The Positive Leader: Relationship between Authentic Leadership, LMX and Psychological Capital

This report explores the relationship between authentic leadership, leader-member exchange (LMX) and employee’s psychological capital (psycap). It also explains how to build psychological capital of different types of employees and why emotions significantly impact employee’s performance.

RUNNING HEAD: The positive leader 0
The positive leader

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Contents
Introduction................................................................................................................................2
The relationship between authentic leadership, leader-member exchange and employee’s
psychological capital..................................................................................................................2
How to build psychological capital of some different types of employees...............................3
Why do emotions significantly impact employee’s performance..............................................4
Conclusion..................................................................................................................................5
References..................................................................................................................................6

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Introduction
A positive leader makes use of the theoretical grounded principles to promote positive
outcomes like moral behaviors, optimistic emotions revitalizing networks. The positive
leadership has 3 areas of prominence. Firstly, the positive leadership empowers completely
unexpected performance. It means that the focus is on the consequences that radically exceed
common or the anticipated performance. Secondly, the positive leader has a favorable bias.
The orientation is towards assisting, prospering, burgeoning, addressing problems and
disablements. The third one emphasis on simplifying the best of the human condition. It is
centered on the eudemonic assumption which is a feeling exists in all the human systems
towards attaining the best of the human condition. The attention is mainly given on exposing
this prospective in the organizations. The positive leadership aims to bring people together
around the shared purpose and empower them to lead in such a way that creates value for all
the stakeholders. The persons who embrace positive leadership are authentic and passionate
in nature and their work on a strong basis. This report includes the relationship between
authentic leadership, leader-member exchange (LMX) and employee’s psychological capital
(psycap). The literature is critically reviewed to build the psycap of some of the different
types of employees. At last, it is also explained that why emotions expressively impact the
performance of the employees.
The relationship between authentic leadership, leader-member exchange, and
employee’s psychological capital
The authentic leaders are self-actualized persons who are attentive to their strengths,
boundaries, and sentiments. They disclose their real side to the followers. They never hide
their errors or weaknesses out of the fear to look weak. They carry business activities in the
pursuit of the outcomes, not for the power, money or ego. The authentic leader's emphasis on
the long-term shareholder value. The authentic leaders will always be focused and interested
in empowering employees. They are devoted to constant personal growth and dedicated to
building lasting associations and strong organizations. These leaders develop their own
leadership style and do not work to overcome shortcomings (Wang, et. al. 2014)s. The
authentic leaders are known to have a positive consequence on the performance of the
followers and influence them. The authentic leader’s behavior contains high moral standards
which are taken as guidance by the followers. The values are shared through transparency,

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positivity and ethical standards among the followers. It creates a sense of self-worth in the
followers.
The leader-member exchange is a relationship based approach to the leadership. It
concentrates on the dual relationship between the leaders and followers. As per the LMX
theory, the leaders form a different kind of relationships with the subordinates. The group
members receive extensively more attention and have more access to organizational
resources. The individuals receiving fewer valued resources are disfavoured by the leader.
The relationship between the leaders and followers concludes two stages which are role
taking and role makes. When an individual joins the organization, the leader is required to
assess the talent and abilities of the individuals and offer them opportunities to demonstrate
their capabilities (Hmieleski, Carr and Baron, 2015). An informal cooperation on work-
related factors takes place between the leader and the individuals. The individual who is
similar to the leader is more likely to exceed. This theory involves a scope to which leaders
and followers develop a trusting and mutually beneficial relationship. This theory focuses on
the importance of communication in leadership. The leaders are highly involved as per the
LMX theory.
The psychological capital comprises four positive capacities like hope, efficacy, resilience,
and optimism linked to job satisfaction. Hope is an optimistic state of mind which is
grounded on the interactively consequential sense of effective agency. When a member
scores high in the hope then he will have will to reach goal along with attaining it. The
optimism cannot be only defined as expecting good things to come but also comprises
reacting to the problems with the confidence. Scoring high in the optimism is possible if the
positive events are interpreted to be internal and pervasive. It is all about having faith in
improving the situation. The self-efficacy is a concept defined as task-specific and self-
confidence with the aim of achieving something effectively (Hartnell, et. al. 2016). The last
one, resilience is based on the capability to bounce back and beyond when confronted with
the difficulty. The psychological capital concept is basically designed for the organizations. It
is suggested that the organizations are required to an emphasis on the spiritual than the
educational development. The human resources can lead to a competitive advantage as they
are incomparable by the competitors than the physical, structural and financial resources. The
psychological capital is an individual’s optimistic psychological state of development. It is
connected with higher performance, lower stress levels and better well-being (Laschinger,
Wong, Cummings and Grau, 2014).

