What Is Psychological Capital?

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See how far optimism and hope can take you.

Have you ever noticed that some people always seem to be able to forge ahead, no matter what gets thrown at them? This is likely because they have a high degree of psychological capital, or "PsyCap."

Psychological capital is something we can all develop to help us overcome obstacles, lower stress and improve job satisfaction.

As a manager, focusing on psychological capital has the potential to transform your organization for the better – improving the performance and well-being of your team.

In this article, we explain what psychological capital is, and explore how you can develop yours and forge ahead on your career path while taking your team with you!

What Is Psychological Capital?

The concept of PsyCap was first developed in the 2000s within the positive psychology movement. In his 2006 book, "Psychological Capital," management professor Fred Luthans defined it as "an individual's positive psychological state of development."

Essentially, PsyCap refers to our mental resources and their ability to help us get through tough situations.

Just as you may have financial capital (home equity, valuable possessions, and so on) to draw on when money gets tight, you also have psychological resources available to sustain you through challenging times.

These internal resources are defined as:

Hope: your willingness to plan for the future and strive toward goals.

Efficacy: belief in your ability to successfully manage tasks.

Resilience: the ability to "bounce back" following adversity or failure.

Optimism: having a positive outlook for the future.

Combined, these resources represent your HERO – your overall psychological capital.

From "Psychological Capital" by Fred Luthans, Carolyn M. Youssef, and Bruce J. Avolio. Published by Oxford University Press, 2006. Reproduced with permission....