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Business Psychology: A New Specialty

Louis A. Perrott, Ph.D.

During the late 1970's and throughout the 80's, the independent practice of clinical psychology fastened itself snugly onto the health care industry. Reaping the historical harvest of that strategic decision is driving independent practitioners further into managed health care organizations during the 90's. As the psychotherapy market enters the "Decline Phase" of its natural market cycle, psychologists are competing with less experienced, less highly trained professionals to provide cheaper, more restricted therapy within managed medical care systems (Perrott, in press). Psychologists must look elsewhere for markets.

Read just about any business magazine creatively, and you can spot opportunities. The "people knowledge" described there tends to be simplistic. Superficial concepts applied to highly complex staff and business issues do not really reflect state-of-the-art psychological knowledge.

The alternative? Psychology needs a new specialty -- Business Psychology. I will describe what I did to establish myself in a local market as a business psychologist delivering results-oriented services to companies.

The Starting Point

My starting point was a new inner attitude, a paradigm shift (cf. Perrott, 1996). A willingness to start orienting to new settings led me to mentally scrap my existing clinical services, but that core of clinical knowledge and skills.

During the 1980's, a small part of my independent practice was providing individual therapy for under- productive managers and employees at local companies. As one step toward expanding those services, I arranged a meeting with a textile plant personnel director where I had seen several of their troubled employees. I asked what advice he could give me about delivering professional business services to companies. Not only did valuable information come from this meeting, but also, one month later, he called me requesting assistance with a pressing business problem at the textile plant. A young department head had replaced an older manager, who had been in that role about eighteen years. Soon afterwards, back-biting, conflicts, and angry verbal outbursts began occurring regularly between staff members. "Can you help us resolve this problem?" I was asked.

By that time, I already had done a great deal of preparation. My aim (which should also be the broad goal of budding business psychologists at this stage) was to broaden my foundational knowledge of business and organizational theories and issues. First, I had created an inventory of my existing clinical experience that I believed would have applications in business settings. For example, being clinically seasoned in resolving group, marriage, and family conflicts, I anticipated conflict resolution to be a frequent business need. This belief was reinforced by the results of a statewide marketing study of businesses, which I helped implement in 1993-94, carried out by the Virginia Academy of Clinical Psychologists. One major finding of this survey of 32 Virginia companies of different sizes and in different industries was that about 81% of the surveyed businesses identified effective conflict resolution as a major concern (VACP and Taylor, p.9). Second, I had begun a systematic reading of business books. Third, I was re-training and developing new skill areas by attending seminars offered by professionals experienced in providing business services. Several of the most useful were the "Corporate Therapy Seminar," given by Iris Martin of Creative Dimensions in Management (610-825-8350), a seminar on the uses of psychology in business by Dr. Saul Gellerman (214-721-5265), and two seminars offered by University Associates (520-322-6700) on "Essentials of Organizational Development" and "Facilitating Organizational Change." Because of this preparation, when the textile mill personnel director called, I immediately said, "Yes, I CAN help you."

The Need For Innovation

I went about expanding my "product line" the same way any company would: with a customer focus. Success in today's highly competitive market requires offering high quality, cost-effective services that add value in the customers' eyes. Where to find these? The starting point for business psychology services is identifying and satisfying perceived needs in work situations where psychological knowledge and skills can provide the basis for creating people solutions for business problems. Meeting this challenge is the entry point to the business psychology marketplace.

A strategy that worked effectively for me was developing a short list of "entry" or "get-acquainted" services that provide solutions to very specific, narrow-band business needs. Providing these services allowed starting an ongoing business relationship with a company, from which future services could be sold. My introductory services included the following: personnel selection evaluations (testing), "Preventing Workplace Violence" seminars (appropriate for responding to OSHA requirements for companies to provide a "safe workplace"), conflict resolution, and supervisor training seminars.

The selling price for these services was set at a reasonable level in the local marketplace, but they were not offered as free services. Businesses expect to pay for services that benefit them. For aspiring business psychologists, these "get-acquainted" services are a means of allowing a company to get to know you and to experience the benefits of your services.

In addition to these get-acquainted services, new business psychologists should develop one or two services that simply ARE superior in some ways to a competitor's services. It is best to base these in professionally strong skills where your expertise really is better and very different than most of your competitors' who are often NOT psychologists. Innovate with customers' needs in mind. Develop your own answers to such questions as: Why would a business purchase this particular service? And, why buy from me over my competitors? What value does it add? Can I demonstrate the benefits that my service will deliver?

