The confluence of dynamic external (socioeconomic, business, military, legal, technology) and internal forces (individuals, theories, research, applications) transformed the science and practice of industrial-organizational psychology from the foresights of a few individuals into a legitimate scientific and applied discipline. Throughout the evolution, an underlying theme persisted: The study and use of psychology for improving the workplace and work lives. As early as 1913 Hugo Munsterberg advocated that the purpose of a new applied psychology was to connect laboratory science with the problems of business.
The Roots: Late 19th Century
The birth of an applied psychology, then labeled business psychology, economic psychology, or industrial psychology, was linked to the inception of psychology as a scientific discipline at the end of the 19th century. Thus I/O psychology has its roots in experimental psychology, the study of individual differences or differential psychology, and psychometrics. Wilhelm Wundt, in his German laboratory, used the experimental method to control observations for studying objectively mind and behavior to distinguish psychology from philosophy. Two graduates of Wundt’s doctoral program, James McKeen Cattell and Munsterberg, relocated to the United States and initiated the application of psychology to solve industry problems. Unlike Wundt, who was interested in general laws of behavior, Cattell measured individual differences and introduced the mental test. He was first located at the University of Pennsylvania and then Columbia University. Munsterberg headed the psychological laboratories at Harvard University in 1892. Also during this time, Francis Galton coined the term co-relation, and Karl Pearson discovered the mathematics behind calculating the correlation coefficient. The American Psychological Association (APA) was founded in 1892 to formalize psychology as a discipline.
The Beginning: Early 20th Century
Psychologists were compelled to legitimize their science by demonstrating the value of psychology to society because of institutional pressures and society’s images of psychology as common sense or as occultism and superstition. A great emphasis was placed on empirical methods, which resulted in various measurement methods (mental tests, observations, and case studies) and statistics for measuring and analyzing individual differences (regression, simple correlation, and partial correlation). Meanwhile, an American functional psychology called functionalism was formulated, which challenged the pervading structuralism view in psychology because it emphasized how and why the mind adapts the individual to its environment rather than focusing solely on the structure, or what, of the mind. This functional perspective provided a foundation for applying psychology.
The primary business objectives during the late 19th and early 20th centuries were to improve efficiency, increase productivity, and decrease costs through standardization and simplification. Scientific management experts Frederick Taylor and Frank and Lillian Gilbreth addressed these objectives by investigating and designing work to improve efficiency. Through the use of time and motion studies, a precedent was established for scientists to enter organizations. In 1915 Lillian Gilbreth was the first individual to complete a doctoral dissertation on the application of psychology to the work of classroom teachers.
A focus on productivity influenced business leaders to determine strategies for advertising, selling, and distributing their goods. In 1901 young psychologist Walter Dill Scott gave a presentation about the value of psychology for advertising to the Agate Club, a group of business leaders in Chicago, and then published his ideas in a book, The Theory of Advertising, in 1903. In 1913 Munsterberg published Psychology and Industrial Efficiency, the first major text on applied psychology.
In 1915 Walter VanDyke Bingham directed the Division of Applied Psychology at Carnegie Institute of Technology (CIT) to create opportunities for research, applications, and collaborative efforts with industry. Bingham hired W. D. Scott in 1916 to lead the Bureau of Salesmanship Research. Scott was also appointed professor of applied psychology, the first appointment by that title in academia. Bingham, Scott, and colleagues developed methods for selecting and training sales personnel (e.g., personal history blank, interview, reference form, mental alertness tests). Later, the bureau was renamed the Bureau of Personnel Research.
In the beginning the objective of an industrial psychology was to improve organizational goals (productivity and efficiency) primarily by applying psychology with an emphasis on individual differences, through selection and training. For example, in 1910 Munsterberg developed an aptitude test for streetcar operators. Most applied psychologists were employed at universities; the first full-time psychologist in industry on record was Henry Link, director of training and psychological research at the Winchester Repeating Arms Company, in 1917. The same year the current premier scientific journal, Journal of Applied Psychology, was created.
World War I: 1917-1919
When the United States entered the war in 1917, Robert M. Yerkes (then president of APA) and other psychologists formed a committee to evaluate a psychological examining program for recruits. Simultaneously, Scott and Bingham formed the Committee on Classification and Personnel to aid the Army in the selection of officers. These psychologists collaborated in developing intelligence tests to be administered to groups, known as the Army Alpha and Army Beta group mental ability tests. These tests paved the way for large-scale intelligence testing and for later expansion of psychological testing into government, industry, and education.
