Relationship Between Authentic Leadership And Psychological Capital Assessment 2 Answer

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Question :

Assessment 2: Essay

The following assessment aims to examine how well you understand the relationship between authentic leadership, effective Leader-Member Exchange and management support and the psychological capital of employees of different employee groups. It continues the development of Cultural Competence Learning Outcome and Graduate Attribute by facilitating students’ increased knowledge and awareness about how authentic leadership, effective Leader-Member Exchange (LMX) and management support interact on employees outcomes.


Pick a topic below and write a well-referenced literature review in response. You are expected to use the academic literature to support a well-constructed argument. This assignment must be submitted through the Turnitin link for this assignment.

  1. What is the relationship between authentic leadership, Leader-Member Exchange (LMX) and employees’ Psychological Capital (PsyCap)? Critically review the literature that explains how to build the Psychological Capital of different types of employees (such as professionals versus administrative employees, emotional labour, blue collar versus white collar employees, different generational cohort, and/or different ethnicities)? Why do emotions (of for example leaders, managers, employees) significantly impact employees’ performance?


  1. Analyse the leadership and/or employee performance (such as their engagement, turnover, commitment, wellbeing) at your workplace and compare it with the positive leadership and Psychological Capital literature. How similar or different is your workplace from what is potentially possible as per recent research studies? Please consider different types of employees (such as professionals versus administrative employees, emotional labour, blue collar versus white collar employees, different generational cohorts, and/or different ethnicities). Use the positive leadership and/or Psychological Capital literature to suggest how to move your workplace towards being more effective?
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Answer :



Employee satisfaction and emotions always affect decision making and the bottom line of an organisation. Therefore, it is necessary for forming employee satisfaction by developing positive emotions among the employees. This study sheds lights on the relationship among the authentic leadership, LMX differentiation and psychological capital. This study also describes different ways by which psychological capital can be created among different employees; this study also focuses on the importance of emotions on employee performance. The main argument of the study is a positive emotion among employees creates employee satisfaction and develops better organisational performance.


As stated by Leroy et al. (2015), authentic leadership is the leadership approach that emphasises on the development of the legitimacy of the leader by developing an honest relationship with the followers that value their input and developed on the ethical foundation. By generating enthusiastic supports and developing trusts, authentic leaders improve their individual as well as team performance (Sendjaya et al. 2016). On the other hand, leader-member exchange theory refers to the approach of relationship that mainly focuses on the dyadic relationship among the followers and the leaders (Martin et al. 2016). As mentioned by Liao et al. (2017), this theory establishes the fact that leaders develop different types of relationship with the subordinates. One group that is referred to as the in-group get more attention of the leaders and achieve adequate access to resources of the organisation. Other groups that are referred to as the out-group do not get the favour of the leaders and receive fewer organisational resources. As stated by Baron, Franklin & Hmieleski (2016), psychological capital is positive organisation behaviour’s prototypical constructs which are defined as the development of the positive psychological state of the individual that is constituted by self-efficacy, optimism and resiliency. 

Authentic leadership can be studied by focusing on the exchange of leaders and member’s relationship. This perspectives mainly shows the fact that leaders develop the interpersonal relationship with the subordinates by applying different style of leadership. Based on the leader-member exchange, mainly two different types of relationship can be produced that are low quality and high-quality relationship. According to Bouckenooghe, Zafar & Raja (2015), this LMX differentiation makes the leader in distributing the resources of the organisation, psychological supports and different work-related benefits as per the qualities of the dyadic relationship among the leaders and the employees. There is the relationship among the fairness in the LMX differentiation and authentic leadership. As argued by Hirst et al. (2016), LMX differentiation is observed to be fair when the team members identify that their leader forms a low-quality relationship with the people who provided a lower contribution to the group, whereas, leader creates a high-quality relationship with those people that offer higher level of contribution to the group. Members of a team mainly used these criteria to identify whether the formation of high quality and low-quality relationship are fair or not. As mentioned by Chen et al. (2017), team members mainly evaluate their leader as an authentic leader when they observed that the LMX differentiation is fair or not.

On the other hand, if the member would perceive the differentiation as the unfair differentiation, then they would perceive their leader as the inauthentic leader. As mentioned by Wu & Lee (2017), from this concept, it can be said that LMX differentiation is used to examine the authentic leadership in a particular team. With the help of the equity theory, it is possible to identify the farnesses in the LMX differentiation. According to the equity theory, the supervisor must show equality to develop a relationship with other people that mean they must establish a high-quality relationship with every people who have demonstrated the high-quality involvement in achieving team result. For being an authentic leader, it is important to inspire the trust and loyalty among the employees by showing the efficiencies of the leader as a good person or feeling of the leader towards the employees (A Megeirhi et al. 2018). Authentic leaders are involved in predicting job satisfaction among employees. Therefore, for satisfying the employees, the authentic leader should show the same behaviours to every employee so that it can boost morale among employees and make them satisfied.

