INDUSTRIAL PSYCHOLOGY
Frederick W. Taylor, the next major figure in I/O psychology,
Part I
I. INTRODUCTION TO I/O PSYCHOLOGY
A branch of psychology that applies the principles of
psychology to the workplace
- principles of learning are used to develop training programs
and incentive plans
- Principles of social psychology are used to form work groups
and understand employee conflict,
- and principles of motivation and emotion are used motivate
and satisfy employees.
MAJOR FIELDS IN INDUSTRIAL/ORGANIZATIONAL
PSYCHOLOGY
1. PERSONNEL PSYCHOLOGY
- The branch of I/O psychology involved with recruitment,
selection, training, and evaluation of workers.
2. ORGANIZATIONAL PSYCHOLOGY
- The branch of I/O psychology interested in how
interpersonal relations in the work setting affect productivity.
Topics of interest include managerial style, worker
motivation, and job satisfaction.
3. HUMAN FACTORS PSYCHOLOGY
- The branch of I/O psychology that studies ways to improve
the design and function of machines and the work
environment to better meet the needs of human users.
BRIEF HISTORY OF INDUSTRIAL/ORGANIZATIONAL
PSYCHOLOGY
During World War I, there was an extreme need of soldiers,
this was the time where Industrial/Organizational
Psychologists made its first impact to the industry setting.
During the testing, there were two types of intelligence tests
conducted:
Army Alpha - This is a type of test conducted to those
applicants who knows how to read.
Army Beta - This is a type of test conducted to those
applicants who do not know how to read.
THE DEVELOPMENT OF I/O PSYCHOLOGY
The formal study of psychology is relatively short, spanning a
mere 125 years or so. The study of I/O psychology is even
shorter, originating with the work of Walter Dill Scott,
Frederick W. Taylor, and Hugo Munsterberg at the beginning
of the twentieth century.
THE BEGINNINGS: APPLYING PSYCHOLOGY TO SALES AND
WORKER EFFICIENCY
On December 20, 1901, Walter Dill Scott, a psychology
professor at Northwestern University, addressed a group of
advertising professionals. In his talk, he proposed an
interesting idea: Using psychological principles in the field of
advertising. Instead of merely exhibiting a product and
hoping that customers would realize their need for it, he
thought advertisers could aggressively influence customers
by suggesting they buy it or by arguing and debating the
undeniable merits of the purchase. In other words, use
persuasion and argumentation to sell.
emphasized the value of designing the work situation to
increase worker output. He correctly surmised that if workers
performed their jobs more efficiently, the company would
increase profits and workers’ wages would go up. In his book
The Principles of Scientific Management (1911), Taylor
formulated four principles for increasing the efficiency and
profitability of any organization:
(1) scientifically design work methods for greater efficiency;
(2) select the best workers and train them in new methods;
(3) develop a cooperative spirit between managers and
workers; and
(4) encourage cooperation between workers and
management to improve the work environment.
Hugo Munsterberg was an early psychologist interested in
applying psychology to the workplace. His book Psychology
and Industrial Efficiency (1913) covered three topics: (1)
selecting workers, (2) designing work situations, and (3) using
psychology in sales. Munsterberg was most influential in the
area of personnel selection and training, and his best-known
research was a study of streetcar operators, where he
created laboratory simulation of an actual streetcar. This
research allowed Munsterberg to develop personnel
selection criteria and training procedures that eventually led
to better street car operators (Muchinsky, 1993).
THE HAWTHORNE EFFECT
The phenomenon that occurs when people change their
behavior because of the novelty of the research situation or
because they know they are being observed.
Researchers found that worker productivity had little or
nothing to do with the lighting level. Productivity improved
under both increased and decreased brightness! Even more
surprising, when the brightness level remained unchanged,
productivity still increased. Simply knowing they were being
used as research participants apparently improved worker
performance. This is known as the Hawthorne effect, when
people change their behavior because of the novelty of the
research situation or because they know they are being
observed.
THE I/O PSYCHOLOGIST
- I/O psychology relies extensively on research, quantitative
methods, and testing techniques
- I/O psychologists are trained to use empirical data and
statistics rather than intuition to make decisions.
- I/O psychologists are not clinical psychologists who happen
to be in industry, and they do not conduct therapy for
workers
- A factor that helps differentiate I/O psychology from other
branches of psychology is the reliance on the scientist-
practitioner model.
MAJOR FIELD IN I/O PSYCHOLOGY
Part II • Ability - Vision, strength, stability, aim
• Others - Weapon certification
II. WORKFORCE PLANNING
Step 5: Selecting Tests to Tap KSAOS
Also known as human resource planning, succession
planning, strategic staffing JOB DESCRIPTION

