LEADER-MEMBER EXCHANGE THEORY

(LMX THEORY)

Presented By:- Group 7

 Shivangi . S . Behera (33)
 Soniya Dash (35)
 Shubham Barik (34)
 Shaloni Jena (31)
 Shirish Kulshreshta (32)
 INTRODUCTION

DEFINITION:-
 The LMX theory conceives leadership as a process that is
focused on the interaction between a leader and followers.
 This model is also known as the Vertical Dyad Linkage Theory.
 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 a
interactive relationship ; not just on the leader or follower.
 INGROUP PRIVILEGES
 Preferential treatment from leaders, upper
management ,CEO’s ,etc.
 Better, high quality information exchange.
 Free access to leadership for feedback,
signatures, etc.
 Better chance to receive higher marks on
performance feed backs.
 Access to resources (paper, money, staffing, etc )
OUTGROUP REALITIES
 Lack of access to resources, leadership input, fair
feedback.
 Limited trust and information exchange with
leadership.
 Feeling of neglect and loss of team identity.
 Lower production and morale.
 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 benefis,
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 maybe relied on for extra duties , but are rewarded with
prise, information ,resources , etc. Subordinate focuses on group goals and
move beyond their own self-interest .
 HOW IT WORKS?
 The goal of the LMX theory is to explain the effects of leadership on
members, teams and organizations. According to this theory, leaders
form strong trust, emotional and respect based relationship with
some members of the team, but not with others.

 Interpersonal relationships can be increased.

 The leaders do not treat each subordinate the same and the work
related attitudes and behaviours of those subordinates depend on
how they are treated by their leader.
 Strengths

 Only theory that focuses on the dyadic relationship between their leaders and their subordinates.
 Only leadership approach that makes the dyadic relationship the centerpiece of the leadership process
 Emphasizes the significance of communication in the work place.
 Serves as a remainder to the leaders to be fair in their interaction with subordinates.
 Research has shown that utilization of the LMX theory creates positive organizational outcomes.
 CRITICISM
 Encourages in- group which features preferential relationship between leaders and followers; flies against the
principles of equality and fairness that was the basis of traditional rule based out- groups.
 May encourage leaders and followers to form in- group based on mutual convenience, discriminating against
out- group members who exists and operates by formal contract.
 May also encourage leaders to bring in non-professional consideration and to play under the veneer of forming
in group.
 Simultaneous existence of out-group and in -group in an organization could lead to undesirable effects on the
organization has a whole.
 The theory is silent on how leader individual dyadic relationship in a group can be converted to group level
formations between leader and multiple followers.
 Does not guide how members of out-groups can move into in- groups the criteria, the initiating process, and
the like.
 SUMMARY

 LMX challenges leaders to look at their own leadership style from

an individual relationship prospective, instead of focusing on
entire groups.
 All levels of managers can use this theory, from CEO’s to factory
line supervisor.
 Understanding the nature of a high-quality relationship and be
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.