Business Psychology

Psychology is widely used in modern business due to its numerous benefits. For example, it helps to set effective relations with employees and attract more clients. Not all aspects of psychology, however, could be applied in business. The aim of this paper is to research the ways in which psychology is used in companies. Besides, it will discuss future perspectives of organizational psychology and its effectiveness in small businesses. In addition, the paper will unfold which theories and concepts can be implemented.

Ways of Applying Psychology in Business

Psychology explains past and future behaviors and their underlying motives. This knowledge could be used in business. The advantages of the ability to predict future behavior are significant. For example, this helps to determine the possible response of employees to planned changes. If an employer predicts the negative reaction, he/she will have time to design strategy to reduce potential resistance. It is determined that misunderstanding and unprofessional management of alterations is the most popular reasons why many innovative initiatives fail, which results in poor performance of the whole company.

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Applications of psychology can make business leaders more successful because they receive the opportunity to discover more information about themselves and about their management skills of labor forces. For example, business leaders can obtain more information about the nature of such work-related issues as conflicts, low motivation, bullying, absenteeism or opposition to alteration. Despite calling these issues organizational, their origins deal with behaviors of individuals within organizations. Therefore, the aim of each business leader should be finding the ways for understanding his/her personal behaviors and motivations as well all his/her employees, and psychology serves as a tool in this process. In other words, knowing about hidden reasons that cause underperformance of the organization is very beneficial for any business.
Overall, organizational psychology can be applied in six different ways to help business. First, it can improve its effectiveness. For example, managers/business leaders need to use their knowledge of psychology to explain job responsibilities and make sure that assignments are finished on time. Second, psychology is useful for hiring process. Particularly managers can hire appropriate workers that will demonstrate high performance. Third, it is necessary for developing leadership strategy, because knowledge of psychology allows business leaders to determine key employees and satisfy their needs. Besides, psychology can help to manage modifications in the organization, because the ability to forecast employees’ response is the first stage in managing any alterations. Another way of using psychology in business is creating successful teams, which is possible through the application of profiling (determining the roles of each team member and identifying his/her strong and weak characteristics). Finally, psychology can help the company to reach its potential and be high performance organization due to proper marketing tools and forecasting consumer behavior.

The Most Effective Theories and Interventions

Many theories, concepts and techniques can be effectively used to be successful by businesses. In particular, psychology of motivation should be applied in the work with staff to encourage employees to reach the organizational goals. For example, Abraham Maslow created a hierarchy of needs. The scientist stated that individuals were motivated by their needs. Therefore, he included the following needs into a triangle in a specific order. The first level consists of psychological needs (e.g. salary and satisfactory working conditions). The second level incorporates safety needs (e.g. safe workplace and job security). The third level relies on social needs (e.g. pleasant atmosphere and amiable colleagues). The fourth level is looking to satisfy esteem needs (work position, acceptance of progress). The fifth level is devoted to self-actualization (possibilities for creativity, individual development and job promotion). Thus, the task of the business leader is to satisfy all these needs from the first level to the last one.
Furthermore, many interventions can be used with potential clients. For example, it is efficient to use effort justification that is related to theories dealing with cognitive dissonance. According to it, customers tend to value products more if they need to make effort to obtain them. For instance, Facebook, Inc. designed a system that required customers to receive invitation in order to join the social media web site. This forced individuals to search an invitation to join the online community. Companies trying to limit sales of new products also use the same intervention. Customers that had to stand in line to receive access to the restricted supply would value their purchase more.
Moreover, even classical conditioning of Ivan Pavlov could be used in business. According to his research, it is possible to reach certain emotional or/and psychical response through stimuli. In business, it is effective to form behavior of clients by pairing products with stimuli too. Specific smell, sound or visual image can immediately raise a strong emotion in people. This happens because the sounds, images or smells trigger memories of something important. For instance, when consumers see yellow arches shaping letter M, their mouths might begin to water because they associate this image with McDonalds. Furthermore, it becomes an unconditional response.

