leadserhip

1. Leader-Member Exchange
Theory

2. Overview
• LMX Theory Approach Perspective
• Early Studies
• Later Studies
• Phases in Leadership Making
• How Does the LMX Approach Work?

3. LMX Theory Approach Description
• LMX theory takes approach and
conceptualizes leadership as a
process that is centered on the
interactions between leaders and
followers.
• Assumption - LMX theory challenges
the assumption that leaders treat
followers in a collective way as a
group using average leadership
style. LMX theory identifies the
differences that might exist
between the leader and each of the
leader’s followers.
• LMX theory
conceptualizes
leadership as a
process centered in
the interactions
between leaders and
followers.
Perspective Definition

4. Main ideas
The basic premise of the theory is that leaders develop separate
exchange relationships with each individual subordinate as the
two parties mutually define the role of the subordinate.
Quality of exchange relationship refers to the degree of
emotional support and exchange of valued resources.

5. Early Studies
• Leader’s work unit as a whole was viewed as a series of vertical dyads;
leader forms unique relationship with each subordinate
• Researchers found two general types of linkages

6. – Expanded/negotiated roles =
in-group
• Relationships marked by mutual
trust, respect, liking, and reciprocal
influence
• Receive more information,
influence, confidence, and concern
than out-group members
– Formal employment contract =
out-group
• Relationships marked by formal
communication based on job
descriptions

7. Differentiating points..
In- Group Out- Group
-Leaders-followers have a significant
relationship beyond job
responsibilities
-Express higher confidence, trust
and support for one another.
-Receive more information,
additional jobs, rewards and
opportunities
-Leaders-followers have a strictly
professional relationship.
-Have basic interactions required to
perform job roles and
responsibilities.
- Receive information and support
necessary for job performance, no
additional jobs or opportunities

8. Early Studies
• In-group/out-group status based on how well subordinate works with the
leader and how well the leader works with the subordinate
• How subordinates involve themselves in expanding their role
responsibilities with the leader determines whether they become in-
group or out-group participants
• Becoming part of the in-group involves subordinate negotiations in
performing activities beyond the formal job description and leader in
turn, does more for these subordinates.

9. Why In-Group & Out-Group: Another
Aspect.
•

10. Later Studies
• Initial research primarily addressed differences between in-groups and out-
groups; later research addressed how LMX theory was related to
organizational effectiveness
• Researchers (Graen & Uhl-Bien, 1995) found that high-quality leader-member
exchanges resulted in:
– Less employee turnover
– More positive performance evaluations
– Higher frequency of promotions
– Greater organizational commitment
– More desirable work assignments
– Better job attitudes
– More attention and support from the leader
– Greater participation
– Faster career progress

11. Leadership Making
• Leadership making promotes partnerships in
which the leader tries to build effective dyads
with all employees in the work units. That
means leader should develop high quality
exchange with all of the leader’s subordinates
rather than just a few.
• Leaders can create network of partnerships
throughout the organization.

12.  Stranger phase: Roles are highly scripted and most exchanges are done
based on organizational rules and hierarchal status(es). There is very
little trust. The subordinate is self-motivated.
 Acquaintance phase: Leader offers a subordinate improved benefits,
information exchange, etc. She/he is attempting to ‘feel out’ the
subordinate and see what they are motivated by. More trust is developed
here. Subordinates begin to focus less on self interest and more on group
goals.
 Partnership phase: Mutual and high-quality leader and subordinate
exchanges. Favors are done for one another and there is mutual trust.
Subordinates may be relied on for extra duties, but are rewarded with
praise, information, resources, etc. Subordinate focuses on group goals
and moves beyond their own self-interests.
Relationship Phases

13. Phases in Leadership Making
Graen & Uhl-Bien (1995)
Stranger
Scripted
Acquaintance Partner
Roles
Influences
Exchanges
Interests
One Way
Low Quality
Self
Tested
Mixed
Medium Quality
Self / Other
Negotiated
Reciprocal
High Quality
Group
TIME
Phase 1 Phase 2 Phase 3

14. Phase 1
Graen & Uhl-Bien (1995)
Stranger
• Interactions rule bound
• Rely on contractual relationships
• Relate to each other within prescribed
organizational roles
• Experience lower quality exchanges
• Subordinate motives directed
toward self-interest
Phase 1

15. Phase 2
Graen & Uhl-Bien (1995)
Acquaintance
• Offer by leader/subordinate for improved
career-oriented social exchanges
• Testing period of taking on new roles and
leader providing new challenges
• Shift from formalized interactions to
new ways of relating
• Quality of exchanges improve along with
greater trust and respect
• Less focus on self-interest, more on goals of
the group
Phase 2

16. Phase 3
Graen & Uhl-Bien (1995)
Mature Partnership
• Marked by high-quality LMX exchanges
• Experience high degree of mutual trust,
respect, and obligation toward one another
• Tested relationship that is dependable
• High degree of reciprocity between leader and
subordinate
• May depend on each other for favors and
special assistance
• Highly developed patterns of relating that
produce positive outcomes
Phase 3

17. How Does the LMX
Theory Approach
Work?
• Focus of LMX Theory Approach
• Strengths
• Criticisms
• Application

18. LMX Theory Approach
• Essential to recognize
existence of in-groups & out-
groups
• Significant differences in how
goals are accomplished using
in-groups vs. out-groups
• Relevant differences in in-
group vs. out-group behaviors
• Best understood within the
Leadership Making Model
– Leader forms special
relationship with each
subordinate
– Leader should offer each
subordinate an opportunity for
new roles/responsibilities
– Leader should nurture high-
quality exchanges with all
subordinates
– Rather than concentrating on
differences, leader should focus
on ways to build trust
Descriptive Prescriptive

19. Strengths
• LMX theory validates our experience of how people within organizations relate to
each other and the leader.
• LMX theory is the only leadership approach that makes the dyadic relationship the
centerpiece of the leadership process
• It makes sense to describe work units in terms of those who contribute more and
those who contribute less to the organization.
• LMX theory directs our attention to the importance of communication
• This theory warns leaders to avoid letting their conscious or unconscious biases
influence who is invited into the in-group ( i.e biases regarding race, gender, ethnicity,
religion or age.)
• Solid research foundation on how the practice of LMX theory is related to positive
organizational outcomes

20. Criticisms
• Inadvertently supports the development of privileged groups in the
workplace; appears unfair and discriminatory ( it divides the work units
into two groups and one group receives special attention.
• The basic theoretical ideas of LMX are not fully developed. i.e the theory
does not fully explain how high-quality leader-member exchanges are
created.
• Researchers have not adequately explained the contextual factors that
may have an impact on LMX relationship.
• Because of various scales and levels of analysis, measurement of leader-
member exchanges is being questioned

21. Application
• Applicable to all levels of management and
different types of organizations
• Directs managers to assess their leadership
from a relationship perspective
• Sensitizes managers to how in-groups and
out-groups develop within their work unit
• Can be used to explain how individuals
create leadership networks throughout an
organization