboratory. Industrial
psychology is simply the application or extension of psychological facts and principles to the
problems concerning human beings operating within the context of business and industry.
The most important aspect of industrial psychology is its discipline. It clearly recognizes that
scientific conclusions must be objective and based upon facts gath¬ered as a result of a defined
procedure. It does not treat assumptions or hypotheses as if they were conclusions. Its findings
sometimes confirm the obvious and very often are not romantic.
Whereas chemists are no longer confused with alchemists, and psychologists are differentiated from
psychologists, the same clear-cut differentiation does not apply to industrial psychologists in relation
to their “gold-brick” salesmen breathren who sell the impossible with all the authority of ignorance.
The misinformed often believe that all that is necessary to have a knowledge of psychology is to be a
human being with common sense and to be a student of human nature. But a psychologist is quite a
different person. He has professional training, is aware of the limitations of his knowledge, and
above all, has been indoctrinated in a methodology to obtain conclusions based upon data acquired
according to certain prescribed scientific methods.
Scientific Method:
In the scientific method, the subject matter of a limited sphere is studied systematically i.e., by the
following steps:
(i) Observation:
This involves careful and detailed observation of the subject matter by using accurate and reliable
apparatus.
(ii) Recording:
In this step, all the observed facts are carefully and systematically recorded.
(iii) Classification:
In this step, all the recorded information is classified and organized in such a logical and coherent
manner that a pattern or relationship ‘becomes apparent in the observed facts. According to Karl
Pearson, “The classification of facts, the recognition of their sequence and relative significance is the
function of science.”
(iv) Generalization:
In this step, general laws are derived on the basis of patterns observed in the organized subject
matter. Laws derived in such a manner are known as ‘scientific laws.’
(v) Verification:

