The Relationship Between Authentic Leadership and Psychological Capital

Authentic Leadership, Leader-Member Exchange (LMX), and Psychological Capital (PsyCap)

Authentic leadership, Leader-Member Exchange (LMX), and employees psychological capital (PsyCap) are all factors that are linked to each other. Some of these qualities even interdepend on each other. The purpose of this paper is to present a critical review of the literature that explains the process of building psychological capital in different employees, ranging from those in administrative positions to blue collar and white collar employees. Various factors that affect the performance of employees, and among these are emotions. This paper also examines how and why emotions have a significant impact on the performance of workers in an organization.

Introduction

Leadership is a form of governance that is propelled towards achieving the goals and objectives of any form of organization or company. It is a form of exercising power in order to have people perform their roles and responsibilities in the right way. The person exercising the governance is referred to as the leader. The leaders utilize skills and knowledge to exercise power. A positive leader has to be authentic. This encourages trust from the stakeholders and employees of the organization. It also encourages everyone to positively contribute to the achievements of the goals and objectives of the organization. Authentic leaders are made, especially through experience, knowledge, and skills. This starts from the will to become effective in the responsibility of leadership. A leader requires positive psychological capital to develop into an effective one.

Creativity, Confidence, and Trustworthiness of Effective Leaders

Creativity, confidence, and being trustworthy are some of the qualities of an effective leader. Effective communication and the ability to come up with innovative ideas are some of the added qualities of effective leaders. Leaders have to build the best relationships with the employees to a point that they are free to discuss matters pertaining to the organization, regardless of how sensitive the issues may be. An organization that ranks highly in effective communication skills is likely to achieve its goals and objectives faster than one that lacks communication. Effective leaders advocate for and implement decisions that drive the organization towards its objectives. Having positive and authentic leaders also makes the organization viable for market competition.

Authentic Leadership

Authentic leadership is a form of leadership that encourages the members of a given organization to have positive psychological capabilities. This encourages rational transparency and an internalized ethical aspect, which leads to a balanced processing of information. It also assists leaders to face the challenges in an organization effectively and to make rational decisions that are to the best interests of everyone. Most of the authentic leaders use openness and inclusion. Openness is in the sense that they can approach their employees on issues to find out their opinions before they can make the final decision. This makes the employees feel like they have been included in running the organization and it does a great deal of boosting the employee satisfaction. According to Avolio and Gardener (2005 p. 320), an authentic leader also has higher chances of being creative because they encourage employees to use their creative skills through other mechanisms besides the psychology capital. The quality of exchange between the leaders and employees increases, causing coherence within the organization. The employees get a feeling of freedom and trust for their employers.

Leader-Member Exchange (LMX)

Leader-Membership Exchange, normally abbreviated as LMX is a strategy of leadership that depends on the leadership between the employer and the employee, and vice versa. Further discussing the exchange, it can be described as the process through which the outcomes of authentic leadership are felt. According to Tang (2011), leadership is a relational process, and within various levels of the process, there is an emerging relationship between leaders and employees. Leroy, Anseel, Gardner, and Sels (2015 p. 1680) suggests that the nature of this relationship will solely depend on the attributes of the leader. One that is authentic is approachable, thus gives easy time for the employees to approach him or her. However, a leader that is not authentic focuses on exercising power, making it hard for the employees to approach him. Psychological Capital has a significant effect on the performance of workers. Research indicates that an authentic leader focuses on instilling positive psychological behavior within the employees.

Psychological Capital (PsyCap)

Psychological Capital is a person’s state of mind that motivates him or her to put in the required effort to take care of a problematic task. It positively contributes to propelling an organization towards achieving its goals and objectives. This factor keeps the workers going, through their daily activities. In case there is a challenging negative situation that is meant to put the employees down, psychological capital is the quality that helps them to bounce back to their initial state of the mind and operate normally. According to Avey, Luthans, and Jensen (2009 p. 678), psychological capital significantly contributes to shaping the behavior of employees. A higher psychological capital translates to positive performance, character, and attitude. In their research study, Avey, Wernsing, and Luthans (2008 p. 50) also agree that a higher psychological capital plays an important role in fighting employee stress thus promoting a conducive environment for the organization’s employees to perform to their level best at work.

The Relationship between Authenticity and Psychological Capital

Wang et.al (2014 p. 16) acknowledges that there is a positive correlation between authentic leadership and the psychological capital of the employees. The more the authenticity of a leader increases, the more the psychological capital of the workers. The reason why most organizations are successful because of authentic leadership is the psychological capital it enhances. Afterward, a higher psychological capital encourages the employees to be more creative and innovative about ideas that are for the achievement of the goals and objectives of the organization. With increased psycap, employees are likely to follow all the ethical standard required of the organization. They will also be transparent in all their operations, which shows a high level of psycap. The level of emotional security is a sign of high psycap, which is caused by the authenticity of the leaders. Besides the emotional security of the workers, the leaders are also not threatened because they believe that the employees will contribute positive ideas for the betterment of the organization. This boosts the overall performance of the firm.

