Linking Authentic Leadership, LMX, and Employee Psychological Capital

This essay provides a literature review examining the relationship between authentic leadership, Leader-Member Exchange (LMX), and employee psychological capital (PsyCap). It explores how authentic leadership forms the basis of positive organizational behavior, enhancing psychological capital and boosting organizational climate. The essay discusses how authentic leadership, LMX, and PsyCap are interrelated, shaping psychological climate perceptions and improving job satisfaction, commitment, and employee engagement. It also examines ways to build PsyCap in employees, focusing on motivation, resilience, optimism, and self-confidence, and how emotions impact employee performance. The analysis concludes that psychological capital can be developed through adequate leadership, leading to improved employee performance and organizational success.

Relationship between authentic leadership, Leader-Member Exchange (LMX) and employees’
Psychological Capital
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Running head: POSITIVE LEADERSHIP

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Contents
Introduction...........................................................................................................................................2
Literature review...................................................................................................................................2
Conclusion.............................................................................................................................................6
References.............................................................................................................................................7
Introduction
In today’s dynamic business environment and socio economic context it is vital to interpret
the significance of stability in different organisations so as to ensure employees commitment
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towards organisation and hence the role of psychological capital and its relations with
leadership helps to build and improve psychological climate. Hence to respond effectively to
dynamic business environment organisations look to explore the manner through which
productivity can be increased along with facilitating growth for organisation that is required
to stay competitive and sustainable on global scenario. As such to attain international
competitiveness the firms need to ensure that they execute workforce intervention approaches
that are meant to improve the psychological climate and extend the psychological capital.
Further to bring more effectiveness authentic leadership can be extended so that it can drive
to relevant influence over levels of psychological capital and climate thus potentially
stimulating the behaviour and attitude of employees and building their strong commitment for
organisation.
Literature review
Relationship between authentic leadership, LMX and PsyCap
Authentic leadership forms the base of positive organisational behaviour that is significant to
enhance psychological capital and helps to boost climate in organisation as it is determined as
a procedure of leader behaviour that drives and facilitates both positive psychological
abilities as well as positive ethical climate to promote larger self-awareness, greater internal
moral perspective and relational transparency on behalf of leaders who work with followers
which helps to develop self-improvement of both the leader and their followers. As such
authentic leadership helps to boost employees performance at both individual and group level
and even facilitates psychological capital so as to enhance trust levels which in turn impacts
employees behaviour (Munyaka et al. pg 42, 2017). Also psychological capital has significant
correlation with authenticity and transformational leadership as well as there exists a positive
association between authentic leadership and psychological capital which indicates that
employees psychological capital is correlated with their attitude as well as their strengths
which gives them direction to meet desirable objectives for efficacious functioning of human
resources in context of todays’ challenging environment.
Also psychological capital helps to build positive psychological state of development within
employees that helps them improve their self-efficacy thereby making them give needed
efforts to overcome and succeed challenges at work as well as encourages them to take risks
thus shaping optimistic behaviour in employees which helps them attain success, makes them
move towards goals and when they are faced with adversity the employees learn to sustain
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and bounce back with their strength of psychological capital to move further to achieve
success. Hence a direct correlation exists between psychological capital, authentic leadership
that helps to shape psychological climate based on experiences and thus makes leader-
member exchange more enduring and wide to influence employees behaviour towards
expectation of behaviour modes as directed to organisational demands (Avey pg. 135-141,
2014). The relationship between authentic leadership, psychological capital and leader
member exchange thus shaped phycological climate perceptions bringing in better outcomes
in context to job satisfaction, commitment, employee engagement, motivation and
psychological wellbeing to drive enhanced employee performances.
Moreover the relationship between authentic leadership, leader member exchange and
psychological capital helps to improve psychological attachment of employees with their
teams thus helping members in team to bond with one another and ultimately enhancing team
commitment where organisation values commitment between employees that helps to
minimise withdrawal behaviour like lateness and turnover. As such it can be stated that
psychological capital is related to commitment of employees towards their organisation
because the firms meet needs for efficacy and development to drive high level of
psychological capital in employees.