The scientific method concludes with the verification of the truth of the derived law so that it
becomes a universal law. Only after validity, a universal law can be called a ‘scientific law’. Industrial
Psychology uses the scientific method as it makes maximum use of the experimental method. All the
subject matter is first placed in predetermined conditions and then studied.
An industrial psychologist observes carefully and then records all the observed facts. After logical
classification of these facts, the universal laws are derived by generalization. The Principles of
industrial Psychology are made up with these very universal laws.
As the principles of industrial Psychology are valid, they are used in Industries in order to discover
the causal relations underlying human relations, development etc. and thereby make predictions
about it. The predictions made by industrial psychologists by using the scientific method, are taken
into account by the industrialists for solving industrial disputes and other industrial problems.
The Role of Industrial and Organizational Psychology in the Workplace
Anyone who has ever held a job can tell you that the office can sometimes be a stressful and even
volatile environment. From entry-level to C-level, the interpersonal relationships in the workplace
and dynamics created by organizational structure affect every single employee within a company.
Most businesses and organizations strive to maintain a healthy work environment and ensure a
company is operating at peak productivity. Industrial and organizational psychologists are
oftentimes brought in to help achieve these goals.
Industrial and organizational psychology, sometimes called ‘I/O psychology’ or ‘work psychology,’ is
two-pronged: it is the study of both a workplace’s environment and the employees who work there.
Because one can’t exist without the other, the industrial and organizational components are typically
studied individually and then compared before recommendations are made.
Industrial Psychology
This area within industrial and organizational psychology takes a close look at employees and their
relationship to a given work environment. Elements such as job satisfaction, performance and
evaluation methods are measured. Employee safety and OSHA standards are considered, as are
employee training and hiring techniques. From a historical standpoint, industrial psychology was
introduced during World War I. This type of psychology was used to pair soldiers with the tasks and
assignments for which they were best suited.
Organizational Psychology
The organizational side of the industrial and organizational psychology dynamic focuses on the
workplace more holistically. The goal of analysing any given work environment from an
organizational standpoint is almost always to increase productivity and efficiency among employees.
Do certain policies within the office produce a negative reaction among employees that in turn
affects productivity and overall behaviour while at work? This is a question a psychologist tasked
with analysing the organizational aspects of a company might ask.
What does an Industrial/Organizational Psychologist do Within a Workplace?
The goal of most I/O psychologists is to increase productivity within a workplace by making it a
better place to work. They go about this by interviewing and counseling employees, observing
employee/employer interactions, helping rewrite company policies and procedures to benefit both
the employee pool and the company officials, develop targeted hiring procedures for new
employees and other methods.
Practicalities and Salary Information for Potential I/O Psychologists
I/O Psychology is gaining a lot of traction in the business world because of its positive effects on
work environments across the board. It’s an attractive field of study for students interested in
psychology, primarily due to its interdisciplinary “business + psychology” slant.
Like other careers in psychology, I/O psychologists must hold advanced degrees to become
competitive in their field because there are limited opportunities for I/O psychologists holding only
bachelor’s degrees. Master’s degrees open the door to entry-level positions, but those with doctoral
degrees will have the best advantage.
The Society for Industrial and Organizational Psychology reports than an I/O psychologist with a
master’s degree can expect a starting annual wage of about $38,750. Those with Ph.D.’s can expect
to earn closer to $55,000 per year. While salaries for those in this occupation will vary based on
location, the company for which they work, their level of experience and other factors, those who
work for large organizations over the course of several years can expect to see their salaries grow to
upwards of $80,000 per year.
Unit 2
Job Evaluation: Concept, Objectives and Procedure of Job Evaluation
Concept of job evaluation:
In simple words, job evaluation is the rating of jobs in an organisation. This is the process of
establishing the value or worth of jobs in a job hierarchy. It attempts to compare the
relative intrinsic value or worth of jobs within an organisation. Thus, job evaluation is a
comparative process.
Below are given some important definitions of job evaluation:
According to the International Labour Office (ILO) “Job evaluation is an attempt to
determine and compare the demands which the normal performance of a particular job
makes on normal workers, without taking into account the individual abilities or
performance of the workers concerned”.
The British Institute of Management defines job evaluation as “the process of analysis and
assessment of jobs to ascertain reliably their negative worth using the assessment as the
basis for a balanced wage structure”. In the words of Kimball and Kimball “Job evaluation is
an effort to determine the relative value of every job in a plant to determine what the fair
basic wage for such a job should be”.
Wendell French defines job evaluation as “a process of determining the relative worth of
the various jobs within the organisation, so that differential wages may be paid to jobs of
different worth. The relative worth of a job means relative value produced. The variables
which are assumed to be related to value produced are such factors as responsibility, skill,
effort and working conditions”.
Now, we may define job evaluation as a process used to establish the relative worth of jobs
in a job hierarchy. This is important to note that job evaluation is ranking of job, not job
holder. Job holders are rated through performance appraisal. Job evaluation assumes
normal performance of the job by a worker. Thus, the process ignores individual abilities of
the job holder.
Job evaluation provides basis for developing job hierarchy and fixing a pay structure. It must
be remembered that job evaluation is about relationships and not absolutes. That is why job
evaluation cannot be the sole determining factor for deciding pay structures.
External factors like labour market conditions, collective bargaining and individual
differences do also affect the levels of wages it, organisations. Nonetheless, job evaluation
can certainly provide an objective standard from which modifications can be made in fixing
wage structure.
The starting point to job evaluation is job analysis. No job can be evaluated unless and until
it is analysed. How job evaluation is different from job analysis, job description and job
specification is given in the following Table 14.1.

Objectives of job evaluation:

