Brokerage Ops the June 2020 issue

In Difficult Times, Look for a HERO

Psychological capital may be the key for success during times of crisis.
By Elizabeth McDaid Posted on May 31, 2020

A second guess could be intellectual. However, Fred Luthans says that the most important capital to an organization is psychological capital, or PsyCap, as it’s known to its friends. Luthans, the father of the PsyCap concept, saw it as a source of competitive advantage for organizations. Many studies have since confirmed that high levels of PsyCap are positively linked with employee performance and job satisfaction, especially in the services industry.

So what exactly is PsyCap? Luthans defines psychological capital as “an individual’s positive psychological state of development,” characterized by high levels of HERO, Hope, (Self) Efficacy, Resilience and Optimism. Studies show that high levels of PsyCap positively influence well-being, including health outcomes like lower BMI and cholesterol levels and even satisfaction with one’s relationships. Research has found that higher PsyCap directly leads to metrics such as lower employee absenteeism, lower employee cynicism and intentions to quit, and higher job satisfaction, commitment, and organizational citizenship behaviors. In other words, to have a healthy, engaged, and high-performing workforce, you need high PsyCap.

And in difficult times, it is more likely that people who are hopeful, efficacious, resilient and optimistic will be successful.

The good news is PsyCap can be developed by deliberate practice. PsyCap’s four psychological capacities of hope, efficacy, resilience and optimism are measurable, are open to development, and can be managed for more effective work performance. PsyCap not only can be strengthened; it can also be enhanced. These four capacities all work best in conjunction with each other, and developing one tends to boost the others. Birgit Ohlin, in her “PsyCap 101: Your Guide to Increasing Psychological Capital” provides ways to develop each resource to strengthen the HERO within each of us.


Hope is an optimistic state of mind based on an expectation of a positive outcome within one’s life or the world at large.  There are a few key ways to help employees develop hope.

1.            Challenge people and set clear, measurable and achievable goals.

2.            Break complex goals into smaller, more manageable pieces.

3.            Celebrate even the small milestones.


Self-efficacy was first defined by psychologist Albert Bandura as “an individual’s belief in his or her capacity to execute behaviors necessary to produce specific performance attainments.” Self-efficacy reflects confidence in the ability to exert control over one’s own motivation, behavior and social environment. Ohlin offers several ideas on how to develop efficacy.

1.            Focus on past success.

2.            Model the behavior of others who have succeeded in similar situations.

3.            Create situations that will foster success. Leaders can structure situations that have a greater chance of ensuring success.

4.            Reframe negative experiences. Become intentional about stopping negative thoughts and replace them with thinking that is more positive. For example, instead of seeing stress as damaging, think of it as energizing.


Resilience is the ability to mentally or emotionally deal with a crisis and then quickly return to pre-crisis state. To develop resilience, one must be able to do the following:

1.            Face reality—this is especially important if the situation is going to be long-term. This will help employees keep up their energy and hope for the long haul.  

2.            Search for meaning. As Ohlin says, “Being able to find meaning even when facing a fate that cannot be changed is at the core of resilience. Helping employees find or create meaning strengthens their level of resilience.”

3.            Improvise—leaders must be role models for their employees and make do with what they have at hand. Being able to improvise is a strong predictor of one’s ability to come back from adverse conditions. 

4.            Give people the resources, relationships and emotional support to help them recuperate from stress, conflict, failure, or changes in responsibility.


Optimism is a mental attitude that reflects a belief or hope that a specific or general outcome will be positive, favorable and desirable. The following practices can help develop optimism:

1.            Change your focus. To do this, accept the past, appreciate the present and look at the future as a source of opportunity.

2.            Practice gratitude.

3.            Surround yourself with positive people.

4.            Broadcast success.

5.            Remember there is always a silver lining.

Every firm has four different types of organizational capital: (1) economic—what we have; (2) human—what we know; (3) social—who we are; and (4) psychological—what our intentions are for who we are and who we can become. While each form of capital is important, in these turbulent times, PsyCap will get us through.

Elizabeth McDaid SVP, Leadership & Management Resources, The Council Read More

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