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How to build psychological capital of some different types of employees
According to Breevaart, Bakker, Demerouti and Derks, 2016, the psychological capital draws
positive psychology and positive organizational behavior. The positive psychological
resources which make up psychological capital are hope, optimism, efficacy and resilience
(Breevaart, Bakker, Demerouti and Derks, 2016). These four meet the inclusion criteria and
have their impact on the attitude, performance, and behavior of the employees. They share
the common theme of positive assessment of circumstances and the likelihood of the success.
It is mainly based on inspired effort and persistence. For instance, the optimistic individuals
showcase their chances of success to be high. They choose the challenging goals and are
motivated to achieve them due to their confidence. The hope encourages the generation and
detection of multiple ways towards the goals. The resilience allows retrieval from the
setbacks especially when the trails are obstructed. As per the views of Goswami, Nair, Beehr
and Grossenbacher, 2016, the psychological capital has a major role in the positive
organizational performance which emphasizes on the need of positive approach (Goswami,
Nair, Beehr and Grossenbacher, 2016). The professional employee’s mental state of
development is deliberated by the necessary efforts to prosper at the challenging tasks. The
psychological capital can be easily built in the professional employees like teachers,
engineers, architects, scientists, editors and more. It can be made possible with the employee
attitude, behavior, workplace outcomes and job performance. The current study emphases on
the relationship between psychological capital and professionals. The psychological capital
among the professionals can be built by leading an optimistic approach and handling human
resources in the complex economic and societal conditions. The application of positive
psychology in the workplace leads to positive organizational performance (Chen, Zhu, and
Zhou, 2015). The human resource strengths and the psychological dimensions can be
developed, dignified and effectively succeeded to build psychological capital at the
workplace. The professional employees enriched with the physiological capital can tackle all
kind of situations. Their self-efficacy has the capability to execute actions even in adverse
situations. The efficacy advancement makes professionals more competence in achieving
stimulating objectives. On the other side, psychological capital of the administrative
employees can be built by undertaking elements like strength, direction, and perseverance
(Walumbwa, Hartnell and Misati, 2017). The administrative staff is generally involved in the
administrative work of the organization such as accounts, human resource etc. The
administrative employees can build physiological capital by putting human resources into the
action and building a friendly relationship with other employees. The efficiency of the

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administrative employees can be achieved when the higher authority creates a positive state
of development by motivating them in the challenging tasks. Getting positive feedback,
training and partnering with staff in the important tasks of the organization helps to build
physiological capital among the administrative employees (Roche, Haar, and Luthans, 2014).
The white-collar employees are the internal staff and liable to perform duties in the office
atmosphere. Accountants, real estate agents, bankers and more can be white-collar
employees. These employees are highly skilled and are experts. The physiological capital
among the white collar staff can be built by the positive organizational behavior which
focuses on the positive approach only. According to Bouckenooghe, Zafar and Raja, 2015,
the physiological capital can even be developed by giving an award of appreciation for the
exceptional performance to the white-collar employees (Bouckenooghe, Zafar and Raja,
2015). It leads to a positive atmosphere and causes employees to perform more. The financial
security is also a good option to build physiological capital. On the other side, blue-collar
employees generally conduct tasks with their hands and perform the labor jobs. The skills
required vary as per the task and occupation. It has been also observed that some blue-collar
jobs necessitate highly skilled personnel who are properly trained. Whereas, some other jobs
require unskilled employees to perform simple activities. According to Paterson, Luthans,
and Jeung, 2014, the physiological capital among the blue-collar employees can be built if
they are provided with the proper working conditions and the guidance. Giving them a
chance to work on the higher position can also lead to the positivity which automatically
builds physiological capital among the employees (Paterson, Luthans and Jeung, 2014).
Why do emotions significantly impact employee’s performance
The emotions of the leaders, managers and other employees significantly impact the
performance of the employees. The emotions of the leaders in the organization affect the
performance of the employees consecutively. As per Baron, Franklin and Hmieleski, 2016,
emotions such as happiness and sadness lead to the performance of the employees to be
positive or negative (Baron, Franklin, and Hmieleski, 2016). A positive leader enhances the
performance of the employees. On the other side, a negative leader puts adverse effects on
the performance of the employees. A negative leader can bring positive results only in the
complicated scenario. It is observed that employees tend to work better under the monitoring
of positive leaders. It directly affects the willingness of the employees to perform tasks. On
the other side, the manager’s emotions influence the practices of the employees at the

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company. The emotions of the managers affect the job satisfaction, customer service and
organizational commitment of the employees (Rivkin, Diestel, and Schmidt, 2014). The
employees create social awareness to impact on the emotions of the managers. It also
determines the way relationships can be handled. The managers pledge change in the
organization by using both positive and negative emotions. The managers maintain a standard
of excellence which puts a positive impact on the employees and persists in pursuing goals.
The emotions of one employee affect the emotions of other employees significantly. The
positive emotions of one employee influences to another person positively and vice versa. A
person spreading positivity influences other employees to conduct operations successively
(Rego, Sousa, Marques and e Cunha, 2014). The negativity of the employees can even affect
the performance of the other employees destructively.
Conclusion
The positive leadership drives to the higher level of performance of the organization. There is
a relationship between the authentic leadership, LMX and psychological capital as all
perform actions as guidance to the followers. The leaders perform actions to build a positive
state of development with the help of the psychological capital. The authentic leaders are
capable enough to build credibility and gain trust. They put a positive impact on the
followers. The LMX theory is successful in building a unique relationship between a leader
and a follower. It helps followers in accomplishing information along with the confidence.
The psychological capital of the various type of employees like a professional,
administrative, blue and white collar can be built by offering them the desired working
conditions. The involvement in decision making has also a role in creating a positive
environment. The emotions significantly affect the performance of the employees in the
organization.

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