Small Business Advice

The Application of Psychology in Business

The lessons of psychology can be used to create more productive work environments and maximize the performance of individual employees. We've outlined a handful of our favorite studies below, and shared how they can be applied to the business world.

Whether we’re working remotely or in the office, business is human-to-human exercise. Even with the help of powerful machines, humans still make the most important business decisions.

As a result, business professionals have much to gain from the field of psychology. Researchers have completed academic studies that provide insight into many aspects of business – management, negotiation, pricing, leadership and teamwork, for example.

We’ve collected a list of our favorite psychology studies below. We also discuss the business applications of each study, highlighting what business executives and employees can learn.

Table of Contents

Why is Psychology Good for Business?

Before we begin to explore ways that psychology influences best business practices, we need to first understand what psychology is. Psychology is the study of human behavior. There are many definitions, however, all of them support the claim that psychology allows us to understand individual actions on a cognitive level.

Psychology is critical to the workplace. As a business leader, it is important to be cognizant of ways that psychology can improve workflows and create productive working environments. Psychology helps inform organizations of workplace practices to keep employees motivated, productive, and satisfied.

There’s even a field called business psychology. As an applied science, business psychology investigates and identifies best organizational practices through the study of individual and collective behavior in the workplace.

How Can Psychology Help You in Management and Business?

Psychology research helps us understand people – how they think and make decisions, what motivates them, how they prefer to interact with others, and why they act the way they do.

Having a deep understanding of people is critical for getting a team of people to accomplish anything. It’s even more important in business where you’re trying to accomplish something exceptional with limited resources.

More tactically, business people can study psychology, and find ways to apply the insights to their day-to-day roles in the workplace.

What are the Applications of Psychology in Business?

Numerous psychology studies can be applied to every part of business. We've picked a handful of our favorite studies, outlined them below, and shared corresponding business lessons.

The Power of Music to Reduce Stress and Anxiety

According to the Bureau of Labor Statistics, Americans work an average of 35 hours each week. Although the average hours vary by occupation, it is not surprising that Americans spend a large portion of their time at work. Because of this, it is important that the workplace environment is optimal for productivity and positive workplace associations.

For centuries, music has been used to restore harmony between the mind and body. Most notable, is its ability to reduce the amount of stress and anxiety on individuals. Because music has the potential to influence people on both a psychological and physiological level, it serves as an important tool for managing stress.

According to PsychCentral, certain music initiates a relaxation response that produces a sense of calmness and can center your focus. By activating non-verbal areas of the brain, the sound of music reduces tension and trains the brain to improve memory. Regardless of what type of music you enjoy, music is arguably one of the best methods to improve your workflow.

Studies have shown that music can help reduce both the sensation and distress of both chronic pain and postoperative pain. In addition, making music can reduce burnout and improve mood.

Music Can Improve Focus at Work

For some, pressure at the workplace takes its toll on their emotional, mental, and physical well-being, stunting their capacity for optimal performance. A perpetual state of stress in employees can be harmful to business productivity and profitability.

On an individual level, workplace stress alters the state of your mind and body which can lead to negative outcomes. Science indicates that music, particularly classical music, can alleviate work-related stress by improving heart rate and blood pressure. By implementing music into the workday, businesses can improve the health of their employees as well as prevent high turnover rates.

Being able to control the amount of workplace stress imposed on your employees can keep them happier longer. Given music’s powerful influence over people's cognition and productivity, it may become essential for businesses to incorporate appropriate soundscapes into their workflows to improve productivity and physical well-being.

Autonomy in the Workplace Drives Productivity and Satisfaction

Autonomy in the workplace has a very positive effect on employees. Although autonomy can take on many different forms, businesses may define autonomy as granting employees freedom to set their own schedules, customize their workflows, or even allow them to work from home.

According to the John Molson School of Business, employees who are free to make their own decisions in the workplace are happier, more productive, and more loyal. Allowing autonomy in the workplace can increase productivity in instances when a job requires more skill or creativity.

A lack of autonomy can drive employees to seek out new opportunities, which can be harmful to long-term business if turnover remains high. An autonomous work environment is built upon trust, respect, and a culture of accountability. Business owners need to equip employees with the proper resources to thrive on their own.

These are the conclusions of a chapter in a book on workplace autonomy, Human Autonomy in Cross-Cultural Context: Perspectives on the Psychology of Agency, Freedom, and Well-Being, written by professors Marylène Gagné and Devasheesh Bhave.