Positive psychological capital mainly represents the psychological states that are positive so that it can help flourish an organisation and improve the effectiveness of the organisation. As stated by Wu & Lee (2017), four different psychological capacities are there that are optimism, self-efficacy, resilience and the hope that are open to manage and develop so that it can be helpful in generating more work performance. As argued by Chen et al. (2017), sub-ordinates mainly apply the analytical approach in developing a perception about the image of the leader. If they observe that the leader has a positive commitment towards the followers or they implement strategies to satisfy the followers or improve the performance of followers then the followers develop a positive perception about the leaders (Banks et al. 2016). This fact automatically creates loyalty and trust among the followers for their leader, which made them involved with the leaders with for generating more output. The primary purpose of authentic leadership is creating a better image in front of the followers so that they can show loyalty to the leader and generate better output. From the discussion, it can be said that there is an interactive relationship between authentic leadership and psychological capital.

According to Verleysen, Lambrechts & Van Acker (2015), psychological capitals are generally created with the help of four different qualities such as efficacy, hope, optimism and the resiliency. As argued by YoussefMorgan & Luthans (2015), when people have all these four qualities, then the positive effects are more significant than the sum of the qualities of the individual.  Professional employees are always self-confident who knows how to improve the motivational level to gain job satisfaction. Despite the motivation, professional people do not work unselfishly. Professional employees always expect positive for a situation. Moreover, they have a better capability in resolving uncertainty or obstacles. Therefore, for developing psychological capital among them, it is always necessary for offering monetary and non-monetary rewards to the professionals because professionals mainly perform their job role for gain. Recognition is one of the strategies that can be helpful for managers in developing psychological capability among the professional. Administrative staff also knows how to extend performance, but they consider the motivational level of both them and other employees. Moreover, administrative staffs always have positive hope so that they always expect a positive outcome from any event. Therefore, for developing psychological capital among them, it is necessary for offering them proper power with the help of which they can develop a strategy to motivate others and take necessary decision to improve organisational outcome. Along with that, for developing psychological capital among them, recognising their capabilities is also important. For this administrative staff, emotional labour is necessary for an organisation. According to Luthans & Youssef-Morgan (2017), in most of the cases, administrative staffs are always emotionally attached to their organisation. Therefore, for managing expressions and feeling, fulfil the emotional requirements of a job is necessary so that they can be more attached with their co-workers or superiors for generating a better outcome. 

As stated by Nutsford et al. (2016), blue-collar employees are those workers who are engaged in hard labour such as construction, agriculture, mining or maintenance. These people do not have self-efficacy, and they are generally not satisfied with their work. This is because, in most cases, they think that they are not getting proper compensation for their work. This fact creates a cynical hope among them, which creates difficulties for them in recovering from any depressing processes. Therefore, for developing psychological capital among them, it is necessary for offering proper remuneration to them.

Moreover, different non-monetary benefits such as providing recognition, a balance among work and family life and insurance need to offer them. As argued by Meyers et al. (2015), white-collar employees are personnel who are associated with performing the managerial, professional and administrative work. White-collar employees are generally performed their job in an office or other administrative settings. These people have higher self-efficacy typically so that they know how to motivate them. These people tend to recover from the adversity so that they do not accept the challenging situation willingly. For developing psychological capital among the white-collar employees, assessing the strength of the employees and allocating the proper job to the employees are highly relevant. Moreover, by offering interactive and constructive feedback, it is possible in developing psychological capital.

The strategy to develop psychological capital among different generation is also different. This is because; among the older generation, self-efficacy became highest. They always have the right motivation in performing well, but they still wanted to avoid the adversity. Therefore, for developing psychological capital, offering the proper job to them is necessary. Moreover, providing good recognition is also essential for them (YoussefMorgan & Luthans, 2015). On the other hand, among the young generation, the capability to take challenges is highest, but they have lesser self-confident or motivated towards their job. Therefore, for motivating them, it is necessary for an organisation in offering monetary rewards.

Emotions play an essential role in the job performance of employees. According to Mulki et al. (2015), positive emotions create a favourable outcome in an organisation which includes high-quality social context, job enrichments and achievement of the job. As mentioned by Cho et al. (2016), these positive emotions are generally created by optimism, positive mood, emotional resilience, self-efficacy for preserving under the adverse circumstances. When an employee becomes in a positive mood, then they get a better motivation to perform their job. A leader with positive emotion influence the co-workers favourably that not only helps the leader in achieving their individual goal, but it also helps in making the team and organisational purpose. Employees mainly produce positive emotions when their upper-level employee develops an open communication, offers support and satisfies the need (Jha et al. 2017). This positive emotion creates good morale among them towards their job, which increases their motivation to provide their best effort for the organisational efficiencies.


From the above discussion, it can be concluded that for developing a better organisational output, satisfying employees' need is highly essential. Following an effective leadership, the strategy is always important to offer excellent support to the employees and handle them. For creating a positive emotion among employees, it is necessary for leaders in developing a relationship with the employees as per their involvement in their team or organisation. Psychological capital is the psychological states that need to be built among employees with the help of effective strategies so that the employees can be motivated to perform their job responsibilities. An interactive organisational environment is always necessary for an organisation to develop positive emotions among its employees so that a better performance can be generated.  Developing a different strategy to satisfy the need of the customers is always necessary for promoting positive emotions among employees, which ultimately creates job satisfaction among employees.