Dr. Kyle Luthans is one of a small group of leaders in a new global movement that is changing the way businesses measure and develop a critical asset—their employees.
Traditionally, employees have been valued for “what you know,” termed “human capital,” and/or “who you know,” described as “social capital.”
While those two human resource qualities are still key in the workplace, Luthans and a few others today emphasize looking beyond the “what” and the “who” to a third dimension–the “who you are” and “what you can become,” which they have termed “psychological capital,” or PsyCap, for short.
It’s not surprising that Luthans would be among those on the forefront of this new movement. For Luthans, who is the chair and a professor in the UNK Department of Management, human resource management is more than his research and teaching focus. It is a family endeavor. His father Dr. Fred Luthans is a distinguished professor at the University of Nebraska – Lincoln, and his brother Dr. Brett Luthans is a professor of management at Missouri Western (St. Joseph) State University. The three have published their work on PsyCap jointly, as well as individually.
In 2004, the three published a seminal article, “Positive Psychological Capital: Beyond Human and Social Capital,” in Business Horizons. In that article, they wrote: “Although the term ‘psychological capital’ has been mentioned briefly in various works on economics, investment and sociology, we draw on the emerging positive psychology movement for our definition. Very briefly, positive psychology got its start just a decade ago when research psychologist Martin Seligman (author of “Authentic Happiness,” 2002) challenged the field to change from a preoccupation with what is wrong and dysfunctional with people to what is right and good about them. Specifically, it focuses on strengths rather than weaknesses, health and vitality rather than illness and pathology.” The three Luthans pioneered this positive perspective on psychology to the workplace.
As Kyle Luthans noted: “With the rising recognition of human resources as a competitive advantage in today’s global economy, human capital and, more recently, social capital are being touted in both theory, research and practice. To date, however, positive psychological capital (PsyCap) has been virtually ignored by both business academics and practitioners. ‘Who I am’ and ‘what I can become’ is every bit as important as ‘what I know’ and ‘who I know.’”
Luthans further added that “PsyCap is a strength-based approach, emphasizing the positive psychological resources employees possess instead of focusing on the dysfunctional. To be included in PsyCap, the psychological resource must not only be positive, but also have valid measurement, be open to development, and have an impact on desirable work attitudes and performance. The positive psychological resources that best meet these criteria are hope, efficacy (confidence), resilience and optimism or our HERO acronym.
“Although each of these four HERO capacities is associated with famous positive psychologists, we have combined them into PsyCap, which our research has shown is greater than any one of them by itself.
“Importantly, PsyCap is malleable – it can be developed by short training programs,” he said. “In other words, it can be managed for more effective work performance.”
Why is PsyCap being touted?
“Research has shown that managers or leaders with high levels of PsyCap not only have the ability to bounce back after difficult times themselves, but they also can create a contagion effect that can spread positivity throughout an organization,” he said, adding that in today’s difficult economic times, such qualities are critical to an organization being able to bounce back and move ahead.
Traditionally, businesses have measured their strength, or competitive edge, in the marketplace by measuring their economic capital—finances, plant, equipment, patents, technology, data, etc.—all tangible assets. However, if you ask Luthans what the source of competitive advantage is in today’s marketplace, he will tell you that, “It’s the people and their psychological capital–the HERO within them.”
One of the most successful entrepreneurs of recent times gets it. “Bill Gates is known for his comment that the most important assets in his company walk out the door every night,” Luthans said. “In other words, he recognizes that the collective knowledge, skills, and abilities of his employees represent a distinctive competency that has created value and set Microsoft apart from its competitors.
“If we take a close look at Microsoft, we know that their total market capitalization, the total value of their outstanding shares of stock, is approximately $220 billion. However, Microsoft’s book value, which is the total value of their tangible assets, is only about $40 billion. Therefore, we have well over $180 billion differential between the market value and the book value of the company. So what are the valued resources?
Of the four PsyCap capacities, Luthans noted that resilience has received the least attention in human resources management research. “Yet this capacity to ‘bounce back’ from adversity is particularly relevant in today’s turbulent business environment.”
Two recent studies Luthans has done with UNK colleagues–Drs. Susan Jensen, Dick Lebsack and Sandy Lebsack–looked at PsyCap among nurses in a health care facility and employees from all areas of a metropolitan bank. In the study of the nurses, “We found a strong relationship between the nurses’ measured level of PsyCap and their rated performance,” he said. Based upon these results, the hospital supervisors can begin to think of the applications of those findings, especially in terms of development programs and employee staffing.
“For example, since it has been demonstrated that PsyCap can be developed, it might be worth the investment to enhance the PsyCap of nurses through short training workshops,” he said. “In addition, nurses with higher levels of optimism and resilience will be more effective than those with lower PsyCap in an emergency room or in day-to-day interaction with patients.
“Can you imagine having a pessimistic nurse taking care of you?” he asked, adding, “We know that positivity leads to improved health and well-being.”
Optimism and employee perfomance were the focus in the banking industry study. “Participants completed surveys to determine their current state of optimism,” he said. “Results indicated a significant positive relationship between the mid-level managers’ measured state of optimism and their supervisors’ ratings of their overall work performance.
“We do feel that these (PsyCap resources) have universal applicability,” he said. “We’ve done research across cultures and across different organizations—profit and nonprofit, retail and service industries. For example, we’ve tested their positive impact in for-profit banking and nonprofit health care.” However, he also warns that PsyCap is not “the answer,” but only “an answer” that too often has been overlooked.
The PsyCap research has far-reaching applications, which is evident from just a partial list of national journals where Luthan’s work is published: Journal of Career Development, Leadership and Organizational Development Journal, Journal of Health Organization and Management, Journal of Applied Management & Entrepreneurship, Journal of Managerial Issues, Journal of Leadership and Organizational Studies, Journal of Nursing Administration, Business Horizons, Journal of Management Development and Journal of Leadership Studies. Further, his work cuts across cultural boundaries and has been published in international journals, including the European Management Journal.
In addition to publishing in top journals, he has presented his work at major national and international academic conferences such as the Academy of Management and Decision Sciences Institute. Internationally, he has presented papers on “Behavioral Management: Implications for Management in Eastern Europe” at the Eastern European Management Conference in Chemnitz, Germany, and “Contingency Guidelines for the Application of Human Resources Management Techniques Across Cultures” at the Pan-Pacific Business Conference in Bangkok, Thailand.
Currently, he and a group of UNK colleagues are studying the development of a large international industry network comprised of non-competing peers who meet quarterly to exchange best practices in management, marketing, finance and other aspects of their business.
As many as 200 businesses, which are divided into subgroups of 10-20, are involved in this unique information exchange network.
“We’re looking at their positive outcomes, their management practices and the relationships they build,” he said.
“It’s important that our research is of use to practicing managers,” Luthans said. “When we do research, we ask what the workplace applications are. We also ask what the pedagogical contributions are. What are some ways we can bring our research to improve what we are doing in the classroom for our students?
“In today’s hyper-competitive environment, we can no longer afford to wait for the years it takes for research findings like PsyCap to reach the textbooks for our students or the literature read by the practicing managers we serve,” he concluded. “Our aim is to provide the most current, evidence-based management practice guidelines so that our students and the business community have competitive advantage in today’s global economy.”