Analyzing Positive Leadership: AL, LMX, PsyCap and Employee Outcomes

This essay delves into the intricate relationship between authentic leadership (AL), leader-member exchange (LMX), and employee's psychological capital (PsyCap) and their combined influence on employee performance. The paper explores how AL fosters a positive ethical climate, transparency, and balanced decision-making, leading to enhanced LMX and improved employee well-being. It examines the role of PsyCap in building employee optimism, hope, and efficacy, and how training and management practices can further develop these resources. The essay also investigates the impact of emotions, both of leaders and employees, on performance, and the importance of addressing emotional intelligence in the workplace. The essay concludes by emphasizing the role of leaders in creating supportive environments to foster employee self-development and build PsyCap, ultimately improving organizational outcomes. The assignment also explores the cross-cultural dimensions of PsyCap.

Student Name
INSTITUTIONAL AFFILIATION(S)
POSITIVE LEADERSHIP

Introduction
The relationship between authentic leadership (AL), leader-member exchange (LMX)
and employee's psychological capital (PsyCap) in today's organization can have a critical
impact on organizational performance. The objective behind this paper is to determine the
relationship between the three identified organizational behavior variables, and their
influence on employee’s emotion, and their ultimate intention to perform well. This literature
review paper will comprehend the relationship between Al, LMX and PsyCap from academic
lenses and as mentioned in the current literature. This paper will define the key terms and
review the literature on how PsyCap can be built in different employees besides finding why
do emotions impact employees' performance. A positive relationship can be seen in between
AL, LMX and PsyCap from the findings made by scientific researchers and management of
organizations which evidence that such relationship must be developed and implemented in
organization's strategies which aim at building psychological climate and capital.
Relationship between AL, LMX and PsyCap
AL is regarded as positive leader's behavioral pattern which promotes and draws upon
both positive ethical climate as well as psychological capital to enhance internalized moral
capabilities, greater self-awareness, relational transparency and balanced processing of
organizational data. LMX perceives ways through which leaders and subordinates develop a
self-directed and mutually beneficial relationship. Whereas PsyCap is an individual's positive
psychological state developed after gaining confidence to put required efforts to succeed in
challenging roles. According to Wherry (2012), present literature states that authentic leaders'
moral abilities make them look at issues from various angles which makes them address
employees' diverse needs (p.5). The author points out that authentic leaders are among
positive leaders who have the modern sense of how to perform as a role model by carrying
responsibility and acting more ethically and morally. It can be said that such leaders send a
robust message to their subordinates influencing what they know, what they intend to and
how to behave ultimately. Therefore, it can be said that AL's are more morally centered, self-
aware, fair and transparent while balancing decision making.
The theory, LMX posits that positive leadership is derived from dynamic leaders-
follower relationship and the benefits behind it includes enhanced employee performance, job
satisfaction, low-stress levels and increased wellbeing. Returning to AL, it is reasonable that
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the identified authenticity reflects a strong characteristic of a compassionate leader, however,
at the same time they can balance fairness with firmness. AL is regarded by followers as one
who displays a realistic and honest approach and is genuine to give credits and hence remains
potentially influential ( Cassar & Buttigieg, 2013, pp. 174-175). Such a benevolent and
influential relationship elicit a level of positive emotional state in employees as mentioned in
PsyCap. The implicit relationship between leader and employee generates a state of employee
wellbeing who shows comfort in the psychologically safe and comfortable environment due
to the presence of AL. It can also be said that AL radiates authentic relations with employees
and in LMX and PsyCap perspectives, it is reasonable to argue that the quality of relationship
received by employees further determines the results of the relationship such as employee’s
wellbeing and superior work performance.
Employees with greater PsyCap experiences low stress levels due to various reasons.
