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 and business software, 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.

Herd Mentality Allows Just 5% of a Group to Influence the Rest of the Crowd

Herd mentality is the phenomenon where an individual, or group of people, may follow the lead of a collective group rather than drawing on their own analysis. It can be distinguished by adopting similar behaviors as nearby entities of influences. For example, as a consumer, we may filter online products by customer satisfaction which would allow us to see how the majority ranks a certain product. This is an example of herd mentality.

According to a study conducted by the University of Leeds, it takes a minority of just five per cent to influence a crowd’s direction – and that the other 95 per cent follow without realizing it. Jens Krause, an expert in Behavioral Ecology, led this experiment which suggested that humans subconsciously flock in a way similar to animals.

The study identified groups that were tasked with randomly walking around a large hall. Within the group, a select few received more detailed information about where to walk within the building. With this information, participants were not able to verbally communicate or gesture to one another.

The findings showed that in all cases, those informed of detailed information were followed by others in the crowd.

Pay Attention to How Your Organization Makes Decisions

Psychological research shows that herd mentality allows just five per cent of a group to influence the rest of the crowd. In a business setting, this can lead organizations and teams to make suboptimal decisions.

By nature, humans want to be part of a larger organization. However, instead of sacrificing your decision-making power you should invite collaboration of ideas and problem-solving in work environments.

At your company, it’s critical to pay attention to how consensus is established around key decisions. Given the tendency of humans to use herd mentality, it’s a good idea to implement processes that encourage some healthy debate. This will help your team make better decisions, and not fall into the trap of reaching consensus around the first solution that seems viable.

Understand the Mere Exposure Effect

The mere exposure effect is a psychological phenomenon whereby people feel a preference for people or things simply because they are familiar. Also known as the exposure effect and the familiarity principle, the mere exposure effect exists in many facets of everyday life.

In advertising, the more exposure you have with a brand is likely to increase the level of trust between you and the brand. This phenomenon occurs simply because of exposure. Becoming accustomed to the logo or jingle can instill an idea that the company is trustworthy.

Social psychologist Robert Zajonc coined the term after conducting a series of experiments that involved the study of images and other various forms of representation. Some examples included foreign words or a strangers’ face.

The participant pool included various levels of familiarity with the articles and, after it was presented, each participant identified the article on a scale of pleasantness. The results showed that those who had been previously exposed to the article tended to admire it the most. Further studies showed that this phenomenon occurs when individuals are stimulated by images, colors, people, and other visual stimuli. These individuals also have a higher favorability towards an item that has been presented to them in the past.

Remind Your Team That Change is Good

It’s helpful to know that your team will have a preference for things that are familiar. While this will help them succeed at repeated tasks and enjoy their jobs more over time, it can also make them resistant to change.

As a leader, it’s important to remind your team that change is good, and often necessary for business success. Discovering new, and better ways of doing things is how companies and individuals improve over time.

Here are some examples of ways to maintain a healthy level of change inside your organization:

  • Change seating arrangements every quarter
  • Ensure team members change projects a few times a year and get to partner with different coworkers
  • Refresh the company strategy each year ahead of team planning

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.

The Effect of Rumination on Work Life

Throughout our lives, we may develop unhealthy habits that lead to negative experiences at work. One of these habits includes rumination, which is defined as an unproductive cycle of self-doubt and fear over things you feel could have done better in the past. Many of these associations become damaging when every event becomes a mental block to your productivity and self-worth.

For many ruminators, it is difficult to remove themselves from the root of this cycle. Those who ruminate are more likely to develop depression and anxiety, which can continue to fuel ruminative thought patterns. Below, you will find insights about the impacts of rumination from experts in the field of psychology.

Clinical Studies on Ruminative Thinking

Research from Susan Nolen-Hoeksema, Ph.D, a psychologist and professor at Yale University, found that when people ruminate they tend to dwell on the causes, situational factors, and emotional experience of distressful events. Rumination has been found to be one of the common links between anxiety and stress, and in the workplace, it can negatively impact individual thought-processes and even responsibilities at work.

