Psychological capital, LMX, employee engagement & work role performance.

AuthorChaurasia, Swati
PositionLeader-member exchange


In the current dynamic business environment where people are looking for better opportunities, it has become extremely difficult to engage employee force. Since, human resources in any organization play a significant role to succeed in market, every organization is looking for devoted, talented, proactive and moreover engaged employees which give firms competitive advantages. In extant research, a number of personal and work related factors have been studied as antecedents for employee engagement. However, past research fails to explore some of the important factors which can also have positive association with employee engagement. These include various personal as well as job related factors, which affect employee engagement and their performance. The extant literature includes personal resources as self efficacy, organization based self esteem, optimism (Xanthopoulou et al, 2007; Bakker & Demerouti, 2008); personality (Langelaan et al, 2006); core self evaluation (Rich et al, 2010). However, there is dearth of research which explores the collective set of various capacities called psychological capital and its linkage with engagement as well as performance. The psychological capital is a positive state of development, includes various dimensions as self efficacy, hope, optimism and resilience (Luthans, et al, 2007). Highly self-efficacious employees have the tendency to believe in their potential and experience good outcomes in life and self-efficacy is the primary dispositional predictor of employee engagement (Bandura, 1982). Hope is defined as a positive motivational state based on an interactive sense of success through willpower (goal directed energy) and pathways (planning to meet goals) (Snyder, et al, 1991; Luthans et al, 2008). Moreover, optimism is the tendency of an individual to believe in best possible outcomes in the face of uncertainty (Peale, 1956) and resilience is defined as the capacity to rebound from adversity, conflict and failure or even positive events, progress and increased responsibility (Luthans, 2002). Such positive motivational states lead to higher levels of employee engagement (Luthans, et al, 2008).

The job related factors also called job resources are identified as social support from supervisor and collegues, challenging work opportunity (Bakker & Demerouti, 2008; Schaufeli & Salanova, 2007; Demerouti et al, 2001), leadership potential (Konczak et al, 2000); as well as psychological contract (Bhatnagar & Biswas, 2010), which influences employee enagagement. Furthermore employee employer relationship also plays an important role to engage employees but still in nascent stage in the extant literaure. The paper addresses employee employer relationship through the lens of Leader-Member exchange (LMX) theory of leadership. LMX is the relationship based approach of vertical dyads (Dansereau, et al, 1975; Graen & Cashman, 1975). LMX is a system of components and their relationships, involving both members of a dyad and their interdependent patterns of behavior, sharing mutual outcome (Scandura, et al, 1984).

Employee engagement refers to the simultaneous investment of physical, cognitive and affective energy of a person into a work role, and hence provides a more conclusive explanation of personal effectiveness in three dominating roles of an employee: individual member, team member and organization member (Kahn, 1990; May et al, 2004; Rich et al, 2010). The engaged employees perform well in their work roles. Moreover, work role performance covers the spectrum of performance constructs and its different dimensions linking them to the context in which work is performed (Griffin et al, 2007). Work role performance includes various sub dimensions: individual task proficiency, team member proficiency, organization member proficiency, individual task adaptivity, team member adaptivity, organization member adaptivity, individual task proactivity, task member proactivity and organization member proactivity (Griffin et al, 2007). The goal of the present study is to address the important and relatively less explored linkage among LMX, psychological capital, employee engagement and their performance.

LMX & Psychological Capital

Various forms of leadership such as transformational leadership and self-leadership enhance employee self-efficacy and cohesiveness therefore enhance performance (Prussia et al, 2003; Pillai & Williams, 2004). Furthermore, the empirical evidence in literature has established that trustworthy, ethical and authentic leaders influence followers' psychological capital through positive work climate (Rachel et al, 2009; Woolley et al, 2010; Walumbwa et al, 2011; Rego et al, 2012). Also, the inspiring leaders facilitate followers to strengthen their psychological capital and transcend their self interest (Gooty et al, 2009). Leaders help employees to develop self efficacy through the opportunities to experience mastery/ success, vicarious learning/ modeling, social persuasion and positive feedback, psychological and physiological arousal and well being (Bandura, 1997; 2000). Similarly, hope can be enhanced through various initiatives including participative goal setting, stretch goals, stepping, involving employees in decision making, transparent reward system, providing adequate resources, training and providing better strategic alignment (Luthans, et al, 2008). Furthermore, providing leniency in assessing past performance, appreciation for the present and opportunity for the future can enhance optimism and resilience in employees (Schneider, 2001). Hence the better quality relationship between employee and employer facilitates the development of employees' psychological capital.

Thus, we hypothesize:

H1: Leader--Member exchange relationship will be positively related to psychological capital of employees.

LMX & Employee Engagement

Leaders in an organization play a vital role in engaging and retaining the talent for a longer time (Snyder & Lopez, 2002). 'Employee-employer relationships' influence the economic as well as the behavioral outcomes of an organization (Rousseau, 1989) and hence the leader-member relations become critical in defining the level of engagement of the employee. In periods of turbulence and change including in times of rapid economic growth, leaders who understand what drives employee engagement, can build a workforce that is motivated to perform (Wiley, 2010). However, leader or supervisor fails to motivate their subordinates uniformly and develops "in-group and out-group" members. The in group members make a high quality relationship which includes trust, open communication and respect for each other and motivates employees to exert their full energy in their work roles while out group members make a contractual type of relationship. Furthermore, leader empowering behavior helps employees to engage in their work (Konczak et al, 2000; Schalkwyk, et al, 2010; Wiley, 2010, Attridge, 2009) and enables better performance with enhanced commitment towards the organization (Walumbwa, et al, 2011). Also, leader empowering behavior influences employee engagement through psychological empowerment and role clarity (Konczak et al, 2000; Schalkwyk, et al, 2010; Wiley, 2010, Attridge, 2009; de Villiers & Stander, 2011; Mendes & Stander, 2011). Social exchange theory, with its emphasis on reciprocation, does explain why workers experiencing high quality LMX are engaged to their organizations than those experiencing low quality relationships (Walumbwa et al, 2011, Cheung and Weiping Wu, 2012). We therefore posit:

H2: Leader-Member exchange relationship will be positively related to employee engagement.

Psychological Capital & Employee Engagement

Employees' psychological capital also defines their levels of engagement with their organization.

More engaged and less engaged employees are likely to possess different traits as well as be performing different nature of jobs (Inceoglu & Warr, 2009). Exposed to similar working conditions and resources, presence or...

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