The main objective of job evaluation is to determine relative worth of different jobs in an
organisation to serve as a basis for developing equitable salary structure. States an ILO
Report the aim of the majority of systems of job evaluation is to establish, on agreed logical
basis, the relative values of different jobs in a given plant or machinery i.e. it aims at
determining the relative worth of a job. The principle upon which all job evaluation schemes
are based is that of describing and assessing the value of all jobs in the firms in terms of a
number of factors, the relative importance of which varies from job to job.
ADVERTISEMENTS:
The objectives of job evaluation, to put in a more orderly manner are to:
1. Provide a standard procedure for determining the relative worth of each job in a plant.
2. Determine equitable wage differentials between different jobs in the organisation.
3. Eliminate wage inequalities.
ADVERTISEMENTS:
4. Ensure that like wages are paid to all qualified employees for like work.
5. Form a basis for fixing incentives and different bonus plans.
6. Serve as a useful reference for setting individual grievances regarding wage rates.
7. Provide information for work organisation, employees’ selection, placement, training and
numerous other similar problems.
ADVERTISEMENTS:
8. Provide a benchmark for making career planning for the employees in the organisation.
Procedure of job evaluation:
Though the common objective of job evaluation is to establish the relative worth of jobs in a
job hierarchy, there is no common procedure of job evaluation followed by all organisations.
As such, the procedure of job evaluation varies from organisation to organisation. For
example, a job e valuation procedure may consist of the eight stages as delineated in Figure
14.1.
1. Preliminary Stage:
This is the stage setting for job evaluation programme. In this stage, the required
information’s obtained about present arrangements, decisions are made on the need for a
new programme or revision of an existing one and a clear cut choice is made of the type of
programme is to be used by the organisation.
2. Planning Stage:
In this stage, the evaluation programme is drawn up and the job holders to be affected are
informed. Due arrangements are made for setting up joint working parties and the sample
of jobs to be evaluated is selected.
3. Analysis Stage:
This is the stage when required information about the sample of jobs is collected. This
information serves as a basis for the internal and external evaluation of jobs.
4. Internal Evaluation Stage:
Next to analysis stage is internal evaluation stage. In the internal evaluation stage, the
sample of bench-mark jobs are ranked by means of the chosen evaluation scheme as drawn
up at the planning stage. Jobs are then graded on the basis of data pending the collection of
market rate data. Relative worth of jobs is ascertained by comparing grades between the
jobs.
5. External Evaluation Stage:
In this stage, information is collected on market rates at that time.
6. Design Stage:
ADVERTISEMENTS:
Having ascertained grades for jobs, salary structure is designed in this stage.
7. Grading Stage:
This is the stage in which different jobs are slotted into the salary structure as designed in
the preceding stage 6.
8. Developing and Maintaining Stage:
ADVERTISEMENTS:
This is the final stage in a job evaluation programme. In this stage, procedures for
maintaining the salary structure are developed with a view to accommodate inflationary
pressures in the salary levels, grading new jobs into the structure and regarding the existing
jobs in the light of changes in their responsibilities and market rates.
In India, the Indian Institute of Personnel Management, Kolkata has suggested the
following five steps to be taken to develop a job evaluation programme:
1. Analyse and Prepare Job Description
2. Select and Prepare a Job Evaluation Programme/Plan
3. Classify Jobs
4. Install the Programme
5. Maintain the Programme
These steps are self-explanatory. Hence are not discussed in detail.
Advantages of job evaluation:
According to an ILO publication job evaluation offers the following advantages:
1. Job evaluation being a logical process and objective technique helps in developing an
equitable and consistent wage and salary structure based on the relative worth of jobs in an
organisation.
2. By eliminating wage differentials within the organisation, job evaluation helps in
minimizing conflict between labour unions and management and, in turn, helps in
promoting harmonious relations between them.
3. Job evaluation simplifies wage administration by establishing uniformity in wage rates.
4. It provides a logical basis for wage negotiations and collective bargaining.
5. In the case of new jobs, job evaluation facilitates spotting them into the existing wage and
salary structure.
6. In the modem times of mechanisation, performance depends much on the machines than
on the worker himself/herself. In such cases, job evaluation provides the realistic basis for
determination of wages.
7. The information generated by job evaluation may also be used for improvement of
selection, transfer and promotion procedures on the basis of comparative job requirements.
8. Job evaluation rates the job, not the workers. Organisations have large number of jobs
with specialisations. It is job evaluation here again which helps in rating all these jobs and
determining the wages and salary and also removing ambiguity in them.
Drawbacks of job evaluation:
In spite of many advantages, job evaluation suffers from the following
drawbacks/limitations:
1. Job evaluation is susceptible because of human error and subjective judgment. While
there is no standard list of factors to be considered for job evaluation, there are some
factors that cannot be measured accurately.
2. There is a variation between wages fixed through job evaluation and market forces. Say
Kerr and Fisher, the jobs which tend to rate high as compared with the market are those of
junior, nurse and typist, while craft rates are relatively low. Weaker groups are better
served by an evaluation plan than by the market, the former places the emphasis not on
force but on equity”.
3. When job evaluation is applied for the first time in an organisation, it creates doubts in
the minds of workers whose jobs are evaluated and trade unions that it may do away with
collective bargaining for fixing wage rates.
4. Job evaluation methods being lacking in scientific basis are often looked upon as
suspicious about the efficacy of methods of job evaluation.
5. Job evaluation is a time-consuming process requiring specialised technical personnel to
undertake it and, thus, is likely to be costly also.
6. Job evaluation is not found suitable for establishing the relative worth of the managerial
jobs which are skill-oriented. But, these skills cannot be measured in quantitative terms.
7. Given the changes in job contents and work conditions, frequent evaluation of jobs is
essential. This is not always so easy and simple.
8. Job evaluation leads to frequent and substantial changes in wage and salary structures.
This, in turn, creates financial burden on organisation.

