Psychological Capital Can Lead to Improved Job Performance

Topic(s): job performance, training
Publication: Personnel Psychology (2011)
Article: Psychological capital and employee performance: A latent growth modeling approach
Authors: S.J. Peterson, F. Luthans, B.J. Avolio, F.O. Walumbwa, Z. Zhang
Reviewed by: Alexandra Rechlin

You’ve probably heard about human capital being related to performance, but what about psychological capital? Human capital refers to the skills and knowledge that employees possess which are relevant to the organization. Psychological capital, however, is a broader concept consisting of efficacy (confidence), hope, optimism, and resilience. The study described in this article explores the variability of psychological capital within individuals and the relationship between psychological capital and performance.


Over a period of seven months, the authors assessed 179 financial advisors’ levels of psychological capital along with objective and subjective measures of performance. They found that participants’ levels of psychological capital changed over time, providing further evidence that psychological capital can be developed. The level of psychological capital was also significantly related to both the objective and subjective measures of performance; that is, performance increased as psychological capital increased, and performance decreased as psychological capital decreased. The authors also found support for psychological capital influencing performance, as opposed to performance influencing psychological capital.


This study indicates that if you want to improve employees’ performance, it is important to consider psychological capital. Organizations may want to consider including psychological capital development as part of a development and performance management program. How can they do this? Training programs aimed at increasing psychological capital have already been developed and tested for both online and traditional workshop delivery. These programs help participants set goals in order to increase hope, and they teach participants to deal effectively with setbacks and create contingency plans, thereby increasing optimism. Through the use of positive feedback, vicarious learning, and modeling, training programs (and managers) can also increase employees’ efficacy.


Peterson, S. J., Luthans, F., Avolio, B. J., Walumbwa, F. O., & Zhang, Z. (2011). Psychological capital and employee performance: A latent growth modeling approach. Personnel Psychology, 64, 427-450. 

Image credit: istockphoto/shironosov