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Industrial/Organizational Psychology

Industrial/Organizational psychology deals with psychology and the workplace. It contains many subdivisions that are like independent disciplines, although all related to business, manufacturing, and industry.

By itself, organizational psychology specializes in the analysis of leadership, decision-making, and control of organi­zations. Consumer psychology is devoted to analyzing the needs and desires of consumers, with an eye toward increasing sales.

Human resources involves management of employee relations, including insurance and retirement plans, sick leave, and other benefits. Studies of management form another specialty.

Human factors and engineering psych­ology examine the interface between humans and technology, to make ma­chines more convenient to use. This can be applied to everything from tooth­brushes to complex control interfaces such as airplane cockpits.

Organizational Psychology

Up to about the 1970s, organiza­tional psychology concerned itself with the structure of organizations. This put the emphasis on durable relationships that could be displayed in charts, such as chains of command or flows of inform­ation and material.

However, in the later decades of the 20th Century, organizational psychology started to change. As Rousseau (1997) put it, psychologists started to pay more attention to organization as a verb rather than as a noun. As a verb, organization is the act or process of organizing.

What was a change in organizational psychology toward the end of the 20th C?

To Rousseau, the second approach was richer in meaning. Organization "as a verb" raises the question of how to adapt to rapidly changing times. Topics include optimizing work groups, networking, communicating, goal setting, and adjusting production techniques to meet changing demands of a dynamic and competitive marketplace.

The emphasis on nimble adaptation is a fairly radical change in the field. From the beginnings of the industrial revolution in the early 1800s to about the 1980s, nearly two centuries, people who studied companies and organizations studied mostly how to control workers, to wring more productivity out of them.

Karl Marx saw the opposition between management and labor as an inevitable feature of capitalism. To him, capitalists and workers formed two separate classes, forever opposed.

Marx believed that as populations grew exponentially (in the manner described by Malthus in 1798) workers would compete against each other for jobs, lowering the value of their labor until they all lived in conditions of misery. This would lead inevitably to a worker's revolution.

In the U.S., management/labor relations reached their nadir in the 1930s, and it is probably no coincidence that social­ism was most popular in the U.S. during that time. Coal miners, steel­workers, and auto assembly workers fought the captains of industry like mortal enemies (which they were from the Marxist perspective).

Conditions improved for average workers after World War II. Ex-soldiers receiving free college educations due to the GI Bill. Jobs were abundant, even for people with a high school education, and (for a while) it seemed like anybody willing to work hard could buy a house and a car and support a family. The middle class grew, something Marx never predicted.

Nevertheless, in major unionized indus­tries, a spirit of animosity persisted between workers and bosses. For example, sabotage was a well-docu­mented problem on automobile assembly lines through the 1970s (Watson, 2005).

Autos were rolling off the assembly line with "slit upholstery, scratched paint, dented bodies, bent gear-shift levers, cut ignition wires, and loose or missing bolts. In some cars, the trunk key is broken off right in the lock, thereby jamming it." ("Labor: Sabotage at Lordstown", 1972).

What were signs of animosity between labor and management, in the U.S. auto industry?

The Lordstown, Ohio, assembly plant produced Chevrolet Vegas. It was notorious for terrible employee/management relations. New managers cracked down by introducing strict new policies in 1971, and over a thousand unsettled grievances piled up.

Salaries were high, because of contracts negotiated by the union, but hatred for the company was also high. The attitude was "us vs. them." The workforce organized a slowdown (the first time that tactic had been seen) and went on strike in the spring of 1972.

Workers felt joy in striking, although it meant a period of time with a fraction of the usual pay (from union strike funds). Nobody talked about cooperation, win-win solutions, or workers helping to improve the manufacturing process.

In the 1980s the U.S. automakers found themselves losing market share to the Japanese. After World War II, the Japanese adopted a radically different approach to industrial manufacturing: the Total Quality Management approach of W. Edwards Deming.