According to research, rumination is associated with a variety of negative consequences, which can create a lifetime of unhealthy coping habits. Rumination can be an irreversible cycle of negative thoughts that interrupts your daily tasks. Ruminators often struggle to seek solutions to hypothetical problems due to the effect that ruminative thinking has on your confidence and problem-solving ability.

A separate UK-based study, conducted by PWC, found that two in five employees described having reduced their work responsibilities due to their physical and mental wellbeing. Cycles of rumination can increase self-doubt and block the flow of ideas between employees.

Your ability to problem-solve may also deteriorate as a direct result of rumination. While it may be true that planning is essential to overcoming a difficult problem, those who ruminate think endlessly about a situation without ever developing a proper solution. Fixation is momentarily placed on the problems, or future problems, of an event rather than focusing on solutions. Rumination is connected to many forms of self-sabotage that will stifle work relationships and productivity flows. However, there are many ways to distract yourself from ruminative thoughts. Some include:

  • Engage in Physical Activity: Find ways to distract yourself from ruminating through exercise or timely walks. Shifting your focus to your body can help clear your mind and create a positive experience. In the workplace, ergonomics can be one way to keep your body active in a short amount of time.
  • Fill your mind with positive thoughts: Get your mind off of your ruminations by participating in your favorite activity or trying out a new hobby. You may also invest in sensory fidget toys to reduce stress and anxiety at work.
  • Be self-reflective: According to Nolen-Hoeksema, self-reflection can help you identify concrete solutions that will help you overcome ruminative thoughts.

Acknowledge and Address Rumination at Work

According to a 2017 survey, 61% of Americans cite work as a significant source of stress. Thinking about work issues outside of working hours is quite common. On one hand, it can be beneficial for employees and could lead to new insights about work-related projects and events. On the other hand, when thoughts are unwanted or outside of employee control, it can become detrimental to their overall health and wellbeing.

Business interventions for reducing rumination could include access to a gym membership or other recreational activities. Creating a healthy working environment should involve reducing overwhelming work demands or providing individuals with access to coping resources in an effort to mitigate work-related stressors.

Recognizing habits of rumination can be a difficult task. In order to overcome obstacles of ruminative thinking, you need to become more aware of workplace triggers and strategize ways to mitigate the problem on an individual level. When you ruminate, you tend to go over the same overwhelming scenario in your mind, therefore, the thought is never broken down in a productive way. The distraction tactics above can also be leveraged to overcome workplace rumination.

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

The Power of Play for Adults

In the workplace, productivity has become a dominant measurement for performance and peak efficiency. Between childhood and adolescence, work consists of more assignments, more work, and more structured practices. With our jobs, finding time to play is not a priority. Furthermore, it has become the mindset of many generations that many adults shouldn’t play. Although working hard has its benefits, studies show that engaging in play as an adult has shown to be beneficial to productivity and workflow.

According to the National Institute For Play, playtime helps foster healthy cognitive and social development for children that can follow through into adulthood. The role of purposeful play as children can boost our creative imagination, a skill that experiences erasure as adults age and engage in steady work.

How To Define Play

Many experts in psychology and business emphasize the importance of engaging in more play on a daily basis, as well as marrying work and play to lead more balanced lives. While the importance of play for children is widely recognized, its role among adults is displaced by the necessity to work harder and more efficiently. But what is play?

Psychiatrist Stuart Brown, MD, defined play as a “state of being”. One main focus on the act of play is the experience itself. It should be a purposeless and fun activity that reduces stress on a psychological level. Play allows us to move and break out of our normal routines, but these are not the only benefits. Psychologists state that play helps us strengthen our problem solving skills, as well as brain functions, which benefits our work and relationships in the long term.

The Psychology of Play

According to Brown, play is as important for adults as it is for children. In his book Play, he showcases decades worth of research on the role of play and its effect on individuals of all ages. The science of play is one that cannot be ignored, especially as a working adult. The research explores the links between play and mental health, as well as play and productivity, citing that reduced play is linked to higher instances of depression and reduced creative capacities.