Higher PsyCap levels in employees, according to Avey, Wernsing, and Luthans, (2008)
results in optimism and hope in them which further triggers employees’ emotions as a
byproduct of increased probabilities and positive appraisals due to goal accomplishments and
success (p. 16-18). Similarly, Zamahani, Ghorbani, and Rezaei, (2011) posits that the
authenticity of leaders and positive PsyCap attain employees trust besides encouraging them
to perform in an enhanced way to facilitate organizational goals (p.666). AL provides a
supportive environment through which employees are influenced to perform unconditionally
and with positive emotions. This further builds a PsyCap in them through self-determination
development, thereby making people share a common vision and mission to serve
stakeholders. Drawing upon AL and leadership behavior pattern, promoting PsyCap and
ethical climate further nurtures employee's self-development capabilities by removing
tensions and conflicts between organizational responsibilities and personal values.
Building PsyCap in employees
The complex interaction between different forms of employees and their surroundings
emphasizes on cognitive process role which may though appear as a hidden factor but impact
potential stressful events which necessitate building PsyCap in employees. Avey, Luthans,
and Jensen, (2009) argues that human stresses are governed by beliefs concerning coping
efficacy. Optimism and efficacy in PsyCap further reflect on both flexible and realistic
variables and the behavioral pattern in employees which can be attributed to permanent,
positive and pervasive events. The findings made by the author implies today's leaders to
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comprehend employees needs to address here-to-fore which remains unrecognized and
contributes to hidden positive resources like PsyCap and combat dysfunctional effects
resulting in stress. A training and education approach can, therefore, be proposed to identify
and enhance the positive resources such as hope, optimism, efficacy, and reliance to construct
core PsyCap. Work stress management programs and policies can further assist management
in developing employee’s wellbeing and assistance programs to encourage social support
from coworkers and supervisors in a positive way.
Employees who realize low PsyCap experiences lower positive emotion levels and in
turn becomes more prone to cynical attitude as well as deviant behavior which detracts
positive organizational behavior. A study made on the role of PsyCap in organizational
change by Avey, Wernsing, and Luthans (2008) reveals that employees who reported the
frequent level of positive emotions showed more socially involved with their organizations
which made it likely that they will lead higher citizenship and engagement as compared to
ones who report few positive emotions. The concept of job effort, job attractiveness and
balanced corporate life also play a catalyst role in developing PsyCap within firms ( Lee &
Yang, 2019, p. 2). This requires human resource management and organizational leaders
manage and treat the employees after considering approaches like work-life-balance,
inclusion and performance improvement concepts to foster employee productivity. The
PsyCap will henceforth develop with the development seen in initiatives taken by leaders to
take care of key concerns and employee’s needs.
The cross-cultural dimension of PsyCap refers to individual beliefs and their abilities
through which they achieve specific goals and succeed in making cross-cultural interactions
successfully. Cross-cultural efficacy can be particularly regarded as a significant resource
while working in a cross-cultural and diverse workplace setting (Brunetto, Xerri, & Nelson,
2014, p. 5). For example, superior efficacy levels can affect expatriate’s willingness to learn
new techniques and thinking style besides behaving in host country way. However, Reichard,
Dollwett, and Louw-Potgieter (2016) claims that besides developing PsyCap in employees,
cultural intelligence must also be developed to realise higher constructs consisting four
significant factors including metacognitive, motivational, behavioural and cognitive cultural
intelligence (p.153-154). Such factors together with PsyCap training can potentially capture
people perception and knowledge about each other's culture along with generating a sense of
motivation to know and learn about each other positive thinking styles. Here, it can be
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assumed that people with higher cultural intelligence will be able to adjust to every form of
employees without experiencing stress while performing for achieving cross-cultural goals.
Without a robust sense of identity, the organization's comprising teams can develop
negative psychological state easily due to ineffective output realised out of work performance
and lack of work enthusiasm from an individual identification perspective, therefore, it must
be addressed critically by leaders who can potentially develop PsyCap in employees.
According to Chen, et al., (2017) “leaders’ psychological capital plays an indispensable role
for their followers” (p.4). Hence, the authors imply leaders to maintain and create work
conditions which can help employees in archiving team goals. Subsequently, social exchange
in the team takes place widely through the relationship between leader and employees in
organizations. When such a relationship becomes strong enough to boost individual self-
esteem, employees tend to measure relationship as the self-development process and
participates willingly to improve their contributions. Though beginning stages may require
making contracts between leaders and employees to link respective job roles, when PsyCap is
built with time, employees see themselves as a part of the organization, reflecting positive
psychological state and behaviour.
