Sunday, February 21, 2010

The LMX Theory

Leader-Member Exchange (LMX) theory

·         While most theories have emphasized the point of view of the leader, the LMX theory conceptualize leadership as a process that is centered on the interaction between leaders and followers.  

·         LMX theory makes a dyadic relationship between leaders and followers as the focal point of the process.

·         It was first described in 1975 by Dansereau, Graen, and Haga. It had undergone several revisions since.

·         Prior to LMX, researchers treated leadership as something leaders did towards followers and assumed leaders treated followers in a collective way as a group using an average leadership style.


Early Studies

·         This is based on the vertical dyad linkage (VDL theory). The focus was on each of the VDLs that are formed between the leader and each of the followers.

·         It was determined there are two dyads:

o    in-groups (extra roles)

o    out-groups (defined roles)

·         Subordinates become either part of the in-group or the out-group based on how well they work with the leader and how the leader works with them. Personality and other characteristics are related to this process.

·         Becoming part of the in-groups involves subordinates  negotiating with the leader about what they are willing to do to become part of the group. The activities involve going beyond their formal job descriptions and the leader in turn does more for these subordinates.

·         Subordinates that are not interested in taking different job responsibilities become part of the out-group.

·         Subordinates in the in-group receives more information, influence, confidence, and concern from the leaders. They are also more dependable, highly involved, and more communicative.

·         Subordinates in the out-group are less involved and receive less attention and perks from the leader. They just come to work, do their job and go home.



Later Studies

·         A shift in focus took place. Early studies focus on in-groups and out-groups. Later studies focused on how the LMX theory is related to the organizational effectiveness.

·         Research determined that high-quality Leader-Member exchanges produced

o    Less employee turn over

o    More positive performance evaluations

o    Higher frequency of promotions

o    Greater organizational commitment

o    More desirable work assignments

o    Better job attitudes

o    More attention and support from leaders

o    Great participation

o    Faster career progress over 25 years

·         Organizations prosper from high quality L-M exchanges


Leadership Making










One Way




Low Quality

Medium Quality

High Quality






·         This is a prescriptive approach to leadership. It emphasizes that a leader should develop high-quality exchanges with all of their subordinates rather than just a few. It attempts to make every employee part of the in-group.

·         Leadership making suggests that leader create partnerships throughout the organization which benefits the organization at larger as well as their own career.

·         Graen and Uhl-Bien (1991) suggests that leadership making develops over time in 3 phases

o    The stranger phase

·         Interactions are rule bound.

·         Relies heavily on contractual relationships

·         Leader-Member relay to each other within the described organization roles

·         Lower quality exchanges similar to the out-groups

·         Subordinate complies with the formal leader who has hierarchical status for the purpose of achieving economic rewards.

·         The motives are directed towards self interest rather than the good of the group.

o    The acquaintance phase

·         Begins by an offer from the leader or the subordinate for improved career oriented social changes.

·         It involves sharing more resources and personal information.

·         It is a testing period for both leader and employee.

·         Dyads shift from away from the prescribed job description and the defined roles.

·         Leader-Member exchange is improved.

·         They tend to focus less on self interest and more on the goals of the group.

o    The mature partnership phase

·         This is a partnership.

·         High quality leader-member exchanges.

·         High degree of mutual trust.

·         Respect and obligation toward each other.

·         Leaders and subordinates are tied together in a productive way that goes beyond traditional hierarchy.

·         Schriesheim, Castro, Zhou, and Yammarino (2001) found that good leader-member relations were more egalitarian and influence and control were equally balanced.


How does the Leader-Member Exchange theory work?

·         As a whole, it is a very interesting approach to the leadership process, and it offers us a lot of ideas to understand better the relationship between a leader and a follower.

·         Although, this theory has not been packaged to be used in training and development, it offer much insight that managers can use to improve their leadership behavior.

·         The ideas set forth by the LMX theory can be used at all levels of the organization.

·         The ideas also apply to creating networks within an organization and calling upon this network to help  solve problems or advance career goals.

·         The theory tells us to be fair to all employees, and to be sensitive.

·          It works in 2 ways:

o    It describes leadership - Highlights the importance of recognizing the existence of in-groups and out-groups.

·         The differences on how goals are accomplished using the in-groups or out-groups are substantial.

·         in-group members  do more that job description requires and look for innovative ways to advance the group. In response, leaders give them more responsibilities and more opportunities. Leaders also give them more time and support.

·         out-group members operate strictly within their prescribed organizational roles. They do what is required of them, but nothing more. Leaders treat them fairly and according to the formal contract, but do not give them special attention. They get standard benefits.

o    It prescribes leadership -

·         The authors advocate that leaders should try to create special relationships with all subordinates.

·         Leaders should offer each subordinate the opportunity to take new roles and responsibilities.

·         Leaders should nurture high-quality exchanges with their subordinates.


·         It is a strong descriptive theory that makes intuitively sense.

·         We may not like it because it is unfair, but it is a reality that the theory describes.

·         It is the only leadership theory that makes the concept of the dyadic relationship the centerpiece of the leadership process.

·         It directs our attention to the importance of communication in leadership.

·         There is also a large body of research that substantiates how the practice of the LMX theory is related to positive organizational outcomes. It is related to performance, organizational commitment, job climate, innovation, organizational citizenship behavior, empowerment, procedural, distributive justice, and career progress.



·         On the surface it runs counter to the basic human value of fairness.

·         The existence of in-groups and out-groups may have undesirable effects on the group as a whole. Our culture repels the discrimination of age, gender, etc and this theory awakens the discrimination factors. 

·         Questions have been raised regarding the measurement of leader-member exchanges in this theory. The measurement scale lacks content validity.

·         The basic ideas of the theory have not been fully developed. It does not explain how the high-quality leader-member exchanges are created. It mentioned that personality compatibilities are key to these high-quality exchanges, but never went in depth about the details.


Leadership instrument

The LMX-7 provides a reliable and valid measure of the quality of leader-member exchanges. It is designed to measure respect, trust, and obligation. 

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