After conducting more than six-thousand “play histories”, Brown explains how play is essential to our cognitive and social development and points to various ways that play enhances our intelligence and problem-solving skills. Through his research, many have begun to recognize the value of playfulness and seek out similar experiences in adulthood. Play is a natural, healthy habit that can steer you towards a more joyful life.

Adult play time can take on many different forms. From reading a new book or joining a game of catch, the mindset of play lacks competition and is an activity that you thoroughly enjoy. It can be found in music, dance, and art. These forms of play stimulate relaxation, boost creativity, and aid in workplace relationships.

The Benefits of Play in the Workplace

The act of play itself is important among adults because it offers an alternative sense of engagement. Engagement in the workplace may be conventionally recognized as leading an important meeting, hosting a workshop, or having team luncheons. Research in several fields indicate that recovery from work is essential for physical and psychological health, in addition to engaged and productive work.

As a business owner, there are many ways to foster a playful work environment, while fostering a highly productive and successful workplace. Office settings can become breeding grounds for sedentary lifestyles. Because of this, it is important to encourage play as an alternative engagement that will drive employee satisfaction and productivity. Incorporating play into the workplace can create a balance in how your business will grow.

There are two categories of play that enhance company culture: structured and unstructured. A structured work-play environment is competitive and may be seen in various team-building activities. An unstructured work-play environment is one of spontaneity and fun. For many adults, finding playtime is difficult. By incorporating unstructured play into the workplace, stimulates creativity and is a natural tool that drives resiliency. When properly applied, it can improve your physical and mental health, regardless of age.

The Health Benefits of Journaling

According to a study by the University of Texas, journaling proves to have a positive impact on physical well-being. The idea of journaling can be daunting. However, journaling can be a powerful tool to identify opportunity, recognize weakness, and release past struggles.

James Pennebaker, the originator of expressive writing, published numerous books on the linkage between journaling on physical and mental health, His work provides important insights on the benefits of journaling. In a chapter of Pennebaker’s book on the healing benefits of journaling, Opening Up by Writing It Down, a study shows how patients with chronic pain disease had decreased symptoms after keeping a journal. It is argued that daily journaling strengthens immune cells called t-lymphocytes, or t-cells, that play a central role in regulating our immune response.

Key Takeaways

  • Journaling reduces stress and improves well-being
  • Journaling clarifies your thoughts and feelings in order to solve problems more effectively,
  • Journaling reduces impact of stressors in your daily life

Early research has shown that journaling provides a wide range of benefits that improve our overall health. However, it can also be a tool to organize your thoughts, plan your goals, and help you troubleshoot difficult problems. Below, you will find ways that journaling can help you become more productive.

How Journaling Works

If you are new to journaling, you may not know where to begin. For many, journaling is a commitment that requires some form of discipline. In this practice, it is necessary to set aside time each day to complete a journal entry.

For some, using the pages of your journal as a place to host your inner dialogue can help clarify your thoughts, prioritize your tasks, and synchronize with a new day. The act of writing optimizes our right brain processes, which is responsible for our creativity and emotions. Active journaling allows us to remove mental blocks to better understand ourselves and the world around us.

Once you begin to write, it is important to write continuously. According to the study, active writing removes mental blocks and allows us to use more brain power towards becoming more introspective. Pennebaker states that effective journaling consists of setting a reasonable time to write each day through a stream of consciousness exercise.

The Benefits of Journaling at Work

Journaling can serve as a physical record of your goals and accomplishments in the workplace. It can even be an important tool for reflecting on your contributions to your company's mission, while also serving as an outlet for how one feels about their own successes.

Keeping a journal can also contribute to how you problem-solve in the workplace, especially if you catalog your work achievements, strengths, and growth opportunities. In the long term, a work journal is a great way to build your resume with crucial information about your responsibilities and accomplishments in previous positions.

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
  • Mental health software
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  • Social media software

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