Industrial-organizational psychology is a specialized science that is finding its way into corporate decision-making.
As business organizations struggle in today’s troubled economy, which has led to declining revenues, weakened customer bases, layoffs, operational cutbacks and other drastic measures, many firms are relying on industrial-organizational psychologists to help them navigate through difficult times and position themselves for better days ahead.
I-O psychology is a relatively small field that has enjoyed steady growth in recent years as more employers face the need to recruit, develop and retain the best employees. In fact, I-O psychologists are becoming strategic HR partners in meeting real business demands, especially during these lean economic times.
“No other profession knows how to help leaders in industry galvanize and energize their workforce as much as organizational psychologists do,” said Gary Latham, president of the more than 7,800-member Society for Industrial and Organizational Psychology and a faculty member in the Rotman School of Business at the University of Toronto.
Latham will be presiding over SIOP’s 24th annual conference April 2-4 in New Orleans. The conference will have more than 800 presentations on a wide variety of workplace topics and will attract more than 3,800 people, including some of the world’s top workplace psychologists.
Michael Beer, professor emeritus at the Harvard Business School and co-founder of the Burlington, MA-based consulting firm Truepoint, said “I-O-trained people can provide different levels of analysis and can advise management to think broadly about their actions and effects on the organization’s human assets.”
These scientists possess a well-schooled understanding of workplace behavior. In many ways, they are the odds-setters of the human capital domain, said Greg Barnett of Hogan Assessment Systems in Tulsa, Okla.
“They build tools and processes that improve organizations’ odds of making better people decisions, the likelihood of improving people’s performance while on the job, and the retention of valued talent. We can provide the means to significantly stack the human capital deck in favor of the organization,” he said.
As progressive organizations seek to build their talent pool, even during the current slow economy, I-O psychologists are being called upon to build and implement better solutions for identifying and developing critical talent.
“We are being asked to design, build, and support mission critical activities like global recruitment strategies, succession planning, executive selection, high potential identification and bench strength analyses,” Barnett said.
There is a great deal of evidence that if companies go about these decisions in the right way they can make a rapid recovery, Beer added.
“One doesn’t have to look further than the preponderance of highly visible executive failures to know the costs businesses and shareholders incur when bad people decisions are made. Failures in executive selection are certainly very public and are one of the clearest examples where I-O psychologists can add significant value to businesses. Whether we are discussing the hiring of a chief executive officer, the development of middle managers, or the entire selection system for customer service representatives, I-O psychologists’ work has a measurable impact on the success of an organization,” said Barnett.
Many business experts agree that despite the downturn in the economy, organizations should be working hard to develop their talent so they will be well positioned when things get better, said Stephanie Tarant, director of talent management at R.H. Donnelly. “It’s like a race when the yellow flag is out. Those behind can use that opportunity to catch up to the leaders and position themselves to possibly take the lead when the flag turns green,” she said.
Management teams need to recognize that the critical choices they make should protect their key assets (employees). Shortsighted personnel decisions can adversely affect the organization. Too many executives get caught up in the moment and make rash decisions, said Beer.
When businesses are strained as they are now, corporate restructuring, downsizing and mergers and acquisitions are an inevitable consequence; actions which result in a stressed and apprehensive workforce.
“We know from research on the effects of mergers/acquisitions and corporate restructuring that success hinges on the organization’s ability to maintain employee engagement and not allowing it to erode,” said Seymour Adler, senior vice president of talent solutions consulting at Aon Corp.
The people side of the deal is an extremely important consideration and one with which I-O psychologists have the knowledge and expertise to provide valuable assistance. There is clearly a need to focus a great deal on engagement, said Adler.
Employees need to be kept engaged in their work, Tarant said. “Highly engaged employees are a positive influence on the work force and that is what organizations should be striving for,” she added.
There is a lot of literature and research showing high engagement leads to better attitudes and more production. “It would seem to be a no-brainer for an organization to want to cultivate and development highly engaged workers,” Tarant said.
Accurate information is vital for senior executives when faced with making tough business decisions, and I-O psychologists, because of their training in gathering reliable and credible data, are in a good position to assist, said Jennifer Deal, senior research scientist at the Center for Creative Leadership. “If the data are unreliable, then the results are going to be unreliable, and therefore not useful to leaders. Unreliable information can cause leaders to move in the wrong direction and to focus on the wrong areas,” she said.
I-O psychologists can produce results that are rigorous, accurate and defensible and which will provide the organization with credible information. Accurate results aren’t always what leaders want to hear, but it is the best way of determining the direction to take, Deal said.
“A lot of business decisions are based upon educated guesswork. The information people use to make those guesses is critical; it is important that leaders rely on solid information as much as they on their experience, especially in today’s rocky economy,” said Deal.
Ultimately some business decisions lead to workforce reductions. The choices can fall between making cuts based upon seniority, by performance or somewhere between. Whatever the choice, it must be done carefully.
‘When it comes to the difficulties inherent in layoffs, organizational psychologists specialize in ways to increase feelings of fairness and mitigate survivor guilt syndrome,” Latham said. “They do this by helping people understand the process that was developed and used to implement the layoffs so leaders are not only fair but also are seen as fair by employees.”
Decisions involving people can sometimes lead to costly litigation. Making reductions based upon seniority (last in, first out) is often the easy way of making cuts and seemingly objective, but may not be rational as it often does not identify those least capable of sustaining and growing the business and can lead to law suits, Adler said. Organizations that conduct regular employee performance and competency assessments greatly limit the risk of litigation and I-O psychologists who are assessment experts can provide key information in making reduction decisions based upon performance.
Organizations able to hold on to customers will recover more quickly, Adler said. “Some companies cut back on customer service during tough times and which is exactly the wrong time to do it. They do it to save money and that often is not a wise decision. That’s a moment of truth for customers who will remember the cuts and move on to someone else because there are lots of choices for them,” he said.
Customer loyalty is taking a beating and organizations must take measures to keep those customers. It is much more costly to acquire new customers than it is to retain current customers, said Adler.
The smart firms are creating a new emphasis upon the customer because with the poor economy, they must retain their customer base. Any erosion of that base weakens the entire organization, Adler noted.
I-O psychologists are impacting businesses in many ways. Some are HR generalists, others work in organizational development, many support recruitment and selection while others serve as coaches and trainers. They also are internal and external consultants and many follow academic career paths. Regardless, of the role, position or proximity to the organization, I-O psychologists are having a measurable impact upon the success of business organizations.
The Society for Industrial and Organizational Psychology (SIOP) is an international group of more than 7,800 industrial-organizational (I-O) psychologists whose members study and apply scientific principles concerning workplace productivity, motivation, leadership and engagement. SIOP’s mission is to enhance human well-being and performance in organizational and work settings by promoting the science, practice and teaching of I-O psychology. For more information about SIOP, including a Media Resources service that lists nearly 2,000 experts in more than 100 topic areas, visit www.siop.org.