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In this article

Why do managers need psychology?

SNATIKA
Published in : Health and Social Care . 12 Min Read . 1 year ago

Introduction

"Psychology" is a relatively new term in the modern business world. Until recently, psychology was used primarily in the political, medical, and counselling sectors and was generally ignored by managers and business owners. However, after the surge in popularity of education and the internet, psychology is being recognised for its uses and is being used in a variety of fields. Management psychology is one of the new and upcoming fields. Psychology helps learners to understand the human psyche and behaviour and recognise patterns.


Though it is not mandatory, psychology education can help managers in several ways. A company is essentially a social system. In this system, management takes the authoritative role in laying the groundwork for other employees to work upon. Even in a small office setting, managers decide which tasks get the highest priority, which team needs better training, who needs to be promoted, etc. Many managers intuitively, or through experience, decide on these factors and keep the office or company running smoothly. However, learning psychology can help managers, company owners, and authorities with key insights into the employees' minds. Managers and business owners can greatly benefit from psychology in administration, team handling, solving conflicts, negotiations, etc. Here are some ways in which management can use psychology to improve their day-to-day activities.


In this article, we will discuss why managers need to learn psychology.

How Psychology Helps Managers

Psychology is an asset for managers themselves. Learning psychology can help managers in many ways. Personal and professional psychology not only improves the lives of managers but also helps in identifying and understanding employees and making decisions that resonate with all of them. It improves a manager's cognitive and social skills by enhancing their understanding of the human psyche. By observing others through the lens of psychology, they can recognize patterns in their own behaviour that affect their careers and lives both positively and negatively. In this way, they can root out problems even before they get the best of them.


In an office setting, psychology helps avoid conflict with other managers from other departments. Psychology plays a major role in enhancing social skills through boosting understanding between two personalities. Hence, it can be used to bring harmony between several departments and management professionals.

1. Psychology boosts employee retention rates

Employee retention has become a major hurdle for HR managers, senior management, and business owners alike. According to Willis Towers Watson's 2022 Global Benefits Attitudes Survey, 44% of the employees are seeking another job (Source: CNBC). As the business world, work environments, and the workforce have evolved with technology and global opportunities in recent years, keeping talented and hardworking employees is becoming more and more difficult. The pool of opportunities is rising with technology, globalisation, and the startup revolution. Talents are in short supply even though the world is becoming increasingly dependent on technology and machinery. As employees have a wide pool of opportunities, keeping them in one company has become a hurdle for managers. A range of mental health issues, identity crises, dissatisfaction with work, efforts, results, salary, growth opportunities, and other benefits are driving the workforce to change jobs more frequently than ever.


Starting with hiring the right person, psychology can help in retaining high-performing employees. It helps hiring managers understand employee intentions, ambitions, and needs. Hiring matching personalities according to the company's values, management styles, and current workforce can boost the likelihood of the new hire staying in the company longer. For example, rather than instilling fear in employees, managers can use psychology to help them by providing constructive criticism over their work with kind words. This likely increases the chance of a better manager-employee relationship. Understanding the employee needs and creating company policies that can bring a change in employee lives gains employees' loyalty in the long run. Psychology helps in understanding what the employees need in the first place.

2. HR managers can function well with psychology education

Psychology can boost HR managers' productivity and make their jobs easier. By definition, HR managers need to assess the hundreds of applicants that apply for a job role and choose the right candidate from among them. These chosen applicants must align with the company's values and must be able to work up to the company's expectations. However, in a recent survey, only 2 out of 100 respondents answered "Integrity and Character" were considered for hiring a new employee (Source: Forbes). Sometimes, several traditional rules must be broken to hire the right candidates. For example, some entry-level jobs need to relax their experience requirements or graduation requirements. In all this, psychology can help HR managers immensely. It helps in assessing the candidates based on their personalities and the alignment of their values with the company. Potential employees might also have underlying fears and problems that need to be addressed. They can be recognised using behavioural cues like angry outbursts, lack of enthusiasm, irritability, depressed attitude, etc.


It helps hiring managers identify employee mindsets from the beginning. HR managers can create company policies to keep the employees engaged by measuring employee satisfaction levels. With the help of psychology, HRs can create training, coaching, and mentoring programs that align with the employee's personality. They can create a working atmosphere where individual preferences are considered and given attention. For example, while some employees like to work in groups, others like to work alone. Some need a busy atmosphere to become motivated, while some need a silent environment where they can concentrate and work with better results. Understanding human behavioural psychology creates better HR departments.

3. It helps in Identifying talent and in rewarding them.

A company must always be evolving to stay relevant in the changing world. Clinging to a trend from the past won't always help in the business world. Especially, in the highly connected, information-hungry, fast-paced business world, being stuck with the same methods will not work for the most part. Against this backdrop, the company needs to keep its employees highly motivated, loyal to the company, and always striving to improve to achieve this. Mere salary hikes or promotions will not help, though they are two major reasons for the Great Resignation. Creating an ecosystem where employees thrive and become an asset to the company needs constant self-assessment and an eye toward employee needs. In this highly important process, psychology can contribute effectively to multiple factors.


To keep an employee engaged, managers must strive to create a healthy environment. There must be room for growth as nobody wants to stick to the same job forever. Transparent promotion policies must be kept in place to avoid employee disengagement. Identifying the employee's performance, knowledge, understanding, and expertise in the industry and rewarding them with what makes them tick can motivate the employee to contribute more effectively. Recognising and rewarding efforts as well as results can make employees highly effective in the workplace. Psychology plays a crucial role in understanding the employee's personality and their interior drive to contribute to the company. It helps identify employees that are aiming for ambitious positions with massive efforts. It can also help recognise high-performing employees that need appreciation for their work and better positions.