“Autonomy is important in every culture,” Gagné said. “The perception of autonomy has very positive effects on workers. Autonomy is especially likely to lead to better productivity when the work is complex or requires more creativity."

Increase Autonomy to Improve Team Performance

One reason why autonomy is crucial in the workplace is that it helps to establish a solid sense of company culture within your organization. Autonomy can help employees feel valued in the workplace, which in turn leads to limitless growth opportunities. By improving interpersonal relationships within the workplace, employees will feel more comfortable and confident in their workflows, which can lead to an increase in productivity.

Work structure, such as employee involvement in decision-making or flexible work hours, are important aspects of choice that allow employees to thrive in the workplace. Promoting autonomy in the workplace means empowering employees to be self-starters in a way that is conducive to their best performance. A culture of autonomy will create healthier work environments and a stronger team that produces meaningful work.

The Power of Talking to Yourself

Talking to yourself is pivotal to your personal development. According to Linda Sapadin, talking to yourself "helps you clarify your thoughts, tend to what’s important and firm up any decisions you’re contemplating." By relying less on others for solutions you become more effective at problem-solving.

Vocalizing thoughts can help you process a situation and even assist with brainstorming different ways of approaching it. In the long-term, talking to yourself can help you gain confidence in making difficult decisions for yourself and guide you towards a more successful future.

Self-talk Helps You Achieve Workplace Goals

Listening to your own voice is important. In fact, talking to yourself is beneficial because it grounds you to the situation and task at hand, which can help you achieve your workplace goals. Researchers at the University of Michigan found that using second- and third-person pronouns in self-talk creates a psychological distance from anxiety-provoking events, which allows individuals to manage distressing feelings more efficiently.

Other Professional Benefits of Self-talk

As a business owner, there are professional benefits to self-talk. Talking to yourself can help you navigate various business scenarios that may involve rehearsing presentations or making a tough business decision. Practicing positive self-talk can sooth nerves caused by high-priority deadlines and can become a necessary process before an important meeting. Ultimately, talking yourself through a process can boost your self-confidence and help you persevere in the workplace.

Pets Relieve Anxiety, Depression & Lower Blood Pressure

Most pet owners are clear about the immediate joys that come with sharing a home with an animal. However, many of us remain unaware of the psychological benefits that are accompanied with owning a pet. Many studies have explored the benefits of human-animal companionship, especially as it relates to physical and mental health. According to PsychCentral, there are many ways animals can benefit our overall well-being.

Key Takeaways

  • Pets can lower stress levels among individuals
  • Pets can improve relationships at work and, in turn, increase productivity
  • Pets help manage feelings of anxiety and supply a stream of companionship

The Health Benefits of Pets

Many pets, especially dogs and cats, have evolved to become attuned to human behavior and emotions. Because of this, they are able to interpret a humans' tone of voice, body language, and gestures to actively gauge our emotional state. As a pet-owner, you can reap the benefits of exercise and play that can improve your overall cardiovascular health. Perhaps more importantly, pets can reduce levels of anxiety or stress and even ease the feeling of loneliness experienced throughout your day-to-day.

Exposure to pets is beneficial to human health and helps build better interpersonal relationships. In recent years, the positive impact of pets has become popularly acknowledged around the globe. Studies have shown that exposure to a dog or cat can elevate levels of serotonin and dopamine, which relax the body. Simply, a pet’s presence can significantly lower blood pressure and heart rate both before and while performing stressful mental tasks.

Many companies have taken action to introduce pets into the workplace in an effort to increase workplace happiness and reduce stress. Research shows that physical touch can be one of the most effective ways to decrease stress. Holding or petting an animal can increase levels of serotonin and dopamine in the office. Ultimately, pets provide constant stimulation which alleviates stress and act as immediate mood boosters in high-stress situations.

The Numerous Benefits of Pets in the Workplace

For business owners or managers, having an office pet could have a positive impact on your company and workflow. A pet-friendly workplace tends to increase employee satisfaction and company morale. Animals are great vehicles for social interactions. In an office, this can help create a welcoming environment for all employees. However, it may not be suitable for all work environments. Overall, office pets can:

  • Boost employee satisfaction
  • Boost performance of employees
  • Boost perception of business
  • Boost recruitment of potential hires
Bruce Hogan

Bruce Hogan is Co-founder & CEO of SoftwarePundit. He leads the team's research and publishes content about software products and trends. Bruce has experience investing at multi-billion dollar private equity firms, leading teams at venture-backed technology companies, and launching new businesses. You can connect with Bruce on LinkedIn.

Bruce is an expert in several software categories including:

  • Dental software
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