Psychological Capital (PsyCap)

Article by: Ben Janse

Last update: July 29, 2023

Psychological capital: This article explains the concept of psychological capital in a practical way. The article contains the definition of the term, followed by a detailed explanation of the components of this concept and tips on how to work on your own happiness. Enjoy reading!

What is Psychological Capital?

Definition of Psychological Capital

Psychological Capital (PsyCap) is a concept developed to understand and cultivate the positive mental states that contribute to individual success.

The framework offers a number of psychological resources:

Hope
Resilience
Optimism
Self-efficacy

Organizations today are increasingly recognizing the importance of promoting psychological well-being among their employees.

Fred Luthans is a leading researcher and scholar at the Gallup Leadership Institute at the University of Nebraska-Lincoln, and was instrumental in the development and application of the PsyCap concept. His team has demonstrated the impact of psychological capital on the various performance and well-being of employees.

With their studies, the connection between PsyCap, job satisfaction and performance has been clearly established. At its core, the concept represents the positive psychological development of an individual. It includes four components, each of which plays an important role in shaping the attitudes, behaviors and outcomes of individuals within an organization.

The first component is self-efficacy. This component is a person’s belief in their own ability to successfully perform challenging tasks and the ability to commit themselves to it. Optimism refers to an individual’s positive beliefs when it comes to achieving success.

Hope is about a person’s persistence in pursuing goals. Resilience refers to an individual’s ability to recover from adversity. These terms are further explained in this article.

The components of Psychological Capital explained

Below you will find a detailed explanation of the aforementioned components of PsyCap. These components are also called the HERO components:

Hope
Efficacy
Resilience
Optimism

Hope

Hope is an important part of PsyCap, or psychological capital. Hope plays a crucial role in fostering resilience, motivation, and purposeful behavior.

In this context, hope mainly refers to a person’s ability to maintain a positive mindset in facing difficult challenges and to put effort into making adjustments towards achieving the objectives. Hope includes belief in one’s own abilities, a sense of self-control and optimism about the future.

Hope is often associated with anticipating positive outcomes, even when setbacks or obstacles are anticipated. It enables people to proactively approach difficult situations with a solution-oriented mindset.

Research shows that people with high hopes are more satisfied with their lives and their jobs. They also cope better with stress and show higher levels of performance and well-being.

Martin Luther King Jr. once said: “We must accept finite disappointment, but never lose infinite hope”

Read below how you can work on developing hope.

Step 1: Set meaningful goals

The first step involves setting specific and meaningful goals that align with your personal values and aspirations. These goals should be challenging, but also achievable. Make sure the goals meet the SMART criteria.

Step 2: Break the goals into smaller pieces

Then break the goals into smaller, manageable chunks. The result is a list of tasks that represent a clear path towards your goals. Follow this path for gradual progress and strong motivation.

Step 3: Be positive

Foster a positive outlook by focusing on the possibilities and potential outcomes rather than dwelling on potential barriers, failures, or other obstacles. Practice positive thinking and seek optimistic perspectives.

Step 4: Build self-efficacy

Develop belief in your own abilities to overcome obstacles and be successful. Celebrate small victories and reflect on past achievements to reinforce a sense of confidence and competence.

(Self-)Efficacy

Self-efficacy is an important component of psychological capital (PsyCap) and refers to the belief and confidence an individual has in his or her ability to successfully perform specific tasks.

It encompasses the belief that people are capable of putting in the necessary effort and performing effectively, even in challenging situations. Self-efficacy has a direct impact on a person’s behavior, motivation, and performance.

Developing self-efficacy begins with the belief that one is able to achieve certain goals and perform tasks.
This belief can be reinforced through experiences, observation of others, and positive feedback. Having higher self-efficacy promotes determination, persistence and effective problem solving.

An inspirational quote on self-efficacy comes from Albert Bandura, a leading psychologist and pioneer in the field of self-efficacy. He said: “People’s beliefs about their abilities have a profound effect on those abilities. They determine whether you become the person that you can be.”

This quote emphasizes the importance of achieving successful experiences to strengthen belief in one’s own abilities.

Here are 4 steps to improve self-efficacy. Many of the steps are similar to those described under the other components of PsyCap.

Step 1: identify strengths

Discover and identify your strengths and skills. Acknowledge what you do well and what you have confidence in. Focus on these areas to increase your sense of self-efficacy.

Step 2: learn from successes

Reflect on previous successes and achievements you have achieved. Analyze what you’ve done to be successful and remember these positive experiences. Use them as a reference point for future challenges.

