The Positive Leader: Authentic Leadership, Leader-Member Exchange, and Employees' Psychological Capital

This paper explores the relationship between authentic leadership, leader-member exchange, and employees' psychological capital. It critically reviews literature on building psychological capital for different types of employees and explains why emotions significantly impact employee performance.

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The positive leader
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Introduction
Positive organizational behavior exists in diverse ways and it influences the relationship
between co-workers and leaders. Positive organizational behavior is application or study of
psychological capacity and positively oriented human resource strengths that can be managed or
developed for improving performances. Leadership is a strategy used by a person for influencing
others in order to achieve a target. Leaders who utilize their knowledge and leadership skills
facilitate the leadership process. Furthermore, leaders should practice authentic leadership in
order to influence the positive psychological capital of employees. Through the authentic
leadership practice, the trust is experienced in the organization with subordinates trusting their
leaders for their production. The authentic leaders are not born but made if a person has a desire
of becoming an effective leader. In addition, a leader with positive psychological capital
develops in a non-ending and slow process involving education, self-study, education and
training. In order to maintain leader-member exchange (LMX), authentic leaders must be
creative, obedient, trustworthy, innovative and have effective communication. These features are
essential in the development of (LMX), authentic leaders and employees’ Psychological Capital
(PsyCap). Therefore, the paper seeks to determine the relationship that exists between authentic
leadership, leader-member exchange and employees psychological capital, critically review
literature explaining “PysCap” of some different types of employees and why emotions
significantly influence employees performances.

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What is the relationship between authentic leadership, Leader-Member Exchange (LMX)
and employees’ Psychological Capital (PsyCap)?
According to Shamir and Eilam-Shamir (2018 p.51), authentic leadership is an approach
to leadership that focuses on the creation of a leader’s legitimacy through a truthful relationship.
Furthermore, authentic leaders are positive and dedicated people with their leadership being
based on self-concept: clarity, self-concept: her or his knowledge, person role merger, self-
concordance and the degree that self-concept of leadership is expressed in her or his behavior.
According to Hooper and Martin (2008 p.20) Leader-Member Exchange (LMX) is an approach
to leadership that emphasis on the relationship that exists between followers and leaders.
Furthermore, the theory suggests that leaders are developed in an exchange with each of their
subordinates and therefore Leader-member exchange quality influences the subordinates
decisions, responsibilities and access to resource and performances. Employees’ Psychological
Capital (PsyCap) is a concept developed in an organization with four pillars of optimism, hope,
resilience and Efficacy and has been associated with life and job satisfaction.
A research conducted by Coxen, van der Vaart and Stander (2016 p.1-13) indicates that
there is a significant positive relationship that exists between authentic leadership, leader-
member Exchange (LMX) and Employees’ Psychological Capital (PsyCap). From the research
finding, it is clear there is the relevance of authentic leadership to (LMX) and (PsyCap) and
utility of effects on both performance and trust.
Authentic relationship increases Employees’ Psychological Capital (PsyCap). Authentic
leaders create Employees’ Psychological Capital (PsyCap) as a key developmental change
among their followers (Luthans, Norman, Avolio and Avey, 2008 p.119). Therefore, the change

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is considered to be brought by the effect of authentic leaders on organizational work climate. In
addition, the outcome of authentic leadership has received greater empirical attention with the
influence of authentic leader’s behaviors being controlled by other factors like an aspect of the
work environment and subordinate characteristics. Furthermore, authentic leader’s enables an
individual psychological state to have confidence, be prepared to face challenges by putting more
efforts and working toward a goal.
Both Authentic leadership and Employees’ Psychological Capital (PsyCap) are also
positively related to leader-member Exchange (LMX). A research conducted by Luthans,
Norman, Avolio and Avey (2008) further showed that Employees’ Psychological Capital
(PsyCap) mediate the relationship that exists between leader-member Exchange (LMX),
employee performance and authentic leadership. The leader-member Exchange (LMX)
relationship makes the employee be effectively committed to the organization as their needs are
addressed appropriately and they have confidence in their authentic leaders. Furthermore, as a
result of Employees’ Psychological Capital (PsyCap), authentic leaders have the desired impact
on the employee’s actual performance. In addition, leader-member Exchange (LMX) and
authentic leadership result in satisfactory and task interdependence positively influencing the
level of commitment to the team.
Higher authentic leaders engage in positive appraisals of their situation with LMX
relationship. The positive appraisals promote authentic leadership and strengthen the relationship
with followers. Furthermore, the relationship is strengthen because positive leaders are likely to
have increased trust and confidence with follower’s ability of conducting their duties and
responsibilities in a timely manner The effect of psychological Capital (PsyCap) on employee

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attitude is that people who are high in PsyCap have a belief they can influence and create their
own success. The positive appraisal from authentic appraisals PsyCap enhances the perceived
success probability in achieving the goals of the organization with given resources.
Critically review the literature that explains how to build the Psychological Capital of some
different types of employees (such as professionals versus administrative employees,
emotional labor, blue collar versus white collar employees, different generational cohort,
and/or different ethnicities)?
Hope
According to Toor and Ofori (2009 p.342).hope is a multidimensional construct
consisting of the way power or willpower of an individual. Way power is the ability of an
individual to devise alternative contingency plans and pathways for the achievement of specific
goals in the face of obstacles, while willpower is the determination or agency of an individual to
achieve goals. Hope enables employees to stay motivated and attain success in their tasks by
finding the best pathway. Therefore, hope components complement each other. Hope has had
great input to positive Psychological Capital and has proved to be important in the workplace.
For example, researchers found out that hope predicts job performance beyond self-efficacy and
cognitive ability. In addition, hope has a positive effect on work happiness, the satisfaction of
employees and their commitment to the organization. Furthermore, hope protects the perceptions
of unpredictability, uncontrollability and vulnerability of an individual. Therefore, sustaining the
hope of a worker is important to their wellbeing.

