Relationship Between Authentic Leadership and Psychological Capital

The term “psychological capital” refers to the positive state of mind of an individual. The major characteristics of such a state are the self-confidence to accomplish the challenging tasks, the optimistic attitude to succeed in the job role assigned, determination to achieve the goals and lastly the ability to face the challenges consistently, or the resilient attitude (Amunkete and Rothmann, 2015). Thus, in simple terms it can be stated that the four chief components of the psychological capital are the hope, efficacy, resilience, and optimism. These are regarded as the essential foundation for the cognitive processes, motivation of the individuals, resulting attitude, and the overall conduct in an organisation.

On the other hand, the term authentic leadership stems its meaning from the term “authenticity,” which means to be true to oneself. Thus, it refers to the quality to own to one’s thoughts, experiences, beliefs, preferences, needs, wants and more (Gardner, Fischer, & Hunt, 2009). An authentic leader of an organisation can engage into any type of behavioural style such as be either the authoritarian, participating or directive.  Thus, it can be stated that the authentic leaders act after taking into account the personal values and thereby building the trust and respect of the employees in the organisation.

The assignment is aimed at analysing the relationship between the authentic leadership, leader member exchange, and the employee’s psychological capital. The analysis is done with the aid of the review of the literatures based on the positive leadership and psychological capital. The sources chosen for the literature review are based on means to build the psychological capital of employees of different backgrounds in terms of the white-collar employees, blue-collar employees, administrative employees and many more.  

Positive relationship between authentic leadership and the psychological capital of the employees

Over the last few years, the topic of the “authentic leadership” has been an interesting subject of the study of the scholars and management and industry experts. According to (Rego et al., 2012), a number of reasons support the prediction that the Authentic Leadership influences employee’s psychological capital. The authors examine each of the elements of the psychological capital. In terms of self-efficacy, it was accorded by the authors that employees tend to develop more self-confidence in their abilities to pursue the goals, when they observe and learn from the extra ordinary behaviours of the authentic leaders, and their psychological strengths. In addition to the above, when the authentic leaders engage in the extending of constructive criticisms and feedback in a respectful and developmental manner aids in strengthening and unleashing the potential of the employees. In terms of the second element of the psychological capital, i.e. the hope, the authors accorded that the attitude of the authentic leaders’ aid in the development of the self-determination, trust and the security. This further aids in the extension of the energies of the employees towards the goal related endeavours. The attitude in addition leads to the pathways to the solution of the problems and benefiting from the opportunities in the industry. For the third element of the optimism, authors stated that the authentic leaders influence the optimism of the employees by improvement in their positive emotions. This is characterised by the activities like adopting fair treatment, caring about the needs and wants of the employees, rewarding the ethical conducts in an organisation, and promotion of the transparent and open communication. Lastly, it has been stated by the authors that the authentic leaders strengthen the resilience of the individuals and capitalize on the same, by identification of the potential adversities and the strains.

Relationship Between Leader-Member Exchange (LMX) and Psychological Capital

Thus, it is clearly evident that the authentic leadership is directly related to the four elements of the employee’s psychological capital. It lays the foundation for the building of the trust and the relationships within the organisations.

Positive relationship between authentic leadership and leader member exchange and the employee performance

According to (Wang et. al, 2012) in their work, it has been stated that there is yet again a positive relationship between the leader member exchange and the psychological capital of the employees. The reason for the same is that the process of leadership is a relational process, in which the nature and the behaviour of the leaders is bound to influence the employee responses. In addition, it has been stated by the authors that the continuous positive interaction between the authentic leaders can trickle down the positive psychological states into the followers. This in turn will aid in the enhancement of the performances of the employees both at the individual levels, as well as for the organisation. Thus, according to the authors the relationship between the leader’s member exchange and the performance improvement is that of a mediating process. Some of the qualities that are essential for the formation of the base of such leader member interactions are self-awareness about one self, respectability and trust towards each other, demonstration of integrity, balanced processing and the overall relational transparency (Luthans et. al, 2010). Thus, when the leaders are able to demonstrate the above qualities in the interactions, they encourage the followers to adopt the above qualities. This further enables the extension of the trust and intimacy among the employees or the followers. Some of the manners in which the leader member exchange can take place is the employee feedback forms, mobilisation of resources that are relevant for the task, defending the employees against negative impacts arising out of the various job situations and more. Another manner stated by the authors by which the leaders can interact positively is by allowance of the build-up of valuable social connections. This can be done by the means like encouraging the employees to do challenging tasks, provision of friendliness and affective intimate behaviour, providing the employees with the required infrastructure and more. Thus, it can be stated that high or low quality of the exchange relationships can further create positive and negative conditions for the employees which can further affect the performance of the employees.

It is significant to note that without the support and the resources obtained from the high leader member exchange relationship, it would be difficult for the employees having low psychological capital to persist and sustain in the negative and the challenging situations. Thus, the employees already having a low psychological capital tend to more receptive towards the leader member exchange, in order to accomplish their work in the assigned job role. The leader member exchange thus assists the employees in enhancing their self-awareness and self-regulatory behaviour (Luthans, Avolio and Youssef-Morgan, 2015).