After World War I: The 1920s and 1930s
Forward-looking managers and organization leaders sought the use of psychological applications, techniques, and programs developed for the Army. Scott and his colleagues of the Army’s Committee on Classification and Personnel formed the Scott Company in 1919, the first I/O private consulting firm. The consultants used mental ability group tests, job standards, performance ratings, and oral trade tests. The CIT expanded its work to include investigating vocational interests and developing sales training, with the establishment of the Research Bureau of Retail Training. The Carnegie program awarded the first PhD in industrial psychology to Bruce V. Moore in 1921 and was instrumental in preparing several applied psychologists, especially women. Also in 1921 Cattell organized the Psychological Corporation, which consisted of 20 influential psychologists as directors and approximately 170 psychologists holding stock. The organization’s purpose was to advance and promote applied psychology.
During the 1920s, the emphasis was on the use of mental ability tests to select proficient employees or employment testing, until around 1930. In addition, the concepts of validity and criterion were introduced, analysis of variance (ANOVA) was developed, the graphic rating scale for performance appraisal was published, and the measurement of attitudes was improved by the scaling techniques of L. L. Thurstone in 1927, and later Rensis Likert in 1932. A widely published research program known as the Hawthorne Studies was conducted at the Hawthorne Works of the Bell System’s Western Electric Company in Cicero, Illinois. The original purpose of the study was to examine the relationship between illumination levels and productivity. Researchers observed that workers changed their behaviors regardless of the illumination levels. Results revealed that work groups and attitudes had an effect on performance and that workers’ behaviors changed because they were being watched, which has become known as the Hawthorne Effect. These studies are frequently regarded as the basis for a human relations movement in I/O psychology.
An emphasis on employee welfare during the depression led to development of personnel counseling as a popular organizational intervention for helping employees solve problems. Other developments in the 1930s included the 1932 publication of the first modern I/O psychology textbook by Morris Viteles, the formulation of work motivation theories, attempts to measure job satisfaction, introduction of factor analysis, and the 1937 establishment of the American Association of Applied Psychology (AAAP) Section D: Industrial and Business Psychology, an early pro-fessional organization for psychologists in industry. The U.S. Employment Service developed the General Aptitude Test Battery (GATB) and completed the first large-scale systematic analysis of jobs, the Dictionary of Occupational Titles (DOT), in 1939. This project moved psychologists toward realizing the importance of matching individuals with job requirements.
World War II
World War II brought new challenges and psychologists were ready to respond. Significant developments included the Army General Classification Test (AGCT), situational stress tests, and the selection and simulation training of pilots to fly warplanes. The U.S. Office of Strategic Services (OSS) developed the assessment center as a technique for selecting spies and sabotage agents. One of the first comprehensive applied psychology programs was the Aviation Psychology Program directed by John Flanagan. World War II served as an impetus and was a turning point for leadership research.
Beyond World War II: 1940s and 1950s
After the war the economy provided prosperity, affluence, education, and a heightened awareness of the good life. An explosion of psychological applications and research opportunities occurred, especially in commercial testing. The focus was on fitting people for jobs and fitting jobs for people. Other areas included job analysis and job evaluation, salaries and wages, placement, promotions, training, performance appraisal, job satisfaction and morale, counseling and guidance, labor relations, industrial hygiene, accidents and safety, equipment design, and quality circles. The forced choice rating system for evaluating performance was introduced during the 1940s. Work motivation theories were further developed and leadership research projects such as, the Ohio State Leadership studies ensued.
The economic and political division of the world along capitalist-communist lines, the emergence of the Soviet Union as a superpower, and the threat of nuclear war increased military spending. Several military research centers were created, such as the Navy Personnel Research and Development Center (NPRDC) and the Air Force Human Resources Laboratory (AFHRL). Psychological research organizations were created (American Institutes for Research, for example); consulting firms were established, such as Richardson, Bellows, Henry, & Company; and research groups were formed in private corporations including General Electric and Standard Oil of New Jersey. For example, a research group at the American Telephone and Telegraph Company (AT&T) was created in 1956 to conduct a longitudinal study to discover qualities related to managerial success and advancement in the company. Universities also organized research centers to investigate aspects of work. In 1944 Kurt Lewin established the Research Center for Group Dynamics at the Massachusetts Institute of Technology, where he collaborated with a similar group in London, the Tavistock Institute of Human Relations. The establishment of numerous graduate programs further legitimized I/O psychology as a discipline.
In 1945 the AAAP merged with the APA to form APA Division 14, Industrial and Business Psychology. Several division members and others began meeting separately in a group called Psychologists Full-Time in Industry to discuss pertinent topics. Additional informal groups were established in the 1950s—such as the Dearborn Conference Group and the No-Name Group—with the purpose of facilitating communication and interaction to advance the science and practice of I/O psychology.
