How Organizational Psychology Can Improve Workplace Culture and Employee Satisfaction

According to a recent Gallup poll, only one in three employees are engaged at work, a number that has decreased in recent years. 

The poll found that 60% of people feel emotionally detached from work, and 19% report feeling miserable. Work-related stress is at an all-time high, with 44% of workers experiencing burdensome stress on a daily basis.

Gallup’s study also found that employee disengagement is costing the global economy $7.8 trillion total—in addition to contributing to unhealthy work environments and employee mental health problems. This cost comes from lower productivity due to employee disengagement as well as turnover.

When employees leave frequently, more and more resources must be allocated to recruiting and training new workers. Additionally, if underlying workplace problems cause employees to quit, simply putting new hires into the same system will not fix the problem. 

Those employees will be subject to the same problematic working conditions, dissatisfaction, and burnout, and more likely to quit, just like their predecessors.

Occasionally, someone will not be a good fit for a position or environment. However, if you’re seeing many new employees leave after less than six months, it’s time to look at the internal factors that might be driving employees away or burning them out.

Improving workplace culture and employee satisfaction

Solving this increasing challenge starts with determining problems within the workplace culture, and figuring out the factors that can improve employee wellbeing. The next steps are to mitigate disengagement and improve satisfaction, focusing on the factors that matter to and impact employees directly. 

As work-related stress continues to increase, employers need to create an environment that fosters employee wellbeing.

While well-intentioned organizations might try to guess which interventions benefit their employees, this might do more harm than good. For example, the concept of a “work pizza party” has become an internet meme for workplace initiatives that do not actually benefit employees. In 2022, a nurse went viral on social media because her employer gave her a pet rock as an “appreciation” gift.

It’s important to understand what initiatives and benefits improve employee wellbeing to avoid coming across as out of touch or condescending to employees.

This is where organizational psychology comes in.

Workplace shifts start at the top

Improving employee benefits, changing expectations, and expressing appreciation in ways that make employees feel valued must all come from positions of leadership. 

This is part one of a blog series that will explore aspects of organizational psychology and employee wellbeing. We’ll be discussing cultural shifts that can increase engagement and job satisfaction, accommodating and supporting employees, creating a psychologically safe and trauma-informed workplace, and how to support leadership in fostering a healthy work environment.

Let’s dive in.

What is organizational psychology?

The American Psychological Association defines organizational psychology as “characterized by the scientific study of human behavior in organizations and the workplace.” Organizational psychology is one-half of the branch of psychology known as Industrial-Organizational psychology, or I-O Psychology.

Industrial considerations include determining what kind of candidate is the best fit for a particular position, and focuses on recruitment. Organizational considerations, on the other hand, look at the job itself, culture within the organization, management, and all the variables that impact how an individual behaves in their role at work.

In other words, how do we behave, interact, and function at work, and what factors contribute to satisfaction, retention, and productivity?

6 Areas of I/O Psychology

Industrial and organizational psychology cover a broad scope that can be broken down into six core components, all of which can be used to understand and improve the workplace:

• Economic, Social, and Psychological Aspects: How people behave in the workplace environment and how economic factors contribute to and impact behavior.
• Physical Aspects of the Work Environment: The concrete, physical aspects of working conditions, such as how the setup of an office impacts work.
• Human Relationships: The impact of leadership’s behavior towards employees on productivity and satisfaction.
• Aptitudes and Motives: Helping employers understand how employees are motivated, and what incentives can help improve attitudes in the workplace.
• Principles of Mental Health: When employees are mentally healthy, they do better work, and their lives are better.
• Human Relations: What factors can improve communication and relationships between employees and management.

I/O Psychology Theories

The various components of organizational psychology, including job satisfaction and productivity, are based on academic theories behind human behavior, motivation, and emotion. There is a wealth of research and theory behind I/O psychology, and three theories that apply to performance in the workplace are job characteristics, social exchange, and equity.