Getting the: - The written output of a job analysis

- Right number of people,
- With the right competencies, PARTS OF THE JOB DESCRIPTION
- In the right jobs
- In the right time 1. Job Identification - tile or name of the job and department
it belongs to
BENEFITS OF WORKFORCE PLANNING 2. Reporting line - position to which the job reports to
3. Organization structure - how many jobs report to the
1. Ensure replacements are available to fill important position
vacancies 4. Principle Accountabilities or Responsibilities - 10 key
2. Provide realistic staffing projections for budgeting Activities
purposes 5. Performance Measures and Standards - target or key
3. Provide a clear rationale for linking expenditures for result areas of the position
training, dev’t, career counseling and recruitment effort 6. Constraints - decision making limits
4. Help prepare for restructuring, reducing, expanding the 7. Nature and Scope - information that describe the context
workforce of the job
8. Working conditions - environment
INDIRECT BENEFITS OF WORKFORCE PLANNING 9. Knowledge, Skills and Experience
10. Signature and Date
1. Provides an opportunity to think about the future
2. Allow the organization to align and centralize efforts in the JOB SIMPLIFICATION
context of decentralization
3. Integrates the various organizational purposes of - Breaking down a job into simple tasks
reinforcing the strategy - Resulted to boredom and negative attitudes, and fails to
JOB ANALYSIS offer sense of accomplishments

Systematic process for collecting and analyzing information JOB DESIGN APPROACHES
about job.
Job rotation - having employees perform different tasks
PURPOSES OF JOB ANALYSIS
- Reduces boredom and provides relief from repetitive
- Job description movements
- Selection
- Training (Horizontal) Job Enlargement
-Person Power Planning
- Performance Appraisal - Giving more responsibilities to the employee.
- Job Classification -Combining two or more simplified jobs
- Job Evaluation
- Job Design Job Enrichment or (Vertical) Job Enlargement
- Organizational Analysis
- Giving more responsibilities to the employee and freedom
PERSON-POWER PLANNING over those responsibilities
- Opportunity to decide how to do their jobs.
• Worker Mobility
• Peter Principle: promoting employees until they reach their JOB EVALUATION
highest level of incompetence
- how much employees in a position should be paid
Conducting Job Analysis -Job's worth

Step 1: Identify Tasks Performed Stage 1: Internal Pay Equity

-Existing info, Interview SME's (Ammerman Technique) Compensable Job Factors - responsibility, physical and
-Observation mental demands etc.
-Job participation
Stage 2: External Pay Equity
Step 2: Write Task Statements
Salary Surveys - sent to other organizations
-Task Inventory Market Position - where an organization wants to be in
-Where, how, why and when relation to the compensation policies of others
Direct Compensation
Step 3: Rate Task Statements
RECRUITMENT
- Task Analysis - a group of SMEs rate each task statement on
the frequency and the importance Recruitment attracting people with the right qualifications (as
determined in the job analysis) to apply for the job
Step 4: Determine Essential KSAOS
1. External recruitment
• Knowledge - target & wind condition 2. Internal recruitment
• Skill - Shooting a gun
PROMOTION
- many techniques can be used to select the best person
Noncompetitive Promotions - career progression (Engineer I from this pool of applicants.
to Engineer II)
Competitive Promotions - internal applicants compete with EMPLOYMENT INTERVIEW
one another (and sometimes with external applicants) for a
limited number of higher positions. Types of Interview

Part III a) Structured/Patterned Interview

III. RECRUITMENT the source of the questions is a job analysis (job-related

questions),
- attracting people with the right qualifications (as - all are asked the same questions
determined in the job analysis) to apply for the job. - there is a standardized scoring key

INTERNAL RECRUITMENT b) Unstructured Interview

- already employed by the organization.
STYLES OF INTERVIEW
EXTERNAL RECRUITMENT
- from outside the organization a) One-on-one interview
b) Serial interview
METHODS OF RECRUITMENT b) Return interview
c) Panel interview
1) Newspaper Ad d) Group interview
Four ways of responding
A. Respond by calling MEDIUMS OF INTERVIEW
B. Apply in person ads
C. Send-resume ads a) Face-to-face interview
D. Blind box ads b) Telephone interview
c) Written interview
Why use blind box?
PROBLEMS WITH UNSTRUCTURED INTERVIEW
- the organization doesn't want its name in public
a) Poor intuitive ability
- the company might fear that people wouldn't apply if they b) Lack of job relatedness c) Primacy effect
knew the name of the company. d) Contrast effect
e) Interviewer-interviewee similarity f) Appearance
- a company needs to terminate an employee but wants first g) Non-verbal cues
to find a replacement

2) Point-of-Purchase Ad

- posted in places where customers or current employees are

likely to see them:
- store windows, bulletin boards, restaurant place mats, and
the sides of trucks.