Deming was inspired by Ludwig von Bertalanffy's General System Theory, which he heard about in seminars during the late 1930s and 1940s. Bertalanffy talked about systems and how they were regulated, and he emphasized that these principles applied to all dynamic or intelligent systems.

Deming related this to business and industry. He developed the idea of using a systematic approach to improve the manufacturing process at every point from receipt of raw materials to pro­duction and delivery of finished goods.

Deming called his approach Total Quality Management. Deming was unknown in the U.S. at the time, but he brought his theories to Japan in a series of lectures in 1950, and his ideas were embraced enthusiastically.

Japan was just recovering from WW II, hungry for new ideas. Deming's ideas had a profound effect on Japan's post-war manufacturing boom. The top prize for industrial innovation in Japan is named the Deming Prize as a token of respect.

What ideas did Deming bring to Japan?

Total Quality Management sees manufac­turing as a total system to be optimized from top to bottom. The realm of employer/employee relationships is included. Fused with Japanese cultural elements, the result is a philosophy known as Kaizen, embraced by companies like Toyota.

Kaizen was re-introduced to the West by Masaaki Imai in his 1986 book, Kaizen: The Key to Japan's Competitive Success. This time it was the Americans who took a keen interest. They realized Japanese products excelled in quality while often being lower in price than their American counterparts.

Part of the Toyota production system was lean thinking. This was popularized in a book, The Machine that Changed the World (Womack, Jones, and Roos, 1990) that exposed a significant perform­ance gap between American and Japanese manufacturers.

Lean thinking removes inefficiency and waste from production process by care­fully analyzing all actions that contribute to the value of a product, such as the steps of manufacturing, and removing any that do not contribute. For example, products are manufactured for a customer "just-in-time" rather than being overproduced and warehoused (which does not contribute to the value of a product).

Lean thinking requires striving for per­fection and nimbleness in arranging storage and production resources. This requires intense participation and cooperation by employees involved in every step of the process.

What is lean thinking?

Kaizen has many bottom-up processes. Workers are consulted about the manu­facturing process on an ongoing basis. A single worker can stop an assembly line to fix a defective product if needed. Everybody from the top to the bottom of the organization is expected to work together and suggest improvements.

This requires relationships unlike the adversarial labor-management relationships in the U.S. up until the 1980s. Major manufac­turers in the U.S. were skeptical about the "new" ideas coming over from Japan.

General Motors decided to experiment with Toyota's production techniques by partnering with Toyota in a unique joint operation in Fremont, California, called NUMMI: New United Motor Manufactur­ing Inc. Retiring workers shared their recollections of those events in the 1980s with Frank Langfitt of National Public Radio in 2010, when the plant finally closed. Following are excerpts from his report.

In the mid-1980s, Toyota took over the Fremont plant, one of GM's worst, a factory known for sex, drugs and defective vehicles. And as part of an historic joint venture, Toyota turned the plant into one of GM's best, practically overnight.

"It was considered the worst work­force in the automobile industry in the United States," said Bruce Lee, who ran the western region for the United Auto Workers and oversaw the Fremont plant. "And it was a reputation that was well earned. Everything was a fight. They had strikes all the time. It was just chaos constantly."

By 1982, GM had had enough and put the Fremont factory out of its misery. Two years later, GM and Toyota reopened the factory with–incredibly–most of the same workforce.

The United Auto Workers' Bruce Lee helped oversee the transformation of the plant from one of the worst under General Motors to one of the best in America. But first, they sent some of them to Japan to learn the Toyota way.

The key to the Toyota Production System was a principle so basic, it sounds like an empty management slogan: Teamwork. At Toyota, people were divided into teams of just four or five and they switched jobs every few hours to relieve the monotony. A team leader would step in to help when anything went wrong.

At the old GM plant in Fremont, Calif., the system had been totally different and there was one cardinal rule that everyone knew: the assem­bly line could never stop. "You just didn't see the line stop," assembly line worker Rick Madrid said.

