Positive Leadership: Authenticity, LMX, and Psychological Capital

This report explores the relationship between authentic leadership, effective Leader-Member Exchange (LMX), and employees’ Psychological Capital (PsyCap). It includes a literature review on the ways to form the Psychological Capital of different employees, the impact of emotions on employee performance, and building psychological capital for different types of employees.

Positive leader
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Contents
Introduction......................................................................................................................................2
Literature review..............................................................................................................................3
Authentic leadership....................................................................................................................3
Leader-Member Exchange (LMX)..............................................................................................4
Employees’ Psychological Capital..............................................................................................5
Building psychological capital for different types of employees....................................................6
Impact of emotions on performance of employees..........................................................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

Introduction
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.

Literature review
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.
Authentic leadership
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.
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.
Leader-Member Exchange (LMX)
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.
Employees’ Psychological Capital
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.
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.

Building psychological capital for different types of employees
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).
Impact of emotions on performance of employees
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).

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
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