3) Employment Agencies and Search Firms

- organization that specializes in finding jobs for applicants

and finding applicants for organizations looking for
employees.

4) Employee Referrals
Part IV
- a current employee refers a friend or family member for a
job. IV. SELECTION

- If a particular employee is a good employee, then the same
characteristics that make her a good employee are probably
shared by his friends and family.
5) Job Fair
several employers are available at one location so that many
applicants can obtain information at one time.
REFERENCES AND LETTERS OF RECOMMENDATION
• In psychology, a common belief is that the best predictor of
future performance is past performance.
A. Reference check
B. Reference
C. Letter of Recommendation

REALISTIC JOB PREVIEW REASON FOR USING REFERENCES AND RECOMMENDATIONS

.
A method of recruitment in which job applicants are told A. Resume fraud
both the positive and the negative aspects of a job. B. Checking for discipline problems
C. Why conduct background check?
SELECTION D. Discovering new information about applicants
E. Predicting future performance
If the recruitment process was successful, an organization
will have several applicants from which to choose.
4 MAIN PROBLEMS IN WITH LETTER OF RECOMMENDATION
 Leniency
 Knowledge about the Applicant
 Reliability (see pic)
 Extraneous factors
ETHICAL ISSUES
1. Explicitly state your relationship with the person you are
recommending.
2. Be honest in providing details.
3. Let the applicant see your reference before sending it, and
give him the chance to decline to use it.
PREDICTING PERFORMANCE USING APPLICANT ABILITY
Ability tests are used primarily for occupations in which
applicants are not expected to know how to perform the job
at the time of hire.
TYPES OF ABILITY MEASURES
Cognitive Ability - Abilities involving the knowledge and use
of information
- Cognitive ability is thought to predict work performance in
two ways: by allowing employees to quickly learn job-related
knowledge and by processing information resulting in better
decision making.
- Drawbacks: Lack of face validity, difficulty in setting a
passing score,
Perceptual Ability - Measure of facility with such processes
as spatial relations and form perception.
- Abilities from this dimension are useful for such occupations
as machinist, cabinet maker, driver etc.
Manual Dexterity - Measure of facility with such processes as
finger dexterity and motor coordination.
- Psycho motor abilities are useful for such jobs as carpenter,
police officer, sewing-machine operator, post office clerk,
and truck driver.
Physical Ability - Tests that measure an applicant's level of
physical ability required for a job.
- Because of the difficulty in using simulations to measure
these last types of behaviors, physical ability tests are used.
- Drawbacks: job relatedness, passing scores, and the time at
which they should be required.
JOB RELATING SKILL
 Work sample
 Assessment center
PREDICTING PERFORMANCE USING APPLICANT SKILL
Work Sample - With a work sample, the applicant performs
actual job-related tasks.
- They are directly related to job tasks, they have excellent
content validity.
- Scores from work samples tend to predict actual work
performance and thus have excellent criterion validity
- Applicants are able to see the connection between the job
sample and the work performed on the job
Assessment Centers - characterized by the use of multiple
assessment methods that allow multiple assessors to actually
observe applicants perform simulated job tasks.
Steps in Creating Assessment Centers
1. Job Analysis
2. Exercises are developed: in-basket technique, simulations,
work samples, leaderless group discussions
3. Assessors are chosen to rate the applicants going through
the assessment center
ASSESSMENT CENTERS
In-Basket Technique - designed to simulate the types of daily
information that appear on a manager's or employee's desk
Simulation - places an applicant in a situation that is similar
to the one that will be encountered on the job
Leaderless Group Discussion - applicants meet in small
groups and are given a job-related problem to solve or a job-
related issue to discuss.
Business Game - exercise that is designed to simulate the
business and marketing activities
PREDICTING PERFORMANCE USING PRIOR EXPERIENCE
Applicant experience is typically measured in one of four
ways:
 Résumé Information
 Biodata
 Reference Checks
 Interviews
PREDICTING PERFORMANCE USING PERSONALITY, INTEREST,
AND CHARACTER
Personality Inventories - are becoming increasingly popular
as an employee selection method because they predict
performance better than was once thought and because they
result in less adverse impact than do ability tests
Integrity Tests - Also called an honesty test; a psychological
test designed to predict an applicant's tendency to steal.
PREDICTING PERFORMANCE LIMITATIONS DUE TO MEDICAL
AND PSYCHOLOGICAL PROBLEMS
 Drug Testing
 Psychological Exams
 Medical Exams
·
REJECTING APPLICANTS
- Once a decision has been made regarding which applicants
will be hired, those who will not be hired must be notified.
