Joe Gerstandt | keynote speaker, freedom fighter, freak-flag flier

This is a guest post from Igor Noveski, masters candidate at the Rochester Institute of Technology.

The 5th Element – Psychological Capital (PsyCap)

Two studies show that hope, resilience, optimism and efficacy produce higher work performance and job satisfaction (Fred Luthans et al., 2004 & 2007). These four elements constitute Psychological Capital (PsyCap). Here are the definitions:

• Persevering toward goal and redirecting if necessary to succeed (hope)
• Having a positive outlook about succeeding in the future (optimism)
• Having confidence and putting effort to tackle a challenge (efficacy)
• Sustaining adversity and bouncing back to attain success (resilience)

The studies go on to assert the following:

• Psychological capital is more important than intellectual capital
• Psychological capital is open to change and development, i.e. it can be managed and nurtured
• Investment in financial, human and social capital may not be sufficient anymore
• Initial analysis indicates that investments in PsyCap yield substantial returns

European-based business guru Jonas Ridderstrale is also a strong proponent of the importance of psychological capital. He asserts the following (Idea Connection, 2009):

• Belief in ability is more important that ability itself
• Psychological capital (self-confidence, hope, optimism) is more important than intellectual capital
• Will combined with skill, results in peak performance

The researchers suggest that psychological capacities are states (not fixed traits) that are open to development (Fred Luthans et al., 2004). To build confidence, they suggest several programs such as:

• Mastery experience and personal attainments: a sense of confidence is gained by completing a complex task through perseverance and learning (Fred Luthans et al., 2004). I think that HR can devise programs that provide challenging tasks/projects to its workforce. Through programs such as mentoring, coaching, social networking, performance feedback, HR can ensure that the workforce handles the tasks successfully, thus gaining confidence and building up their psychological capital.

• Vicarious experience and modeling: The authors suggest that people also build a sense of confidence by observing their peers succeed through ongoing effort. I think that HR can establish peer-to-peer mentoring and executive mentoring programs where new talent can receive guidance from successful individuals/role-models, and thus build their psychological capital.

• Social persuasion: Experienced, successful and well-respected individuals in an organization can encourage their peers that they can succeed as well. In my opinion, HR can make sure that the workforce gets empowering performance feedback that builds confidence, and once again through internal networking programs and mentoring programs, HR can ensure that the workforce gets empowering feedback and support needed to succeed.

Hope is also a psychological state that can be managed and developed. The authors suggest the following guidelines: 1) setting clear goals helps ensure focus; 2) breaking down goals to small steps and making progress through small wins; 3) developing contingency plans to goals; 4) being able to persist in the face of problems; 5) knowing when to pursue and alternative solution and when to reset goals (Fred Luthans et al., 2004). All these aspects are part of the performance management system, therefore HR can make sure that its workforce has clear goals and resources needed to reach the goals. In my opinion, performance feedback and coaching are crucial steps in the performance management process, and they can help develop the psychological capital of employees.

Developing optimism can be done by “identifying self-defeating beliefs when faced with a challenge; evaluating the accuracy of the beliefs; and replacing the dysfunctional with more constructive ones” (Fred Luthans et al., 2004). I think that HR can help develop optimism through tailored training and coaching, by ensuring that the workforce has the right attitude and mindset when dealing with complex tasks.

Developing resilience requires enhancing the social competence, problem solving skills, and ensuring a sense of purpose and future (Fred Luthans et al., 2004). This includes “avoiding negative thinking traps when things go wrong; and remaining calm and focused when overwhelmed by emotion or stress” (Fred Luthans et al., 2004). I think HR can develop resilience in its workforce by establishing internal social networks which provide professional support to the workforce. Career management and performance management also will help build a sense of purpose and successfulness with the workforce.

In conclusion, HR is ideally positioned to be at the forefront of developing and managing human resources’ psychological capital and drive business results. With a set of strategic HR policies that incorporate a psychological component, HR can help invest in the psychological capital in its workforce, which yields substantial returns.

Resources:
Fred Luthans et al. (2007). Positive psychological capital : Measurement and relationship with performance and satisfaction. Available at: http://www3.interscience.wiley.com/journal/118503262/abstract

Fred Luthans et al. (2004). Positive psychological capital: Beyond human and social capital. Available at: http://tinathomsen.files.wordpress.com/2007/11/positive-psychological-capital-beyond-human-and-social-capital.pdf

Idea Connection. (2009). Interview with Dr. Jonas Ridderstrale. Available at: http://www.ideaconnection.com/articles/00115-Funky-Business.html

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My name is Igor Noveski. I am from The Republic of Macedonia and I am currently a Fulbright Scholar studying in Rochester, NY. I am a masters candidate in human resource development at the Rochester Institute of Technology. After I graduate on August 15, 2009, I will be returning to Skopje, the capital of Macedonia. I will be going back to my previous job as an HR Generalist for a major telecommunications company. I am highly interested in the issues of human capital management, organizational behavior, human and social interactions.

I am posting this blog as part of my Leveraging Technology class with Professor Steve Boese. In this class we’re reviewing the application of technology in improving HR efficiency. We’re explofing software tools used for recruitment, performance management, development, social networking etc.