As opined by Wang et al. (2014), the extensive usage of different kinds of innovative technologies had drastically changed the nature of the business and to a great extent had made it more competitive than the earlier times. Banks et al. (2016) are of the viewpoint that the different organizations thus take the help of diverse kinds of strategies as well as measures so to gain competitive advantage within the contemporary business world. It is precisely here that the notion of leadership becomes important within the framework of the contemporary business world.
As argued by Hirst et al. (2016), one of the major trends, which is being noticed within the spectrum of the contemporary business world is the fact that the focus of the organizations has shifted from profitability and other aspects of their business to the notion of employee performance. This can be justified on the basis of the fact that it is the employees who perform the majority of work within the fold of an organization and thus can be seen as the backbone of any organization. Gu, Tang and Jiang (2015) are of the viewpoint that prominence which the process of leadership has gained within the cannon of business world can be explained on the basis of the contribution that this machinery makes towards the enhancement of the employee performance. This paper will undertake a literature review of the notion of leadership and its association with Psychological Capital.
Anderson et al. (2017) have stated that leadership can be defined as the ability of an individual to effective influence the behavior of the followers who are associated with them so as to achieve the goals that have been outlined for them. According to Karam et al. (2017), the leaders for the attainment of this end are required to take the help of different measures or strategies like motivating the followers in an effective manner, creating effective job designs, delegating the right kind of tasks to the followers on the basis of their capabilities and others. This is important since they are directly correlated with the performance of the followers. For example, if the right kinds of tasks are not delegated to the followers on the basis of their abilities or capabilities then it is more likely that those tasks will not be completed in an effective manner and this in turn is likely to affect the performance level of the concerned followers or employees (?erne et al. 2014).
As argued by Hoch et al. (2018), the contemporary business leaders can also be seen as the stewards of the business enterprises for which they work. More importantly, in this capacity they are required to work both as the leaders of the organization and also as a managers. The net result of this is the fact that the contemporary leaders in addition to different leadership abilities or traits are also required to have effective managerial skills which are likely to help them manage the different followers or the employees of the organization in an effective manner (Gill and Caza 2018). This change in the job role of the leaders is not only a reflection of the changing nature of the contemporary business world but also of the increasing focus of the organizations on the machinery of employee performance.
More importantly, it can be said that if the leaders are being able to perform their job roles in an effective manner then it is more likely that the employees will be able to perform their job roles in an ardent manner. This in turn is likely to enhance the job satisfaction level of the followers which in turn will reduce the attrition rate of the organizations (Carasco-Saul, Kim and Kim 2015). Reb, Narayanan and Chaturvedi (2014) are of the viewpoint that high attrition rate of the employees is one of the major problems that the majority of the business organizations are facing currently and its resolution is of paramount importance for the organizations. Thus, it can be said that the process of leadership by offering the above mentioned benefits to the organizations has become an important part of their overall business process itself.
Bouckenooghe, Zafar and Raja (2015) have stated that the notion of psychological capital can be defined as the core construct within the framework of various organizations which is aimed at improving the wellbeing of the employees. More importantly, recent researches have revealed that there are four pillars of the notion of psychological capital, namely, hope, resilience, efficacy and optimism, which are often called by the acronym of “HERO” (Landy and Conte 2016). It is pertinent to note that these attributes are primarily related to the core psychology of the employees and helps them to perform not only in a better manner but at the same time as per the expectations of an organization. Moreover, the leaders as well as the organizations to which they are related, are required to not only identify the psychological capital of the different employees of their organization but also take various kinds of initiatives for the development and also the implementation of the policies which are likely to improve these attributes (Chughtai, Byrne and Flood 2015). This is important since the psychology of the individuals is directly related to the performance or the job productivity of the employees. As opined by Braun and Nieberle (2017), individuals with better psychological capital are likely to perform in a much better manner than the ones with inadequate psychological capital. It is precisely here that the role of the leaders becomes important within the framework of the contemporary organizations since they are not only required to motivate the employees but also to develop their psychological capital as well.
The changing nature of the business world and also the wide variety of roles that the leaders are required to perform within the spectrum of the contemporary business world had lead to the emergence of different kinds of leadership theories (Wang et al. 2014). More importantly, these theories are being used by different leaders for the purpose of leading the diverse employees who are related to an organization in an effective manner. Two of the most important leadership theories which are being used extensively by different leaders in the contemporary times are authentic leadership and Leader-Member Exchange (LMX) theory. Banks et al. (2016) are of the viewpoint that the focus of the traditional leadership theories was on the role of the leaders and the followers were always related to the background. However, these theories of leaders try to overcome the limitations of the traditional leadership theories and it is seen that these theories put the followers on the same pedestal as that occupied by the leaders.