- Rejected applicants should be treated well because they
are potential customers and potential applicants for other
positions
HOW TO MAKE A GOOD QUALITY REJECTION LETTER?
 A personally addressed and signed letter
 The company's appreciation to the applicant for
applying for a position with the company
 A compliment about the applicant's qualifications
 A comment about the high qualifications possessed by
the other applicants
 Information about the individual who was actually hired
 A wish of good luck in future endeavors
 A promise to keep the applicant's résumé on file
SUMMARY
- References typically are not good predictors of performance
due to such factors as leniency, poor reliability, fear of legal
ramifications, and a variety of extraneous factors.
- Reliability, validity, cost, and potential for legal problems
should be considered when choosing the right type of
employment test for a particular situation.
- Cognitive ability tests, job knowledge tests, biodata, work
samples, and assessment centers are some of the better
techniques in predicting future performance.
- Drug testing and medical exams are commonly used to
screen employees prior to their starting a job.
- Writing a well-designed rejection letter can have important
organizational consequences.
Part V
F. PERFORMANCE APPRAISAL
Step 1: Determine the Reason for Evaluating Employee
Performance
1. Providing Employee Training and Feedback
- feedback about what employees are doing right and wrong.
2. Determining Salary Increases
- to provide a fair basis on which to determine an employee's
salary increase.
3. Making Promotion Decisions
- to determine which employees will be promoted.
4. Making Termination Decisions
- When performance management techniques are not
successful, the results of a performance review might suggest
that the best course of action is to terminate the employee.
5. Conducting Personnel Research
- employment tests must be validated, and one way this can
be done is by correlating test scores with some measure of
job performance.
Step 2: Identify Environmental and Cultural Limitations
Identify the environmental and cultural factors that could
affect the system.
- if supervisors are highly overworked, an elaborate, time-
consuming performance appraisal system will not be
successful.
- In an environment in which there is no money available for
merit pay, developing a numerically complex system will
become frustrating, and the results of the evaluation may not
be taken seriously.
Identify the environmental and cultural factors that could
affect the system.
- In an environment in which employees are very cohesive,
the use of peer ratings might reduce the cohesiveness.
Step 3: Determine Who Will Evaluate Performance
• Consequently, to obtain an accurate view of the teller's
performance, these other sources can be used to provide
feedback.
• The buzzwords for using multiple sources to appraise
performance are 360-degree feedback and multiple-source
feedback.
- About 34% of large U.S. organizations use some form of
multiple-source feedback (Mercer Consulting, 2013).
Sources of relevant information about employee
performance include supervisors, peers, subordinates,
customers, and self- appraisal.
Supervisors
- By far the most common source of performance appraisal is
the supervisor rating.
- a 2013 Survey by the Society for Human Resource
Management (SHRM) found that in 74% of organizations rely
on supervisor ratings.
- Though supervisors may not see every minute of an
employee's behavior, they do see the end result.
Peers
- Whereas supervisors see the results of an employee's
efforts, peers often see the actual behavior.
- Peer ratings usually come from employees who work
directly with an employee
- Research has shown that peer ratings are fairly reliable only
when the peers who make the ratings are similar to and well
acquainted with the employees being rated (Mumford, 1983).
- Research suggests that certain employees are more lenient
in their peer ratings than are other employees.
• Saavedra and Kwun (1993) found that high performers
evaluate their peers more strictly than do low performers.
Subordinates
- Subordinate feedback (also called upward feedback) is an
important component of 360-degree feedback, as
subordinates can provide a very different view about a
supervisor's behavior.
- Subordinate ratings can be difficult to obtain because
employees fear a backlash if they unfavorably rate their
supervisor, especially when a supervisor has only one or two
subordinates.
Customers
- customers provide feedback on employee performance by
filing complaints or complimenting a manager about one of
her employees.
- Formally, customers provide feedback by completing
evaluation cards.
Step 4: Select the Best Appraisal Methods to Accomplish Your
Goals
Prior to developing the actual performance appraisal
instrument, two important decisions must be made
- Decision 1: Focus of the Appraisal Dimensions
• The appraisal dimensions can focus on traits, competencies,
task types, or goals.
- Decision 2: Should Dimensions Be Weighted?
• Whether the dimensions should be weighted so that some
are more important than others.

