Importance of Studying Industrial Psychology

As Industrial Psychology is mainly concerned with studying different aspects of human behaviour in the
work environment, it has tremendous scope. The entire process of industrial management, dealing with
people at work and the problems linked with industry and personnel management are all included in
Industrial Psychology. Hence, there is no aspect of Industrial management where industrial psychology is
not put to use. Application of the techniques and principles of industrial psychology to different aspects
of industrial management results in the efficient management of people at work. Industrial Psychology is
important in:

1. Understanding Human Relations: By understanding the relations and group behaviour existing
between the individuals working in industrial organizations, it is possible to develop concepts and
techniques of supervision, effective leadership, motivation etc. This knowledge can be applied in
industrial management to increase efficiency of management.

2. Human Engineering: Industrial Psychology is very important for understanding the work environment
and human performance. Engineering psychology or Human factor engineering is not possible without
studying industrial psychology. This is because human engineering in the study of man in his work
environment, his work methods, the machine design, i.e., design of the equipment and tools used by
him and the effect of work environmental conditions on his efficiency. Improving the work environment
as advised by industrial psychologists leads to improvement in productivity and job satisfaction.

3. Recruitment, Selection and Placement: Industrial psychology facilitates the appropriate matching of
the requirements of a job, with the abilities of a prospective employee. This considerably reduces the
cost of hiring, supervision and ultimately, production. By using psychological tests, candidates can be
properly screened before recruitment. Accurate job analysis and standardized application forms also aid
in recruiting the right personnel for a job. The guidelines for the interviewer i.e., the knowledge of
psychological principles to select right candidates by studying the information supplied by prospective
employees in standardized application forms and the structured interviews, the body language and
behavior, all help in proper selection and placement thereby reducing the problem of inefficiency and
indiscipline in the industrial organization.

4. Development and Training of Personnel: Industrial psychology provides knowledge of individual

behaviour and individual differences. This knowledge can be measured for use in training of personnel
to bring them up to a certain expected level of efficiency. The techniques and principle of industrial
psychology can be applied to train both workers as well as supervisors so that problems of supervision
do not affect productive efficiency. Delegation, communication, motivation and leadership training
imparted to managers increases their capabilities.

5. Accident Prevention: It has been observed from various surveys that majority of the industrial
accidents are preventable. Personal factors such as fatigue, monotony and boredom play an important
role in accident prevention. Fatigue studies also help in the analysis of factors leading to fatigue. If
causes of fatigue are known then solutions are also possible and thereby accidents caused due to fatigue
also become preventable. Thus Industrial psychology cannot only help in identifying accident prove
people but can also help in finding solutions to prevent accidents in industrial organizations.

6. Promotional Schemes and Wage and Salary Administration: Based on the abilities performance and
seniority of personnel, the management decides to promote, demote, transfer or discharge personnel
employed in their organizations. Industrial psychology technique of Performance Appraisal brings out
those abilities of personnel that aid the management in promotional schemes. It is no longer considered
right in considering seniority as the guiding principle for promotion of personnel.

7. Motivation, Attitude and Morale: Industrial psychology recognizes that needs or motives drive an
individual to behave in a particular manner i.e., they are the causes of differences in human behaviour.
Industrial psychology plays an important role in determining the financial and non-financial incentives
that can be used by industrial managements for motivating the personnel into working willingly and to
his best ability in order to increase productivity.