Leveraging Psychological Capital To Optimize Workforce Performance

The core of psychological capital model is developing the interconnected processes of thought and action, focusing on hope, optimism, resilience, and self-efficacy.

psychological capital

In an increasingly competitive business environment, the forces of globalization threaten to consign even the most storied and seemingly insurmountable businesses to the slag heap of history. As the marketplace expands and internationalizes, it’s no longer enough simply to recruit the most desirable candidates.

Increasingly, the success of modern businesses relies on the ability of company leadership to continuously develop their teams, to drive performance as the sole mechanism for keeping pace with an ever-evolving, ever-tightening marketplace. Traditional HR practices, however, have all too often relied upon an outmoded orientation toward performance management. More specifically, these practices envision the workforce as largely static, possessed (or, conversely, devoid) of the traits the organization needs.

This puts the burden of performance management falling principally on the recruiting process. Such a traditional trait-based methodology suggests that there is little to be done once candidate selection and recruiting have taken place. From there on, this paradigm suggests, the success or failure of the employee and, subsequently, of the team and the organization as a whole, is largely a matter of destiny. Success means that the recruiter has chosen well, while failure indicates a lack of discernment that may well be catastrophic for the company.

“But by fostering workers’ sense of self-efficacy, we foster their sense of personal power, their confidence in their own ability to succeed.”

However, research such as that conducted by Fred Luthans at the University of Nebraska,  is increasingly demonstrating that this trait-based model of performance management is not only archaic but it is also crippling. Conversely, performance management practices  rooted in the principles of cognitive behavioral therapy (CBT) are proving profoundly effective in driving workforce performance, even in the most challenging of environments.

Among the most promising of these models is known as psychological capital, or PsyCap. The effectiveness of PsyCap derives principally from its fluidity, adaptability, and teachability. Unlike the trait-based model of performance management, PsyCap put the onus for workforce performance on management and coaching, rather than selection and recruiting. It conceptualizes a workforce that is responsive, agile, and empowered.

At the core of PsyCap is the development of the interconnected processes of thought and action centering upon four specific factors: Hope, Optimism, Resilience, and Self-efficacy.

Hope is one of the most fundamental features of the PsyCap model, insofar as it enables managers, coaches, and executive leaders to support their workers in an ethos of forward-looking momentum. The cultivation of hope as a form of psychological capital is profoundly dynamic. It envisions a tomorrow, for the business, for the team, and for each individual employee, that is worthy of today’s effort. It is the cultivation of a desirable thought which in turn motivates and legitimizes a desirable present action—hard work today in exchange for a legitimate expectancy of a worthwhile benefit tomorrow.

Hope aligns in innumerable ways with optimism, the second feature of the PsyCap model. Not only does the cultivation of optimism support worker performance by supporting a vision worth working toward, it also facilitates a more positive view of her present situation, of the work she is doing in the moment, of the colleagues with which she is doing it, and of the company for which she is doing it. Supporting workers in developing a sense of optimism about their work, their colleagues, and their organization is essential to driving the workers’ sense of investment in, ownership of, and enthusiasm for their work.

Cultivating hope and optimism, however, does not require us to blind ourselves to failures or to deny that disappointments, mistakes, and challenges will come. Indeed, the opposite is true. Supporting performance excellence means building workers’ sense of resilience, their ability to face challenges, acknowledge and endure them, and then move through them, taking with them the lessons to be learned. This is a mindset which sees errors and lapses not as intrinsic and inextricable deficiencies of character but as opportunities for growth. By helping workers to develop resilience, we are developing a workforce that not only survives its mistakes but is made better by them.

This connects to the fourth and perhaps most important of psychological capital, the one to which all the others lead: self-efficacy. At its root, self-efficacy is about personal responsibility, about escaping the victim mentality. Self-efficacy is about learning to envision ourselves not as the product of environment, destiny, or chance, but as the result of our choices and our actions. As business leaders and as mentors, we must require a great deal from our workers. But by fostering workers’ sense of self-efficacy, we foster their sense of personal power, their confidence in their own ability to succeed, their belief in their own capacity to shape the future they desire for themselves, for the work they do, and the people and the organization for which they do it.


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