One of the most crucial factors for a successful business is through the collaboration of its people. As cliche as it may sound, an employee is considered the most valuable assets of any business. People in the companies execute processes, plans, and strategies towards a business’ goal.

Psychology and Business: Why It’s Good To Understand People

To show that such mantra is real, you need to understand the people working with you, and for other reasons such as the following:

1. You can become an effective leader

Understanding people or the psychology of employee in the business is key to becoming an effective leader. Because of this, a lot of graduate schools offer business and applied psychology, such as the University of Southern California, to become a successful leader.

If you’re a leader with a vision, you want your people to understand and share this vision as part of your leadership. To achieve your goal, you need to understand and build a responsive partnership with your people. One way to understand them is to understand their needs:

  • Informational needs – It covers the knowledge and facts necessary for the development of an employee. For instance, the leader must know whether his members are knowledgeable about writing a newsletter, running a meeting, or managing business operations. When you know what they lack, you’ll think of ways to let them learn such knowledge relative to your business.
  • Personal needs – These tangible needs cover the person’s need for care, understanding, and appreciation. As a leader, you must show gratitude and care towards your employees through simple notes or verbal acknowledgment.
  • Physical needs – In an organization, these needs include more staff or more money for your organization. When your business has enough staff, employees can be more productive without being pressured to do more.

When you know those needs, it gives you these advantages:

  • Appropriate response will be implemented and, as a leader, its fulfillment will help you reach your shared goals.
  • Belief in your leadership will be reinforced.
  • Your needs will also be met by your employees when they know you do your part to provide for their essentials.

“We are all faced with a series of great opportunities brilliantly disguised as impossible situations.” Chuck Swindoll quote Psychology and Business: Why It’s Good To Understand People

2. You can resolve conflict

In any business, conflicts are normal. But their real causes must be understood to resolve such disputes properly. One of the reasons for arguments is the clashing of personality types or behaviors between different people. The conflict can occur when a person’s authority, beliefs, or values are challenged. To turn this conflict into a positive energy or outcome, one must find its underlying cause.

When you know the reason for such conflicts, you’ll understand how a person reacts to such causes. For instance, a person might be okay with dirty jokes but it might offend other people. As an individual, understanding the other individual’s preferences or beliefs can help you gauge yourself whether you’re the reason for such conflicts. Moreover, when you know other people, you’re more likely to be aware of what approach to use in resolving such conflicts.

Understanding personality types will also help you communicate better so you can come up with a resolution. Through this, you can even avoid such conflicts from happening again.

3. Boost your sales

Since one of the primary goals of a business is to make sales, understanding people or customers should be a tool to achieve this goal. One way to understand people is by applying psychological strategies like persuasion and influence. When you know your customers, you’ll more likely find the best way to communicate and sell to them.

Here are the different types of customers you need to understand to plan your best approach:

  • Loyal customers – These are the people who heavily value your business product or service. To retain and avoid losing them, you must consider them a priority for your company. You can collect their feedback and input as part of your decision making process.
  • Impulse customers – Since these types of customers don’t have a specific list of what to purchase, you must update them with your new products to generate more sales.
  • Discount customers – These customers don’t purchase items at full price, but when you want your inventory to be over, offering them markdowns can help you with it.
  • Need-based customers – These are customers who only enter shops to buy specific needs. Since they’re hard to upsell, you need to build positive interaction to convert them to returning customers.

Conclusion: Psychology and Business

When you’re in business, understanding different types of people is a must for you to survive. Without such understanding, conflicts among your people and doom of your business are possible results. But when you know how to apply the proper approach in dealing with various behaviors and personalities, you’ll master a skill essential for an entrepreneur, leader, or employee.

One Response

  1. Gazelle dela Pena

    Totally agree with this. When you care about/understand your frontliners ( aka your employees) and your customers, it would always have a positive effect on your business.


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