11 Uses and Roles of Psychology in Business

Is psychology good for business?

In today’s world if you wish your business to be successful then you should have a proper understanding of the psychology of your customers and employees. While psychology and management seem like two different subjects, but psychology has become important for business management.

In this article, we will find out how Is psychology good for business?

The role of psychology in business administration is crucial today, with a proper understanding of human psychology; a company can manage its employees in a better way as well as increase their sales and grow their business respectively.

Today Entrepreneurs understand the importance of psychology in business and hence are hiring a Business psychologist to increase their productivity. Before we dive deep into business and psychology, let us first understand what psychology is.

What is psychology?

Psychology is a scientific study of the human mind and its behavior. In simple words, psychology examines why a person acts in a specific way.

Is Psychology good for business?

With a proper understanding of human Psychology, a CEO can understand his employee and customers’ mind in a better way.

  • Employees:

    he can develop a better work environment for its employee and help them by being productive, motivate, and satisfied. It will thereby increase their efficiency and consequently, the business will expand.

  • Customers:

    he can understand a customer’s needs, wants, and desires and use respective sales tactics so that he purchases your commodities.

  • Companies:

    Psychology even helps an entrepreneur to understand his competitors and business partners in a better way.

Psychology is thereby good and even beneficial for a business. And as one wise person said, 50% of business is psychology as a business is made of people, not machines.

Use of psychology in business

Psychology in organization assists in managing, supporting, and training employee as well as understands customer mindset and motivates them to purchase your commodity. Let us look into how Psychology helps a Businessman.

  • Marketing:

    psychology helps an organization to understand the psychology of its customers and help Marketer to increase sales. It helps to decide which advertisements or promotion method, duration, target audience, consumer needs, and wants.

  • Finance:

    It helps to identify cost expenditures, make investment decisions, provide an incentive to employees, and pricing a commodity.

  • Human Resource:

    human resource involves managing humans and thereby psychology is very important for it. It helps an hr to take proper measures and increase employee satisfaction, retention, loyalty, motivation, and productivity.

  • Production:

    It helps to understand labor factors and customers’ wants and decide what, how much, how, and where to produce.

Role of Psychology in Business Management

  • Recruitment

Psychology helps in recruitment. With the help of psychological assessments and analytics Company will be able to hire fit candidates for its organization and job role.

  • Training and Development

Psychology can help a Manager to understand his employee’s skills and talents and allocate them proper job roles so that they can be satisfied, productive and efficient.

  • Workplace

The role of Psychology in managing a Workplace is crucial. A proper workplace is very important for employee productivity and psychology helps a manager to create a positive, productive, and healthy work environment.

  • Consumer

Understanding Consumer psychology is also very important for a company to maximize its profits. It helps them to decide on production quantity, distribution, sales promotion, etc.

  • Supplier

Supplier psychology helps an Entrepreneur to select a proper supplier and to negotiate commodities at a fair rate.

  • Employee

Psychology can help employers and Employees understand each other. It promotes employee retention, satisfaction, and keeps them motivated. A motivated and productive employee ultimately contributes to Company’s overall progress.


The role of Psychology in Business administration is ever-evolving and growing. With the increase of awareness, people are forced to think and act rationally. Psychology can help a businessman to run his business smoothly and expand it. They both revolve around people and psychology can help to understand humans in a better way. It is rightly being said that 50% of business in psychology.