Positive Leadership Essay: LMX, Psychological Capital, and Performance

This essay delves into the realm of positive leadership, exploring its impact on employee performance through the lens of authentic leadership, leader-member exchange (LMX), and psychological capital. The study emphasizes how authentic leaders foster trust and transparency, leading to improved employee engagement and organizational commitment. It examines the positive association between authentic leadership, LMX, and employees' psychological capital, which encompasses hope, resilience, optimism, and efficacy. The essay further reviews the importance of psychological capital in enhancing employee performance and demonstrates how leaders can cultivate it among diverse employee groups, including professionals, administrative staff, and those from different generations and ethnicities. The discussion also highlights the significance of emotional intelligence in employee performance, emphasizing the role of leaders in creating a supportive and positive work environment. The paper concludes by underscoring the importance of high-quality LMX relationships and their role in mediating the relationship between leaders and employees, ultimately contributing to enhanced productivity and organizational success. The essay provides a comprehensive overview of these critical leadership concepts, offering valuable insights into effective leadership practices.

Running head: POSITIVE LEADERSHIP
Positive Leadership
Name of the Student:
Name of the University:
Author’s Note:

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Introduction
Authentic leaders or positive leaders are highly capable of establishing collaborative and
positive relationship with the employees. Positive leader member exchange relationship results in
moral integrity and honesty within the employees (Leroy et al. 2015). Therefore, such employees
can build strong emotional bonding with the goals and objectives of their organizations. In this
way, such honest employees turn into highly committed employees towards meeting their
organizational goals in most effective way. This study will highlight the positive association and
relationship between authentic leadership, Leader-Member Exchange (LMX) and employees’
Psychological Capital. Furthermore, the literature review will also highlight the significance of
Psychological Capital for enhancing the performance level of the employees. Apart from that,
the study will review the literature critically for demonstrating the ways in which the leaders can
build positive psychological capital among different employees such as professionals versus
administrative employees, emotional labor, blue collar versus white collar employees, different
generational cohort, and/or different ethnicities. On the other hand, the importance of emotion on
the performance of employees will also be discussed in this literature review.
Discussion
Authentic leadership is considered to be the most positive, genuine and ethical form of
leadership. Authentic leaders are thought to be highly sensitive and moral to the employees
through their behavior and thought process. Gill and Caza (2018) pointed out that authentic
leaders constantly share important organizational information with the followers for engaging
them in organizational decision making process. Moreover, the leaders always value the
employees’ inputs through disclosing their motives, sentiments and personal values. In this way,

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the authentic leaders are mostly characterized for clarity behavior, openness and self-awareness.
Furthermore, Hewlin, Dumas and Burnett (2017) opined that the attributes of the authentic
leadership make it possible for the followers to assess the competence and morality of the
authentic leaders accurately. In this way, such positive leaders maintain transparency and clarity
in their actions and behaviors with their followers for building trusting relationship with them.
Apart from that, high quality leader member relationship leads to effective intimacy and
friendliness between the leaders and followers. Such friendly relationship and mutually
beneficial relation between employees and leaders result in increased level of employee
performance.
Authentic leaders are extremely capable of influencing and developing the followers
through energizing their positive psychological state. It is highly beneficial for their enhanced
performance level. As per Leroy et al. (2015), authentic leaders can effectively draw from their
own psychological state and contribute in the psychological state of the employees for their
increased performance. Psychological capital of the employees has been identified as the positive
psychological resources that include the factors such as hope, resiliency, optimism and efficacy.
On the other hand, Hirst et al. (2016) opined that authentic leaders consistently act and behave
according to their actual value and endeavor to achieve openness and trustfulness in their
relationship with followers. Moreover, such positive leaders always guide their followers
through demonstrating transparency in organizational decision making and setting examples.
They also guide the employees to be highly connected emotionally with their job role and
cognitively vigilant in their job performance. Moreover, authentic leaders are highly concerned
with generating moral standard among the employees, which keeps the employees honest with

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their organizations. They can maintain ethical standard, fairness and integrity in their job
performance.
Psychological capital is extremely important to moderate the performance level of the
employees. Authentic leaders make positive association between the psychological capital and
enhanced employee performance of an organization. Avey (2014) mentioned that authentic
leaders remain rationally hopeful and trustworthy, which enhance the hopefulness of the
employees through not only establishing willpower among them but also representing positive
direction of pursuing a certain job. Hence, such leaders are highly capable of enhancing the sense
of self-efficacy among the employees to perform certain job. Furthermore, Wang et al. (2014)
opined that authentic leaders interpret exchange the core organizational information with the
employees from positive perspective, which induce positive emotion among the employees. In
this way, positive emotion turns into positive and optimistic perspective among the employees,
which facilitates the employees to complete their jobs successfully. Precisely, the employees
having high level of psychological capital remain highly hopeful, optimistic, resilient and
confident in performing their jobs effectively.
Leader member exchange (LMX) represents the rational approach to establish the
positive relation between the leaders and employees that actually enhance employee performance
level. LMX has significant role to mediate the performance level of the employees. According to
Little, Gooty and Williams (2016), leader member exchange relationship promotes the positive
social exchange with the virtue of gaining respect from the employees and establishing
credibility among them. The factors such as self-awareness, balanced processing, internalized
moral standards and relational transparency form the core element of positive leader member
exchange relationship. Authentic leaders always show respect to the employees through bringing

