In a tough global economy, when more layoffs seem to be announced every day, people around the world are questioning the way they do business. Especially for those thinking about starting their own companies, the answers may never have been more important.
What makes one business succeed, while another down the street fails? How can owners keep costs low and get more production? What conditions bring out the best in employees, from the highest-paid executive to the newest staff member?
According to Dr. Susan Jensen, an associate professor of management, not all the answers can be found on a balance sheet. Part of what it takes to succeed in business, she has learned, is psychological. It is a lesson she is passing on to current and future business leaders through her research and mentoring at UNK.
Psychological capital (PsyCap) refers to the level of efficacy, hope, optimism and resilience people in a business possess. In a soon-to-be published article, Dr. Jensen and her co-authors (Drs. Fred Luthans and James Avey at the University of Nebraska – Lincoln) show empirically that these resources help people in business cope with stress. The better people are at dealing with stress, the reasoning goes, the less likely they will be to quit a job, suffer from burnout or give up on a business venture.
“Psychological Capital: A Positive Resource for Combating Employee Stress and Turnover” will appear in Human Resource Management magazine later this year. It is the most recent of Dr. Jensen’s offerings on a subject she has been passionate about throughout her career.
“(Psychological factors) aren’t something organizations have thought about before,” Dr. Jensen said, but that might change as she and other advocates spread the word about an approach called positive organizational behavior, and the benefits of psychological capital. “Faculty across the country and the world are now advancing the approach,” she said.
A Sam Walton Fellow, Dr. Jensen has published research on psychological capital since 2002, when she was getting her doctorate in organizational behavior from UNL. Her mentor there was Dr. Luthans, who had written one of the first texts on organizational behavior decades ago and is again pioneering business frontiers with his positive organizational behavior theory.
Drawing from positive psychology, positive organizational behavior (POB) encourages managers to move away from the traditional approach of identifying faults in employees that need to be fixed.
“Instead, POB says back up, figure out what positive cognitive strengths this person may have, and build from there,” Dr. Jensen explained.
In their work with psychological capital, Dr. Jensen and her co-authors are also suggesting a new way for businesses to look at the issue of workplace stress. Rather than focus only on reducing employee stress, businesses could help workers learn to cope with stress by helping them further develop their PsyCap levels. Research indicates the components of psychological capital are not static personality traits, but instead are malleable states that can be developed through training interventions. That developmental aspect presents exciting and practical opportunities to enhance employee performance.
In advancing the positive organizational behavior approach, Dr. Luthans was following the lead of psychology researchers. Experts in that field had noted relationships between the components of psychological capital and performance in academics, athletics and mental health, but no one had yet explored the link between psychological capital and work performance.
Dr. Luthans’ approach resonated with Dr. Jensen, as did his ideas that psychological variables can make a big difference in business owners’ success. She said the idea of psychological capital gave a name to something she had seen for years in the business world.
In the early 1990s, Dr. Jensen helped launch an investment banking firm. She later became a business consultant, and was hired in 1996 as director of the Nebraska Business Development Center housed on the UNK campus. Working with entrepreneurs in all those jobs, she said, she’d seen the effects of psychological capital first-hand.
“I would find some folks simply seemed able to succeed,” while others, who had better business networks, education and greater tangible resources, failed. Those successful entrepreneurs had distinctive strengths that helped them better cope with the inevitable stresses of owning a business.
That distinctive difference, Dr. Jensen later discovered, was psychological capital. The widely recognized aspects of human capital (i.e., what you know, in terms of your knowledge, skills and experience), social capital (i.e., who you know, including your network of relationships) and financial capital (i.e., access to funds) are all necessary, but not sufficient, for entrepreneurial success.
Dr. Jensen joined Dr. Luthans’ research during her first semester at UNL. Their early articles and presentations laid out the foundation of Dr. Luthans’ approach, and established the concept of psychological capital. Dr. Jensen has been the principal author on several articles that apply the PsyCap concept to specific business populations, including entrepreneurs, and the banking and health care industries.
In their latest article, Dr. Jensen and her co-authors present findings from a study of 416 adults. Participants came from a variety of backgrounds and worked in various industries. They were given surveys to record their current PsyCap levels and the effect stress has on them, measured through variables such as their intentions to quit and job search behaviors.
Dr. Jensen said the findings, which show a correlation between high PsyCap levels and employee behavior that is positive for businesses, are significant as a way to get companies interested in developing programs to help their employees combat stress.
“Basically this article’s saying ‘pay attention,’” Dr. Jensen said, because knowing about psychological capital can potentially help businesses reduce unwanted turnover, increase production and therefore, stay financially healthy.
Dr. Jensen said the next step in PsyCap research will be to further explore the impact of PsyCap on various business outcomes and subgroups, including immigrant entrepreneurs, contingent workers, and bottom line financial performance
across cultures and economies.
Another very important subject for future research, according to Dr. Jensen, will be ways to develop the four PsyCap states. If businesses know how they can increase employees’ psychological capital, they can develop and implement programs to do just that. While the current article presents the idea that businesses can offer PsyCap training, Dr. Jensen said that more needs to be known about ways to develop effective training methods.
“We are living in a time when it’s an even more pressing issue” for businesses to succeed, Dr. Jensen said, adding that the American economy depends on it. Searching for business answers, owners and managers are also influenced today by a culture that is embracing change, looking in new directions and hopefully, thinking about more than just short-term gains.
“That makes me wonder if it will make it even more likely the positive organizational behavior approach will be embraced,” Dr. Jensen said.
Looking at the psychological effects of business is a philosophy Dr. Jensen practices with success on the UNK campus in her role as faculty adviser for the Students in Free Enterprise (SIFE) team. The SIFE team, which is comprised of UNK students who plan and implement educational outreach projects focused on financial literacy, market economics, entrepreneurship, personal success skills, ethics and environmental sustainability, has won awards in numerous regional and national competitions, and in 2007, received the Nebraska Governor’s Point of Light award.
The UNK SIFE team was established in 2003, in Dr. Jensen’s first year as a full-time faculty member. Last year, the group completed 20 projects, including Smart Money Week activities, a “New Venture Adventure” event for area high schoolers and a business etiquette dinner followed by mock interviews. The team also supports the KIVA program and loaned money to 16 entrepreneurs in nine countries. They followed the KIVA entrepreneurs’ progress via online updates.
“It’s an excellent way to practice what they’d be doing in their careers,” Dr. Jensen said, adding that the students develop their own agenda and decide on their own projects each year. “The motto of SIFE is a head for business and a heart for the world, with a mission to use good business practices and make things a little better than how you found them.”
As the team adviser, Dr. Jensen said she is more of a coach than anything else, and tries to focus her efforts on building the members into a team and modeling the behaviors expected of them. She meets with the students to talk through conflicts, check on their progress and deconstruct completed projects – whether they succeeded or not. In fact, Dr. Jensen said, the talks about what did not work might be the most important.
“I’m really helping them try to understand the consequences of each decision,” she said. She also talks with the students about empathy, helping them see each other’s point of view and understand other perspectives. She added that while she has been pleased with the team’s awards, she is the most happy about the successes those awards do not measure.
“I think I get the most satisfaction out of seeing how the students develop and gain confidence,” she said.