Job Analysis: Overview

Job Analysis is a process to identify and determine in detail the particular job duties and
requirements and the relative importance of these duties for a given job. Job Analysis is a
process where judgements are made about data collected on a job.
The Job; not the person an important concept of Job Analysis is that the analysis is
conducted of the Job, not the person. While Job Analysis data may be collected from
incumbents through interviews or questionnaires, the product of the analysis is a
description or specifications of the job, not a description of the person.

Purpose of Job Analysis

The purpose of Job Analysis is to establish and document the 'job relatedness' of
employment procedures such as training, selection, compensation, and performance
appraisal.
Methods:
There are numerous methods in use to appraise employee performance depending upon
the size and nature of the organizations. A common approach to assess performance is to
use a numerical or scalar rating system whereby managers are asked to score an individual
against a number of objectives/attributes.

In some companies, employees receive assessments from their manager, peers,

subordinates, and customers, while also performing a self-assessment. The most popular
methods used in the performance appraisal process can be divided in two categories:

These methods include Ranking methods, Graphic Rating Scale method, Critical Incidents
Method, Checklist Methods, Essay Method and Field Review Method.

Modern Appraisal methods include Management by Objectives, 360 – Degree Feedback

Appraisal, Behaviourally Anchored Rating Scales, Assessment Genre, Human Resource
Accounting, and Balanced Scorecard.

Traditional Trait Appraisal Methods:

1. Ranking Methods:

Ranking can be based on the followings:

(а) Straight Ranking Method:

This is one of the oldest and simplest techniques of performance appraisal. In this method,
the appraiser or evaluator ranks the employees from the best to the poorest on the basis of
their overall performance. It is very useful for a comparative evaluation.

(b) Paired Comparison Method:

It is a better way of comparison than the straight ranking method. In this method each
employee is compared with all others on a one- to-one basis, and then ranked.

(c) Forced Distribution Method:

It is a method of appraising employees on the basis of a predetermined distribution scale.

The evaluator is asked to rank 10% employees in the best category, 20% in the next
category, 40% in the middle category, 20% in before the low, and 10% in the lowest
brackets.

2. Graphic Rating Scale Method:

In this method, an employee’s quality and quantity of work is assessed in a graphic scale
indicating different degrees of a particular trait, i.e., behavior or characteristics as they
relate to work performance.

For example a trait like Job knowledge may be judged on the range of average, above
average, outstanding or unsatisfactory or on the basis of numbers (1,2,3,4, 5, and so on).
The list of factors to be appraised is dependent upon the company requirements.

3. Critical Incidents Methods:

In this method, the evaluator rates the employee on the basis of critical events and how the
employee behaved during those incidents. It includes both negative and positive points. The
negative point incident might be damage to machinery because of not following safety
measures.

Positive point incident may be staying beyond working hours to repair a machine. The
drawback of this method is that the supervisor has to note down the critical incidents and
the employee behavior as and when they occur.

4. Checklist Methods:

The appraiser is given a checklist of several behaviours, traits, or job characteristics of the
employees on job. The checklist contains a list of statements on the basis of which the
evaluator describes the on the job performance of the employees. If the rater believes that
employee does have a particular listed trait it is marked as positive check, otherwise the
item is left blank.
The company has a choice to choose either Weighted Checklist Method or Forced Checklist
Method.

5. Essay Appraisal Method:

It is also known as “Free Form Method”. It involves a description of the performance in a

number of broad performance criteria of an individual employee by his superior based on
the facts and often supported by examples and evidences. A major drawback of the method
is how to keep the bias of the evaluator away.

6. Field Review Method:

In this method, a representative of the HR department or a training officer discusses and

interviews the supervisors to evaluate and rate their respective subordinates. This method
is very time consuming method. However, this method helps to reduce the superiors’
personal bias.

At this stage it would not be out of context to mention some of the limitations associated
with trait-based methods of performance evaluation. First, the trait-based methods are
based upon traits (like integrity and consciousness) which may not be directly related to
successful job performance. An employee can change behaviour, but not personality.

