The Importance of Authentic Leadership in Building Positive Psychological Capital and Leader-Member Exchange

This article discusses the importance of authentic leadership in building positive psychological capital and leader-member exchange. It explores how authentic leadership can improve employee productivity and motivation, and how it relates to positive psychological capital and leader-member exchange. The article also delves into the impact of emotional intelligence and job satisfaction among employees on organisational success.

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The type of leadership within an organisation is domineering in determining the
performance and motivation of workers. Different leadership models explain the relationship
between employees and their managers and in the end, they influence the outcomes of an
organisation defined by the productivity of the staff (Olaniyan & Hystad, 2016, pp. 164).
Notably, authentic leadership (AL) attracts considerable support and attention among scholars
over the past few decades. Wong & Laschinger (2013) say that (AL) is a strategy to govern
through acquiring the legitimacy or approval from the followers that applies honest relationships
between the leader and the subjects (949). Notably, (AL), positive psychological capital
(PsyCap), and leader-member exchange (LMX) are related terms influencing the association
between managers and the employees within an organisation. In a study conducted by Wang et
al., 2014) AL positively relates to the LMX and the workers' performance and this improved
productivity of employees become more significant among workers with high levels of PsyCap.
The understanding of the dynamics involved between the three elements in organisational
management is critical in helping managers among corporations learn how to improve employee
productivity through active engagement with the workers. The building of the PsyCap among
different employees depends on the execution of AL, which helps in enhancing LMX within an
organisation.
The prominence of AL implies that it has a positive effect on the performance of
followers. A study conducted by Olaniyan & Hystad (2016) concluded that authentic leaders act
according to particular values and try to attain truthful and openness with their subjects (164).
The most significant elements portrayed by authentic leaders are that they lead by example and
exemplify high-level transparency while making decisions. Therefore, leadership by example

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epitomises the commitment of the leader and offers guidance to the follower on how to be
psychologically and cognitively vigilant while working. Indeed, Brown & Treviño (2015) argue
that the moral behaviour of an authentic leader is the foundation for follower direction because
they are attractive and transparent making them more of role models than managers within an
organization (592). Therefore, under AL, the construction of PsyCap is easy since employees are
motivated by the leader to act rather than the direction or instruction trickling from them. Cheng
et al. (2017) conducted a study among Chinese community and established that authentic leaders
motivated their followers PsyCap through the mediation implication of the identification of the
workers with the goals of the organization. Therefore, the leadership can bolster PsyCap among
different level of employees running from white collar, casual labourers, blue collar,
administrative, and professional regardless of the age of the workers.
There is considerable evidence on the implications of AL on their followers PsyCap in
the areas of human resource management and manufacturing organisations. In a study conducted
by Baron, Franklin & Hmieleski,. (2016), the success of an organisation and its ability to realise
its objectives depend on the physical and psychological participation of human resources.
Therefore, effective leadership is significant in bolstering a firm’s competitive advantage through
increasing employee’s motivation that augments their PsyCap. Indeed, positive business
scholarship offers a structure for comprehending the implications of human behaviour on
corporate strategy and elucidates the importance of LMX and workers competencies. In another
study conducted by Liu et al. (2013), PsyCap appeared as the quest to determine what is right for
workers living with HIV and the means through employers can develop and manage the human
resources effectively. Thus, LMX structures and paradigms play a significant role in influencing
how employees engage and bolster their PsyCap to become productive and align themselves with

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the objectives and aspiration of the organisations where they work. Therefore, LMX attained
through AL can help reduce depression and anxiety among workers working on a fulltime basis
increasing the PsyCap.
Employees PsyCap is essential for all workers regardless of the ranks and nature of
organisations they work. Paek et al. (2015) conducted a research in South Korean five-star hotels
and the methods to improve PsyCap for the staff. The results showed that LMX mediated the
effect of PsyCap on job satisfaction and employee commitment to their work. Therefore, the
leaders of the five-star hotels could apply AL to augment manager and employee’s relationship
that would eventually lead to improved PsyCap. Indeed, workers are the most significant
resources in an organization, and the active association with their leaders dictates the heights to
which the business can rise (Paek et al., 2015). Peng et al. (2013) assessed the impact of PsyCap
on job turnover among nurses in China. The study also pursued to establish how the Chinese
government could improve nurses PsyCap through the commitment to the needs of the health
workers. The results certified that lack of government commitment to the needs of nurses was a
significant reason the led to turnover intentions among nurses (Peng et al., 2013). Inadequate
resources and poor management of hospitals appeared to be some of the critical elements that
reduced nurse’s motivation. Therefore, the education of nurse leaders on how to embrace modern
methods of leadership such as transformative and authentic leadership was one of the
recommendations to help solve the situation. Nurses would have a platform under effective
leadership to raise their concerns and motivation for the job well done would bolster their work
morale.
There is a different perception of PsyCap among managers and employees among
organisations. Therefore, delving into the understanding of employees towards their leader’s