Step 3: set realistic goals

Set goals that are challenging, but achievable. Break big goals into smaller, measurable steps. In this way you can achieve success and increase your self-efficacy step by step.

Step 4: reinforce positive self-talk

Pay attention to your inner dialogue and make sure you use positive, encouraging language. Replace negative thoughts and self-doubt with positive affirmations and belief in your own abilities. Practice positive self-talk daily to strengthen your self-efficacy.

Resilience

Resilience is the ability of people to adapt, recover and bounce back after setbacks or challenges. It implies being able to maintain emotional well-being and function effectively in stressful or difficult circumstances.

Resilience is not about avoiding difficulties, but rather about navigating those difficulties with strength and persistence. Here are 4 steps to improve resilience:

Step 1: cultivate a growth mindset

Adopt a mindset that sees challenges and setbacks as opportunities for growth and learning. Embrace the belief that difficulties can be overcome and that personal development comes from navigating those challenges.

Step 2: build a support network

Surround yourself with a supportive network of family, friends or mentors who can provide guidance, encouragement and a listening ear during difficult times. A strong support system can provide emotional support and different perspectives that can enhance resilience.

Step 3: practice self-care

Take care of your physical, emotional and mental well-being. Do activities that promote relaxation, stress reduction, and self-reflection. Prioritize self-care routines such as exercise, mindfulness, getting enough sleep, and maintaining healthy relationships.

Step 4: develop problem-solving skills

Improve your problem-solving skills to effectively tackle challenges and find solutions. Break problems into manageable steps, find alternative perspectives and explore different strategies.

Developing problem-solving skills can increase confidence and resilience in the face of adversity. By applying these steps and incorporating resilience-building practices into your life, you can increase your ability to adapt and recover from difficult situations.

Remember that resilience is a skill that can be developed and strengthened over time, leading to greater well-being and personal growth.

Optimism

Optimism refers to a positive outlook on life and the expectation of favorable outcomes in various aspects of life. It implies having a hopeful and positive perspective even in the face of challenges or uncertainties. Optimism plays an important role in promoting resilience, motivation and general well-being.

Here are 4 steps to improve optimism:

Step 1: practice gratitude

Cultivate a habit of gratitude by focusing on the positive aspects of your life. Take time each day to think about things you are grateful for, big or small. This practice helps shift your mindset to positivity and promotes an optimistic perspective.

Step 2: challenge negative thoughts

Become aware of negative thought patterns and challenge them. Whenever you catch yourself thinking pessimistically, replace those thoughts with more positive and realistic thoughts. Rewrite setbacks as opportunities for growth and focus on potential solutions.

Step 3: surround yourself with positivity

Surround yourself with positive influences, such as supportive and optimistic people. Undertake activities and hobbies that bring you joy and lift your mood. By surrounding yourself with positivity, you create an environment that nurtures optimism.

Step 4: set realistic goals

Set realistic and achievable goals for yourself. Break bigger goals into smaller milestones that can be achieved one step at a time. Celebrate your progress along the way and recognize your achievements. This process strengthens your belief in your own abilities and fosters an optimistic mindset.

Now it is your turn

What do you think? Do you recognize the explanation about psychological capital? Do you recognize the positive effects of psychological capital? How do you think organizations can promote the psychological well-being of their employees? Which aspect of PsyCap do you think is most important? Do you have tips or comments?

Share your experience and knowledge in the comments box below.

More information

Luthans, F. L., Avolio, B. J., & Avey, J. A. (2007). Psychological capital questionnaire.
Luthans, F. L., Youssef, C. M., & Avolio, B. J. (2015). Psychological capital and beyond. Oxford University Press, USA.
Newman, A., Ucbasaran, D., Zhu, F. E. I., & Hirst, G. (2014). Psychological capital: A review and synthesis. Journal of organizational behavior, 35(S1), S120-S138.
Youssef‐Morgan, C. M., & Luthans, F. (2015). Psychological capital and well‐being. Stress and health: Journal of the International Society for the Investigation of Stress.

How to cite this article:
Janse, B. (2023). Psychological Capital (PsyCap). Retrieved [insert date] from Toolshero: https://www.toolshero.com/psychology/psychological-capital/

Original publication date: 07/03/2023 | Last update: 07/29/2023

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Article by:

Ben Janse

Ben Janse is a young professional working at ToolsHero as Content Manager. He is also an International Business student at Rotterdam Business School where he focusses on analyzing and developing management models. Thanks to his theoretical and practical knowledge, he knows how to distinguish main- and side issues and to make the essence of each article clearly visible.