How Psychological Capital Can Help Your Business

The Wellbeing Write-Up: Strategic Wisdom from SuperWellness

How Psychological Capital Can Help Your Business

Issue One

Resourceful people = organisational success:
How Psychological Capital can help your business.

In the main, it is possible to procure or build the resources that help us to work and live better. Perhaps it’s a chair that provides effective support for that dodgy back, or maybe it’s having a regular catch up with peers to share battle scars from the latest new change programme. Either way, the acknowledgement and availability of our own resources remains a powerful way to improve both employee wellbeing and workplace experience and will positively impact the organisational performance. In the first of a new series of regular blogs from SuperWellness, I am writing about the topic of Psychological Capital, or PsyCap, which promotes the use personal psychological resources to build successful teams.

So, what is PsyCap?

I first learnt about PsyCap five or six years ago when I was studying for a masters in occupational psychology. Discovering such a powerful tool that is both reliable and valid in a variety of settings, has proven high returns on investment, and yet remains simple and effective to measure, build and maintain was a turning point in my own working life. Why wouldn’t I want to share it with the world?

PsyCap is a tool that is grounded in the positive branch of psychology. While traditional psychology is very much focused on ill health and fixing problems, positive psychology takes the opposing view in that it places a spotlight on individual strengths and the growth of these. Developed at the start of the 21st century by Fred Luthans [1] and a team of psychologists, the tool aims to determine how best to develop people within organisations to create competitive advantage. Instead of using the standard measure of intelligence quotient (IQ) to create teams of high performing employees, PsyCap builds a set of psychological resources for individuals; namely hope, efficacy (or self-efficacy), resilience, and optimism which together form the acronym ‘HERO’.

Luthans referred to PsyCap as ‘building the hero within’, which initially feels like a bold claim. However, numerous studies conducted over the last 20 years have shown PsyCap to be effective across service, manufacturing, education, technology, and military industries. PsyCap is also related to multiple performance outcomes in the workplace, including reduced absenteeism and cynicism in combination with increased job satisfaction, commitment, and organisational citizenship behaviours; that is being a good person to work with, for, and around. Imagine having an instruction manual for consistently developing employees who felt so happy in their job that they naturally want to go the extra mile – what would this mean for your organisation?

Adding PsyCap to your L&D agenda

Typically, as organisations you will be focusing on developing your employees through standard training interventions, be they mandatory – GDPR, anyone? – or optional, based on individual needs (think Excel for Beginners or Assertiveness Skills). Of course, there is a place for this type of training, but rarely is the focus on continued forms of individual development that empower users to be accountable for building psychological strengths. And sadly, organisations often don’t fully appreciate the power of harnessing these kinds of competencies.

A 2015 study [2] on the impact of PsyCap on innovation and job stress determined that high PsyCap individuals were rated by their managers as displaying greater creativity and innovation. Those same individuals self-reported lower levels of job stress. A more recent article in Organizational Dynamics [3] looked at the positive impact of PsyCap on individuals in a post-pandemic world. As employers and managers, you are likely still struggling with finding a new normal, but PsyCap can provide a toolkit to help you and your employees to better deal with the uncontrollable events that occur around them. PsyCap in an increasingly volatile, uncertain, complex, and ambiguous (VUCA) world can act as a pragmatic tool to create a buffer between individuals and adverse events.

Leading, not following

But why haven’t organisations like yours already got on board with PsyCap? Simply put, you’ve never heard of it! A quick look at Google Trends (fig.1) using psychological capital alongside the broader term of ‘workplace wellbeing’ and the on-trend ‘psychological safety’ shows many peaks and troughs especially in the immediate aftermath of COVID-19. However psychological capital lags behind with an average search score of just four compared to workplace wellbeing (26) and psychological safety (19), and my belief is that unless you are on a taught master’s course in either occupational or positive psychology, it simply doesn’t feature in mainstream discourse around workplace wellbeing.

Fig.1 Google Trends – search term comparison workplace wellbeing (blue), psychological safety (red), and psychological capital (yellow). UK only, past 5 years.

Factor in the absence of the subject occurring in the work of popular leadership and organisational psychology gurus (Grant, Edmondson, Sinek, et al.), and the still-pervasive mindset of senior leaders to err on the side of caution when it comes to anything perceived as being remotely frivolous, and we have a PsyCap crisis on our hands. Far from being an under-explored, purely theoretical model without basis or justification, PsyCap is heavily supported by continued studies that more than prove the positive impact on both individuals and organisations that is both cost-effective and long-lasting. And before the word really gets out, maybe you can use PsyCap to your advantage before everyone else catches up.

What next?

PsyCap offers a rich and varied toolkit of strategies to explore though I leave you now with a couple of examples to take away:

  • H – Provide time and space for your employees to set meaningful goals (hope)
  • E – Work with coaches or mentors to identify areas for growth (efficacy)
  • R – Suggest creating a list of all resources available (resilience)
  • O – Attribute success to internal factors rather than external ones (optimism)

Acknowledging the importance and simplicity of Psychological Capital and empowering your people to be accountable for their own internal ‘hero’ will have a two-fold positive impact. Recognising the need to build the pillars of hope, efficacy, resilience, and optimism will create happier and healthier individuals and teams, resulting in huge organisational wins from reduced turnover and negative employee sentiment to greater innovation, improved productivity, and ultimately top and bottom-line growth.

For more information on how SuperWellness can help to develop PsyCap in your teams, visit our page on Psychological Capital.

[1] Luthans F, Youssef CM. (2004). Human, social, and now positive psychological capital management. Organizational Dynamics, 33, 143– 160.
[2] Abbas M, Raja U. (2015). Impact of Psychological Capital on Innovative Performance and Job Stress. Canadian Journal of Administrative Sciences, 32, 128-138
[3] Luthans F, Drydek Broad J. (2022) Positive psychological capital to help combat the mental health fallout from the pandemic and VUCA environment. Organizational Dynamics, 51, 1-13.

Next month, I’ll be writing about the ever-present but under-discussed theme of the Imposter Phenomenon.

About the Author
Joh Foster is a positive organisational psychologist and wellbeing strategy consultant at SuperWellness. Joh also teaches the postgraduate certificate in the psychology of kindness and wellbeing at the University of Sussex.
View Joh’s LinkedIn Profile


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