I capitalized on my expertise in individual therapy to develop executive coaching skills that I market to companies with dysfunctional managers or those interested in developing younger supervisors and managers for higher, more responsible management positions. Most other consultants providing management coaching services in my community do not bring the level of training and clinical experience that I do to the client company's leaders.

What Business Psychology Is

A specialty must identify its scope and field of practice. Rodney Lowman (1993) makes a case for "the practicing clinician seeking to help actual clients who present with psychologically relevant work issues" (p. ix). Lowman's focus is upon work dysfunction, or, as he puts it, "psychological conditions in which there is a significant impairment in the capacity to work caused either by characteristics of the person or by an interaction between personal characteristics and working conditions"(p. 4). His work has a pathological bent, with emphasis upon dysfunction and impairment. Business Psychology, on the other hand, extends beyond dysfunction to focus upon positively impacting the business as a whole, the non-psychopathological working population, and the work environment, including organizational structure, business systems and processes, and corporate strategies. The overall aim of business psychology is enhancing people processes and work performance -- of individuals, teams, managers, business leaders, and ultimately, the entire business. The client, essentially, is the business, itself. "Business Psychology" is the application of Clinical Psychology's traditional knowledge and skill base, modified and augmented by related knowledge and skill areas bases (such as organizational development theory), to people working in business settings, for the ultimate purpose of enhancing the business' performance. It differs from industrial/organizational psychology by being much more exclusively centered on people.

New Skills: Market Entry and Marketing

Business psychology centers on enhancing people processes within organizational and technological systems. But, psychologists' huge bank of knowledge and skills cannot simply be fork-lifted into new settings. To tap into new business, psychologists must become skillful at carefully positioning new services in business markets using marketing skills, sales presentations, media techniques, and promotional materials, as well as professionally "closing the sale" to prospective business users.

I did not want it to be seen as a mental health professional providing clinical services in a business setting. Wanting a corporation to relate to me as a consulting business, I had to do what other consulting companies are doing. In response, together with my business partner, I co-founded "Peak Performance Consultation." This trade name is different than my clinical practice ("The Manassas Group"), so as to differentiate these services to my business customers. With the assistance of a public relations and marketing consultant, we created stationery, a logo, and business cards, as well as descriptive handouts and "leave-behinds." My aim was to make the "face" I presented to businesses easily distinguishable from my established clinical practice. When I talk to new clients as a business psychologist, I go into the company with the goal of discussing their business problems and selling my people-oriented solutions.

The "Sale" and Contract With the Company

When I told the textile mill personnel manager I could help, I went into his company to close a sale for one of my "products". The sale of the needed business service was "made" only AFTER I had identified what internal problem the company was facing and "sold" my services as an effective solution to that problem. What I identified on-site was ineffective employee conflict resolution skills and also the department manager's dysfunctional leadership skills.

The new textile mill department manager -- let's call him "Bashful" -- was a young man with an engineering degree, four years out of an undergraduate university. He was soft-spoken, usually smiled while he talked, often stared down at the floor, and emitted short, embarrassed chuckles before he said anything that was controversial or required giving his opinion. He came across to others as unseasoned, insecure, eager to learn and do well, but very unsure of himself. Bashful had been with the company only 18 months when he replaced the older employee -- let's call him "Wizard" -- who had only a high school education, but had been with the company 28 years and was nearing retirement. Wizard was outspoken, personable, technically knowledgeable, practical, and very opinionated. His reputation in the department was "don't cross him, or he'll find a way to get you." When employee conflicts surfaced, Wizard made unilateral decisions about how issues were to be resolved, with no appeal possible.

The agreement I formed with the company centered on the goal of reducing the frequency and intensity of overt conflict within the department. To achieve this, I proposed a two-pronged intervention: (1) individual coaching with the department manager, to improve his leadership and facilitation skills, and (2) conflict resolution training workshops for all departmental employees. The change measure chosen was the number of conflicts coming to Bashful's attention. Before the business psychology intervention, these were averaging about 5-6 increasingly severe conflicts per week.

Part I: Executive Coaching/Mentoring:

To expand the young manager's leadership skills, I used executive mentoring/coaching. Kilburg (1996) describes executive coaching as "an eclectic mix of concepts and methods that are being applied by a variety of consultants who have accepted assignments to work with individual executives" (p. 59). Within this mentoring relationship, the focus is upon identifying a person's work problems, analyzing what causes them, and then creating and implementing effective, corrective actions. Kilburg (1996b) has outlined the essential steps in executive coaching: (1) develop an intervention agreement with the company, (2) establish a mentoring/coaching relationship with the coachee, (3) create goals and build successful outcome expectations, (4) design and carry out effective interventions, (5) measure outcomes, and (6) review, evaluate, and provide feedback to the company.