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Optimism
Optimism has a more close association with positive psychology than the other constructs
and is regarded as a more dynamic, flexible and realistic construct that can be developed and
learned. Optimism is defined by pervasiveness and persistence which are key dimensions of the
way individuals present explanations of events. Individuals who have an optimistic outlook see
setbacks as opportunities and challenges that can eventually result in success, which enables
them to persevere when faced by obstacles. Optimistic workers can better assess situational,
temporary and external circumstances. Research by Simons and Buitendach (2013 p.50) shows
that dispositional optimism directly affects cynicism and exhaustion among staff. In addition,
optimism correlates with the performance and engagement of employees. Optimism, therefore,
forms an important part of the resource capacities of employees since their optimistic approach
to challenging and stressful situations could have a positive impact in achieving goals related to
their work.
Resilience
Resilience is the ability of people to successfully manipulate their environment so as to
protect them from the negative consequences of adverse events and includes the ability of people
to recover from adversity. In view of this, people who are resilient move on with life easily even
after experiencing events or experiences that are stressful such as conflict, failure or personal
adversity. Therefore, resilience emphasizes an individual’s strength and their resources of coping
to manage or resolve testing situations successfully. Research by Avey, Wernsing and Luthans
(2008 p.53) suggests that when workers experience negative events in their jobs, workers who

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possess high psychological capital have a higher likelihood of adapting positively and recovering
from the events thus inhibiting the development and escalation of intentions to quit.
Self-efficacy
According to Clapp-Smith, Vogelgesang and Avey (2009 p.232) self-efficacy is the
conviction of an individual regarding their ability for the mobilization of the courses of action,
cognitive resources and motivation necessary for the accomplishment of specific tasks within a
particular context. The interpretation and perception of events by an individual determine and
influences how they will address challenges that are difficult as well as how they will experience
symptoms of stress. Individuals with high self-efficacy levels usually perceive challenges as
surmountable, given enough effort and competencies. Self-efficacy is related to the retention and
socialization of new employees as well as being related to turnover intentions and organizational
commitment of existing staff. Psychological constructs that are positive such as self-efficacy
have mediating effects such as work engagement, burnout and occupational stress.
Why do emotions (of for example leaders, managers, employees) significantly impact
employees’ performance?
Basically, emotions are reactions or internal feelings towards all situations. Emotions
play an integral role in the daily life of people. Further research by Gruman and Saks (2011
p.132) shows that an individual’s personality and professional career are affected by both
negative and positive emotions. An emotion is a psychological and mental state that is related to
a wide range of changes in body behavior, thoughts and feelings. Anger is a general human
emotion experienced by all people and often occurs under unpleasant situations. When

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employees are performing their jobs, mistreatment from supervisors and managers may lead to
anger which will ultimately affect the working environment. Angers demotivates employees and
tends to divert their attention towards the particular issue affecting them thus leading to poor
performance in their roles.
Trust is also an emotion that is important in the workplace since employees who have
secured trust from their superiors are able to be more productive as they can confidently work
with minimum supervision. In this case, the managers and supervisors are sure that the employee
will deliver on their roles and responsibilities even without their supervision. Therefore, the
manager can also take part in other developmental activities for the benefit of the organization.
Another emotion is interest whereby it causes attention for an employee to focus on a process,
event or object. Interest expresses an excitement of the mind and therefore causes employees to
work harder as they have the organization’s interest at heart. On the flip side, negative interest by
employees will lead to poor job performance as the employee does not care whether the
organization will be successful or not. Employees who have negative interest end up being fired
due to their unproductivity in their roles. Therefore, positive emotions by supervisors, leaders
and employees will contribute to organizational effectiveness.
Conclusion
There is a strong influence in the emotions of an individual to their performance.
Currently, organizations have invested too much effort in measuring and defining performance
since emotions and employee performance are interrelated. Bosses seek to have a positive
employee attitude so as to improve employee performance. Authentic leadership is an honest
approach based on self-concept: clarity, knowledge, person role merger and self-concordance

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and the extent of expressing the behavior of leadership. Leader-Member Exchange (LMX) is a
leadership approach emphasizing on the relationship between leaders and followers. Employees’
Psychological Capital (PsyCap) is a developed concept of four pillars including optimistic, hope,
resilience and efficacy. All the approaches and concepts are positively related to each other with
authentic relationship increasing Employees’ Psychological Capital (PsyCap) and performances
on the leader-member exchange. The authentic leadership determines the Leader-Member
Exchange (LMX). If the leader is authentic and follows workplace ethics, the Leader-Member
Exchange (LMX) relationship is significantly boosted.

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References
Avey, J.B., Reichard, R.J., Luthans, F. and Mhatre, K.H., 2011. Meta‐analysis of the impact of
positive psychological capital on employee attitudes, behaviors, and performance. Human
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Avey, J.B., Wernsing, T.S. and Luthans, F., 2008. Can positive employees help positive
organizational change? Impact of psychological capital and emotions on relevant attitudes and
behaviors. The journal of applied behavioral science, 44(1), pp.48-70.
Clapp-Smith, R., Vogelgesang, G.R. and Avey, J.B., 2009. Authentic leadership and positive
psychological capital: The mediating role of trust at the group level of analysis. Journal of
Leadership & Organizational Studies, 15(3), pp.227-240.
Coxen, L., van der Vaart, L. and Stander, M.W., 2016. Authentic leadership and organizational
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psychological capital in the supportive organizational climate—employee performance

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