Literature Review

The aim of the report is to understand the relationship between the authentic leadership, effective Leader-Member Exchange (LMX) and employees’ Psychological Capital (PsyCap). Further, the literature review has been conducted which include the opinion of the different authors that helps in understanding the ways to form the Psychological Capital of the different employees. These employees include professionals versus administrative employees, emotional labour and many others. In the end, it includes the description of the emotions that can create an impact on the performance of the personnel.  

This section includes the review of the literature which includes the different opinion of the authors on the leadership that leads to the positive at the workplace. This review of literature will help in understanding the kind of the process that is made by the leaders who use their leadership skills along with their knowledge. This has been found that in the present era every leader of the company is in practice of becoming the effective authentic leader so that they can become more capable of attracting the psychological capital in a positive manner. Once the leader gets involved in the authentic leadership then they will be able to amplify the trust that can help to overcome in the company where the faith of the personnel increase in organization. In addition to this, this system of positive leadership offers their contributions that remain effective in accomplishing the objectives related to the company. The author exhibits that leader become the effective leader when they have the readiness to achieve the same. A leader with optimistic psychology capital can bring the improvement slowly by a never-ending process that majorly involves proper training, education and self-study.

According to Leroy, Anseel, Gardner and Sels, 2015, authentic leadership is an approach of the leadership that focuses on forming the leader legitimacy in the company with the honest relationship with the personnel which leads to the ethical foundation. Further, the authentic leadership contributes to developing the fundamental of the positive behaviour of the company which is difficult to be done with the help of the PsyCap (Psychological Capital) and to create the psychological climate. This leadership is linked with the prototype of leader behaviour that is essential to form positive climate and optimistic dimensions of psychological. The authentic leadership can easily create trust and enthusiastic support among their subordination which shows that they can enhance the team as well as individual team performance.  

Authentic Leadership

This type of leadership can bring the change in the behaviour of the employees by making them encouraged towards their performance. This how the leader can win the faith or trust of the customers which affects the citizenship behaviour (Wang, et, al 2014). The relationship between the transformation and authenticity leadership can be evident with the help of another factor of PsyCap which is positive bonding. This is evidence that another factor of PsyCap includes their beliefs and attitude in direction and strength that referred to as the motive for the effective management of the human resource in today’s organizational challenges.

According to the Bauer and Erdogan, 2015, the leader-member exchange theory work as an approach that is based on the relationship leadership that emphasis on the two-way relationship among the followers and leaders. One of the features of the LMX is that it reflects the interactive and authentic bonding that improves the relationship among the followers and leaders. This positive bonding can nourish the social exchange in an effective manner with the help of the virtue of forming credibility and winning the faith of the followers (Martin, et al, 2016). This can be witnesses with the help of the relationship that leads to successful follower performance. LMX relationship with the authentic leadership can be witnesses as authentic leadership helps in enhancing the improvement and maintenance of the exchange bonding with the employees. This has been found by the different researcher that imperative bonding among the LMX and employees performance is due in related to the different advantages that the followers can get the high-level quality of LMX (Little, Gooty and Williams 2016). All these benefits can entail the behaviour of the leader that offers the job feedback information to the followers in order to defend them irrespective of unconstructive influence and activating the job-related resources for them. In addition, this has been witnessed that LMX theory reflects the departure for the similar sort of theories related to leadership.

According to Little, Gooty and Williams 2016, there are numerous theories that emphasis on effective leaders. Contracting, LMX emphasize positive bonding among employees and leaders which leads to success. LMX concept will become effective when the leader and employee will be able to manage the effective relationship that can work for improving the performance.

Psychological capital of the personnel involves different results which include performance, the financial performance of the company, organizational citizenship, job satisfaction to employees, deviant behaviour and intention to quit. PsyCap offers the conceptual model that individual resource of the psychological permits the companies and persons to carry out efficiently. This has been discovered that PsyCap characterizes by four sides which include hope, resilience, optimism and self-efficient that leads to the efficient functioning at the workplace (Luthans, Youssef and Avolio, 2015). In addition to this, the major focus of the Psychological capital remains on strength. This highlight that the employees remain encouraged for achieving the goals of the organization.