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PsyCap and the implications it has on LMX and PsyCap of the workers is significant in
understanding how to help organisations bolster staff PsyCap. In a study conducted by Hongyi
(2017) among managers and employees employees PsyCap depended on the AL style adopted by
the managers that influenced the way they perceive the leaders and willingness to engage them in
case of any concern within the organisation (26). Therefore, managers could improve their
follower engagement in the matters of organisational performance through authentic leaders that
would augment their PsyCap. In the words of Bouckenooghe, Zafar & Raja. (2015),
psychological capital is both an employee and leader essential because they require
understanding each other positions for them to nurture an environment of interaction. The
perceived LMX is a product of trust and confidence in the structures of an organization, and the
failure of the institution of these significant elements is tantamount to failed communication
networks among leaders and followers. Consequently, the practical achievement of employee
PsyCap within a corporation is an element of the leadership structure adopted by the
organisation.
PsyCap comes from positive psychology and optimistic institutional behaviour. Notably,
organisational derives from the cultural components enshrined in the structure and models
frameworks for objectives and goals attainment. Luthans & Youssef-Morgen (2017) researched
the elements of PsyCap and organisational commitments applicable in ensuring that their
employees cherish maximum PsyCap. The authors recognise that Psycap is a prominent element
in relationships, education, work, and life in general (340). Unfortunately, much focus in
psychology lays in the field of mental illnesses neglecting the significant contribution it provides
in organisational management. Modern studies in psychology have diversified their areas of
research to cover other elements such as leadership, management, productivity, and motivation

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(Roche, Haar, & Luthans, 2014). Therefore, the type of organisational behaviour may cultivate
or hamper the sense of ownership and safety among their employees while working in an
organisation. The use of motivation for the realisation of organisation performance is a famous
concept in the current business environment. The idea embedded in stimulation and response to
different types of stimuli is real in the interaction of leader and followers in the corporate
context. Indeed, the guarantee of safety and useful communication tools within an organization
gives workers a sense of belonging and they identify with the operations of the firm. In the words
of Malik (2013), the application of positively oriented human resources psychological and
strengths are manageable and effectively developed for employees’ performance improvement
(3). Thus, the effectiveness of business culture and leadership style has the potential to improve
employee’s engagement and the PsyCap making them more productive.
While researching Chinese logistics companies in the city of Beijing, Wang et al., (2014)
found the challenges facing organisational leaders while trying to augment their followers
PsyCap. According to the findings, leaders sometimes focus more on external factors influencing
the productivity of firms neglecting the human resources available in the internal environment
(18). Therefore, the overemphasise on factors such as competition winning market share often
repatriates the focus of the business away from employees needs and concerns. Clarke (2013)
says that the absence of focus on employees needs and interests make the redundant affecting the
performance of the business (25). It would be absurd for leaders to forget that the most
significant element in the pursuit of business excellence is the workers who dictate the quality of
services and products in the organisation. Consequently, it becomes critical for an organisation to
enter the competitive world through the effective utilisation of the available resources before
diverting their attention to the externalities (Bilbao-Osorio et al., 2013). Precisely, the AL style

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ensures that employees always cherish the attention of the leader. Employees feeling appreciated
for what they do require minimum supervision because their willingness to work remains at a
maximum level all the time.
The idea of emotional intelligence and job satisfaction among employees is critical in the
contemporary environment of work. In a research conducted by Ngirande & Timothy (2014),
among South African electric power industry, the emotional intelligence of the managers in the
sectors appeared to have a significant impact on the motivation and performance of workers
(Ngirande & Timothy, 2014, pp. 36). The emotional intelligence among different stakeholders
within an organisation is the tool that propels understanding and peace among them (Fierro,
2016, pp. 34). Employees and leaders with higher levels of emotional intelligence operate within
the limits of motivation essential for job satisfaction. Notably, stakeholders within an
organisation do not work in isolation and one instance or another; they require making
communication for the furtherance of the institution goals (Leavy, 2013). Therefore, the negative
emotions among human resources in a business are tantamount to failed operations in an
organisation. Emotional intelligence leads to increased job satisfaction, PsyCap among leader
and workers, teamwork, and organisational success. Therefore, researchers have delved into the
reasons that make poor emotions in business society affect the success of a business.
Organizational and individuals productivity depends on the relationships between the
stakeholders. Therefore, one could contemplate the situation where individuals are isolated and
do not speak to one another because of some emotional issues among them. Indeed, when all
parties are in tandem emotionally, they are bound to make effective consultations geared towards
the attainment of the overall goals of the organisation (Leavy, 2013). Notably, the willingness of
employees to contribute to the growth of the firm depends on their emotional state. According to

