Business Psychology Terms

The Power of Cognitive Bias

Cognitive bias refers to the unconscious mental shortcuts that influence how people perceive and interpret information. In business, these biases shape hiring choices, marketing strategies, and financial decisions. For instance, confirmation bias may lead leaders to favour information that aligns with their existing beliefs, affecting company direction and innovation.

The Legal and Ethical Impact of Bias

Globally, employment and anti-discrimination laws—such as the UK Equality Act 2010 and the US Civil Rights Act—emphasise fair treatment. Understanding cognitive bias helps organisations minimise prejudice in recruitment, pay equity, and promotions, aligning psychological awareness with legal compliance and ethical practice.

What Drives Motivation in the Workplace

Motivation theory explores what inspires people to perform and persist. From Maslow’s Hierarchy of Needs to Herzberg’s Two-Factor Theory, motivation connects deeply to workplace satisfaction and productivity. Businesses that nurture purpose and recognition experience stronger employee engagement and retention.

Burnout: A Global Workplace Epidemic

Burnout, now recognised by the World Health Organization (WHO), is a psychological syndrome resulting from chronic workplace stress. Its symptoms—exhaustion, detachment, and reduced performance—can lead to decreased productivity and higher turnover. Countries like Sweden and Japan have introduced labour reforms promoting work-life balance and mental health support.

Leadership Style and Organisational Culture

Leadership style defines how managers guide and motivate their teams. Transformational leaders inspire through vision, while transactional leaders focus on structure and reward. The psychology behind leadership reveals how empathy, communication, and adaptability foster trust and innovation—essential traits in today’s diverse global business environment.

Consumer Behaviour and the Psychology of Buying

Consumer behaviour combines psychology and economics to understand why people make purchasing decisions. Emotional appeal, brand trust, and social influence all play roles. Businesses that respect consumer protection laws and apply behavioural insights ethically can create meaningful connections while maintaining transparency and loyalty.