The Relationship between LMX and PsyCap

A research done in 2015 by Bouckenooghe, Zafar, and Raja suggests that LMX has a direct relationship to PsyCap optimism and resilience. Much as there has been no proved relationship between LMX and efficacy, most organizational behaviorists have linked psychological capital to leader-member exchange. The whole idea of developing a positive psychological capital begins from the interaction of the leaders with the employees, both in formal and informal settings. There is a direct relationship of interdependence between LMX and PsyCap because each is affected by the other. One point to note about human exchange situations is that numerous factors that affect how people relate with each other. One of these factors is the age of employees. Old employees have spent a longer time in the firm, and therefore do not have a problem relating with the leaders. However, younger employees may shy off. Regardless of how many of these factors affect the exchange promise, one can conclude that it determines the measure of PsyCap among the members of the organization.

PsyCap of Professional and Administrative Employees

Emotional labor has been an issue of concern in organizational behavior. It has evolved over the years and its relationship with psychological capital cannot be underestimated. Psychological capital regulates emotional labor and job satisfaction. There are three emotional strategies, which PsyCap associates differently. They include the external behavior, internal state, and internal process displays. Surface acting and burnout are some of the serious outcomes of weak PsyCap. Employees are likely to be motivated both at the administrative and professional levels when the capital is high. However, if it is weak, satisfaction will be low, thus demotivating the employees. when employees carry out deep acting and generally felt emotions, positive emotions are generated. At the same time, the strain is released while elevating psychological aspects. This prompts the administrative employees to equip professional employees with a high PsyCap with more resources to complete their tasks because their performance is high.

Psychological Capital of Different Generational Cohort

Every generation is influenced differently depending on their age and the nature of experience that they have gone through. Therefore, their psychological capital is also likely to vary. It is up to the authentic leader to find out how to motivate different groups of cohorts to perform to their level best. The leader should identify which groups work best and under what circumstances so that he or she can avail it for them. Leaders should also seek to hire a cohort group that values their work relationship.

Psychological Capital of Employees from Different Ethnicities

Goldsmith, Darity, and Veum indicate that there is an undeniable positive relationship between psychological capital and ethnic personality. Leaders should be aware of the mental limits of the employees working in the organization. This improves the advantages because one can learn how to maximize the utilization of their strengths. Different ethnic groups learn and perform duties differently, and just like any other groups of people, they have their strong and weak points. Being aware of this enhances the relationship at work.

Emotions of Leaders and their Impact on Employee Performance

One of the most vital factors at work is the management of emotions, both from the leaders as well as the employees. Authentic leaders develop skills on how to manage their emotions, even in grave situations. This promotes a good relationship with the employees. On the other hand, a leader that is not authentic is likely to have lack of control of emotions, a factor that creates a poor working relationship with the subordinates. Managers are the most influential people in determining the measure of performance in an organization. The performance depends on their ability to control their emotions, thereby translating to their relationship with the employees. An organization with good managers is likely to perform better than an organization that lacks such managers. Emotions of managers virally spread across all the other members of the organization. Positive emotions encourage employers while negative emotions such as hostility increase predictability and affect the reputation of the firm. Managers have a significant role in shaping the emotional life of a firm. Therefore, they should be careful with the kind of energy they transmit because it will be reflected in the overall performance of the organization. Research shows that organizations that perform well in the market also have good organizational relationships. Administrators relate well with employees and among each other. This determines how the employees will relate to each other.

Emotions of Employees and their Effects on Performance

Human relations studies confirm that performance at the workplace highly depends on the emotions of employees. An employee’s emotions will determine his or her team spirit and attitude towards work. Organizations that highly rely on customer service as the core activity are likely to be highly affected if the employees do not learn the skills of containing their emotions. Projection of a negative attitude towards the customers and work, in general, is very dangerous. It can cause the downfall of service organizations. On the other hand, when employees have mastered the skill of containing emotions and not projecting them at work, then there is a likelihood of a successful work setting. It is impossible to do away with things that cause strong emotions in employees. However, the workers can learn the skill of dealing with such triggers without projection.

Conclusion

Leadership entirely depends on authenticity. How authentic a leader is, determines the success and failure of an organization. Authentic leaders are guided by the urge to not only be of governance but also of service to others. They strive to have a positive impact and improve the performance of the organizations they run. They also strive to develop themselves by the day, while having the organization’s best interests at heart.

References

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