The document provides an overview of leader-member exchange (LMX) theory. It defines LMX theory as focusing on the interactive relationship between a leader and subordinates. The theory proposes that leaders form distinct relationships, either in-groups or out-groups, with subordinates. In-groups receive more privileges and resources while out-groups receive the minimum. The document outlines the phases of LMX relationships, benefits of high-quality LMX, strengths and weaknesses of the theory, and provides examples of how LMX can be applied and measured in organizations.

1. Veronica Benitez
Daisy Gutierrez
Erin Young

2. Objectives
Students will understand LMX theory
Class will identify group and out-group
dynamics
Students will utilize knowledge to
analyze LMX assessment results

4. What is the LMX theory?
“The LMX theory
conceives leadership as a
process that is focused
on the interactions
between a leader and
subordinates” (Northouse, 2010, p. 147).

5. Traditionally, researchers
thought of leadership as
something that was done at a
group level.
 Unlike the trait or skills
approach, the LMX theory focuses
on an interactive relationship; not
just on the leader or follower.

6. Theory Significance
LMX theory challenges the belief that
leaders should interrelate with and
have the same association with every
member of their group. This theory
addresses the issue that people are
vastly different and need to be
interacted with as such.

7. LMX - Roots
Vertical dyad linkage theory- researchers originally focused on vertical
linkages between leaders and each of their subordinates.
Sub Sub
Further research into these dyads revealed two distinct types of relationships:
INGROUP: special relationship in which more privileges, preference, and
access to resources are given in exchange for going “above and beyond”
routine duties.
OUTGROUP: typically only do the minimum amount of work and in
exchange are given low levels of access to resources and decision making.

9. Relationship Phases
 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.

10. Task Allocation
• Break down the project into small tasks.
• Rank all tasks based on importance.
• List the competencies of each team member.
• Match competencies with tasks.

11. In-group & Out-group

12. In-group Privileges
 Preferential treatment from leaders, upper management, CEO’s, etc
 Better, higher quality information exchange
 Free access to leadership for feedback, signatures, etc.
 Better chance to receive higher marks on performance feedbacks
 Access to resources (paper, money, staffing, etc)

13. Out-group Realities
 Lack of access to resources, leadership input, fair feedback.
 Limited trust and information exchanges with leadership
 Feelings of neglect and loss of team identity
 Lower production and morale

14. Workplace Scenario
Is the leader-member exchange in-group or out-
group?
What is the quality of the leader-member exchange?
Where can the leader-member exchange be
improved, and how?

15. Organizational Benefits
Subordinates that are involved in a high-quality
relationship with their leader “receive disproportionate
attention from managers, higher performance
evaluations, report lower turnover rates, and
experience greater satisfaction with their managers”
(Jones, 2009).

16. Strengths
 Only theory that focuses on the dyadic relationship
between a leader and their subordinate.
 It is a very descriptive theory.
 Emphasizes the significance of communication in the
workplace.
 Serves as a reminder to leaders to be fair in their
interactions with subordinates.
 Research has shown that utilization of the LMX theory
creates positive organizational outcomes
(Northouse, 2010)

17. Weaknesses
 Because this theory divides people into two distinct
groups, there is often a feeling of unfairness.
 Does not address unfairness issue and the subordinates’
perceptions of it.
 Fails to explain how high-quality relationships are actually
created and how one gets into it.
 Measurement scales of the LMX lack content validity.
(Northouse, 2010)

18. Overall
 LMX challenges leaders to look at their own leadership style from
an individual relationship perspective, instead of focusing on entire
groups.
 All levels of managers can use this theory, from CEOs to factory line
supervisors.
 Understanding the nature of a high-quality relationship and being
able to form them will help leaders network with more people to
work more efficiently and productively.
 LMX theory can be used in many different settings.
 Reminds leaders that every member of their team is unique and
must be related to in a unique manner.

19. LMX 7 Questionnaire

20. Research

21. Team Reflection

22. Questions?

23. References
• Ballinger, G. A. (2010). Leader-member exchange and turnover before and after succession events.
Organizational Behavior and Human Decision Processes, 113(1), 23-36.
• Credo, K. R., Armenakis, A. A., Field, H. S., Young, R. L. (2010). Organizational ethics, leader-member exchange, and
organizational support: Relationships with workplace safety. Journal of Leadership & Organizational
Studies, 17(4), 325-334.
• Jacques, P. H., Garger, J., Thomas, M., and Vracheva, V. (2012). Effects of early leader-member exchange
perceptions on academic outcomes. Learning Environments Research, 15(1), 1-15.
• Jones, J. A. (2009). Gender dissimilarity and leader-member exchange: The mediating effect of
communication apprehension. Emerging leadership journeys, 2(1), 3-16.
• Kreitner R. and Kinicki A. (2004). Organizational Behavior, 6e, p. 617-618. Burr Ridge: IL, McGraw-Hill
• Moritz, N. H., Levy, B. L., Travis, P., Quaid, D., Fox, M., Whitaker, F., McGill, B., Sony Pictures Home
Entertainment (Firm). (2008). Vantage point. Culver City, Calif: Sony Pictures Home Entertainment.
• Mueller, B. H., & Lee, J. (2002). Leader-member exchange and organizational communication satisfaction
in multiple contexts. Journal Of Business Communication, 39(2), 220-244.
• Northouse, P. G. (2010). Leader-member exchange theory. In P. G. Northouse, Leadership theory and practice: fifth
edition (pp. 147-170). Thousand Oaks, CA: SAGE Publications, Inc.