Job Characteristics Theory

Job characteristics theory refers to overall job design, and how that impacts an employee’s mental state and production. This theory allows leadership to analyze the specific job components that are helping or hindering employees, and what specific changes could improve the work output. 

This includes how an employee feels about the specific tasks required by their job, relationships with leadership, and compensation. If an employee is bored by repetitive tasks, experiences excessive demands by management, or is not compensated a living wage, they are likely to have low satisfaction and burnout.

Some components are universal or at least very common. For example, underpaid employees are typically unhappy with their jobs. Other variables may depend on individual preferences, like what an employee likes to do or their personal strengths as they relate to the work environment.

Social Exchange Theory

According to social exchange theory, human relationships are built on an analysis of the costs and benefits of being in that relationship. If someone feels like they are putting too much effort into a relationship or the effort they exert is not reciprocated, they are likely to pull back or stop putting in their own emotional labor.

Of course, this applies to interpersonal relationships, including friendships and marriages, and it also applies to people’s performance at a job. Employees who feel appreciated, respected, and rewarded for their hard work invest more into their work. 

This theory is particularly relevant in a world where many have the option to start their own business. Employees may ask themselves, “What benefit does this job give me that I couldn’t get working for myself?”

Equity Theory

Equity theory is exactly what it sounds like: humans are motivated by a sense of fairness and justice. Everyone has a mental calculator of the effort they put into jobs, tasks, relationships, etc, and what they feel they get in return. 

If the ratio shifts, and an individual feels like they’re putting in more than they’re receiving, they’re likely to feel dissatisfied or reduce their effort.

Why is organizational psychology important for the workplace? 

Psychologists who specialize in organizational psychology have expertise in how organizational culture and development foster positive experiences for employees at all levels. They can analyze performance and workplace behavior and provide actionable feedback to employers. 

In addition to these steps, organizational psychology focuses on ethics in the workplace. In a capitalistic society, it can be tempting to emphasize profits over everything else, but when you employ real human beings, you must also treat employees ethically. This will not only help them work harder for you, but it is the right thing to do.

Organizational psychology addresses both current employees and potential employees, recruitment tactics, training, productivity measures, quality of life at work and at home, and the impact on the organization’s customers.

While there are overarching concepts, such as understanding what benefits tend to increase satisfaction, it is important to determine what individualized changes and interventions will benefit a specific organization. 

It may be worthwhile to hire a professional consultant to analyze your workplace’s culture and employee needs. They can provide concrete changes that will bring the most benefit to your workers.

Examples of organizational psychology in practice

Businesses can implement organizational psychology in various ways, depending on the company’s values and goals. These interventions can improve satisfaction, reduce turnover, and increase productivity.

Organizational psychology can involve measuring employee satisfaction, determining what changes could make employees happier with their jobs, or decrease challenges or things they dislike about their roles. 

It can also determine barriers to performance—figuring out what might be preventing employees from doing their best work—and identify accommodations that can improve procedures. Plus, it helps employers identify what kind of employee would be the best fit for each job and effectively recruit candidates who will perform best in the role.

How can organizational psychology help effectively support employees?

At the most obvious level, organizational psychology assesses the factors that can improve the organization through employee satisfaction, motivation, and retention. Stephen Covey says, “Always treat your employees exactly as you want them to treat your best customers.” 

There is a dated mentality that employers don’t need to consider their employees’ needs and wellbeing, but the Great Resignation and Quiet Quitting trends have shown that workers are no longer tolerating poor treatment or substandard working conditions. Forbes and other business news outlets have called for re-evaluation of how businesses view and treat their employees.

It sounds simple: treat workers well so they want to keep doing good work for you. 

This not only benefits your bottom line, but it means treating your employees ethically and appropriately. In other words, yes, an emphasis on organizational psychology can help profits, and it does right by your employees.

Employee wellbeing begins at work. Here are three ways to develop a workplace that reduces burnout while continually supporting wellbeing.