As opined by Hirst et al. (2016), authentic leadership refers to the style of leadership wherein the leaders are required to establish ethical relationships with the followers who are associated with them. More importantly, the leaders who take the help of this style of leaders are required to act in an ethical manner and treat all their followers in an equal manner and not indulge in favoritism and other such activities (Gu, Tang and Jiang 2015). The LMX style of leadership, on the other hand, puts equal emphasis on the role of the leaders and also the employees. Anderson et al. (2017) are of the viewpoint that the individuals taking the help of this style of leaders are required to act upon the feedbacks as well as the viewpoints articulated by the employees. More importantly, they are also required to take into effective consideration the perspective of the subordinates into the decisions that they make on behalf of the employees. It is pertinent to note that both of these theories of leadership by helps in the development of the psychological capital of the employees in a better manner.
Recent researches have shown that different employees have different psychological capitals and the performance of these employees depend to a great extent on these attributes of the employees (Karam et al. 2017). For example, it is seen that the major psychological capital of the administrative employees are optimism and efficacy whereas that of the professionals are efficacy and resilience (Gu, Tang and Jiang 2015). On the other hand, the psychological capitals of the blue-collar employees are optimism and hope whereas that of the generational cohort employees is resilience and hope (Karam et al. 2017). Furthermore, for the white collar employees the most important psychological capital is efficacy and for the people who are doing emotional labor it is hope (Gu, Tang and Jiang 2015). It is pertinent to note that both the theories of authentic leadership and LMX help in the development of these psychological resources of the employees (Karam et al. 2017). The leaders are not only required to identify the psychological capital of the employees and take various measures for the development of these attributes of the employees. This is mainly done by the leaders with the ulterior motive of improving the performance of the employees in an effective manner.
As opined by Hoch et al. (2018), the personal emotions of the leaders as well as the managers not affect the leadership or management style adopted by them but at the same time their decisions as well. For example, the leaders or the managers are required to have an unbiased attitude towards all the employees or the followers who are related to them. This is important since they are to adopt a biased attitude towards the different employees of the organization then this is likely to affect the morale of these individuals and thereby affect their productivity or job performance. This in turn is likely to reduce the job satisfaction level of the employees and thereby enhance the attrition rate of the employees of the organization (Reb, Narayanan and Chaturvedi 2014). Thus, the leaders are required to adopt an unbiased towards all the employees of the organization and treat them all in the same manner since this is directly related to their performance.
Carasco-Saul, Kim and Kim (2015) are of the viewpoint that the personal emotions of the leaders or the managers also have an influence on the kind of decisions that they make which in turn is related to the performance of the employees. For example, it is seen that if the managers are angry or hot headed then they are more likely to make rash decisions which can adversely affect the performance level of the employees rather than improving it. More importantly, rash decisions on the part of the leaders or the managers can make them resort to the sort of decisions or actions which might not be agreeable with the majority of the employees and thereby it is likely that a rift might be created between the managers, leaders and the different employees of the organization (Landy and Conte 2016). This is once again likely to affect the performance of the employees who are associated with the concerned leaders or the managers.
Leadership is a topic which has been much researched by a wide range of authors to not only to understand the process of leaders but also the important factors that affect it. More important, the primary focus of these researches was to understand the manner in which the process of leadership can be used by the different organizations to improve the performance of the employees. In this regard, it needs to be said that this will be a unique research since it tries to analyze the correlation between authentic leadership, LMX leadership and psychological capital and also the manner in which these can be used to improve employee performance. Thus it can be said that this research will serve as a framework which the other future researchers can use to shed more light on the topic which has been discussed in this paper.
Conclusion
To summarize, the notion of employee performance has emerged as one of the most important ones within the framework of the contemporary business because of its association with the revenue earned by the organizations. In this regard, it needs to be said that leadership is an important process which is being used by different organizations to improve the performance level of the employees. More importantly, organizations are also trying to effectively use the psychological capital of the employees to enhance their performance. The authentic leadership theory and LMX theory are important ones in this regard since they offer the opportunity to the leaders and also the organizations to not only effective motivate the employees but also to use their psychological capital for the enhancement of their performance.
References
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Banks, G.C., McCauley, K.D., Gardner, W.L. and Guler, C.E., 2016. A meta-analytic review of authentic and transformational leadership: A test for redundancy. The Leadership Quarterly, 27(4), pp.634-652.
Bouckenooghe, D., Zafar, A. and 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), pp.251-264.
Braun, S. and Nieberle, K.W., 2017. Authentic leadership extends beyond work: A multilevel model of work-family conflict and enrichment. The Leadership Quarterly, 28(6), pp.780-797.
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