Psychology also helps management to identify key employee problems like burnout, lack of productivity, etc. In most cases, all these problems can be fixed with the help of management. Those who need additional training can be provided with mentorship programs. Those who are concerned about the future can be warmly communicated with and given advice. Sponsorships for education, company trips, and hybrid working environments can all have a significant impact on the workforce and their perception of the company. Identifying what makes an employee tick can become easier with psychology education.


Many professionals are experiencing midlife identity crises, mental health complications, workplace stress, and suicidal thoughts. Due to higher living costs, a plummeting economy, health issues, and personal problems, over 9% of today's workforce has substance abuse disorders (Source: NSC.org). All these can hinder the employees from giving their best. With psychology education, managers become adept at recognising underlying issues more easily and making countermeasures effectively and early.

4. Customer psychology can boost managers' expertise

Psychology helps Management to understand the customers and trends. In any business, customers are the final authority in deciding the fate of the business. As a result, understanding the customer's mentality is crucial for companies and service providers. Thousands of marketing research firms are deployed around the world to understand customer tastes and expectations. Customer psychology controls the market for most industries, as they are directly or indirectly dependent on the general public.


Becoming well-versed in psychology can help in understanding customers' mindsets and trends. Social media sites, newspapers, and TV channels somewhat control the narrative of the news and are thereby tools for understanding the mindsets of people. This helps managers make early adaptations. Through market research techniques, managers can exhaustively understand the needs and expectations of customers. As the media and politics have the ability to impact the lives of the general public, keeping a closer watch on these can give deeper insights into what will happen in the near future.

5. Psychology helps in managerial dealings with Shareholders and investors

Managers can assess the mindset of the shareholders through psychological frameworks. In this way, they can sometimes predict stock markets and investment patterns. For example, the political atmosphere plays a crucial role in the investment and stock market. By assessing the major investors based on their political leanings and keeping up with local, national, and global politics, investment managers can predict the rise and fall of the stock markets. In investment proceedings, managers can learn early about angel investors' lifestyles, beliefs, and investment patterns, and make the presentation accordingly. As many investors invest money in companies that align with their values and beliefs, psychology helps managers make investments. For example, religious investors keep their distance from brands that promote addictions like alcoholism, smoking, and other controversial products and brands. In such cases, managers can be sure to avoid the investor and move on to the next prospect without wasting time.


Management can also control their shares by keeping an eye on social changes like elections, new laws, geopolitics, budgets, and new government schemes that have the potential to change societal norms. For example, the Indian government's UPI scheme was adopted early by companies like Google, Paytm, and PhonePe to adapt to the evolving market base. In contrast, other IT giants like Amazon and WhatsApp missed the early market share of the UPI (Source: Financial Express). As a result, these companies started late and had to fight their way upward as the early birds were already reaping the benefits for years. Convincing investors and shareholders about possible markets and bringing investments is easier if managers know the psychology behind investment decisions.

6. It helps managers while working with suppliers.

In several industries and small businesses, managers are regularly required to interact with suppliers. Hotel managers, logistics and supply managers, event managers, and the like need to make key decisions with suppliers and supply departments. Psychology can help with all the interactions and decision-making processes. It can lay bare negative motives and help companies avoid potential losses and lawsuits. Psychology can also help in negotiations, thus resulting in higher margins in raw materials for the company. In many cases, keeping suppliers happy with timely payments, warm communication, and other favours can all become easier if managers know the supplier's psychology and understand their problems.

7. Psychology help in building a great company culture

For any company, workplace culture is a critical need. Company culture not only facilitates a safe and sound working environment but also increases productivity and job satisfaction among employees. A toxic work environment can drain employees and management alike. Workplace politics and conflicts can hinder the company with productivity loss and employee walkouts.


A manager who is well-versed in psychology, on the other hand, will be ever vigilant against workplace negativity. Building a respectable company culture will help employees and management by minimising these threats. For this, managers need to understand the employees and their ambitions, motives, and personalities. For example, not every employee likes to work inside a personal cubicle all day long. For such employees, creating a social working space where they can interact with others helps boost productivity.


Keeping an eye on office politics and solving office conflicts before they reach a threshold becomes easier with psychology education. Putting together a team according to their strengths, personality traits, and values is better than random team allotment. Managers can identify who works well with a team with behavioural and social psychology education.

Conclusion

Learning psychology can be beneficial for managers in many ways. Though little research has been done on the need for psychology for management, changing times are showing the needs more readily. It not only helps managers to recognise their own flaws but also avoid the personality flaws of others who get in the way of company productivity. Psychology boosts employee retention rates and makes the lives of HR and managers easier. It boosts employee engagement and makes way for a healthy and transparent corporate ladder. Managers can use it to build high-performing teams, avoid or solve workplace conflicts, and build an inclusive company culture. Working with other departments and higher authorities becomes easier for managers. Along with that, they can use it in interactions and negotiations between themselves and investors, shareholders, suppliers, and customers. All in all, psychology can considerably boost managers' productivity.


SNATIKA provides the prestigious UK Extended Diploma in Psychology to senior professionals. Management professionals can aptly use the online program to refine their understanding of the human psyche and benefit greatly from the benefits of that understanding. If you, or some professional you know, need reputed UK qualifications, visit SNATIKA. SNATIKA is known for its quality, dual qualifications, and shortest duration, as well as its ISO-certified academic delivery process and Masters degrees awarded by UK state universities. Visit SNATIKA to find out more.


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