Further analytical review of authentic leadership emphasises that it is efficacious, morally
suitable and deliberate reflective practice that needs to be encouraged in organisations where
leadership can be corelated with assumptions, beliefs, actions that are associated to authentic
self-relationships, learning, control and arrangement driven together with essential human
values which makes leadership and management approaches ethically and morally
developing to support needs of employees in organisation at times when there is possibility of
emergence of psychological climate of distrust and despair. Hence the growing role of
authentic leadership is significant in organisation to develop a rich, engaging and productive
psychological capital and productive learning atmosphere for employees with collective
efforts of all stakeholders so that employees can attain high quality and result oriented
outcomes (Avey, Luthans and Jensen pg. 670-677, 2009). Moreover building authentic
capacity in followers is another vital function of authentic leaders so as to support
development of psychological capital with leader-member exchange where the viewpoint is
that authentic leaders can bring in optimistic behaviour change for their followers or
employees to emulate where they are more likely to embrace same values and behaviour for
authentic ability with improvement of high quality relationship with their leaders which are
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based on aspects of social exchange through leader-member exchange. Hence authentic
leadership, leader member exchange (LMX) and psychological capital are inter-related and is
developed with appropriate interaction or exchange amongst leaders and subordinates and
this relationship develops feeling of personal obligation, trust and commitment where the
employees are inspired to fulfil the expectation of leaders so as to lend desirable efforts to
attain objectives through interdependence of relationships (Liao et al. pg 433-449, 2017).
Hence authentic leaders are more likely to promote high quality leader-member exchange
(LMX) that is attributed by high standard of respect, positive impact and commitment in a
manner that it reciprocates desired results with wider authenticity and well-being of
employees or followers, thus maintaining and retaining phycological capital among
employees.
Ways to build PsyCap in employees
Most of the organisation focus on developing human resource policies and practices by
looking at employees from quantitative perspective but it is argued that organisations need to
identify the significance of psychological capital within the people or employees of a firm to
set out positive personality characteristics among their employees so as to shape their
psychological capital needs and exhibit optimistic behaviour at workplace (Larson and
Luthans pg. 75-92, 2006) These personality traits can and should be considered as assets by
leaders of organisation as they help to develop desirable outcomes from the employees who
contribute committed efforts to attain expected goals.
Different types of employees ranging from professionals, administrative, blue collar, white
collar, generational cohorts or employees from different ethnicities as well as labourers can
be developed to ensure progress in their psychological capital which is quite similar to other
forms of assets like financial capital that defines possessions, intellectual capital that defines
what we know about how to do and social capital that defines who we know. In similar
context psychological capital or how we are or in other words how employees are can be
reshaped to exhibit a set of desirable behaviour at work from employees belonging to
different kinds. This psychological capital in employees helps to set some positive
personality attributes that they deploy in professional life and environment in context to work
and these psychological capital shaped with personality traits or characteristics makes a
distinctiveness in attaining the outcomes that are attained by employees of different types.
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It is significant that employees are trained to build psychological capital focusing on four
particular aspects of personality i.e. motivation or will, resilience, realistic optimism and self-
confidence.
For example, in order to build the psychological capital in professional vs administrative
employees it is necessary that basic aspects of hope, positivity, confidence and resilience is
developed among employees. Like culture of organisation can be developed to shape
psychological capital of professionals through imbibing in them assumptions that underpins
the values and characteristics of organisation as workplace or workgroup. These values will
help to found the base of thoughts and behaviour exhibited by professionals at work thus
developing positive psychological capital with assimilation of culture to promote resourceful
thinking to drive success and promote sustainability in organisation (Story et al. pg 25-34,
2013). While in case of administrative employees PsyCap can be developed through
proactivity training where employees can be encouraged to drive strategic decisions to
support behaviours that is expected to bring success for firms in context to positive behaviour
of employees like confidence and resilience that would facilitate psychological capital with
persistent focus on organisational policies and practices as well as supervisory practices
within workplace.
Similarly other group of employees like generational cohorts and resource from different
ethnicities can be trained to build psychological capital through practice of traits like
resilience which ensures practice to maintain effective adjustment at workplace to
accommodate with other people around work. Job design aspects of these types of employees
can be strategically restructured to facilitate resilience at work like this trait can be developed
by reducing unessential complexities at work through mindful consideration so that job
designs provide ways to eliminate tasks that may be better fit and performed by other at
workplace. As such resilience can be developed in generational cohorts and resources from
different ethnicities by ensuring that organisation have right fit of employee for all jobs and
by giving them available resources that are required to perform the work as well as ensuring
that these employees are actively involved when they report to perform as desired which will
help to build resilience practice and improve their psychological capital.
