2013

PSYCHOLOGY
ROLE OF PSYCHOLOGY IN BUSINESS
This assignment includes information regarding role of psychology in different aspects of business functions.

Submitted To: Mr. Shahid Naved Submitted On: September 17th, 2013

IQRA UROOJ (122071)

HAMDARD UNIVERSITY

9/17/2013

Role of Psychology in Business

Psychology is the study of behavior and mental processes, so it is obvious that it have significant role in every field and every action of our life, including business practices and processes and studying human behavior would help us understand the meaning, purpose, background and philosophy of every action in every human made process. So it plays a vital role in the field of business too as humans are directly involved in different functions of the business as manufacturers, sellers, managers, buyers, consumers, retailers etc.

Organizations are run by the top management who are highly qualified, experienced and capable of dealing with the employees effectively. In short, managers deal with the situations and handle their human resource by planning, organizing, controlling and leading, all of which involve mental capabilities and thoughts to be put into process, which obviously is psychology.

The most important department of business that is most related to psychology is the marketing department, which involves understanding the needs of consumers/customers and fulfilling those needs in the best economical way. Comparing to the traditional way of business known today as production concept, which involves manufacturing a product and selling it, considering that the buyers will buy the goods widely available to them, the newest concept, namely marketing, involves more understanding of the customers needs and the market situations and then producing best products to give value to customers is wholly psychologys game; though the other two concepts involve psychology too.

Role of Psychology in Different Functions of Organization: Recruitment:

Psychologists can prevent organizations from making costly recruitment mistakes by identifying top talent who will not only help the organization but also enable it to come out of the downturn in a stronger position. Business psychologists offer organizations a layer of information that often goes beyond standard interviewing processes. Acute understanding of different types of intelligence and the affect of personality on corporate and leadership behavior can be fed back to employers. Furthermore, an understanding of the effect of corporate culture on staff enables expert advice to be given on the best fit of your prospective candidates.

Organizational culture:
Whilst many organizations will be focused on immediate challenges, such as short-term budgeting and restructuring for survival, it is also important to maintain a long-term perspective. At a time when many organizations are looking to cut costs through redundancies and pay rises that are below inflation, it is vital that you protect the culture that has been created and make the organization an attractive place to work.

Development:
Investing in workforce through personal, managerial and leadership development will not only help organizations to retain their top performers but also attract talent in the market. Such provision provides a competitive advantage to attracting these people, who increasingly expect such organizational support as part of their package. Furthermore, succession planning and maintenance and development of future leaders can be addressed.

Pain points:
Different surveys all over the world have confirmed that the majority of employees are scared of losing our jobs, and employees are often stretched to capacity, working long hours and doing the jobs of two or three people. The fear of an unstable economic climate can severely reduce core leadership skills and at worst can create a paralysis and lack of productivity.

Business psychologists have the knowledge to deal with and tackle the pain points within a business to significantly reduce levels of stress and tension. Consequently, the organization can be in a better state to innovate and formulate solutions to its current challenges. Executive coaching offers senior leaders the opportunity to develop the soft skills that are required to engage and re-motivate employees, as well as build their own resilience to lead others through times of change.

Downsizing:
Many organizations may also be forced to consider a downsizing strategy. In redundancy situations it is important to make informed and timely decisions, communicate clearly, and treat people respectfully. Psychologists are well placed to offer career transition coaching to exiting staff who may be distressed and needing support in their job search. Offering such services can facilitate the job termination process and result in a mutually beneficial outcome. Negative feedback from exiting staff can be minimized, legal complications avoided, and the opportunity made available to collect valuable exit interview data.

In summary, investment in your people will enable you to cope optimally in a difficult and uncertain time. Clearly communicating a supportive stance to all members of your organization will facilitate the best performance, lower turnover rate and the opportunity to prepare yourself for growth during the upturn.