"I saw a guy fall in the pit and they didn't stop the line." Lee, the super­visor who oversaw the plant sum­med it up this way: "You saw a problem, you stopped that line: you were fired."

As a result, vehicles at the plant had lots of defects. ...At the NUMMI plant you can see Toyota's solution to this—a thin nylon rope that hangs on hooks along the assembly line. It's called the andon cord and when pulled, it will stop the line.

What was the andon cord, and why did it strike a visiting American autoworker as significant?

When Rick Madrid trained in Japan, he saw workers stop the line to fix a bolt. "That impressed me," he said. "I said, 'Gee that makes sense.' Fix it now so you don't have to go through all this stuff. That's when it dawned on me. We can do it. One bolt. One bolt changed my attitude." (Lanfitt, 2010)

The new methods cut down on defects drastically, which made the Fremont plan very efficient. The next year GM tried to implement the same system at a plant in Van Nuys, 400 miles south of Fremont. Employees were skeptical. "Unlike workers at NUMMI, they'd never lost their jobs and didn't think they would."

With employees resisting new proce­dures, the Toyota production system could not be implemented. "Quality at Van Nuys never did improve. And in 1992, GM closed the plant." (Lanfitt, 2010)

Why did Kaizen fail at the Van Nuys plant?

GM did implement Japanese style pro­duction systems at all its plants in the early 2000s. By then, companies all over the world were imitating the Japanese model.

Kaizen evolved into a philosophy known as Continuous Improvement (CI). This called for ongoing feedback processes between workers and management and alteration of manufacturing processes on the go, to improve them. (Some industry groups note that continual is the gram­matically correct term, referring to step-by-step incremental change, so CI may eventually stand for Continual Improve­ment.)

What is CI, and what might it be called in the future?

Rapp and Eklund (2010) traced a typical introduction of Continuous Improvement to a Swedish industry in the 1990s. First, a "champion" (one of the executives) initiated the system in 1993. After an initial flurry of interest came a period of decline, when the suggestion system was neglected.

It was revived by new interest from employees. The suggestion system was revised to make it simple and easy to adjust. This suited the interests of all stakeholders in the organization: workers, management, and owners.

By the time research (consisting of structured interviews) concluded, the Continuous Improvement system had been in effect for nine years. The industry was thriving, and employee satisfaction was high.

Continuous Improvement (CI) epitomizes "win-win" solutions or cooperation in corporate culture. Everybody benefits. The Swedish researchers found "quick feedback to employees submitting suggestions" was key, so that people could see the system working.

How does CI represent a win-win solution?

The goal of CI is to optimize production as well as working conditions, much like Deming's original conception of Total Quality Management. The idea is now widespread. The Tesla giga-factory in Nevada, for example, embraces the philosophy of continual improvement (CI).

In the 1990s and 2000s, a new breed of manager emerged in response to Kaizen-like systems. Unlike the old stereotype of a hostile, distant boss, new managers were less dependent on trappings of authority. They might dress informally and mingle with workers.

"Management by walking around" be­came a popular phrase in management psychology. Like a gardener with a green thumb, managers found that consistent attention to the details of production helped things thrive.

How did new management slogans reveal new attitudes?

A popular book suggested "Management by Saying Yes," a philosophy of giving new ideas a try when they were sug­gested. Supervisors made more effort to learn from workers, seeking to actualize the promise of continual improvement.

By the 1990s, many companies were experimenting with management styles in which employees set their own goals. Self-management became more popular (Rousseau, 1997).

A typical implementation of this idea involves splitting the work force into teams, each oriented toward a problem. The teams meet once a week to examine results and adjust their goals.

Variations of self-management have been used for years in American colleges and universities. An example at our school was the self-study carried out every ten years by each academic department.

