MBA Research

Trend #28: The Use of Psychology in Business

Business Trend

Humans tend to be creatures of habit. Businesses that understand and respond to what makes us tick give businesses a competitive advantage. This month's trend focuses on the use of psychology in business.

Workplace Implications

Marketing has traditionally relied on psychological understanding to determine what customers want and what influences and persuades them. It has used its understanding of what makes people tick to build relationships and effectively interact with them. Marketers provide a variety of product and pricing options to appeal to customers’ varied preferences and needs.

Now, psychology has become a key business tool. It’s being used across companies by supervisors and managers to motivate employees, to make effective hiring decisions, and to form effective teams.

Research indicates that people act differently in groups than they do individually because they are concerned about their image. They want to impress others, becoming self-conscious and error-prone. This indicates that people tend to work better on simple tasks when in groups and better individually on complex tasks. Knowing this helps to guide managers as they structure projects and teams, enabling them to create better, more cohesive teams.

Psychological understanding of followers’ personalities and motivators enables leaders to effectively manage interpersonal-relationship issues that crop up. Knowing what motivates followers can be used to encourage them to do their best.

Classroom Implications

Teachers need to show students how psychological understanding can be applied in business functions to effectively and meet company goals. Since businesses use past customer and employee behavior to predict future business actions, students need to be taught how to use historical data and events for insights. Local business representatives can be invited to speak to students about current applications of psychology in their industry and/or function.