Aspects of Psychology that I Like

I believe that industrial/organizational psychology contains the most effective tools for business because this branch of psychology concentrates on studying people’s behavior in the workplace. Business cannot work effectively without suitable workers. Organizational psychology covers such areas as job analysis, selection and placement, training and development, performance management and evaluation, organizational development, leadership development, team building, quality of work life and ergonomics.
In particular, I find effective to pay attention to work-life balance. In case if employees cannot manage their lives, businesses have higher turnover and reduced morale. Workers are also absent at work more often. At the same time, family-friendly workplace as well as caring employers and families lead to reduction of work-family conflict. The specific attention should be paid at working parents. Businesses need to assist them in balancing the demands of their personal life and work. Unfortunately, only few American businesses have family-friendly corporate culture. Moreover, American companies are not family-focused in comparison with other developed countries. For example, not all American companies have paid maternity and paternity leave, alternative timetables and paid sick days. The aim of psychologists working in business is to observe all the trends as presented above and making changes in the organization to be efficient.

Aspects of Psychology that I Do Not Like

There are also aspects of psychology that are not effective in business. First, I believe that knowing about psychological disorders is not beneficial for a business leader. Business psychologists can potentially meet customers with anxiety disorders, mood disorders, eating disorders, personality disorders, the dissociative disorders or schizophrenia during selecting and hiring new personnel. However, they usually do not have time for determining these issues and it is not their direct responsibility. Clinical psychologists usually diagnose psychological disorders. This aspect of psychology is not effective during work with customers since businesses usually focus on attracting healthy clients.
Besides, I do not find interesting the information about various therapies because business leaders are not required to conduct them. It is not necessary for work with clients. If some employees need therapy, it is more reasonable to send him to certain clinic to get a professional help. Therefore, neither information about therapies nor knowledge about psychological disorders can improve the performance of business, increase sales, and create effective team, so I do not find these aspects interesting and useful for business.

Cross-Cultural Lens towards Potential Clients

Globalization of marketing and understanding of cross-cultural consumer psychology has increased the importance of using cross-cultural lens regarding potential clients in any business. For example, cultures affect the messages used in advertisements. American advertisers prefer to focus on benefits and features of an advertised brand. It is based on the idea that learning some information about the product precedes such responses as liking and purchasing the brand. Therefore, American adverts usually try to teach clients about some brand. This knowledge should be used during designing advertising campaigns for American market. The objective of advertisement in Japan, however, differs and advertisers should consider this too. For example, Japanese advertisements are aimed at showing customers that the company is their friend and satisfies their needs. Japanese advertisers believe that clients will buy some product if they feel connection to it and trust the organization. Besides, Japan, Korean and other counties from this region belong to cultures that need indirect communication strategies and symbolism, whereas American customers respond to direct practices.

Ideas for Future Studies

I would like to study deeper cross-cultural consumer psychology. First, it is very close to business. Second, the textbook lacks information on this issue. Besides, I believe that it is important to consider cultural differences when working on international market. The strategy that is effective in one culture, can fail in another due to different cultural peculiarities. For example, Americans like when some brand is compared with other, whereas in Japan, it is not effective.

Psychology for Small Business

The advantage of applying psychology in business can reduce costs of a company, and, thus, is suitable for small businesses with limited budgets. For example, they could apply the effects of color perception. For example, restaurants or cafes should use yellow for decorating their interior because human mind subconsciously associates it with hunger, so it increases people’s appetite. Another idea is using effort justification that has already been discussed. These methods do not require significant financial spending but can influence customer behavior, particularly motivate clients to purchase more products or services of a company.

Emerging Changes in Organizational Psychology

Organizational psychology is expected to change. In particular, focus on individual psychology is growing. It will become more relevant and useful to clients and businesses. Effects of technology, economy and globalization will become more significant. Besides, the roles and careers of organizational psychologists will change. Overall, the science will become more influential and more practical, so professionals, who want to work in this field have to focus on practical aspects of organizational psychology. In particular, they should concentrate on aspects of psychology that deal with the ways in which customer behaviors could be changed. Businesses need to operate in a highly competitive environment even now. In the future, competition will continue to increase, so each business leader needs to know psychology of its clients and employees.


In conclusion, use of psychology in business is beneficial. It can help to understand behaviors of employees and predict the reactions of customers. The most interesting aspects of the science for business are related to organizational psychology. Information about psychological disorders and therapies cannot be applied effectively. In the future, I would like to study more about cross-cultural consumer psychology because modern businesses try to expand their presence across many cultures, so knowing peculiarities of human mind in different counties is useful.

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