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out diverse opinions from them. In this way, such positive leaders can build trusting relationship
with their followers. As per Day et al. (2014), authentic leaders always remain true to themselves
as well as the employees and demonstrate moral integrity in their behaviors and actions. Such
honesty and moral integrity of the leaders encourage the employees to cooperate with them
towards enhancing their job performance.
Authentic leadership is positively connected with leader member exchange relationship,
which is extremely important for leading high level of employee performance. Lyubovnikova et
al. (2017) pointed out that low quality leader exchange relationship results in normal to standard
task performance because of contractual exchange of relationship. Hence, the employees, who
are having low level of psychological capital, are less driven through leader member exchange
relationship. On the other hand, Michel and Tews (2016) stated that high quality leader exchange
relationship always results in superior work performance on the part of the employees. Such high
quality exchange relationship of between the leaders and followers moves from economic factor
to social exchange relationship. The LMX relationship is exemplified through mutual trust,
respect and obligation that foster the willpower among the employees to enhance their
performance. Hence, authentic leaders are highly responsible for leading high quality LMX
relation and enhancing employee productivity.
Leader member exchange leadership mediates the relationship between the leaders and
employees. Such exchange relationship becomes the instrument to support and motivate the
employees towards higher level of job performance. Litano et al. (2016) opined that the
employees can gain several tangible and intangible benefits from LMX relations, which foster
positive relation between LMX relationship and increased employee performance. The
employees are more likely to receive positive feedback from the leaders and assistance to defend

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them from any form of negative impact through high quality leader member exchange
relationship. Furthermore, Laschinger and Fida (2014) mentioned that the employees can get
favorable assignments, encourage themselves to perform challenging jobs and protect themselves
from any form of unfair activity having high level of exchange relationship with the leaders.
Hence, high level of LMX relationship leads to positive working condition in the workplace of
an organization. The employees receive cooperation, support and motivation from the leaders
through establishing positive LMX relationship. Hence, they become highly willing to enhance
their performance level.
Psychological capital demonstrates the most important positive psychological resources,
which foster motivational propensity within the employees towards accomplishing their jobs
successfully. Buch et al. (2014) stated that psychological capital encourages the employees to be
emotionally allied with their own job roles and their organizations. In this way, the employees
get positive enthusiasm to achieve their specific job role effectively. Apart from that, Hinojosa et
al. (2014) pointed out that positive psychological resources build trusts within the employees for
their organizations and their leaders. Hence, the employees try to keep up positive outlook within
them regarding organizational success. Furthermore, the employees having high level of positive
psychological capital remain honest and ethical towards their organizations and job roles for
leading organizational standards through their job performance. The employees are also
encouraged to perform well for establishing positive leader member relationship. Furthermore,
Gu, Tang and Jiang (2015) pointed out that positive psychological capital keeps the employees
highly optimistic regarding their job performance to achieve high level of organizational success.
In this way, such employees are best directed towards achieving organizational success.

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LMX relationship and authentic leaders positively establish psychological capital
among different types of employees. Professional employees mostly perform specialized jobs
that require specific experience and skills rather than specialized intellectual instruction. Such
employees require adequate level of freedom to carry out specific jobs and proper control over
their jobs. He et al. (2017) pointed out that the authentic leaders must delegate some level of
authority to the professional employees to develop psychological capital within them. Positive
relation and delegation of authority from the leaders put up confidence within the professional
employees. Hence, they can perform their jobs quite efficiently.
Administrative employees mostly deal with general business and management
operation. Such employees frequently exercise independent judgment about the performance of
intellectual jobs. Therefore, the leaders must be open and adaptive to the innovative ideas of
executive employees, which will build trust and resilience within them to complete their job
efficiently. Emotional labors always need to regulate their emotion all through their interaction
with the customers, co-workers and superiors. Therefore, such types of employees require
effective demonstration of role model and positive support that can help them to be optimistic to
control their emotion in their interaction.
Blue collar employees typically perform labor jobs and generally work on manual job
roles. Such employees are generally low skilled or even unskilled, who perform the jobs like
maintenance, assembly line work and maintenance. According to Boekhorst (2015), the leaders
must exchange core organizational information and provide positive support for fostering
psychological capital among the blue collar employees. Exchange of information will enhance
the engagement level of blue collar employees with the organization goals. In this way, they can
enhance their willpower to achieve the organizational goals. Apart from that, positive support

