Corporate Heros: Psychological capital and performance improvement


Just 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 in tough times. 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, as outlined below:

Hope. Individuals with hope can 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 can 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 the effort to achieve their goals (Luthans et al., 2007).

Resilience. When faced with adversity, resilient individuals can 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 successfully 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 growing 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 have a sense of empowerment. 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 also 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 is the availability of valid and reliable instruments 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.



  • I enjoyed reading the article, the concept of PsyCap is powerful; however, the culture and values of few organizations can exterminate an individual’s (HERO) hope, efficacy, resilience, and optimism toward work. I believe that the HERO are part of essential ingredients to perform well at work and in personal life.

  • Kathleen, great articles and thanks for sharing. This simply makes sense, not sure I have ever encountered a happy employee who has been disgruntled at work. Unhappy employees tend to spread that mindset with their colleagues. The 4 capacities of PsyCap, hope efficacy, resilience and optimism apply in life but also in the workplace. A happy employee will serve any business well. I recently read the article below from Forbes which is related to workplace performance.

  • amandavaughan11

    I really enjoyed this article. At first glance, one would think that PsyCap is not something that you could necessarily teach or coach someone to increase their individual PsyCap. But, as the article states, this is possible. What an amazing resource to tap into, especially in times when financial distress is upon the economy or a specific industry or company. It goes to show that money doesn’t always fix everything and it is not always the answer. It is important to invest in people.

  • I think PsyCap is very accurate in my current organization. It is easy to see the attitudes and perceptions of people change based on the work atmosphere and environment on a daily basis. Poor attitudes lead to poor performance, positive attitudes lead to positive performance.

  • I think PsyCap is important, especially during current times, as many organizations and employees are feeling the impacts of the pandemic. The PsyCap tool can be used to increase performance by identifying areas where employee culture can be improved or common strengths and weaknesses.

  • Knovva Academy imparts leadership skills to students and empowers them through Experiential Learning.

  • I like the PsyCap tool because it is a very helpful to know the strength of a person and what they can accomplish during ups and downs times in a person’s life. Understanding HERO capacities is a great way to identify these strengths. I would use this tool as a way to identify those high performers to coach as they plan their careers and futures.

  • PsyCap is fascinating in that we consistently hear that we need to keep our head up and look for the silver lining, and yet it goes so much deeper. Promoting the HERO principles is something that we can do for each other in a work setting, not just a coach-client setting.

  • Sherri Hayden

    Wonderful post. I especially liked the 3 things one can do to promote resilience. These same things are just as effective for an individual as well as an organization. Promoting resilience is about preparedness and using ones resources.

  • PsyCap is huge in the workforce because although some jobs aren’t physically stressful, they can be mentally stressful. This leads to frequent absenteeism in some departments. Organizations must find a way to balance stress on the job.

    • PsyCap is a great tool and aims to validate universal measure. I can use this tool to increase performance by recognizing the strengths of people and capitalize on the results to improve work-life balance, empowers creative relationships, and create happier relationships.

  • My thoughts that PCO can help push great performance but can put pressure amongst great human in the desired workforce.

    I would use PCO to improve and build better strategies and great skills

  • Great article. Just an FYI, I tried to access the PCQ questionnaire via the link and received an error – couldn’t access.

  • I found this article to be of great value to my own personal development and mindset as I plan to enter into a new field. I’ve been reflecting back on my previous experiences with my former employer and identifying areas of improvement or opportunity for myself in the areas of hope, efficacy, resilience, and optimism as outlined in this article. I think being aware of our shortcomings in these areas can help us better avoid the negative consequences and further develop in these areas. I hope to have a productive conversation with my manager when I start my new job identifying some of my areas of opportunity with them in hopes they can also assist in helping me build resiliency and identifying when I may be falling short in one of these areas before too much damage or fallout is done.

  • I am a proponent of Phychological Capital and find great benefits in this approach. My organization is diverse enough in its application of strategies, I can see this intervention proving to be well received and very effective. I can invision the implementation as a precurser to visioning and strategic planning sessions.

  • 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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