Corporate Heros: Psychological capital and performance improvement

business-hero-300x225Just as organizations benefit from a healthy stash of financial capital, human performance is enhanced by reserves of psychological capital (PsyCap) that supply the strength and capability to carry on, even when things are tough. A spin-off the positive psychology movement (see Positive Psychology: Shifting from what’s wrong to what’s right), PsyCap is defined as an individual’s strength, perceptions, attitudes toward work, and general outlook on life (Luthans, Youssef, et al., 2007) and consists of four capacities (HERO): hope, efficacy, resilience, and optimism.

Hope. Individuals with hope are able to set goals, self-motivated to achieve goals and to change course as needed to determine alternate strategies for goal achievement (Snyder, 2000). In an organizational setting, those higher in hope can use planning to predict obstacles and identify different ways to achieve their targeted goals. They are able to set goals, predict potential obstacles, and adjust their strategy as needed to continue toward goal achievement.

Efficacy. Based on Bandura’s social cognitive theory, efficacy refers to a worker’s confidence in his or her ability to get things done using motivation, cognitive resources, or specific courses of action. Those high in efficacy are confident and persistent, and when faced with challenges, willing to put forth effort to achieve their goals (Luthans et al., 2007).

Resilience. When faced with adversity, resilient individuals are able to bounce back quickly and effectively (Masten, 2001). In organizational settings, resilient individuals recover from change, regardless of whether it is positive or negative in nature. They bounce back when faced with negative outcomes like adversity, uncertainty, conflict, or failure, and even positive ones like a promotion or increased responsibility. Masten identified three ways to promote resilience: 1) reduce risk exposure by identifying factors that create adversity that can be eliminated or changed, 2) increase resources to counterbalance risk, and 3) mobilize and facilitate powerful protective systems. Resiliency increases with practice, and individuals become more resilient each time they effectively recover from a setback, creating a positive cycle of improvement.

Optimism. Optimism refers to the positive belief that a desirable outcome will result from increased effort. Optimists continue to put forth effort even when faced with increasing adversity, leading them to perform better than pessimists. Optimism is the foundation of Seligman’s approach to positive psychology, and he supports the development of an optimistic orientation as a requirement for a meaningful life (Seligman, 2002).

Psychological Capital and Performance

Extensive research has proven the value of PsyCap in workplace performance. Research has shown that individuals high in PsyCap are also high performers, committed to the mission of their organization, and empowered. Given that PsyCap contributes to so many beneficial outcomes, how do we raise psychological capital when reserves are low? Two strategies that show promise are training and performance coaching. Because PsyCap is “state-like” it is open to development. Luthans, Avey & Patera (2008) increased PsyCap with a two-hour web-based training program. Coaching shows promise as a way to increase PsyCap and its components (Iverson, 2016).

Measuring Psychological Capital

An added benefit of basing your HPI practice on PsyCap intervention are the valid and reliable instruments that are available to measure the construct. PsyCap is measured with the PsyCap Questionnaire (PCQ), developed and validated by Luthans, et. al. (2007). The 24-item PCQ and a 12-item reduced version are available at Mind Garden.

You may view the 24 questions of the PCQ in this handout. Scroll to Page 3 to see the questions.

Questions for Discussion

  1. What are your thoughts about the accuracy of Psychological Capital and PCQ for you      and your organization?
  2. How might you use this tool to increase performance?


Iverson, K.M. (2016). Measuring the Magic: The Thrive Model of Evidence-based Executive Coaching. O D Practitioner, 48 (4) 20-26.

Luthans F., Youssef, C. M., & Avolio, B. J. (2007). Psychological capital. New York, NY: Oxford University Press.

Masten, A. S. (2001). Ordinary magic: Resilience processes in development. American Psychologist, 56(3), 227.

Seligman, M. E. (2002). Positive psychol­ogy, positive prevention, and positive therapy. In C. R. Snyder & S.J. Lopez (Eds.), The handbook of positive psychol­ogy (pp. 3–12). New York, NY: Oxford Press.




  • This is a great article because it reestablised the idea that a positive can be successful in all aspects. PsyCap is a great new way of showing an employee happiness outside of work first. When I have seen this in the past, it usually has employers trying to keep employees happy in the workplace only. I think this is a great way of saving companies money by not having to retrain employees.

  • This article is a great break down of psychological capital and its measurement relevant to work performance. I think this summary is quite applicable to various industries and works to develop performance, outcomes, and organization.

  • PsyCap alone within itself has tremendous value. The killer of hope, efficacy, resilience and optimism is culture. I wonder how these items come into play for individual if the culture they are operating in is toxic. It would be interesting to see the comparison in a healthy organizational culture compared to a toxic one.

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