Psychological Capital – A Mindset Shift for HR

I recently spoke at an event about retention calling the talk, ‘The Human in Human Resources’. Putting moral debates to one side, the increasing amount of information and evidence from social science on the psychology of behaviour and from applied neuroscience on the physiology of this behaviour, means we know more than ever before what people need to be engaged and to perform at their best in work.

In this article, I hope to increase awareness of the importance of the subject of Psychological Capital (PsyCap) to the HR community, how we build and implement our strategies, to summarise the HERO model and provide some questions to get you thinking about how to create truly engaging organisations that utilise the scientific research about the value of putting the human being at the heart of how we work.

There is an increasing acceptance of the importance of people to organisation success, a deeper realisation that without the ability to attract and retain talent, our organisations are in trouble. The competitive demand for people across not only Ireland but globally, across industry sectors and public organisations, is challenging all organisations to create environments where people want to work and where, through thriving, they help create competitive advantage.  The research evidence is helping us to rethink how we achieve this.

“There are only three measurements that tell you nearly everything you need to know about your organisation’s overall performance: employee engagement, customer satisfaction, and cash flow. It goes without saying that no company, small or large, can win over the long run without energised employees who believe in the mission and understand how to achieve it.”
Jack Welch, former Chief Executive Officer of General Electric

Model source: Luthans (2004) 

Current thinking provides a fresh model to underpin HR strategies. A shift to building environments that support a HERO state and build the four key traits in our people.

Dr David Woods introduced the concept of Psychological Capital (PsyCap), built on principals of positive psychology, in an earlier blog.

Thriving as the additional element required for true engagement is identified by Spreitzer et al., 2005; Patterson et al., 2013. It is described as, “the higher psychological state in which the individual feels involvement and energy, marked by both a sense of learning (gaining comprehension and informational understanding) and a sense of vitality (robustness in the work environment).”

Combined, these drivers represent a shift in the core drivers of HR strategy, people management and engagement.  A lot of the recommendations around how we develop workplaces that support this are not new.

However, underpinned by the learning from applied neuroscience and psychology, we now have evidence of the impact on performance and retention, how we build capability and the need to prioritise things that were once considered “nice to have”. 

The HERO model

You can read more detail on the HERO model and links to research based evidence of the effectiveness of a HR approach that develops individual PsyCap here in Dr David Woods blog. In summary:

• Hope is defined as a positive state where our feelings of agency (goal-oriented determination) and pathways (proactively planning to achieve those goals) interact.
• Self-efficacy is depicted as confidence in our ability to achieve a specific goal in a specific situation.
• Optimism is theorised as a realistically-positive view of what we can or cannot do.
• Resilience is defined as successfully coping with adversity or stress. In organisational settings, it is characterised as the ability to “bounce back” from high workload, conflict, failure, and ongoing organisational change.

What can the HR community do to build PsyCap?

The principals need to permeate strategy and how we manage our colleagues.  The list below focuses on 4 key areas to think about:

1. Review the core drivers of HR / People strategy, planning and decisions

Based on the current evidence are you investing in the right areas to attract, retain and develop your teams?

Getting clear on the current evidence and building this into role definition, employer brand, engagement definitions, what we measure and how often, performance development, change management and at the core of this, how managers manage requires a subtle but significant shift.

This is a broad area however, a simple first might be improving knowledge within the HR community/team in your organisation.

2. Consider what we measure and how we measure engagement

Levene (2015) suggests that we need to reconsider what we are building and evaluating in relation to employee engagement.  He proposes the “Gallup definition seems to have lacked the academic rigor and clarity to find its way as a definition into the emerging empirical research.”  Right or wrong, we are being challenged to think about how we have done things.

Are you measuring the right things?  It must be worth considering whether the key constructs within PsyCap and Thriving, as based in psychological research and neuroscience, are built into your engagement assessment? Have you tested your engagement survey model to ensure that what you are measuring are true motivators and drivers of engagement and performance?  

If not, we could be building strategies that don’t focus on the priorities or investing resources in the areas that may not deliver what is most important to your people and your organisation.

3. Develop managers knowledge and translate this into how people are managed

Our managers remain key to how people experience our organisations, what they learn, focus on, how they are listened to, valued and respected.  A manager’s core responsibilities around delivering performance may have changed little, but how they do that in a way that gets the best from individuals has shifted dramatically.  There may even be similar practices, e.g. goal setting, but awareness of how we do things in a way that utilises what neuroscience tells us about how to do this right based on how people are motivated (and demotivated) changes the approach and indeed mind-set needed from managers.

If we take the need for goal setting as an example, you may well be thinking ‘nothing new here’. Honestly, how good are your managers at setting truly clear, motivational and realistic goals? Goals that support individuals motivation and hope, increasing learning and challenges in line with their motivators and showing clear alignment with the organisation? Goals that break down challenges in a way that trigger optimism and motivation, rather than fear?  Goals that engage and encourage development (a well-documented driver of retention)?

Does your management development, in the first instance, raise awareness of neuroscience and psychology so they build real understanding that can be applied to their interactions with their teams, to their understanding of why people react more positively or negatively to different things?  Are management programmes and coaching building capability that helps them create the right environments for engagement? Do they know how to support development of HERO’s? Are you using the lessons from neuroscience to create truly human centric environments and psychologically safe teams where they are free to thrive? Do they understand the critical importance of trust, of listening, of the need to feel part of the process and of the psychological impact of good conversations?

Is trust at the heart of your leadership model? High trust is a critical component of psychological safety and building PsyCap.  Is there a high trust culture? Are your leaders trusted and do they show trust?

It can all sound a little ‘soft’ to some, and maybe a little ethereal, but it’s critical. How can we manage people if we don’t build our understanding of what people need? Now that we have the scientific proof, why wouldn’t we use it?

4. Managing change – big and small

Change is a modern day constant. What we are all challenged with is the need to build our ability to deal with it and our manager’s capability to manage it well.

At an organisational level, we in HR need to plan change management approaches that integrate all our new awareness. I particularly recommend considering the SCARF model (David Rock) which looks at the triggers of our reward and threat circuitry in the brain and provides new understanding of why change can trigger ‘threat responses’, giving us valuable information on how we can design change processes to mitigate these.

Developing manager’s ability to apply the SCARF model to understand the impact of change and to influence how they manage their teams, but also how they introduce change and managing others through it.

Developing the HERO capabilities within all colleagues is one way we can become more changeable and agile.