According to (Avey et. al, 2011), psychological capital is found to be positively related to the desirable employee attitudes and negatively related to the undesirable employee attitudes. The above statement is based on the research conducted with the aid of the Meta analysis of performance and attitude of about 12567 employees. Since the organisation is regarded as one entity, the attitude of the leaders is likewise to be pursued by the employees. Thus, if this influence is positive, meaningful and productive, the same is most likely to be extended to the employees belonging to different backgrounds.

Psychological Capital and Employee Performances

According to (Peterson et al., 2011), the concept of psychological capital is significant for the performance at both the individual and the group levels of the employees. In addition, it has been accorded by the authors that the psychological capital is found to provide more value addition in terms of the employee’s positive behaviours while on the organisational premises, organisational citizenship, activities like self-evaluations, and combining of the individual differences in terms of the traditional differences, personality traits and various kinds of job roles.

Building the psychological capital is on the top priority of the leaders (Olaniyan and Hystad, 2016). The term psychological capital varies in terms of not only the personality and the backgrounds of the employees, but also in terms of the kind of the job role. The various kinds of job roles in an organisation are the administrative jobs, white collar jobs, blue collar jobs and more. In simple terms it can be stated that job satisfaction plays an important role in the wellbeing of an individual. While the employees having the white collar jobs are said to be more satisfied in terms of the pay scale, however, such jobs also demand high degree of responsibility and involvement as compared to the blue collar jobs. This is because of the nature of the jobs. In simple terms it can be stated that the nature of the white collar jobs is such that the employee’s psychological capital is dependent upon the fulfilment of the various responsibilities and the accountabilities of the job. Thus, in order to improve the psychological capital of these levels of the employees, leaders must initiate feedbacks and interactions with these kinds of employees.

In case of the blue collar jobs, the motivating factor of the employees is the positive interactions with the leaders and the managers managing them and the continuous support. Therefore in order to enhance the psychological capital of the employees belonging to this group, it is necessary that department heads in an organisation or the leaders continuously discuss about the challenges and complexities of the job role.

Thus, from the above discussions it can be stated that the employees belonging to the different job roles have different elements to enhance the psychological capital. Thus, it is essential for the authentic leaders to assess the various requirements of the psychological capital and accordingly plan the interaction with the employees. This is very important to build the trust and basic foundations of loyalty in an enterprise.

It is significant to note that the employees who consider their leaders authentic are reported to have greater job satisfaction, and lesser job insecurity and intention to quit the organisation (Olaniyan and Hystad, 2016). Although the authentic leadership does not have a direct relationship between the job insecurity, however, it has an indirect influence over the same via the building of the psychological capital and extension of the essential attributes.

Conclusion

Thus, as per the discussions conducted in the previous parts and the supporting literature reviews it can be stated that there exist a strong relationship between the authentic leaders, leader member exchange and the employee performance. These three factors contribute significantly for the overall success and the working of an organisation. While the authentic leaders at the top are responsible for the formulation of the policies and the business strategies as a whole. It is necessary that their positive attitude is extended down the various hierarchy levels of the organisation. As discussed in the previous parts, authentic leaders possesses the qualities like integrity, taking into account the needs and considerations of others and more. These qualities when extended to the employees, aids the employees in facing the challenging tasks of the job. In addition, as mentioned above a positive leader member exchange provides a long lasting impact on the motivation, trust and the loyalty level of the employees. Thus, while the authentic leadership is related to the psychological capital; the psychological capital is further related to the employees’ performances within an organisation. Hence, it can be stated that in order to keep the employees motivated and perform to the best of their abilities, it is necessary that the qualities possessed by the authentic leaders are shared with the employees. However, the same is possible only when the leaders engage in a systematic and an effective exchange or communication with the employees.

Reference

Amunkete, S. and Rothmann, S. (2015) Authentic leadership, psychological capital, job satisfaction and intention to leave in state-owned enterprises. Journal of Psychology in Africa, 25(4), pp. 271-281.

Gardner, W., Fischer, D. and Hunt, J. (2018) Emotional labor and leadership: A threat to authenticity?. [online] Available at: https://psycnet.apa.org/doi/10.1016/j.leaqua.2009.03.011 [Accessed on 30/11/2018].

Peterson, S., Luthans, F., Avolio, B., Walumbwa, F. And Zhang, Z. (2011) Psychological Capital And Employee Performance: A Latent Growth Modeling Approach. Personnel Psychology, 64(2), pp. 427-450.

Luthans, F., Avey, J. B., Avolio, B.J. and Peterson, S. J. (2010) The development and resulting performance impact of positive psychological capital. Human resource development quarterly, 21(1), pp. 41-67.

Luthans, F., Avolio, B. and Youssef-Morgan, C. (2015). Psychological capital and beyond. Oxford, UK: Oxford University Press.

Olaniyan, O. and Hystad, S. (2016) Employees’ psychological capital, job satisfaction, insecurity, and intentions to quit: The direct and indirect effects of authentic leadership. Revista de Psicología del Trabajo y de las Organizaciones, 32(3), pp. 163-171.

Rego, A., Sousa, F., Marques, C. and Cunha, M. (2012) Authentic leadership promoting employees’ psychological capital and creativity. Journal of Business Research, 65(3), pp. 429-437.

Wang, H., Sui, Y., Luthans, F., Wang, D. and Wu, Y. (2012) Impact of authentic leadership on performance: Role of followers’ positive psychological capital and relational processes. Journal of Organizational Behavior, 35(1), pp. 5-21.