Invest in the Psychological Capital for your Employees

Did you ever hear the term “Psychological Capital”? Are you wondering how psychology and capital go together and how this might be relevant for your business? Please, continue reading to find out.

What is PsyCap?

Positive Psychological Capital (PsyCap) is one of the new, fascinating concepts developed in the wake of Positive Psychology. It is an individual’s “positive appraisal of circumstances and probability for success based on motivated effort and perseverance” (Luthans, Avolio, et al., 2007, p. 550) or, plainly speaking, the conviction that one is able to face challenges and difficulties in a productive way. Specifically, PsyCap is constituted by four distinct capacities:

  • Efficacy, or the confidence to mobilize the resources necessary to fulfill a task;
  • Hope, or a positive motivational state based on agency (goal oriented determination) and pathways (proactively planning to achieve those goals);
  • Optimism, or an attribution style that interprets positive events through internal, permanent, and pervasive causes, and negative events through external, temporary, and situation-specific ones;
  • Resilience, or the capacity to recover from set-backs and failure.

“PsyCap appears to be a core construct where the whole is greater than the sum of its parts.”

Why is PsyCap beneficial?

Newman, Ucbasaran, Zhu, and Hirst (2014) conducted a comprehensive literature review on the outcomes of PsyCap. Their findings impressively show the many ways in which PsyCap may improve an individual, a team or an entire organization. We have selected the most interesting findings for you:

  • Employees with high levels of PsyCap have more positive individual attitudes, such as higher job satisfaction and less intentions to leave the current job. Moreover, these employees showed a higher well-being as well as more beneficial individual and team behaviours, such as extra-role behaviours, less counterproductive work behaviours and absenteeism.
  • Additionally, various studies consistently reported a positive connection between PsyCap and performance in several dimensions (e. g. individual-level job performance, financial and manager-rated performance). This connection was found to be true even in different cultural settings such as, for example, the US, Portugal, China and Vietnam.
  • Finally, PsyCap at the organizational level is strongly related to the subsequent financial performance of the organization.


Takeaways for your practice

As shown above, research provides strong support for positive connections between PsyCap and many beneficial outcomes such as employee satisfaction and performance. Now you may ask yourself how you can use this knowledge to improve your team, department or organization. We have good news for you: You can enhance the levels of PsyCap of employees rather easily by drawing on a wide range of ready-made interventions. Besides other options, the “PsyCap Intervention” is a brief and efficient way to develop PsyCap in all of its four dimensions. With this method you may already achieve beneficial outcomes for the participants through short 1-3 hours interventions. Good Luck!

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Luthans, F., Avolio, B. J., Avey, J. B., & Norman, S. M. (2007). Positive psychological capital: Measurement and relationship with performance and satisfaction. Personnel psychology, 60(3), 541-572.

Find the original article here!

Newman, A., Ucbasaran, D., Zhu, F., & Hirst, G. (2014). Psychological capital: A review and synthesis. Journal of Organizational Behavior, 35(S1), S120-S138.

Find the original article here!

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