By the end of the 1940s, the discipline of I/O psychology had dramatically evolved. Viteles revised the title of his 1932 book in 1953 to Motivation and Morale in Industry because of numerous changes, including more complex theories of motivation, and attention to emotions and attitudes, such as job satisfaction. Edwin E. Ghiselli and C. W. Brown published a major text, Personnel and Industrial Psychology, in 1948, which became the key reference in I/O training and education. Modern cognitive psychology began in the 1950s, which led to significant developments in years to come. One survey revealed at least 1,000 psychologists who were employed full-time in industry in the United States in 1959.
The 1960s And 1970s
Unrest surfaced in American society because of changes in values and enhanced attention to discriminatory and unfair practices, the Vietnam War, baby boomers in the workforce, and international and foreign competition. The civil rights movement had begun in the 1950s when the separate-but-equal doctrine in education was struck down in the case of Brown v. Topeka Board of Education (1954). The Civil Rights Act (CRA) of 1964, Title VII, prohibited discrimination in employment because of race, color, religion, sex, or national origin. This and other legislation, such as the Age Discrimination in Employment Act of 1967, significantly influenced I/O developments in fair employment practices and test validation. The development of guidelines for doctoral training in industrial psychology in 1965 further legitimized the discipline of I/O psychology.
A new generation of employees questioned the authority of organizations, which stimulated interest in democracy and autonomy in the workplace. These changing societal views, along with flagging productivity, forced organizations to rethink their ways of dealing with and managing employees. North American companies changed from highly bureaucratic authoritarian structures to open systems, emphasizing total quality management, teamwork, and employee participation. How the organization could best serve the individual became important. Research was stimulated in areas of communication, conflict management, socialization, organizational climate and culture, and group development and maturation. The creation of interventions for facilitating organizational development (OD) surfaced.
During the 1970s several Supreme Court decisions, including Griggs v. Duke Power Co. (1971), further highlighted the need for job analysis and test validation to defend tools and techniques used for personnel decisions. The federal government developed administrative guidelines for employment selection procedures, which included definitions of adverse impact and employment discrimination. Validity generalization and meta-analysis were introduced as approaches for generalizing validity studies across various jobs and organizations. Cognitive-based theories began to emerge, especially in the areas of motivation and leadership. In 1976 a one-volume Handbook of Industrial and Organizational Psychology was published by Marvin Dunnette.
Because of the changing nature of the field, APA Division 14, Industrial and Business Psychology, changed its name in 1973 to better reflect the discipline’s science and practice. Organizational was added to the name to become Division 14, Industrial and Organizational Psychology. Other developments included the establishment of consulting firms such as Development Dimensions International and the Center for Creative Leadership; the implementation of teams in business and industry; and the formulation of social learning theory, which influenced training approaches and conceptualizations of work motivation.
1980s And Beyond
In the 1980s stagnant productivity and threats to economic well-being heightened concerns about productivity and quality. Serious attention was given to utility analysis, and a renewed interest in organizational development built relations between organizations and employees. With the fall of Communism and the passage of the North American Free Trade Agreement (NAFTA), a global and diverse workforce became commonplace. Other changes included increased competition, restructuring, mergers, and acquisitions. The Americans With Disabilities Act in 1990 created an emphasis on identifying essential job functions, physical requirements, and job design. The CRA of 1964 was amended by the CRA of 1991 to prohibit quota hiring, which renewed interest in fair personnel decisions.
In 1982 APA Division 14 incorporated as the Society for Industrial and Organizational Psychology (SIOP) to achieve some independence from the APA. The overall purpose of SIOP did not significantly differ from the purpose established by the AAAP Section D in 1937. In 1988 some SIOP members elected to join the newly formed Association for Psychological Science (APS), which was established for psychologists with scientific interests.
Although military spending on research decreased during this time period, some projects were successful. In 1990 John Campbell described Project A, a large-scale project for the U.S. Army; this endeavor involved several psychologists over a 10-year period to research the selection and classification of military personnel and develop the Armed Services Vocational Aptitude Battery (ASVAB). Another example of military research was the extensive investigation of team training and performance completed by the U.S. Navy’s Training Systems Center.
A plethora of developments in I/O psychology have occurred since the 1980s. These include a cognitive perspective of performance appraisals; organizational justice theory; computerized adaptive testing; personality testing for employment; Internet for recruitment, assessment, and selection; research on work stress and work-family balance; the Occupational Information Network (O*NET) to replace the DOT; and the second edition of the four-volume Handbook of Industrial and Organizational Psychology.
Over the years I/O psychology shifted from a simple, narrowly defined technical field focused on individual issues for accomplishing organizational objectives to a complex, broad scientific and applied discipline emphasizing individual and organizational issues for achieving both individual and organizational goals. Today the objective is to improve both organizational goals or efficiency and individual goals or efficiency by applying psychology and by theorizing and researching psychology in the workplace, with consideration for individual and organizational factors. The key challenge within the discipline is to maintain an identity as a rigorous scientific discipline, while at the same time providing a growing range of professional services and applications.
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