An employee who is dishonest, may stop stealing, but is likely to involve the moment he
feels the threat of being caught is gone. Second, trait-based methods are easily influenced
by ‘office politics’ and is thus, less reliable.

Modern Appraisal Methods:

These methods are described as under:

1. Management by Objectives:

The concept of ‘Management by Objectives’ (MBO) was given by Peter F. Drucker in 1954. It
can be expressed as a process whereby the employees and the superiors come together to
identify common goals – the organizational goals as well as individual goals, the standards
to be taken as the criteria for measurement of their performance and contribution and
deciding the course of action to be followed.

Thus, the essence of MBO is participative goal setting, choosing course of actions and
decision making. Ideally, when employees themselves have been involved with the goal
setting and the choosing the course of action to achieve them, they are more committed.

clip_image002

2. 360 -Degree Feedback Appraisal Method:

360-degree feedback, also known as ‘multi-rater feedback’, is the most comprehensive
appraisal where the feedback about the employees’ performance comes from all the
sources that come in contact with the employee on his job.

These sources include superiors, subordinates, peers, team members, customers, and
suppliers apart from the employee himself (see Figure 18.10), who can provide feedback on
the employee’s job performance.

clip_image004

Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses,
his achievements, and judge his own performance (in University of Delhi’s Master’s in
International Business, faculty member is not only evaluated by the head of department but
also by students).

Subordinates (part of internal customers) evaluation gives an opportunity to rate the

employee on the parameters like communication and motivating abilities, superior’s ability
to delegate the work, leadership qualities etc.

Evaluation by peers can help to find employees’ abilities to work in a team, co­operation
and sensitivity towards others. Thus an evaluation by one and all is a 360-degree review and
the feedback is considered to be one of the most credible. Some of the organisations using
this method include Wipro, Infosys, and Reliance Industries etc.

3. Behaviourally Anchored Rating Scales:

Behaviourally Anchored Rating Scales (BARS) is a modern technique which is a combination

of the graphic rating scale and critical incidents method. It comprises predetermined critical
areas of job performance or sets of behavioral statements describing important job
performance qualities as good or bad (like the qualities such as inter-personal relationships,
adaptability and reliability, job knowledge etc.).

The typical BARS includes seven or eight performance behaviours each one measured by a
seven-or-nine point scale. These statements are developed from critical incidents.

In this method, an employee’s actual job behaviour is judged against the desired behaviour
through recording and comparing the behavior with BARS. Developing and practicing BARS
needs expert knowledge.

4. Assessment Centres:

Assessment centres are a contribution of German psychologists. The main feature of

assessment centres is that they process. Assessment Centres consist of many multiples.

a. Multiple competencies to be evaluated for in a candidate.

b. Multiple observers to eliminate the subjectivity and increase objectivity involved in the
process.

c. Multiple participants: 18 – 21 in case of TMTC (Tata Management Training Centre).

d. Multiple exercises: Exercises like role plays, case analysis, presentations, group
discussions etc.

e. Multiple simulations: These could be creative, crisis or exploitative type of simulations.

f. Multiple observations: Each observation is observed at least twice. There are five main
ways in which evaluation is made. A group of participants takes part in a variety of exercises
observed by a team of trained assessors who evaluate each participant against a number of
predetermined, job related behaviours. Decisions are then made by pooling.

5. Human Resource Accounting Method:

Human resources are valuable assets for every organization. Human resource accounting
method values the relative worth of these assets in the terms of money. In this method the
valuation of the employees is calculated in terms of cost and contribution to the employers.

The cost of employees includes all the expenses incurred on them , viz., their compensation,
recruitment and selection costs, induction and training costs etc., whereas their
contribution includes the total value added (in monetary terms).

The difference between the cost and the contribution will be the performance of the
employees. Ideally, the contribution of the employees should be greater than the cost
incurred on them.

6. Balanced Score Card:

It was developed by Robert Kaplan and David Norton in 1990s. The purpose of balanced
scorecard is to evaluate the organizational and employee performance in performance
appraisal management processes. The conventional approach measures the performance
only on a few parameters like the action processes, results achieved or the financial
measures etc.

The Balanced scorecard provides a framework of different measures to ensure the complete
and balanced view of the performance of the employees. Balanced scorecard focuses on the
measures that drive performance.

