According to Li et al. (2016), the use of various kinds of technologies and innovations has drastically changed the nature of the business world in the recent times and because of this employee performance has become the catch-phrase of the contemporary business world. As stated by Newman et al. (2014), organizations are taking the help of diverse kinds of processes as well as strategies for the enhancement of the employee performance like effective training, delegating suitable tasks to individuals as per their capabilities and others.
Laschinger and Fida (2014) have stated that the prominence attained by the construct of employee performance within the framework of the modern business world can be justified on the basis of the fact that the overall performance of a business enterprises depends greatly on the individual performances of the different employees of the concerned enterprise. The processes of effective leadership and the development of the psychological capital of the employees are the two most important ones which are being used by the majority of the contemporary business enterprises for the enhancement of the performance or job productivity of the employees. This paper will conduct a literature review to understand the correlation which exists between the concepts of leadership, employee performance and psychological capital.
Leadership is a notion which many scholars as well as researchers have tried to define in an effective manner since the traditional times however it is pertinent to note that none of them have been able to come up with a standard definition of the same (Abbas & Raja, 2015). For example, Wang et al. (2014) argue that leadership is defined as the process which is being used by different individuals to affect the behavior of their team mates in a positive manner through motivation and thereby helped them to complete their job roles in an effective manner. On the other hand, Luthans, Youssef and Avolio (2015) have argued that leaders need to guide the followers or for that matter act as their mentors. More importantly, these traditional definitions of leadership have changed substantially because of changes in the world of business. The contemporary leaders are required to take the help of different kinds of innovative ideas not only for the enhancement of the business prospects of an organization but at the same time for the improvement of job productivity of the subordinates who are associated with them (Avey, Luthans & Jensen, 2009). As discussed by Bouckenooghe, Zafar and Raja (2015), the leaders need to posses different skills like effective communication skills, problem solving skills, task delegation, empathy, emotional intelligence and others which are likely to help them manage the performance of the diverse subordinates who are related to them.
Brunetto et al. (2017) are of the viewpoint that the performance of the subordinates who are associated with a particular leader depends greatly on the personal traits as well as the leadership style which is being followed by the concerned leader. For example, one of the most basic skills that the leaders need to posses is to understand the abilities of the subordinates and delegate tasks or job roles to them accordingly (Wong & Laschinger, 2013). More importantly, the modern leaders are also required to have the quality of emotional intelligence which is likely to help them to understand the emotional needs of the employees and thereby manage them on the basis of this fact. In addition to this, the effective use of different skills like communication, decision making, problem solving and others also help the contemporary leaders to enhance the performance of the subordinates who are associated with them in the best possible manner (Avey et al., 2011). Thus, it can be said that the process of leadership is an indispensible tool for the organizations which are trying to enhance the performance of their employees.
There are various leadership theories which are being used by the contemporary leaders and also organizations for the purpose of effective leading the different entities of their organization. In this regard, mention needs to be of authentic leadership, leader-member exchange (LMX), transformational leadership theory and others. Leroy et al. (2015) are of the viewpoint that unlike the traditional theories of leadership like the Great Man Theory, Trait Theory and others which completely relegated the subordinates to the background these theories of leadership take into effective consideration the role played by the subordinated. In this context, the LMX theory of leadership is perhaps the most important one since this theory articulates the fact that the leaders and also the organizations need to consult the employees and integrate the feedbacks or suggestions given by them in the important decisions of the organization (Gardner et al., 2011). As opined by Brunetto et al. (2017), the concept of shared liability which this theory articulates is an important one since the organizations by offering a say to the employees in the important decisions of the organization are able to motivate as well as influence them to work in a much better manner.
Authentic leadership is another important leadership theory which is being used by the contemporary leaders and organizations for the enhancement of employee performance. The use of this style requires the leaders to forego favoritism and establish ethical as well as morally based relationships with the different followers who are associated with (Wong & Laschinger, 2013). This is important since through the use of this style the leaders can offer the same kind of opportunities to the diverse followers who are associated with them and this in turn is likely to influence not only their job satisfaction level but also performance in a positive manner. Luthans et al. (2010) are of the viewpoint that the majority of the employees complain regarding the partial treatment that they get within their workplace and also the adverse effect that this has on their productivity. Thus, it can be said that the use of this style is likely to help the leaders as well as the organizations to address this grievance of the employees and thereby improve their performance in a positive manner.
As opined by Li et al. (2016), the notion of psychological capital has unprecedented prominence within the contemporary business world and is being actively used by the different organization for the enhancement of the job productivity of the employees. Psychological capital refers to the psychological as well as the emotional resources of an individual which enable them to perform in a much better manner (Newman et al., 2014). As per the four pillars of psychological capital, the major psychological entities of different kinds of employees are hope, optimism, resiliency and efficacy (Laschinger & Fida, 2014). In this regard, it needs to be mentioned that different employees have diverse psychological capitals and the leaders as well as the organizations need to use them in the best possible manner for the enhancement of their performance. For example, the psychological capital of the white collar employees is efficacy whereas for the generational cohort it is resilience (Abbas & Raja, 2015). Furthermore, the psychological capital of the blue collar employees is resiliency whereas in the case of different ethnic groups it is hope (Bouckenooghe, Zafar & Raja, 2015). Moreover, in the case of professionals it is optimism and for the administrative employees it will be efficacy (Luthans, Youssef & Avolio, 2015). The leaders and also the organizations for the enhancement of these different kinds of employees need to focus on the development of these capitals of the employees.