The self-study was an exercise in bottom-up self-management. It included the following steps:

–We met and reviewed larger institutional goals. Ours was a medium-sized, regional university, so we sought to detect and define needs in our region of the state, strong in agriculture, home to several military bases, and close to a major ocean port.

–We defined our departmental objectives. We attempted to spell out what skills and abilities could be delivered in each course in our curriculum.

–We gathered data about how well we were meeting departmental objectives defined by our last self-study. We designed questionnaires for students, faculty, and recent graduates, asking them for feedback and suggestions for improvements.

–We defined goals for the next ten years, specifying changes and improvements we would like to see and how we could measure them to see if they were accomplished.

How was self-management used in a departmental self-study project at a university?

During this entire process, we were never once told by an administrator above the department level how to do the job. We had previous self-studies as a model, but we were free to make creative changes.

We knew the resulting document would be reviewed at higher levels of the administration, and then it would have to be approved or revised, but it was accepted the way we submitted it.

Corporate Culture

Every company has its own culture, and corporate culture can determine whether employees are satisfied or disgruntled. Executive Mort Meyerson told how he returned to Ross Perot Systems in 1992, after five years away from the company, and found a poisonously negative corporate culture:

For example, I listened to some of our senior leaders talk about how they handled people on teams who didn't perform. I heard talk of "drive-by-shootings" to "take out" non­performers; then they'd "drag the body around" to make an example out of them.

They may have meant it only as a way of talking, but I saw it as more: abusive language that would influence behavior. Left unchal­lenged, these expressions would pollute the company culture. (Meyerson, 1997)

How did Meyerson attempt to improve the corporate culture at Ross Perot Systems?

In response, Meyerson started programs to make workers feel respected and valued.

We initiated a company-wide program to teach us how to dis­agree with each other without tearing each other down... During these seminars, we identified people who were abusive. We coached them and took them through a person reinvention process to show them new ways of leading...

We started to behave like a company whose people not only focused on day-to-day business and economic performance, but also concerned themselves with the well being of the people on their teams and the concerns of their customers. We were becoming a company where the larger issues of life were as important as the demands of profit-and-loss performance. (p.6)

What are some benefits of a people-centered management approach?

A compassionate or people-centered management approach turns out to be beneficial for all concerned. Naturally the workers like it, but there are many benefits for the company as well.

When morale is higher, employees are less likely to sabotage the company with unproductive practices (or bolts dropped into the door frames of cars). Customers feel better treated, and turnover rates are lower because fewer employees quit, so expertise is conserved and training costs are reduced.

A big change in job organization at some companies, during the 1990s, was the emergence of work teams. Sometimes each member of a team was expected to learn all the skills used by the team, so workers could be rotated periodically from one activity to another, relieving the tedium of repetitive jobs.

How were work teams used to relieve the tedium of repetitive jobs?

The Saturn auto company made this concept of work teams famous in the United States, although they were not the first to use the idea. Volvo, for example, has been doing it for decades. Saturn, as it turned out, did not succeed; it folded after the economic crisis of 2008.

The concept of work teams remains viable and widely employed in various industries. Work teams are a good example of modern workplace practices that require a flexible, educated work­force. Members of a team must interact and get along, so interpersonal skills are more important than before.

Stevens and Campion (1994) found that the most important social skills for work teams were ability to work with others in solving problems, ability to communicate, and ability to manage and resolve conflicts. Work group members are also required to have good cognitive skills. They must be flexible and able to learn many different jobs, because frequently they take turns doing each other's jobs.

How are companies changing what they look for in employees?

Landy, Shankster, and Kohler (1994) suggested that, because of the emer­gence of work teams and similar arrangements, companies should look upon organizational citizenship as a highly desirable characteristic in employees.

The Organization Man of the 1950s was a conformist who followed orders and did not rock the boat. The good organizational citizen of the 2010s is a flexible thinker and learner who knows how to cooperate with co-workers and communicate with leaders about suggested workplace, process, and product improvements.

