Human, Social, and Now Positive Psychological Capital Management

Investing in People for Competitive Advantage

By –Fred Luthans, Carolyn

M.YoussefReview by-

Ankit Mehta-198 Arihant Surana-204

Bibliography

• Human, Social, and Now Positive Psychological Capital Management-Investing in People for Competitive Advantage: Fred Luthans, Caroyln M. youssef, Organizational Dynamics, 2004, Vol. 33, No. 2, pp- 143-160

IntroductionThe Need to Treat human resources as a capital

investment has never been more crucial specially since downsizing, restructuring ,outsourcing ,and other lean and mean HR Slashing approaches have become the norm for meeting today’s economic challenge.

The purpose of the article is to establish HRM as a source of competitive advantage over and above the traditionally recognized sources.

Attention is given to guidelines for how to practically manage the human ,social and positive psychological capital for competitive advantage.

Criteria for being Recognized source of Competitive advantage

» Long term and Rare»Unique»Cumulative» Interconnected»Renewable

Traditional Sources Vs. Human Resource

Traditional Sources of Competitive advantagePlant ,Equipment ,Technology

» - Easily copied(reverse engineering)

Structural Capital, Physical resources» -Can be copied directly

Organizational resources (Systems, procedures, management decision making models and techniques)

» -Can be copied and imitated(Industry Bench marking)

Information technology.» -Readily available at a exponentially decreasing price.

Recognition of Human CapitalExplicit Knowledge

» Empirical Studies and meta-analytical results by Hunter and Schmidt show that on average education has a predictive validity of 0.1 only and experience also has a unimpressive 0.18 predictive validity for Job Performance.» Easily imitable, outsourced, and also obsoletes fast.

Tacit Knowledge»Organization specific and built over time as members

become socialized in the organization.» Intangible,vital process of “learning the ropes”»Non-Transferable and lost if employee leave so

retention become crucial.

Social Capital It includes inter-personal, inter-group and inter-

organizational relationship.

Also includes community resources, social structure and cultural dynamics.

Three valuable aspects of Social capital are:1.Network2.Norms3. Trust

Network- involves contacts and ties which relate organizational member and units with each other and with outer world.

Norms- provide the foundational infrastructure for organizational strategies, structures and processes through which organization achieve goals.

Trust- act as the bonding agent that allows for networks and norms to actualize and achieve their full potential.

Social Capital ManagementOpen Communication channels1. Key to development of trust2. Ensures consistency and accountability3. Includes positive feedback system

Cross-functional work team1. Platform for cross-organizational communication2. Prevents isolation in single department

Work-life balance program1. Improves job performance as life satisfaction can

cause job satisfaction

Positive Psychological Capital

Led by Martin Seligman.

Focuses on:- making people’s life more productive and actualizing human potential.

Movements that applied positivity and strength-based management to the work place:-

1. Positive Organizational Scholarship movement2. Positive Organizational Behavior movement

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Basic Components and Management of Positive Psychological Capital

1.Self-Efficacy/ConfidenceDrawn from the work of Albert Bandura.

Defined as one’s confidence in his ability to mobilize the motivation, cognitive resources and courses of action necessary to execute a specific course of action within a given context

Experimental exercises, on job training and coaching contribute to building it

2.HopeDrawn from the work of C. Rick Snyder

Motivational state based on three factors; goals, agency and pathways.

Realistic Goal setting, participative initiatives and preparedness/planning are the ways to develop it.

3.OptimismWork done by Seligman

It involves positive explanatory style that attributes positive events to internal, permanent causes.

Negative events to external, temporary and situation specific ones.

Approaches like leniency from past, appreciation of present and opportunity seeking for the future are used for its development.

4.ResilienceWork done by Ann Masten

Capacity to bounce back from adversity, uncertainty or failure

Organization can adopt asset-focused, risk-focused and Process-focused strategies.

ConclusionHR is crucial to sustainable competitive

advantage in today’s global environment.

Except few (1/8 as per studies) HR has been given lip service and not treated as capital investment to be developed and managed

The dimentions of the human factor are gradually lending themselves to more objective measurement and cost benefit investment analysis

Conclusion..The authors proposes that its high time that We

move away from narrow selection oriented techniques, primarily tailored to shield organizations against discrimination related litigations and towards developmental approaches that can consistently enhance performance over time.

The positive Psychological capital management in particular can effectively channel people’s strengths, talents and psychological capacities towards achieving enhanced productivity, ethical, sustainable outcomes and hence result in competitive advantage.

Thank You!