Emotions impacting employee’s performance
The significance of emotions concerning human psychology necessitates leaders,
management and employees acknowledge their emotions since it constitutes in driving
human behavior. It can be said that "Emotions are attributes of all humans and to be free of
emotions is to be non-human” (Bambale, Kassim, & Musa, 2016, p. 23). In other words, a
leader who wishes appropriateness in workplace need to enforce appropriate principles on
employees however, how a leader imposes the principles matters a lot in determining
employees' performance. Performance can be defined as individual proficiency through
which he/she performs the task and contribute to organizational core objectives. The research
conducted on emotional intelligence of leaders impacts on employees finds that positive
mood in leaders attributes to the positive work environment and increased organizational
productivity as compared to leaders who show frustration and anger. This reveals that team
and organizational leaders must transmit ideal principles with positive mood as then team
members will pay required attention to leaders rather than neglecting leaders.
Positive leaders can transmit their idea to employees more easily as they have more
opportunities through which ideas can be exchanged with them. However, if employees faces
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distrust, biases in decision making, discrimination or stereotyping in the workplace, their
overall behaviour and view towards the organizations is affected adversely. It can be said that
overall temperament and emotions of leadership can impact employee performance, team
spirit, decision-making skills and ultimate organizational turnover. Knowing what employees
feel and addressing their concerns can highly influence the decision making and creativity in
employees besides developing positive relationships between them and their leaders.
Research made by Pervez (2010) finds that emotions in the workplace are significant while
determining their relationship between job satisfaction and wellbeing (p.11-12). While
emotions in leaders such as anger often lead to aggressions towards employees, it
subsequently led to job dissatisfaction in them. In brief, changes in leader's mood or emotions
directly impact employee emotions which subsequently leads to reduced performance.
Emotional intelligence study demonstrates managing feelings in a way that can
express emotions properly to enable people to work together for accomplishing a shared goal
transparently and constructively. When managers or executive gives emotions value, so will
the employee and hence, if mangers feel optimistic confident and respectful, employees will
likely mirror their manager’s feeling. Therefore, Gunu & Oladepo (2014) posits, “Emotion is
a powerful psychological action that can affect behaviour and performance in an important
way” (p.3). For instance, when a salesman confronts with the angry consumer, he/she may
focus on consumer's emotions to calm him down as well as focus on own emotions to remain
calm. Therefore, several studies recommend that it requires more than cognitive intelligence
to perform effectively in the workplace. An emotional manager, as well as employees who
entail the ability to eliminate negative feelings while focusing on positive emotions further,
determines enhanced productivity combinedly.
Although the work setting may provide employees with chronic needs to value
employees' emotions, any acute incident can immediately impact employees' emotions which
hinders attitude and behaviour in them. Any emotional event can potentially result in the
detraction from organizational rules and can influence a person's wellbeing negatively.
Particularly, if the incident interferes with individuals' personal goals, it will be appraised
negatively as it induces positive emotions into negative one (Gopinath, 2011). Such emotions
not only make employees feel stressed at work but also tends then blaming each other for
malfunctioning of learning or training given regarding particular job role. Under such a
situation, employees require emotions which can regulate their appropriateness at the
workplace and overall appearance. On the other hand, motivation and positive incidents
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create positive emotions like getting accepted for promotions can then help employees
display rules again and fight against negative feelings of their own to improve performance
level in them.
Conclusion
After reviewing literature pertaining authentic leadership, leader-member exchange
and psychological capital, it can be said that successful organizations are the ones whose
leaders effectively meet every challenge and to achieve success, they develop PsyCap in
employees so that employees efforts are illuminated in a way that enables self-motivation and
dedication towards achieving a shared objective. The literature on emotions of employees,
leaders and managers reveals that emotions play a critical role in determining job
performance level in employees and hence requires leaders and managers instil ways through
which positive workplace environment is built besides developing PsyCap in employees.
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References
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