Human Factors Psychology

Human Factors psychology is a branch of experimental psychology associated with industrial/organizational psychology. It concentrates on the interaction of people and machines so that products can be made user-friendly.

What is Human Factors psychology?

The discipline of Human Factors came into existence partly as the result of pilot errors during World War II. Human error cost many lives. Analysis of flying accidents revealed that many crashes were due to confusing layouts of instrument panels in aircraft.

Pilots were faced with a bewildering array of dials and gauges in the cockpit. They were expected to keep track of all pertinent information and respond appropriately during emergencies.

Human Factors psychologists helped to identify problems in cockpit design. They attempted to re-design instrument panels so the most important gauges were clear and easy to read, and other instruments responded in ways that were intuitive and natural for humans.

In the post-war economy, Human Factors researchers turned their attention to consumer products. Today, the design of electronic devices such as smartphones require that human factors be taken into account. Thoughtful design can also benefit kitchen appliances, office furniture, and many other products.

Good design can help the sales of any manufactured product. Poor design results in poor word-of-mouth reputation, or poor reviews on consumer sites, and this can drastically reduce the sales of a product.

Many amusing examples of bad design are found at Michael J. Darnell's web site, Visitors to the site are invited to submit examples of bad product design.

In each case, a product would be more convenient if the designer spent more time considering how humans interact with the product. For example, consider the "ergonomic toothbrush." A corres­pondent wrote to the web site about it:

toothbrush with odd handle
"Ergonomic" toothbrushes described on

This toothbrush comes in both right-handed and left-handed versions. It is contoured to fit the hand and has a depression for the thumb. The idea is that since you probably hold your toothbrush with the preferred hand, why not contour it to make it comfortable to hold?

The problem with using this toothbrush is that it was based on holding a tooth­brush in a stationary position. If you observe a real person (such as yourself) brushing teeth, people re-position a toothbrush continuously as they brush, switching it around as they move from one side of the mouth to the other, or from upper to lower teeth, or from front to back.

The user of this toothbrush faces a dilemma: do I rotate my grip on the handle and go against how the handle is shaped? A user complained, "The wrist must be held at an awkward angle. If the handle is rotated in the hand, it no longer conforms to the contour of hand." ("Ergonomic toothbrush?", May 10, 1999)

What was wrong with the "ergonomic toothbrush"? What is ergonomics?

The label "ergonomic toothbrush" is ironic, because ergonomics is the study of the efficiency and safety of human-machine systems. If the company pro­ducing this toothbrush had actually hired a human factors expert to test the ergo­nomics of their product, they would have discovered its deficiencies and either changed it or decided against bringing it to market.


Ilgen, D. R. (1999). Teams embedded in organizations: Some implications. American Psychologist, 54, 129-139.

Labor: Sabotage at Lordstown. Time Magazine. Retrieved from:,9171,905747,00.html

Landy, F. J., Shankster, L. J. & Kohler, S. S. (1994). Personnel selection and placement. Annual Review of Psychology, 45, 261-296.

Langfitt, F. (2010, March 26) The end of the line for GM-Toyota joint venture. Retrieved from:

Meyerson, M. (1996, April 30) Everything I thought I knew about leadership was wrong. Fast Company. Retrieved from:

Rapp, C. & Eklund, J. (2010) Sustainable development of improvement activities—the long-term operation of a suggestion scheme in a Swedish company. Total Quality Management, 13, 945-969.

Rousseau, D. M. (1997) Organizational behavior in the new organizational era. Annual Review of Psychology, 48, 515-546. doi:10.1146/annurev.psych.48.1.515

Stevens, M. J. & Campion, M. A. (1994) The knowledge, skill, and ability requirements for teamwork: Impli­cations for Human Resource Management. Journal of Management, 20, 503-530.

Watson, B. (2005, October 28) Retrieved from:

Write to Dr. Dewey at

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