Leader-Member Exchange (LMX)

This has been found that there is a great relationship between them which is clear with the experientially distinct with co-relation that ranges from 0.35 to 0.48. Thus reflects the moderate amount of the shared variance but also enlarging the absence of co-linearity (Olaniyan and Hystad, 2016). In the discussion, Psychological capital reflects the affirmative link related to the evaluation related to the performance, job satisfaction and organizational citizenship behaviour.  

In the contemporary organizations, the major trend followed is workforce diversity as it helps the organization to generate various new and innovative ideas to perform the task in order to gain desired goals. In relation to this, the different types of employees are been categorised into ‘White Collar’ and ‘Blue Collar’ employees. The categories have been made on the basis of requirements of individuals as well as on the basis of personal lives of the employees. The analysis is executed for the objective of evaluating ramifications of the personality traits for the objective of analysing the probability of achieving attaining the title while collar above than the baseline set up for the blue collar type of employees. PsyCap is known for multidimensional construct of hope, resilience, self-efficacy and optimism and it is referred to the as the HERO. Main components for organization and the leaders are the development of psychological capital for the different types of employees with the title HERO (Laschinger, et. al., 2014).

There are numerous aspects which focus on determining the values and beliefs of the employees in the organisation. Psychological capital needs to be developed in the business in terms of increasing the involvement of the employees. In addition to this, adequate training and development sessions are also executed for the employees for enhancing their performance (Pinder, 2014). Psychological capital has the tendency to showcase the substantial work behaviours and attitudes and it is also considered as the high order construct which also puts huge impact over the job satisfaction for the employees. This also plays vital role in managing their performance at the workplace. The psychological capital has sundry outcomes like firm’s financial performance, performance, job satisfaction, innovation, etc. Impact of these elements is directly on enhancing the productivity of the employees and its direct affects the revenues of the company (Nel, Stander & Latif, 2015).

It has been reviewed that for the attainment of sustainable competitive advantage, competitive business environment and the requirement of context-specific resources plays vital role. Thus, handling, investing and developing is very essential for managing psychological capital. With the help of psychological capital, two ways emerges and these ways helps in handling different types of employees. These two ways are authentic leadership development and training interventions. In order to improve psychological capital, majorly focus is implemented on micro-interventions and it is mainly dependent on the group discussions for the objective of enhancing the participation’s level of self-efficacy, resilience, hope and optimism. While on the other side of the coin, authentic leadership development affects the performance of employees which ultimately affects the employer-employee relationship. It has been reviewed that the positive relationships at the workplace leads to generate positive results and thus, organization influences its teammates to put appropriate efforts for the objective of enhancing output (Whittington, 2017).

Employees’ Psychological Capital

Emotions are the unblemished human psychosomatic observable fact. An employee is first an individual and an individual is a mixture of various types of emotions, thus, their behaviours at the workplace are affected by the emotions. Decision making approach, performance, team spirit and leadership are some of the crucial elements of an employee which are mainly affected by the emotions. Thus, the productivity of the overall organization gets affected by the employee’s emotions and it also affects the interpersonal relationships. Creativity, innovation, and the decision making directly gets affected with the emotions of employees, thus, it is necessary for the organization to ask their employees to keep their emotions separate so that the organizational performance does not get affected. Apart from this, management is also responsible for keeping morale up for the employees by maintaining the positive workplace environment and by various other measures (Parke & Seo, 2017). An employee with positive mood and emotions is an asset for the organization while a satisfied employee is a liability as he will not be able to match up with the expectations of the management. So, management has given employees’ mood much more importance than other factors as the emotions of the employees are the destructive as well as positive element at the same time for the organization. Management should not directly impose blame on the employees for their low performance in comparison to the expectations, thus, it is very important to analyse the factors responsible for the low performances (Bhandarker & Rai, 2015).

