At The End of a Needle – The Importance of Psychological Capital

Way back in 2012 a strange craze swept Wall Street.

Well, maybe ‘craze’ is the wrong word. ‘Crazy’ might have been a better way of describing it. Anyway, the growing trend which I am referring to was reported upon at that time in the Financial Times and I have just come across it recently. In the said article[1], a Dr Bissoon described the rationale behind the worrying developments I am referring to: “Since the recession started, more guys want to be on top of their game,” he said…”as one patient told me: ‘There’s a whole bunch of whizz-kids beneath me who are ready to take my place’.”

And what were the executives – his patients - actually doing to stay ‘on top of their game’? Queuing up to get shots of testosterone from the good Doctor is what.

Yes, you did read that correctly. Testosterone.

As was reported in the article, Dr Bissoon also said that when he first started offering testosterone therapy, he thought most of his clients would have been gym rats hoping to build Arnold Schwarzenegger-style physiques. “I was surprised that 90 per cent of my patients have some involvement in the finance industry,” he said. “They are upper-level management and most of them are in their 30s and 40s.”

Now, very little surprises me when it comes to the mad, mad world of high-finance, and particularly to the trading end of it. But this really does take the biscuit, I have to say.

What’s more, if this is reflective of the predominant mindset amongst that crowd, it’s no wonder we ended up in the global financial mess in and around the same time. Still, that old FT article got me thinking about what factors drive personal performance at work.

Now, for sure, every industry has its own unique features, attitudes or behaviours and what is acceptable in some settings would be entirely unacceptable in others. And in the financial world, I have no doubt that the ‘macho mentality’ is a big success factor for those involved – survival of the fittest and all that – and it undoubtedly drives performance in sections of that industry. But I also believe that it also contributed to the blind competitiveness and herd mentality that landed us in the mire of the global financial crisis. Thankfully, when we talk about what truly drives individual performance, in any industry, there are other (more sane) views on the matter beyond the quick-fix to be found at the end of a needle.

I am referring to the growing research on ‘Psychological Capital’ or Psycap. To be honest, I hadn’t heard all that much about it myself until I was reading a number of articles on the subject some time back and I think the issue of Psycap is an interesting one and worth consideration by all mangers, regardless of your level or industry. Apparently, there is a now a significant and expanding body of evidence which shows that individuals with high Psycap consistently outperform those with lower levels of it.

And what does Psycap actually entail, you are likely thinking?

Well, four components of Psychological Capital have been identified by Fred Luthans a leading expert in this field and I will give only a very brief summary of them here:

1. Hope – Will Power and Way Power to Accomplish a Goal

This component uses the term ‘hope’ in a slightly different way than we would normally use it every day. In this context they mean ‘hope’ as referring to the willpower and ability to set and achieve goals. So, if you have high ‘hope’ you are good at pushing yourself for greater achievement.

2. Self-efficacy – Personal Confidence to Successfully Complete a Task or Objective

High levels of Self-efficacy, or more simply Self-Confidence, lead to greater performance because you are more assured that you can fulfil tasks, or succeed in your role than if you lack the same confidence.

3. Optimism – Personal Assurance of a Positive Outcome

This is fairly clear, the more optimistic you are the more likely you are to believe in positive outcomes from your efforts, and that you will influence others in a positive way too.

4. Resilience – The Ability to Bounce Back in the Face of Adversity (or Severe Success), Bounce-back-ability as the Americans call it.

A person who displays this quality is tenacious and as such keeps going in the face of seemingly impossible obstacles and odds.

What the research is showing is that individuals with higher levels of Psycap (the combination of the above four elements) are more confident, better able to manage stress and adversity, have a higher level of motivation and drive, and likely to pursue growth and development. And, most important of all, there is plenty of concrete evidence to show that those with higher Psycap consistently outperform others. One such study[2] I came across explored the relationship between Psychological Capital and performance. A couple of points arise from that particular study which are worth noting here:

The levels of Psychological Capital of those participating in the study changed over time, which proves that Psycap can actually be enhanced and developed.

·As Psychological Capital increased, so too did performance; the reverse was also true.

This and other studies are indicating that if you want to improve your own, and indeed your employees’ performance, you therefore cannot ignore Psycap. In fact, training programs aimed at increasing Psychological Capital have already been developed and tested for effectiveness and it is a growing (and credible) field of organizational development. Two questions should come to mind here.

The first is obviously how strong your own Psycap currently is. Okay, perhaps you can only make a biased judgment on that front right now but, if you are interested, there are plenty of companies out there who apparently provide self-assessment testing in this area. The second question is to consider how your people rate in these areas. For sure, in terms of training your employees in the past, you have likely focused on developing their knowledge and skills (human capital) in order to boost performance.

And, of course, you should continue to do so in future.

That said, what the research on Psycap is telling us is that we should seek to develop the Psychological Capital of our employees too.

Worth a thought when you are next planning some training for your team.

If you found the content of this article interesting, I have expanded on this and related topics in my book, 'The Essential Manager'. Click on the image to the left to purchase the book on Amazon, or if you'd like a signed copy, you can purchase one directly on this site via our products page.

References:

[1] Keep taking the Testosterone, By Charles Wallace. Financial Times, February 9, 2012.

[2] Psychological capital and employee performance: A latent growth modeling approach. Peterson, S. J., Luthans, F., Avolio, B. J., Walumbwa, F. O., & Zhang, Z. (2011).