Newman et al. (2014) are of the viewpoint that one of the most important job roles of the modern leaders within the framework of different organizations is to take initiatives for the development of the psychological capital of the different followers. Recent researches have suggested that an effective development of the psychological capital of the employees not only enhances the level of wellness but at the same time reduces the work stress felt by the employees (Li et al., 2016). This is important since it is seen that the majority of the employees these days complain regarding the high level of work stress that they face which in turn affects the level of their job productivity.
The leaders are required to organize various kinds of training programs, use the construct of emotional intelligence and others for the effective development of these capitals of the employees. The leadership theories of authentic leadership and LMX are important in this regard since the focus of both of these theories is on the establishment of effective relationship with the followers (Laschinger & Fida, 2014). Establishment of ethical relationship with the followers is important since it is likely to contribute in a significant manner towards the removal of favoritism and would also offer the opportunity to the leaders for the effective identification as well as development of the psychological capital of the different employees. Thus, it can be said that the leaders by playing a pivotal role in the development of psychological capital of the employees help directly in the enhancement of their psychological capital.
As opined by Wang et al. (2014), the effectiveness of a leader or a manager depends greatly on the extent to which they are being able to control their emotions while managing the teams they are associated with. Recent researches have shown that the personal emotions of the individuals have a significant effect on the decision making process used by them or for that matter the decisions that are being made by them (Abbas & Raja, 2015). In this regard, it needs to be said that if a particular leader lets their emotions dictate the course of their actions then they are inadvertently like to use favoritism and not use ethics or morals for the management of an effective relationship with the different followers who are associated with them. More importantly, emotions are likely to make the leaders or managers take the kind of decisions that might not be agreeable with the majority of them (Bouckenooghe, Zafar & Raja, 2015). This is likely to adversely affect the prospects of the organization since the employees are increasingly playing an important role with the decision making process used by the organizations and if the decisions made by the leaders or the managers are not agreeable with them then they are not likely to accept them (Abbas & Raja, 2015). Furthermore, this is likely to adversely affect the motivation level of the employees and thereby their job productivity. Thus, it can be said that within contemporary business world it has become important for the leaders and the managers to control their emotions.
The process of leaders had been explored by numerous scholars however the notion of psychological capital and its use for the enhancement of the job productivity of the employees is a nascent concept. The net result of this is the fact that a substantial amount of research have still not been conducted on this topic to explore the manner in which they could be used by a leader to positive enhance the performance of the subordinates who are associated with them. Thus, it can be said that the literature review which has been conducted in this paper will serve as a guide to the future researchers which they can use to conduct full-fledged research works.
Conclusion
To conclude, the leadership theories of authentic leadership and LMX are increasingly being used by the different leaders because of the plethora of benefits that they offer to them. The major advantages of the use of these theories of leadership is the fact that they help the leaders to effective develop the psychological capital of the different kinds of followers who are associated with. This is important since the overall performance of an individual or employees depends to a great extent on the kind of psychological capital that they have and also to what they have developed. Thus, it can be said that one of the major job roles of the contemporary leaders is to positively develop the psychological capital of the workers so as to improve their performance in the best possible manner.
References
Abbas, M., & Raja, U. (2015). Impact of psychological capital on innovative performance and job stress. Canadian Journal of Administrative Sciences/Revue Canadienne des Sciences de l’Administration, 32(2), 128-138.
Avey, J. B., Luthans, F., & Jensen, S. M. (2009). Psychological capital: A positive resource for combating employee stress and turnover. Human resource management, 48(5), 677-693.
Avey, J. B., Reichard, R. J., Luthans, F., & Mhatre, K. H. (2011). Meta?analysis of the impact of positive psychological capital on employee attitudes, behaviors, and performance. Human resource development quarterly, 22(2), 127-152.
Bouckenooghe, D., Zafar, A., & Raja, U. (2015). How ethical leadership shapes employees’ job performance: The mediating roles of goal congruence and psychological capital. Journal of Business Ethics, 129(2), 251-264.
Brunetto, Y., Farr-Wharton, B., Farr-Wharton, R., Shacklock, K., Azzopardi, J., Saccon, C., & Shriberg, A. (2017). Comparing the impact of management support on police officers’ perceptions of discretionary power and engagement: Australia, USA and Malta. The International Journal of Human Resource Management, 1-22.
Gardner, W. L., Cogliser, C. C., Davis, K. M., & Dickens, M. P. (2011). Authentic leadership: A review of the literature and research agenda. The Leadership Quarterly, 22(6), 1120-1145.
Laschinger, H. K. S., & Fida, R. (2014). New nurses burnout and workplace wellbeing: The influence of authentic leadership and psychological capital. Burnout Research, 1(1), 19-28.
Leroy, H., Anseel, F., Gardner, W. L., & Sels, L. (2015). Authentic leadership, authentic followership, basic need satisfaction, and work role performance: A cross-level study. Journal of Management, 41(6), 1677-1697.
Li, Y., Wang, Z., Yang, L. Q., & Liu, S. (2016). The crossover of psychological distress from leaders to subordinates in teams: The role of abusive supervision, psychological capital, and team performance. Journal of Occupational Health Psychology, 21(2), 142.
Luthans, F., Avey, J. B., Avolio, B. J., & Peterson, S. J. (2010). The development and resulting performance impact of positive psychological capital. Human resource development quarterly, 21(1), 41-67.
Luthans, F., Youssef, C. M., & Avolio, B. J. (2015). Psychological capital and beyond. Oxford University Press, USA.
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