THE DEVELOPMENT OF AUTHENTIC LEADERSHIP AND POSITIVE PSYCHOLOGICAL CAPITAL: THE CASE OF TRIGLAV INSURANCE COMPANY, THE REPUBLIC OF MACEDONIA

MASTER’S THESIS

Author: Zage Filipovski

Mentor: doc. Dr. Sandra Penger

Theoretical model of the thesis

The basic aim of the thesis is:

• to define the key constructs of Authentic Leadership (AL) and Positive Psychological Capital (PPC);

• to explore the links between the two;

• to validate these theoretical findings with practical research in a company;

• to analyze, examine and present the existing state of AL and PPC of the case study subject Triglav Insurance Company and to offer concrete recommendations as to how to increase the PPC by fostering AL of the leaders and followers.

Components of Authentic Leadership

o Positive psychological capital a fundamental asset of authentic leadership considered a unique and vital competitive advantage for contemporary businesses.

o The positive moral perspective: system of fundamental beliefs and values.

o Self - awareness: being aware of own personal and professional characteristics, strengths and weaknesses (feelings, professional values and motives).

o Self - regulation: consists of self-control. . o Balanced - processing: objective decision making by taking

into consideration different and all relevant data and views.o Relational transparency: openly sharing information.

Components of Positive Psychological Capital

o Confidence (self-efficacy): people believe in their capabilities.

o Hope: will to succeed; ability of a person to identify, clarify, and follow different possible ways to success

o Optimism: expect good things to happen; expect the best outcome; believe to be able to deal with most of the situations in the best possible way.

o Resilience: ability to “bounce back”, to recover from negative or positive changes; adaptability, flexibility to significant change, the ability to adapt to new circumstances, risk or adversity.

Research

Research questions:

R 1: Does the authenticity of the leader correspond to the existing level of PPC in the company?

R 2: Does the authenticity of the leaders influence the development of PPC in a company?

R 3: Are the instruments for measuring AL and PPC adaptive and applicable to Macedonian realm and to what extent?

Research Protocol in the Case Study of Triglav Insurance Company

Discussion of the results

Average Values of the Survey Results per Each Department

  PPC Standard deviation

AL of the leader

Standard deviation

AL self-evaluati

on

Standard deviation

Sales 3.74 0.63 4.00 0.30 4.37 0.38

Damages 3.42 0.75 3.56 0.27 4.29 0.44

Other 3.51 0.49 3.52 0.26 4.14 0.43

Total 3.57 0.55 3.67 0.23 4.22 0.37

Correlation Coefficient (R) of the Results of the Three Survey Questionnaires

1. PPC / AL of the Leader

2. PPC / AL self -evaluation

3. AL Self- evaluation / AL of 

the Leader

0.94 0.55 0.79

Conclusions

Conclusions

1. The researchers in the field agree that AL is a continuous functional process which primarily influences the creation and maintenance of PPC as well as building a system of values and integrity, providing trust, hope, optimism, flexibility, sincerity, and honesty of managers as leaders.

2. Such performance on the part of leaders influences the relationships, attitudes and behaviours of employees. They develop ethical responsibility and self-regulation, while also developing their followers as authentic leaders, fostering positive self-development by identifying people’s talents and helping them build these talents into strengths.

Conclusions

3. Fourthly, all of the abovementioned functional elements will motivate employees to perform beyond expectations. They will deliver improved results, providing unique customized services and products and creating value by doing things differently from the company’s rivals.

4. All these psychological states, correlated with authentic leadership, contribute to achieving above-average performance over a longer period of time. Such veritable sustained performance creates competitive advantage that cannot be duplicated by others and results in creating longstanding values for shareholders. Luthans, Youseeff and Avollio (2007) and Luthans et al. (2004)

Advice for Triglav Insurance Company

The company can invest in the development of PPC by the following actions:

• providing positive feedback (enhances confidence); • fostering participatory planning considering suggestions

from the front-line staff; • empowering and delegating; • undertaking regular reviews and constantly exploring

alternative courses of action (enhancing hope); • celebrating positive achievements, even including small

successes and accomplishments (builds optimism); • while enhancing resilience probably requires slightly more

complex interventions to enhance organizational learning.

Thank you for your attention!