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The complete guide to business psychology: Education, careers and more

At a glance

  • Psychology has several applications in the field of business, such as in marketing, human resources, recruiting, company culture and more.
  • Business psychology professionals can work for public or private sector organizations in a wide range of industries and departments and help in a number of functions, such as evaluating practices and policies, advising leadership and developing strategies.
  • An industrial-organizational psychology degree from University of Phoenix can equip students with an educational foundation that is useful in the field of business psychology.

What is business psychology?

Businesses in virtually every industry are in a constant struggle to distinguish themselves from their competitors. Psychology can be a valuable tool to this end, as an understanding of human behavior inside and outside the organization can give a business a leg up on the competition. By better understanding both employees and customers, a business can fine-tune services and strategies to improve outcomes for all parties involved. 

Business psychology, often known as industrial-organizational psychology (IO psychology), is a field that focuses on psychology in the context of workplace and business efforts. Businesses can use organizational psychology for a variety of outcomes, but often the ultimate goal is to increase a company’s bottom line. 

Those who work in this field are known as business psychology professionals. People may consider those working in IO psychology as “psychologists,” but becoming a psychologist requires a doctoral degree in psychology as well as specific licensure. Where the two differ is that a psychologist position is usually more clinical or research-driven, while work in business psychology is more focused on organizational development and problem-solving.

Psychology professionals typically need a master’s degree in psychology and must be licensed to practice in their state, the U.S. Bureau of Labor Statistics (BLS) reports. However, a doctoral degree may be preferred by an employer and is the required education level to be a licensed psychologist. If business and IO psychology professionals do not possess a terminal degree—the highest degree available in a field—they must work under the supervision of a doctoral psychologist in clinical, counseling or research settings.

Increased productivity, improved service quality and advanced reputation management are some typical focus areas for a company using organizational psychology to boost its revenue. Generally speaking, business psychology professionals support these goals by providing insight into the perspectives and behaviors of employees and customers alike. This can give a business more direction when it is trying to adjust its strategies or offerings.

Business psychology professionals often approach their work through a combination of consultation and review. They provide businesses with best practices regarding target areas of concern and review current trends related to that area. The latter can help better understand and address a business’s unique circumstances and concerns. These efforts are often highly effective when approached properly as business and psychology are connected in many ways, both expected and unexpected.    

Psychology and business

Psychology plays a role in several fundamental aspects of business, and therefore organizations can use business psychology to help optimize their operations in any or all of these areas. Some businesses may consult professionals in organizational psychology on an as-needed basis, while others may maintain one or several people with applicable credentials on the payroll.

Marketing

Businesses can use psychology in marketing to help understand consumer behavior and therefore develop more engaging messages and optimized services. Marketing is a key investment for many organizations, as it is the primary means through which a business can set itself apart from competitors and inform customers about updates and offerings. Without understanding its customer base, a business’s marketing efforts will fall flat. 

Human resources and recruiting

Using a psychological approach, organizations can optimize recruitment by crafting customized messages that resonate with potential candidates. Psychology professionals in human resource departments can also help anticipate employee needs and mediate disputes. By recruiting and maintaining a high-quality pool of talent, an organization can significantly increase its productivity and the quality of its offerings.

Change management

Major changes within an organization may cause serious disruptions and losses if they are not handled appropriately. These changes might include a wide variety of adjustments, such as relocation, new acquisitions, rebranding or reorganization. Organizations should guide employees through changes with compassion to minimize stress and other potential obstacles. To this end, a business can use organizational psychology to anticipate and address any potential stressors or problems that employees may experience as a consequence of changes within the organization

Company culture

Development and maintenance of company culture is an important way to promote wellness and productivity in the workplaceHealthy workplace culture helps to keep employees motivated and collaborative. However, cultivating a culture that is right for a particular organization can be a significant challenge. Considering the psychological impacts of various strategies can play a key role in developing a company’s culture. 

Where do business psychology professionals work?

These professionals can work for public or private sector organizations in a wide range of industries and departments. They may work in an as-needed, freelance capacity for businesses, or they may remain on a company’s payroll. The latter situation is more common in the human resources department of a larger organization. Their position in a company may also depend on their specific duties. The profession has five major focus points. 

Is psychology a science? (Spoiler alert: Yes)

What do business psychology professionals do?

Business psychology professionals may handle a large variety of concerns within a company or they may specialize. Five of the most common duties they fulfill are:

  • Evaluating practices and policies
  • Advising leadership
  • Developing strategies
  • Assisting in various processes
  • Supporting employees

In short, however, their job is to analyze business procedures and strategies through a psychological lens to improve outcomes. 

Evaluate practices and policies

Psychology can help organizations evaluate the efficacy of their current practices and policies through a variety of means. Notably, business psychology professionals may ask for feedback from employees or customers and provide insight about procedural practices that tend to garner positive psychological responses. This can optimize procedures at both the design and production phases. 

Advise leadership

An organization’s leadership decisions are best made when informed by the opinions of a variety of relevant professionals. When a business is making a decision that affects or will be affected by the perceptions or expectations of people, input from a psychological professional can be highly valuable. These professionals may anticipate problems such as negative effects of overwork on employees or how customers may perceive certain practices. 

Develop strategies

Industrial-organizational psychology professionals can help organizations refine strategies aimed at promoting growth, managing crises and maximizing operational efficiency. Therefore, they can be particularly useful whenever a business is restructuring or otherwise updating or adjusting procedures. They also may be able to help the organization measure the success of strategies and adjust them as needed. 

Assist in processes

IO psychology professionals can also offer direct support to other professionals within an organization. By assigning a psychology professional to oversee a process, a leader can assess efficacy from a psychological perspective. For example, one of these professionals could help a hiring manager adjust how they speak to prospective talent or determine how to reduce fatigue on the production floor. 

Support employees

Organizational psychology professionals can not only help other employees in accomplishing their work tasks but can also help them address personal concerns and stressors. These professionals can be very effective assets when it comes to mediating disputes and providing counseling resources for employees. By hiring an IO psychology professional in this capacity, a business can improve morale, manage concerns as they arise, and demonstrate a dedication to their employees’ well-being.   

How can you become a business psychology professional?

According to BLS, psychologists typically need a doctoral degree in psychology and must be clinically licensed to practice in their state. However, a master’s degree, such as a Master of Science in Industrial-Organizational Psychology, may be the minimum education level needed for employment in non-research or clinical settings. As stated, a doctoral degree is often required for a psychologist, and those without a terminal degree must be supervised by a doctoral psychologist in those settings.

A master’s degree can help those with an undergraduate degree enhance their skills in critical areas, like research and statistics, that are necessary in the workplace. Gaining experience through business consultation will also help build up your portfolio. 

People interested in this position are typically those who are interested in both the objective and subjective aspects of business strategy. A desire to help people and solve problems will also be beneficial in this field. 

Interested in learning more about the intersection of business and psychology? Check out the Bachelor of Science in Industrial-Organizational Psychology and Master of Science in Industrial-Organizational Psychology from University of Phoenix.