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from the leaders enhances the optimism level of the employees to complete their jobs
successfully. On the other hand, Avey (2014) mentioned that white collar employees are
generally officially trained and highly skilled and they perform their job tasks within the office
premises. Such types of employees usually require applying their intelligence level to perform
their job roles properly. The leaders must delegate power and authority these types of employees
for building trusting relationship with them. The trusting relationship will build self-efficacy
within the white collar employees that will mobilize their cognitive resources to perform specific
jobs.
The employees from different generational cohort usually hold different behaviors and
characteristics. Such employees generally have different perspectives and attitudes on their job
roles. Therefore, it is extremely challenging for the leaders to manage such different employees
and maintain collaboration among them. According to Leroy et al. (2015), leaders must follow
positive and authentic leadership behavior, where the leaders will respect and open to all the
employees regardless of the generational background. The leaders should evenly value the
innovative ideas and inputs from all the employees regardless of generational cohort. Moreover,
the leaders must highly value the level of experience of the old generation employees to make
organizational decision. It will enhance the self-efficacy and confidence level of the old
employees to perform their job roles in effective manner. On the other hand, the leaders must
also equally value the technical skills and advanced job skills of the young generation
employees. Such openness and value can lead to resilience among the young employees, which
will encourage them to foster organizational innovation. Such employees also require positive
support from the leaders to build their confidence level in performing certain jobs efficiently.

8POSITIVE LEADERSHIP
The employees having different ethnicities have different perspectives towards same
types of jobs. Such employees can have different types of job attitudes for the same jobs in same
organizational settings. Such employees are more likely to create cultural clashes with each other
for their different job perspectives. In such extent, it is quite challenging for the organizational
leaders make collaboration in the opinions of the employees having different ethnicities. The
leaders must be adaptive and open to the new perspectives and opinions of the employees from
different ethnicities. The equal value provided to these employees will lead to a feel of fair treat
among the employees from different ethnicities. Apart from that, the leaders should also
effectively exchange core organizational information will all the employees equally regardless of
their ethnic backgrounds. It will build resilience and optimism among the employees having
different ethnicities to perform their job roles in effective manner.
Emotion is highly significant among the managers, leaders and employees to improve
the performance level of the employees significantly. Laschinger and Fida (2014) pointed out
that strong emotional intelligence within the leaders facilitates them towards recognizing core
strength and weakness of the employees. Therefore, the leaders can properly concentrate on
utilizing the strong abilities of the employees and improving the weak abilities towards employee
development. Strong emotional intelligence also builds high level of emotional bonding between
the leaders and employees. In this way, they can better encourage the employees towards high
level of performance. Furthermore, Gill and Caza (2018) mentioned that adequate emotional
intelligence assists the managers to understand and involve with the employees properly to better
directing them towards organizational success. Hence, the emotional managers are extremely
efficient in enhancing the performance level of the employees. On the other hand, Little, Gooty
and Williams (2016) stated that strong emotion inside the employees encourage them to build

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strong emotional bonding with the goals and objectives of their organizations. In this way, the
employees can effectively align their efforts with the goals and objectives of their organizations
to achieve them properly.
Summary
While concluding the study, it can be said that authentic leaders can build positive and
highly genuine relationship with their followers. Such leaders are also effective in establishing
high level of leader member exchange relationship with the employees. Authentic leaders are
more likely to build positive leader member exchange relationship for fostering positive
psychological capital inside the employees. The psychological capital namely hope, resiliency,
optimism and self-efficacy/confidence are highly significant to enhance the employee
performance level. Authentic leaders often exchange the core organizational information with
their followers openly, which leads to optimism and hope among them to meet organizational
goals and objectives.
Leader member exchange relationship promotes positive social exchange with the virtue
of gaining respect from the employees and building credibility within them. It builds self-
awareness and moral standard within the employees to achieve the goals and objectives of the
organizations. Strong psychological capital makes the employees confident, efficient and honest
towards their job roles. The leaders must be supportive and open enough to the blue collar
employees to build confidence among them in performing their job roles effectively. On the
other hand, the while collar employees should be provided with adequate level of authority to
enhance their self-efficacy level for performing their job roles efficiently. Apart from that, the

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leaders should be concerned about providing equal values to the different ideas of the employees
having different ethnicity and generational cohort.

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