Psychological capital (PsyCap): The newest form of Organizational capital.

What is Psychological capital

Psychological capital is a form of capital that is intangible, it is about an awareness of “who you are” (the actual self) and investment in “what you intend to become” (your possible self).

In the past, financial and economic capital had been the key consideration in driving business growth and competitive advantage but in the recent past, the emergence of intellectual human capital has taken the stage and more so psychological capital (Avolio & Luthans, 2006).

The development of psychological capital is unique and not transferrable unlike other forms of capital. If developed properly, it is can be the source of enduring, sustainable, and competitive advantage for today’s organizations. Traditional capital is said to be ‘what you have”, Human capital is “what you know, and social capital is “who you know”. Psychological capital is about “who you are” and “what you intend to become”.

Building Psychological capital.

Psychological capital involves investing in the actual self to reap the return of becoming the possible self. Psychological capital places hope as a key fundamental attribute. Hope comprises both willpower (goal-directed energy) and way power (pathways or planning to meet goals). High-hope individuals look for different ways to bring the future to the present, they are never short of alternatives for their desired goals. They are irritated by the statement “I can’t”. This type of belief is founded by the understanding that individuals have immense potential, it is an internalized belief that one can do all things through Christ who strengthens them (For Christians).

Managers with higher levels of measured hope are rated as a better performers, more satisfied, and more committed to their organizations. High-hopers don’t blame, they take responsibility. Hope is about beliefs and the ways that those beliefs can be actualized.

The other key attribute of PsyCap is optimism (an expectation of a positive outcome). Optimists do not interpret failures personally but rather as learning points in the journey to success.

Related to optimism, is efficacy, which is an individual's belief in their capacity to act in the ways necessary to reach specific goals. The concept was originally proposed by psychologist Albert Bandura. Efficacy can be built over time through verbal persuasion, vicarious learning and enactive mastery

Finally, PsyCap is also about building resiliency. Resiliency represents patterns of positive adaptation in the context of significant adversity or risk, resilient people bounce back and beyond, never bemoaning the past or the present. Life is bound to present to everyone difficult moments. Avolio and Luthans (2006) argue that the question is not whether we will go through it; it is how we will come out of it. What distinguishes those who are successful from others is, in large part, resilience in the face of humiliation, defeats, and setbacks of various kinds. The COVID-19 pandemic brought major disruption to life in an almost irreversible way, many companies sunk, and health was affected yet there were those that thrived in the same period. In the volatile, uncertain, complex, and ambiguous VUCA generation, building psychological capital is invaluable.

References

Avolio, B. J., & Luthans, F. (2006). THE HIGH IMPACT LEADER: Moments Matter in Accelerating Authentic Leadership Development. McGraw-Hill Companies, Inc.