Profit Meets Capital

How Psychological Capital Can Improve Employee Experience, and the Bottom Line

It is the dream of any organisation to have both a happy, healthy and motivated workforce, and a happy, healthy, and growing bottom line.

Regrettably, it often seems that profit comes at the expense of employee health and wellbeing. In many instances, and beyond difficulties with entrenched practices of organisational culture, a difficulty seems to exist in terms of the cost and efficacy of initiatives focused on keeping employees motivated and happy at work. The difficulty with such an assumption is that throwing money and/or a training program at a problem will solve it. The reality is that neither will really do the trick, especially if the ‘training’ conducted does not provide employees with insights into their own, inner motivations and resources.

In the end then, what occurs in many organisations is a negative cycle in which the perception of people development practices is poor, owing in part to the often-exorbitant cost of such initiatives, and (in some cases) non-existent change at grassroots level.

If we follow the principle of Occam’s Razor, and attempt to understand the core, intrinsic aspects of employee motivation and performance, the concepts of psychological well-being (PWB) and psychological capital (PsyCap), appear to hold salience. To start, PWB is a subjective employee experience, that is to say; the degree to which people think themselves psychologically well is based very much on how much they believe they are psychologically well. PWB has been linked with increased workplace performance, and the capacity to realise goals. Indeed, PWB has been linked with happier, more positive people, who are resilient during difficult times, have better immune systems and are in better physical health.

In other words, PWB, whilst a psychological process, has impact on motivation, performance, happiness, resilience, immune response and physical health. In a nutshell, PWB sounds a lot like what many EAP’s attempt to accomplish, but fail dismally at. The difficulty here is that PWB is an outcome, and therefore, we need to better understand what fuels that outcome. Enter the concept of PsyCap.

Many studies show that when people are in a positive state at work, they tend to have better perceptions of their capacity for efficacy, have more optimistic expectations and set higher goals for themselves. Research also indicates that psychological resources are actually related, meaning that people high in one resource, are often high in others too. PsyCap acts very much like a binding agent, which bonds together the aspects needed for people to be in a positive state, and experience the ‘overflow’ of one psychological resource onto others.

PsyCap integrates verified psychological aspects integral to positivity and performance into one, primary construct. The great thing about PsyCap, is that research shows it to be state-like, that is, the resources that make up PsyCap are open to development through intervention, and provide an organisation with the greatest opportunity for enhancing employee wellbeing, and PWB.

Think of it this way then, PsyCap acts as a secondary resource which fuels PWB, and in turn, research shows that PWB can fuel greater PsyCap in individuals. Very much a win-win type of situation then.

The core, psychological aspects of PsyCap are; hope, efficacy, resilience and optimism – the so-called HERO aspects. When these psychological aspects are combined, they create a higher order construct called PsyCap, which research shows to predict higher performance and job satisfaction. Research finds that employees with higher PsyCap tend to take different perspectives on problems, have more positive, opportunistic appraisals of situations, and are more adaptive in solving problems.

Just like physical resources, building up PsyCap, allows an employee to have a reservoir of sorts, from which they can draw during times of stress and difficulty in the workplace. The idea here is to build initiatives which assist in building each of the key HERO components in PsyCap, so that this reservoir is built and maintained for times of difficulty, and consequentially, so that PWB is maintained during such difficult times.

This is why death-by-PowerPoint, training manuals, and unfocused (or illegitimate) coaching initiatives often fall flat on their face. They are not addressing the core, psychological, and importantly, intrinsically-driven aspects, which fuel PWB and positive organisational results.

The good news is that PsyCap is easily developed, through research proven exercises, which are simple, quick, cost-effective, and have a long track-record of verifiable, positive organisational results. Of course, this is not to say that PsyCap is a magical source to solve all employee motivational difficulties, or that it is a replacement for other interventions. However, it does provide a meaningful springboard from which other interventions can be developed, and through which, overall intervention efficacy can be improved for your employees. If you are looking for a PsyCap (and by implication, a PWB) solution for your staff compliment, reach out to psyQ Consulting today, for your first, free 1 hour consultation and needs assessment.

References & Further Reading

Avey, J.B., Luthans, F., Smith, R.M., Palmer, N.F. (2010). Impact of positive psychological capital on employee well-being over time. Journal of Occupational Health Psychology, 15(1), pp. 17-28.