USE OF EMPLOYEE COMPARISONS, OBJECTIVE MEASURES,
OR RATINGS
• Once the types of dimensions have been considered, the
next decision is whether to:
1. evaluate performance by comparing employees with one
another (ranking),
2. Using objective measures such as attendance and number
of units sold, or
3. having supervisors rate how well the employee has
performed on each of the dimensions.
EMPLOYEE COMPARISONS: RANKING METHOD
• To reduce leniency, employees can be compared with one
another instead of being rated individually on a scale. The
easiest and most common of these methods is the rank order.
- employees are ranked in order by their judged
performance for each relevant dimension.
EMPLOYEE COMPARISONS: PAIRED COMPARISONS
• This method involves comparing each possible pair of
employees and choosing which one of each pair is the better
employee.
EMPLOYEE COMPARISONS: FORCED DISTRIBUTION
- a predetermined percentage of employees are placed in
each of the five categories
OBJECTIVE MEASURES
• A second way to evaluate performance is to use what are
commonly called objective, or hard, criteria. Common types
of objective measures include quantity of work, quality of
work, attendance, and safety.
Step 5: Train Raters
Frame-of-reference training provides raters with job-related
information, practice in rating, and examples of ratings made
by experts as well as the rationale behind those expert
ratings
- it increases rater accuracy and reduced rater errors
- the better that employees understand the performance
appraisal system, the greater is their satisfaction with the
system
Step 6: Observe and Document Performance
• The next step in the performance appraisal process is for
supervisors to observe employee behavior and document
critical incidents as they occur.
• Critical incidents are examples of excellent and poor
employee performance.
• Critical incidents should be
communicated to the employee at the time they occur
The importance of documentation:
1. documentation forces a supervisor to focus on employee
behaviors rather than traits
2. documentation helps supervisors recall behaviors when
they are evaluating performance
3. documentation provides examples to use when reviewing
performance ratings with employees.
4. documentation helps an organization defend against legal
actions taken against it by an employee.
• Common sources of error when not documenting
performance
- First impressions
- Recent behaviors
- Unusual or extreme behaviors
- Behavior consistent with the supervisor's opinion.
Step 7: Evaluate Performance
Obtaining and Reviewing Objective Data
- a supervisor should first obtain and review the objective
data relevant to the employee's behavior.
Reading Critical-Incident Logs
- Reading these incidents should reduce errors of primacy,
recency, and attention to unusual information.
Completing the Rating Form
- Once critical-incident logs have been read and objective
data reviewed, the supervisor is ready to assign performance
appraisal ratings.
- While making these ratings, the supervisor must be careful
not to make common rating errors involving distribution,
halo, proximity, and contrast.
DISTRIBUTION ERRORS
• Leniency Error - because certain raters tend to rate every
employee at the upper end of the scale regardless of the
actual performance of the employee.
• Central Tendency Error - results in a supervisor rating every
employee in the middle of the scale.
• Strictness Error - rates every employee at the low end of
the scale.
Halo Errors
- A halo error occurs when a rater allows either a single
attribute or an overall impression of an individual to affect
the ratings that she makes on each relevant job dimension.
Proximity Errors
• Proximity errors occur when a rating made on one
dimension affects the rating made on the dimension that
immediately follows it on the rating scale.
Contrast Errors
• The performance rating one person receives can be
influenced by the performance of a previously evaluated
person
Step 8: Communicate Appraisal Results to Employees
• Perhaps the most important use of performance-evaluation
data is to provide feedback to the employee and assess her
strengths and weaknesses so that further training can be
implemented
- Normally, in most organizations a supervisor spends a few
minutes with employees each year to tell them about the
scores they received during the most recent evaluation
period
DEALING WITH NEGATIVE FEEDBACK
• Feedback sandwich - negative feedback is sandwiched
between positive feedback
Step 9: Terminate Employees

LEGAL REASONS FOR TERMINATING EMPLOYEES

•Probationary Period
•Violation of Company Rules

- rule against a particular behavior must actually exist.

- If a rule exists, a company must prove that the employee
knew the rule
- ability of the employer to prove that an employee actually
violated the rule.
- rule has been equally enforced.

• Inability to Perform

- an organization will need to prove that the employee could

not perform the job and that progressive discipline was
taken to give the employee an opportunity to improve.

- The organization must next demonstrate that there was a

documented failure to meet the standard. Such
documentation can include critical-incident logs and work
samples

• Reduction in Force (Layoff)

• Employees can be terminated if it is in the best economic

interests of an organization to do so.