Management adopt various steps for the objective of keeping their employees happy so that the desired goals could be attained. Happy employees are the true asset for the organization and it also leads to create positive workplace environment. Amongst the various types of emptions, anger, panic and disgust are the primary factors through which an employee is not able to focus on the assigned task and it leads to generate negative outcomes for the organization. The following figure shows the types of emotions an individual have and their impact over the organizational performance. Absenteeism is another negative result for the organization and it is also linked with the bad moods of the employees. For innovative and unique ideas, it is necessary for the organization to provide adequate time and resources through which the employees could think of the box and at the same, their every demand and want is fulfilled with the view to utilise the available resources, time and the talent of employees to the optimum level (Strom, Sears & Kelly, 2014).

Building Psychological Capital for Different Types of Employees

Conclusion 

From the aforesaid information and discussion over the positive leadership, it has been concluded that the productivity and performance of the employees directly gets affected with their mood. The whole paper has focused on describing the information regarding the information shared between the management and employees. Leader-Member Exchange (LMX) and employees’ psychological capital relationship has also been covered in this paper. In order to enhance the organizational productivity, it is essential for the organization to encourage psychological capital by enhancing the involvement of employees in the decisions making processes of the organization. In order to attain competitive advantage, sustainable growth and overall development, an organization must create highly engaging workplace environment along with the context-specific and imitate resources.

References 

Bauer, T.N. and Erdogan, B. eds. (2015) The Oxford handbook of leader-member exchange. USA: Oxford University Press.

Bhandarker, A. and Rai, S. (2015) Positive transformational leadership: case study of an Indian public sector bank. Asia-Pacific Journal of Business Administration, 7(1), pp.34-55.

Laschinger, H.K.S., Wong, C.A., Cummings, G.G. and Grau, A.L. (2014) Resonant leadership and workplace empowerment: The value of positive organizational cultures in reducing workplace incivility. Nursing Economics, 32(1), pp.5-18.

Leroy, H., Anseel, F., Gardner, W.L. and Sels, L. (2015) Authentic leadership, authentic followership, basic need satisfaction, and work role performance: A cross-level study. Journal of Management, 41(6), pp.1677-1697.

Little, L.M., Gooty, J. and Williams, M. (2016) The role of leader emotion management in leader–member exchange and follower outcomes. The Leadership Quarterly, 27(1), pp.85-97.

Luthans, F., Youssef, C.M. and Avolio, B.J. (2015) Psychological capital and beyond. USA: Oxford University Press.

Martin, R., Guillaume, Y., Thomas, G., Lee, A. and Epitropaki, O. (2016) Leader–member exchange (LMX) and performance: A meta?analytic review. Personnel Psychology, 69(1), pp.67-121.

Nel, T., Stander, M.W. and Latif, J. (2015) Investigating positive leadership, psychological empowerment, work engagement and satisfaction with life in a chemical industry. SA Journal of Industrial Psychology, 41(1), pp.1-13.

Olaniyan, O.S. and Hystad, S.W. (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.

Parke, M.R. and Seo, M.G. (2017) The role of affect climate in organizational effectiveness. Academy of Management Review, 42(2), pp.334-360.

Pinder, C.C. (2014) Work motivation in organizational behavior. Psychology Press.

Strom, D.L., Sears, K.L. and Kelly, K.M. (2014) Work engagement: The roles of organizational justice and leadership style in predicting engagement among employees. Journal of Leadership & Organizational Studies, 21(1), pp.71-82.

Wang, H., Sui, Y., Luthans, F., Wang, D. and Wu, Y. (2014) Impact of authentic leadership on performance: Role of followers’ positive psychological capital and relational processes. Journal of Organizational Behavior, 35(1), pp.5-21.

Whittington, J.L. (2017) Creating a positive organization through servant leadership. In Servant Leadership and Followership (pp. 51-79). Palgrave Macmillan, Cham.