Another example to build psychological capital amongst blue collar vs white collar
employees is to promote practice of optimism or positive expectancy among blue collar
employees by engaging them into adaptive work practices. Developing personality
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characteristics to endure and accommodate with situation through effective support from
policies and practices would help to build adequately managed blue collar employees who
could be encouraged to desirable performance through belief in hard work and desirable
rewards like bonus based on outcomes. These optimistic traits will help to build
psychological capital among blue collar employees. While for white collar employees pay for
performance plan can be encouraged to develop positive psychological capital and also
giving them leadership opportunities will encourage conviction in their capabilities that will
make them master their experiences to attain success through support and network which
would build confidence and boost their psychological capital. However for emotional
labours psychological capital can be built through practising aspect of belief in order to attain
significant goals and giving them motivation under proper supervision so as to develop them
to direct their psychological capability towards good performance for achieving business
goals and achievement of their own lives.
Impact of emotion on employee performance
Emotions like will, optimism, resilience and confidence which are vital elements to achieve
psychological capital in employees helps to refine the basic assumptions of psychology in
employees with focus on human behaviour so that strengths and positive outlook are
developed in them which impacts their performance at work. While in context to leaders
emotions for exemplifying behaviour that can encourage attitude of their followers helps to
encourage self-awareness thoughts and practices that can result to improvement of
psychological capital of leaders thus making them exhibit behaviour that encourages
performance in their followers or employees through development of skills like teamwork
and commitment to attain goals as desired (Story et al. pg 25-34, 2013). While in context to
managers emotions like interaction, collaboration and leadership along with self-confidence
helps to combine traits of the employees who collaborate to attain shared goals under
teamwork so as to drive effectiveness and performance with appropriate maintenance of
workplace policies and communication that helps to direct psychological capital of
employees having a multiplier impact in competitive business environment to attain strong
performance with employees collaboration, high level of satisfaction and well-being in
employees that have significant impact on employees emotions and their performances.
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Conclusion
Hence it can be inferred that psychological capital can be developed in employees through
adequate leadership and leader member exchange under social interactions that helps to
promote a culture within organisation where employees have positive outlook and
commitment to achieve desired goals and outcomes so as to maintain growth of organisation.
Also psychological capital can be promoted with training and leadership as well as effective
job designing with support of relevant policies so that best practices are deployed for
employees that helps to build trust, commitment and optimism to attain better performance.
References
Avey, J. B. (2014). The left side of psychological capital: New evidence on the antecedents
of PsyCap. Journal of Leadership & Organizational Studies, [Online]21(2), 141. Available
https://search.proquest.com/docview/1522962082?accountid=30552 Accessed on 1 Dec.
2018
Avey, J. B., Luthans, F., and Jensen, S. M. (2009). Psychological capital: A positive resource
for combating employee stress and turnover. Human Resource Management,[Online] 48(5),
677. Available:https://search.proquest.com/docview/222116600?accountid=30552 Accessed
on 1 Dec. 2018
Larson, M., and Luthans, F. (2006). Potential added value of psychological capital in
predicting’ work attitudes. Journal of Leadership & Organizational Studies, [Online] 13(2),
75-92. Available from:https://search.proquest.com/docview/203141739?accountid=30552
Accessed on 1 Dec. 2018
Liao, S., Hu, D., Chung, Y., and Chen, L. (2017). LMX and employee satisfaction: Mediating
effect of psychological capital. Leadership & Organization Development Journal, [Online]
38(3), 433-449. Available from https://search.proquest.com/docview/1886580242?
accountid=30552 Accessed on 1 Dec. 2018
Munyaka, S. A., Boshoff, A. B., Pietersen, J., and Snelgar, R. (2017). The relationships
between authentic leadership, psychological capital, psychological climate, team commitment
and intention to quit. SA Journal of Industrial Psychology,[Online] 43 Available from
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https://search.proquest.com/docview/1938808816?accountid=30552 Accessed on 1 Dec.
2018
Story, J. S. P., Youssef, C. M., Luthans, F., Barbuto, J. E., and Bovaird, J. (2013). Contagion
effect of global leaders' positive psychological capital on followers: Does distance and
quality of relationship matter? The International Journal of Human Resource Management,
[Online]24(13), 25-34. Available from https://search.proquest.com/docview/1364811108?
accountid=30552 Accessed on 1 Dec. 2018
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