This essay examines the intricate relationship between authentic leadership, Leader-Member Exchange (LMX), and employees’ Psychological Capital (PsyCap). It reviews literature highlighting how authentic leadership fosters trust and positive behavior, while effective LMX enhances relationships between leaders and followers, leading to improved performance. The essay also discusses how to build psychological capital in different employee groups, such as white-collar versus blue-collar workers, emphasizing the importance of hope, resilience, optimism, and self-efficacy. Furthermore, it explores the impact of emotions on employee performance, noting that positive emotions can boost creativity and productivity, while negative emotions can hinder focus and lead to absenteeism. The conclusion emphasizes the importance of fostering a positive workplace environment to enhance employee well-being and organizational productivity. Desklib provides a platform for students to access past papers and solved assignments for further study.