Bashful's coaching goals focused on learning assertive communication skills, using the conflict resolution model to be presented to his supervisees in my workshops, and using existing company rewards to motivate employees to resolve their differences differently than before. The following were areas of psychological expertise I used within Bashful's weekly mentoring process:

Interview Techniques Behavioral Analysis
Personality Theory Communication Skills Training
Assertiveness Training Active Listening Techniques
Role-plays Modeling
Behavioral Rehearsals Positive ReinforcementStructured Homework Assignments Verbal Feedback

Within one month after regular coaching sessions started, Bashful had successfully begun modifying his verbal behavior with supervisees. We then began troubleshooting specific situations with employees occurring on the plant floor. Bashful would describe a situation and his proposed response, and then I would provide him with feedback and the opportunity to rehearse (role-play) his intended verbal response. These skill development sessions increased his confidence about his actions on the floor. No longer did he avoid dealing with thorny issues. As Bashful further improved his verbal assertiveness, we went on to lower his fears about not pleasing people, which further decreased when he saw the positive effects of his changed behaviors with supervisees.

Part II: Conflict Resolution

Concurrent with Bashful's coaching sessions, a four part conflict resolution workshop series was started, adapted from material commercially available (Silberman and Whiteling). Its aims were to introduce a model and common language for conflict resolution and to normalize workers' attitudes toward it. Actual conflicts, taken from Bashful's list of past conflicts, were integrated into the didactic classroom presentations and the role-plays used extensively throughout. These two-hour, every-other-week workshops were repeated for both shifts and concluded within two months.

The Outcome

The department staff took positively to the conflict resolution model. This especially was true after they heard Bashful using the common language and making it clear in weekly departmental meetings he expected the conflict resolution model to be used by everyone, including himself. Several test situations emerged that gave him and the staff opportunities to use their new skills. Bashful's coaching sessions continued, after the workshops concluded, for approximately three more months, on a tapering basis, to troubleshoot specific situations that emerged. Bashful noticed there were fewer and fewer conflicts to deal with, involving less intensity and more minor issues. The reason was that staff members began using their conflict resolution skills to resolve issues between themselves, usually with no need for Bashful's intervention. During the three months following the workshops, conflicts coming to Bashful's attention averaged only about one per week and were of low intensity.


By turning to the world of business, psychologists now in independent practice can find new markets by using their knowledge and skills to create fresh solutions to companies' perplexing people problems. Clinical psychologists, through their breadth of experience with people and change, their training in scientific methodology, plus their strong ethical commitment, are well-positioned to deliver outstanding value in the corporate world.

However, preparation and re-tooling are required first. The challenge involves adapting clinical skills and knowledge learned and refined in health care settings to new customers, new problems, and new markets. Creating a new specialty -- Business Psychology -- can catalyze the development of non-pathology-oriented, people-centered services relevant to business settings. These services will center primarily on optimizing people functions within organizational and technological systems.


    Alleman, Elizabeth, Cochran, John, Doverspike, James, and Newman, Isadore. (1984). Enrichening Mentoring Relationships. Personnel and Guidance Journal, 62 (6), 329-332.

    Kilburg, Richard R. (ed.) (1996). Executive Coaching. A Special Issue of the Consulting Psychology Journal, 48 (2).

    Kilburg, Richard R. (1996b) Toward a Conceptual Understanding and Definition of Executive Coaching. Consulting Psychology Journal, 48(2).

    Lowman, Rodney L. (1993). Counseling and Psychotherapy of Work Dysfunctions. Washington, D.C.: American Psychological Association.

    Martin, Iris.* (1996). From Couch to Corporation: Becoming a Successful Corporate Therapist. New York: John Wiley & Sons.

    Perrott, Louis A. (1996). It's the Paradigm, Stupid! The Independent Practitioner. 16(4), 193-96.

    Perrott, Louis A. When Will It Be Coming to the Large Discount Chain Stores? Psychotherapy as Commodity. Professional Psychology: Research and Practice. In press.

    Phillips-Jones, Linda. (1982). Mentors and Protégés. New York: Arbor House.

    Silberman, M. and Whiteling, V. (eds.) (1992). Twenty Active Training Programs. San Diego: Pfeiffer and Company.

    Virginia Academy of Clinical Psychologists and Frank Taylor Consulting. Competitive Edge Market Study Report. Unpublished.

    Wilson, James A. and Nancy S. Elman. (1990). Organizational Benefits of Mentoring. Academy of Management Executives, 4 (4), 88-94.

Jeff McKee
Saturday, April 25, 1998