Modern psychologists are more than tweed-jacketed shrinks with whom you discuss your struggles while lying on a comfortable leather couch. In fact, they can serve a purpose in corporate settings, and even impact the bottom line.

What is organizational psychology?

Organizational psychology aligns the interests of the company with the needs of its employees. It aims to improve the quality of life and work conditions of employees to achieve greater performance and boost company efficiency.

What benefits can companies get from organizational psychology?  

Organizational psychology takes into account the interests of the company and its employees, suggesting a win-win scenario for both parties. An organizational psychologist (aka someone who studies and practices organizational psychology) can serve as an intermediary between upper management and the workforce, understanding and respecting the goals, perspectives, and motivations of both sides. 

The main goal for organizational psychologists is to propose strategies to build an organizational culture that encourages a healthy environment, which generates a greater increase in productivity, engagement, and thus profitability.

It’s not all for amusement. Many studies report employee commitment and job fulfillment impact company success; high employee engagement has been proven to reduce absenteeism and turnover while increasing company sales and profitability.

And turnover is particularly costly for companies as recruiting and hiring costs skyrocket to three to four times the position’s salary, according to data from Society of Human Resources Management (SHRM). Investing in tried-and-true ways of retaining talent just makes sense. 

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How does organizational psychology benefit employees?

Erudit’s research team speaks to many executives who have highlighted the challenge of truly understanding the needs, goals, and motivations of their employees. This struggle only scales with business growth—the more staff members, the greater the challenge. An organizational psychologist bridges the communication gap between managers and employees to help boost the employee experience.

Organizational psychologists focus on understanding the preferences of each employee, address topical issues, and suggest preventive and curative measures and programs for management to implement. They can also train executives to hone soft skills within the workplace. 

The overall goal of the organizational psychologist is to empower every staff member, encouraging well-being at work and home, all while strengthening relationships within the company. Common business impact include:

  • Recruitment: Provide the company with the candidates that are the best fit for the company's needs—an increasingly topical challenge for every business, considering the cost of recruitment, training, and retention. 
  • Conflict: Act as a mediator between employees, facilitating negotiation and settlement by providing direction and encouragement to both parties. They aim to find the middle ground between the disputing parties and reach a fair resolution of the conflict that not only protects the company's interests but also preserves the integrity of individuals. 
  • Professional development and personal growth: Motivate team members and encourage them to be result-oriented in order to facilitate employee development and personal growth.

>> Progressive organizations are using artificial intelligence (AI) in their organizational psychology efforts. Soon, it will be the norm for a high-performing workforce. Read more: How is AI being used in organizational psychology? Findings from Erudit’s latest literature review

How can the organizational psychologist motivate employees? 

There are several techniques that organizational psychologists apply to achieve the goal of creating a happy, successful business and workforce. Some of the common approaches are the following:

  • ‍Group activities: Designed to improve work relationships and strengthen the connection between the organization and its human capital.‍‍
  • Training programs: Ensure that everyone in the company, from interns to executives, is constantly upgrading their skills and striving to reach their full potential.‍‍
  • Promotion programs: Provide stability and security for employees as they appreciate the recognition of their hard work and effort, allowing them to think long-term and be truly invested in contributing to the success of the company.

Organizational psychology plays a crucial role in business, serving the company and its best asset—people. Investing in effective organizational psychology within the company could pay off tenfold, improving your employees’ quality of life and your bottom line.

Updated content: Apr 27, 2023