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3 Ways I/O Psychology Can Help You Make Better Hiring Decisions with AI

Integrating I/O psychology into AI recruitment platforms is crucial to making the right hiring decisions.

Industrial/organizational (I/O) psychology has been around for a century. From early beginnings in WW1, when the U.S. military began leveraging the concepts of I/O psychology to soldier performance in the battlefield, to 2021, when I/O psychologists are transforming the way organizations apply AI to the hiring process.

This article will explore the why and how of I/O psychology in an AI-driven recruiting ecosystem. But before we do that, here’s a quick look at what it actually is:

What Is I/O Psychology?

It’s a branch of psychology used to study human behavior in organizations and the workplace. I/O psychologists apply the foundational principles of individual, group, and organizational behavior to solving workplace problems.

Hugo Munsterberg is widely credited as one of the early founders of this specialization. A Harvard professor, Munsterberg, began studying human behavior in the workplace in the early 1900s He experimented with determining what candidates were best suited to become trolley operators based on their ability to mitigate accident risks. This was one of the earliest simulations around competency-based recruitment.   

During World War 1 (WW1), Robert Yerkes, a student of Munsterberg, convinced the U.S. government that I/O psychology could be used to recruit the best soldiers for the war effort. He and a group of researchers developed numerous psychological tests to determine what type of soldiers are best suited for specific roles. These tests were later dubbed the Army Alpha and Beta tests. Since these tests just required a pencil and a piece of paper, administering these tests in large group settings was easy. Which eventually helped these assessments gain traction across large-scale organized industries such as manufacturing.

Cut to 2021 – as technologies such as artificial intelligence and machine learning make their way into the recruitment process, I/O psychology has emerged as a critical factor influencing the ultimate success of AI-led recruiting processes.

I/O Psychology and AI: The Best Recipe for Recruiting Success?

As AI and ML-based talent assessments become ubiquitous across the board, I/O psychology serves an important purpose – determining the context and evaluating the judgment parameters of the algorithm. While technology is incredibly effective in measuring abilities, skills, and credentials, it often takes a very narrow (numerical) interpretation into account.

I/O psychology helps identify traits and characteristics that are difficult to measure, such as culture, training needs of candidates, value alignment and more. Most ATS systems and recruiting platforms are designed to enable organizations to automate and scale sourcing, assessment, and evaluation. But as candidates move towards the bottom of the recruiting funnel, context and judgment become the most critical factor influencing the final hire decision. For instance, organizations would typically cite a candidate’s cultural fit as an important consideration for recruitment. Now, however, hiring for cultural fit could be considered a discriminatory hiring practice.

I/O psychology provides the contextual information around a hiring decision. The role of I/O psychology becomes even more pronounced when you consider the transformation underway in the very nature of jobs. McKinsey predicts that by 2030, up to 375 million workers may need to switch their occupational categories.

With new skills, capabilities, and technologies coming to the fore, a contextual understanding of these changes will be essential to succeeding with recruitment.

3 Ways I/O Psychology Helps Leverage AI for Recruitment More Meaningfully

We’ve already established that AI and ML hiring solutions are as good if not better than humans at statistical analysis, accuracy, and speed. However, recruitment is still an inherently human process. It’s as much about forging human connections and building trust as it is about skills assessment. So, let’s take a look at how I/O psychology can help recruiters and employers retain the human element while automating the hiring process:

1. Eliminate Bias

AI systems are only as good as the datasets they are trained on. And these datasets can often feature inherent biases that become embedded in AI systems. Remember Amazon’s AI engine that preferred males applicants over females for technical coding roles? It’s a classic case where insufficient data around a modern job was used to develop invalid predictions. I/O psychology brings much-needed context to situations like these.

2. Create Accurate Assessments

If you’ve ever been a part of an interview panel, you’re probably aware of how similar questions are posed to multiple candidates. In the AI context, standardized assessments administered across a wide pool of candidates can lead to a common frame of reference that limits the ability of the predictive model to make accurate judgments. I/O psychology can be applied to this process to define the “structure” of these assessments and map them to relevant competencies.

Drive Visibility into the “Black Box” Predictions

Most AI and ML systems are trained on big data and often yield black box predictions. This means that while the algorithm itself is well understood, the way it arrives at the prediction is too complex to interpret. In other words, we have little visibility into how AI systems make their predictions with big data. A single random forest algorithm could have hundreds or thousands of different predictive trees that represent predictive relationships. AI recruitment solutions cannot explain how the specific factors in the big data resulted in a set of hiring decisions. Here, I/O psychology is valuable in informing the validity of datasets and the AI methods applied. Think job analysis.


The events of the past few years – rapid technological advancements, consumerization of AI, and a global pandemic have transformed the nature of work. So, it is imperative that hiring decisions for the new jobs being created and the older ones undergoing transformation, are based on the principles of fairness, objectivity, and legality. I/O psychology is indispensable to achieving these goals.

We expect I/O psychology and expertise becoming a competitive differentiator for vendors offering AI-based recruitment solutions. The future of recruitment will demand closer collaboration between psychologists and data scientists to develop a diverse and relevant range of knowledge, skills, and capabilities to improve AI-based talent assessment and recruitment platforms.  

Curious to learn how Yobs is integrating I/O psychology into AI-led talent assessment? Let’s talk!