The balanced scorecard has two basic characteristics – a balanced set of measures based on
four measures (financial – profits, market share, ROI; customer – perspective about
organization loyalty to firm, acquisition of new customers; internal business measures –
infrastructure, organisational processes and systems, human resources; and the innovation
and learning perspective – ability to learn, innovate and improve) and linking these
measures to employee performance. Senior managers are allocated rewards based on their
success at meeting or exceeding the performance measures.
Concept of Performance Appraisal:
Appraisal is the evaluation of worth, quality or merit. In the
organization context, performance appraisal is a systematic
evaluation of personnel by superiors or others familiar with their
performance. Performance appraisal is also described as merit
rating in which one individual is ranked as better or worse in
comparison to others. The basic purpose in this merit rating is to
ascertain an employee’s eligibility for promotion.

However, performance appraisal is more comprehensive term for

such activities because its use extends beyond ascertaining
eligibility for promotion. Such activities may be training and
development, salary increase, transfer, discharge etc. besides
promotion.

ESSENTIAL OF GOOD PERFORMANCE APPRAISAL SYSTEM

To effective, a performance appraisal system should the following requirements:

Mutual Trust :-

An atmosphere of mutual trust and confidence should be created in the organisation

before introducing the appraisal system. Such an atmosphere is necessary for frank
discussion of appraisal. It also helps to obtain the faith of employees in the appraisal
system.

Performance appraisal is an emotional process involving feelings of fairness and

equal treatment. The human element in it must be considered if is to serve the
individual and organizational purposes.

Clear objectives :-

The objectives and uses of performance appraisal should be made clear and
specific. The objectives should be relevant, timely and open. The appraisal system
should be fair so that it is beneficial to both the individual employee and the
organization. The system should be adequately and appropriately linked with other
subsystems of human resource management.

Standardization :-

Well – defined performance factors and criteria should be developed. These factors
as well as appraisal form, procedures and techniques should be standardized. It will
help to ensure uniformity and comparison of ratings.

The appraisal techniques should measure what they are supposed to measure.
These should also be easy to administer and economical to use. Employees should
be made fully aware of performance standards and should be involved in setting the
standards.

Training :-

Evaluators should be given training in philosophy and techniques of appraisal. They

should be provided with knowledge and skills in documenting appraisals, conducting
post appraisal interviews, rating errors, etc.

Job Relatedness :-

The evaluators should focus attention on job-related behaviour and performance of

employees. Multiple criteria should be used for appraisal and appraisal should be
done periodically rather than once a year.

Documentation :-

The raters should be required to justify their ratings. Documentation will encourage
evaluators to make conclusions efforts minimizing personal biases. It will also help to
impart accountability for ratings.

Feedback and participation :-

Arrangements should be made to communicate the ratings to both the employees

and the raters. The employees should actively participate in managing performance
and in the ongoing process of evaluation. The superior should play the role of coach
and counseller. The overall purpose of appraisals should be developmental rather
than judgemental. The feedback message must contain comments with examples
and suggestions for improvement.
Individual differences :-

While designing the appraisal system, individual differences in organisations should

be recognized. Organisations differ in terms of size, nature, needs and environment.
Therefore, the appraisal system should be tailor-made for the particular organisation.
The needs of ratees in terms of feedback, mobility, confidence and openness should
also be considered.

Post appraisal Interview :-

After appraisal, an interview with the employee should be arranged. It is necessary

to supply feedback, to know the difficulties under which the employees work and to
identify their training needs. The rater should adopt a problem – solving approach in
the interview and should provide counseling for improving performance.

Review and appeal :

A mechanism for review of ratings should be provided. The review may be made by
a committee consisting of line executives and personnel experts. The committee will
see whether the raters are unusually strict or lenient. It may compare ratings with
operating results and may require the raters to give specific examples or tangible
proof. Differences if any are discussed and dissent isrecorded. Provision must
be made for an appeal in case the employee/ratee is not satisfied with the ratings.
Performance appraisal (PA) is a method by which the job performance of an employee is
documented and evaluated. Performance appraisals are a part of career development and
consist of regular reviews of employee performance within organizations.

A merit rating is a score that each state assigns to employers based on their employment
stability and employee turnover. The state then uses the merit rating to levy state
unemployment taxes on each employer. Companies with lower ratings will have to pay
lower unemployment tax percentages.