Leadership and Psychological Capital

Running head: LEADERSHIP AND PSYCHOLOGICAL CAPITAL
Leadership and Psychological Capital
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1LEADERSHIP AND PSYCHOLOGICAL CAPITAL
Table of Contents
Introduction................................................................................................................................2
Leadership and performance of the employees..........................................................................2
Leadership Theories and contemporary organizations..............................................................4
Psychological Capital and their importance...............................................................................5
Leadership and the development of Psychological Capital.......................................................6
Emotions and Employees Performance.....................................................................................6
Literature Gap............................................................................................................................7
Conclusion..................................................................................................................................8
References..................................................................................................................................9

2LEADERSHIP AND PSYCHOLOGICAL CAPITAL
Introduction
According to Li et al. (2016), the use of various kinds of technologies and innovations
has drastically changed the nature of the business world in the recent times and because of
this employee performance has become the catch-phrase of the contemporary business world.
As stated by Newman et al. (2014), organizations are taking the help of diverse kinds of
processes as well as strategies for the enhancement of the employee performance like
effective training, delegating suitable tasks to individuals as per their capabilities and others.
Laschinger and Fida (2014) have stated that the prominence attained by the construct
of employee performance within the framework of the modern business world can be
justified on the basis of the fact that the overall performance of a business enterprises
depends greatly on the individual performances of the different employees of the concerned
enterprise. The processes of effective leadership and the development of the psychological
capital of the employees are the two most important ones which are being used by the
majority of the contemporary business enterprises for the enhancement of the performance or
job productivity of the employees. This paper will conduct a literature review to understand
the correlation which exists between the concepts of leadership, employee performance and
psychological capital.
Leadership and performance of the employees
Leadership is a notion which many scholars as well as researchers have tried to define
in an effective manner since the traditional times however it is pertinent to note that none of
them have been able to come up with a standard definition of the same (Abbas & Raja, 2015).
For example, Wang et al. (2014) argue that leadership is defined as the process which is
being used by different individuals to affect the behavior of their team mates in a positive

3LEADERSHIP AND PSYCHOLOGICAL CAPITAL
manner through motivation and thereby helped them to complete their job roles in an
effective manner. On the other hand, Luthans, Youssef and Avolio (2015) have argued that
leaders need to guide the followers or for that matter act as their mentors. More importantly,
these traditional definitions of leadership have changed substantially because of changes in
the world of business. The contemporary leaders are required to take the help of different
kinds of innovative ideas not only for the enhancement of the business prospects of an
organization but at the same time for the improvement of job productivity of the subordinates
who are associated with them (Avey, Luthans & Jensen, 2009). As discussed by
Bouckenooghe, Zafar and Raja (2015), the leaders need to posses different skills like
effective communication skills, problem solving skills, task delegation, empathy, emotional
intelligence and others which are likely to help them manage the performance of the diverse
subordinates who are related to them.
Brunetto et al. (2017) are of the viewpoint that the performance of the subordinates
who are associated with a particular leader depends greatly on the personal traits as well as
the leadership style which is being followed by the concerned leader. For example, one of the
most basic skills that the leaders need to posses is to understand the abilities of the
subordinates and delegate tasks or job roles to them accordingly (Wong & Laschinger, 2013).
More importantly, the modern leaders are also required to have the quality of emotional
intelligence which is likely to help them to understand the emotional needs of the employees
and thereby manage them on the basis of this fact. In addition to this, the effective use of
different skills like communication, decision making, problem solving and others also help
the contemporary leaders to enhance the performance of the subordinates who are associated
with them in the best possible manner (Avey et al., 2011). Thus, it can be said that the
process of leadership is an indispensible tool for the organizations which are trying to
enhance the performance of their employees.