Organizational Success

The healthiest Companies outperform their Competition on the Stock Market

Smiling - MappaliciousAre you working for a company that treats you like a valuable human being? Do they care about your psychological and physiological health? Yes? Good for you! And good for them as well!

A couple of weeks ago, I shared Alex Edmans´ studies on how the “Best Companies to work for” in the U.S. outperform their competitors on the stock market. Now here comes another piece of compelling evidence for the idea that treating your employees exceptionally well is not a cost factor, but rather gives your company an edge pertaining to financial performance. For a study published in the Journal of Occupational & Environmental Medicine, a group of researchers compared the stock market performance of companies that were awarded the “. Everett Koop National Health Award”(a prestigious award for companies running outstanding employee health programs named after a former Surgeon General) with the average performance of companies comprising the Standard and Poor’s (S&P) 500 Index. What they´ve found:

The Koop Award portfolio outperformed the S&P 500 Index. In the 14-year period tracked (2000–2014), Koop Award winners’ stock values appreciated by 325% compared with the market average appreciation of 105%.

The researchers conclude that “this study supports prior and ongoing research demonstrating a higher market valuation – an affirmation of business success by Wall Street investors – of socially responsible companies that invest in the health and well-being of their workers when compared with other publicly traded firms.”

 

Image via Gratisography

 

Positive Psychology at Work: A Book List for the Layman [updated]

Here, I´ve compiled a list of books that apply Positive Psychology to the realm of “the organization”, leadership, management etc. As always, I see the list as work in progress and will be happy to include your suggestions. When making suggestions, please stick to books that have a clear link to Positive Psychology and are (by and large) backed by research.

Positive Leadership Books

Are you a H.E.R.O.? Positive Psychological Capital (PsyCap) explained

Positive Psychological CapitalSince it´s “formulation” at the onset of the new millennium, researchers have tried to apply Positive Psychology to organizational settings. E.g., Adam Grant promotes pro-social behavior in business settings, Amy Wrzesniewski looks at how employees can foster (perceived) meaning via job-crafting, and Jane Dutton investigates the impact of high-quality connections.

Another interesting framework is offered by Fred Luthans and his colleagues. They have developed the idea of Positive Psychological Capital (PsyCap) which is seen as a valuable extension to the concepts of economic, human, and social capital (see table above; taken from Luthans et al., 2004). PsyCap is theorized as a higher-order construct that is “composed” of four underlying constructs, precisely Self-Efficacy (also called Confidence), Hope, Optimism, and Resiliency. It´s called higher-order because PsyCap is not just “made of” the underlying constructs, but taken together, they form something new, an entity that is more than the sum of its parts. Please see diagram at the bottom, based on Luthans & Youssef (2004). This shows the whole framework, precisely: the H.E.R.O. formation by which the constructs is sometimes known to the general public. What are the building blocks all about – as defined in Positive Psychology?

  • Hope is 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 theorized as a realistically-positive view of what can or cannot do.
  • Resilience is defined as successfully coping with adversity or stress. In organizational settings, it is characterized as the ability to “bounce back” from high workload, conflict, failure, and ongoing organizational change.

Why were these four concepts chosen? In the words of Luthans et al. (2004):

The four psychological capacities of confidence, hope, optimism, and resilience are measurable, open to development, and can be managed for more effective work performance.

Why is this important? Because it means that – unlike trait-like concepts such as general intelligence – PsyCap can be developed by deliberate practice. Just the other three forms of capital, it can be built and enhanced – in a rather short amount of time, by the way (see this paper for more info). As such, it can be a very valuable tool in organizational and personnel development.

Why should you care (especially if you are a CEO or HR Director)?

Well, you should care if you are interested in having a healthy, engaged, and high-performing workforce. A meta-analysis (a type of study that aggregates the results of prior studies) based on 51 empirical investigations found a wide array of positive consequences for workers displaying high (vs. low) PsyCap. From the study abstract:

The results indicated the expected significant positive relationships between PsyCap and […] job satisfaction, organizational commitment, psychological well-being, desirable employee behaviors (citizenship), and […] measures of performance (self, supervisor evaluations, and objective). There was also a significant negative relationship between PsyCap and undesirable employee attitudes (cynicism, turnover intentions, job stress, and anxiety) and undesirable employee behaviors (deviance).

Are you curious now?

PsyCap Structure