Psychological Capital and Employee Performance: A Latent Growth Modeling Approach

Abstract

The positive core construct of psychological capital (consisting of efficacy, hope, optimism, and resilience) has been conceptually and empirically demonstrated to be related to employee performance. However, much of this work has relied on cross‐sectional designs to examine these relationships. This study utilizes longitudinal data from a large financial service organization (N= 179 financial advisory‐type employees) to examine within‐individual change in psychological capital over time and if this change relates to their change in performance. Latent growth modeling analyses revealed statistically significant within‐individual change in psychological capital over time, and that this change in psychological capital was related to change in 2 types of performance outcomes (supervisor‐rated performance and financial performance, i.e., individual sales revenue). Moreover, results of an exploratory cross‐lagged panel analysis suggested a causal relationship such that prior psychological capital leads to subsequent performance rather than vice versa. Taken together, these results highlight the impact employees’ psychological capital may have on their subjectively and objectively measured performance over time and offer evidence‐based practical guidelines for human resource selection, development, and performance management.

A Tale of Two Paradigms: The Impact of Psychological Capital and Reinforcing Feedback on Problem Solving and Innovation

“…A recent meta-analysis indicates that this PsyCap has a positive relationship with desirable employee attitudes, behaviors, and performance (Avey, Reichard, Luthans & Mhatre, 2011). Specifically, over the past few years, PsyCap has been shown to be developable in employees (Luthans, Avey, Avolio & Peterson, 2010;Luthans, Avey & Patera, 2008) and to cause performance Peterson, Luthans, Avolio, Walumbwa & Zhang, 2011). Further, PsyCap has been found to predict unique variance in important employee attitudes and behaviors over and above their demographics, core-self evaluations, personality traits, and person-organization and person-job fit (Avey, Luthans & Youssef, 2010).…”

Wellbeing and Society: Towards Quantification of the Co-benefits of Wellbeing

“…This is a composite measure capturing several characteristics of the worker, such as creativity, sociability and quantity and quality of work. More recently, Peterson et al (2011) specifically address the issue of causality in the relationship between positive psychological wellbeing and work performance in a sample of 179 employees working in the financial sector. Work performance is measured using manager performance evaluation and sales data.…”

Thinking about cognition and its central role in entrepreneurship: confessions of a ‘reformed’ behaviourist

“…One such factor is known as 'psychological capital,' and involves high levels of self-efficacy (confidence in one's own ability to successfully complete various tasks), optimism, hope and resilience -the ability to 'snap back' after setbacks (Peterson, Luthans, Avolio, Walumbwa and Zhang, 2011). Previous research on psychological capital indicates that it is negatively related to stress: the higher individuals are in this cluster of characteristics, the less stress they experience (Avey, Reichard, Luthans and Mhatre, 2011).…”