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Gooty et al. (2013), emotionally deprived individuals will express withdrawal symptoms towards
the responsibility they are given to perform. Therefore, emotional nourishment among
employees and their managers is imperative in guaranteeing both the spiritual and physiological
commitment. For instance, a job environment that involves quarrels and disagreements may be
inimical to the required cooperation among the workers and the senior management. Often, the
leaders will be raising personal issues directed towards workers they dislike making it for them
to work as required of them. Emotional attachments are private, and they do not contribute to the
productivity of the organisation (Kaplan et al., 2014). Passionate leaders lead an enormous
deterioration of the of the worker's motivation because they feel disliked by the manager or the
leader.
Another aspect associated with emotions in the working place is the impacts on the
teamwork among workers at different levels of the institution. In the words of Kaplan et al.
(2014), the attainment of the projected objectives of a business requires the collaboration of
workers and departments. Little, Gooty & Williams, (2016) reiterates the same by arguing that
stakeholders in an organisation need to work together as a team because the various segments
work differently for the realisation of a common goal. In light of research conducted by Arghode
(2013), multiple departments in an institution are answerable and report to a common end, and in
case there are disconnections among workers in the various departments, it will be difficult to
keep track of the miles the business has gone (72). Firms require frequent consultation to
determine the extent of the realisation of their goals making teamwork an essential element in the
fulfilment of the intended ends. Therefore, in a situation where a leader in a department has
personal issues with another leader in a different department, there will be less consultation
making it difficult to compare the progress between the two wings in the business.

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Unfortunately, when employees engage in emotional wars, they may become jealous of their
colleagues to the extent of trying to set them up to their seniors (Humphrey, Ashforth &
Diefendorff, 2015). Significantly, emotional fallout among people within an organisation sets a
lousy precedent for prospective workers who may not want to face what they here concerning an
organisation.
Undoubtedly, organisations face various forms of emotional lapse. Unfortunately, most
of these setbacks come from personal connections between the parties involved. Therefore, they
are dangerous to the success of the business because they occasion fragmentation among the
workers (Humphrey, Ashforth & Diefendorff, 2015). Thus, organisations must draw the lines of
interaction to ensure that there are no instances of emotional fallout among their workers. It
would be critical for businesses to spell out the interaction rules among employees at different
levels to avoid commotions that may lead to unnecessary hatred among themselves. Those
employees taking things personal against others should receive sanctions to ensure collaborated
efforts for the realisation of institutional performance. Moreover, the organisation may have
policies stipulating the extent into which employees need to engage each other while working to
avoid some of them bring outside issues into the working environment (Little, Gooty, &
Williams, 2016). Significantly, it is essential for the management to ensure that they forester a
platform where employees can raise they displeasure without the knowledge of the involved
persons. Consequently, all people within the firm will have the privilege to do their duties as
expected of them without fearing their relationships with others.
AL, LMX, and PsyCap are essential elements within an organisation. Often, good
leadership engendered through authentic leaders nurtures an environment where workers feel
free to interact and associate with their leaders improving their PsyCap. Authentic leaders ensure

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that they identify with the needs of their followers and act as facilitators of success. Therefore,
they avoid confrontation and commands and make workers feel appreciated for what they do and
motivated to contribute effectively to the productivity of the organisation. The relationship
between an authentic leader and the employees facilitates understanding between them despite
their age, professional level, and the degree of supervision involved. Workers under authentic
leaders will always perform their duties even without supervision. Related to PsyCap is
emotional intelligence that is a significant influence of the productivity of the employees.
Notably, stakeholders within an institution require exemplifying high levels of professionalism
for them to avoid emotional fallouts with their colleagues because it deteriorates the attainment
of business goals and objectives. Therefore, an authentic leader is useful in helping an
organisation cultivate emotional intelligence among workers and their leaders improving Psycap
among them.

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