LEADER-MEMBER

EXCHANGE
MHR 640

FA L L 2 0 2 3
 Definition
Leader-member exchange (LMX) theory:
conceptualizes leadership as a process that is centered on the
interactions between a leader and subordinates

Leader-follower relationships are the focus

LMX Theory • LMX theory challenges the idea that leaders treat followers in a
collective way, as a group

Description • LMX - Directed attention to the differences that might exist

between the leader and each of his/her followers
Early Studies: Vertical Dyad Linkage (VDL)
In-Group/Out- • How well does the…
⚬ subordinate work with the leader?

Group Status ⚬ leader work with the subordinate?

Based On... • Do subordinates try to expand their role?

• Do subordinates try to take on tasks beyond their job

description?
 • Less turnover

h Quality LMX • Better job attitudes (job satisfaction, organizational

ated To…
commitment)

• Positive performance evaluations

• Leader attention and support

• Faster career progress

 Avoiding In- • Three phases of leadership making which develops over time:
⚬ stranger phase

Groups and Out- ⚬ acquaintance phase

⚬ mature partnership phase

Groups

(Graen & Uhl-Bien, 1995)

 • Interactions within the leader-subordinate dyad are generally
Phase 1: Stranger rule bound

Phase • Rely on contractual relationships

• Relate to each other within prescribed organizational roles

• Experience lower quality exchanges

• Motives of subordinate directed toward self-interest rather than

good of the group
Phase 2: • Begins with an “offer” by leader/subordinate for improved
career-oriented social exchanges

Acquaintance • Testing period for both, assessing whether

Phase ⚬ the subordinate is interested in taking on new roles

⚬ leader is willing to provide new challenges

• Shift in dyad from formalized interactions to new ways of

relating

• Quality of exchanges improve along with greater trust &

respect

• Less focus on self-interest, more on goals of the group

 • Marked by high-quality leader-member exchanges

Phase 3: Mature • Experience high degree of mutual trust, respect, and obligation
toward each other
Partnership
• Tested relationship and found it dependable

• High degree of reciprocity between leaders and subordinates

• May depend on each other for favors and special assistance

• Highly developed patterns of relating that produce positive

outcomes for both themselves and the organization
 PERSPECTIVE TAKING

• Ability to “read” leader or member important in

LMX
• Use role-taking skills to entertain the point of
view of another
• Associated with increased…
⚬ patience
⚬ reasonableness
⚬ sensitivity
• …and decreased...
⚬ aggressiveness
⚬ sarcasm
 • Self-fulfilling prophecy (SFP): expecting an event to occur
Expectations increases the likelihood that the event will actually occur

• Studies show it is possible to improve subordinate performance

AKA The Pygmalion Effect
(e.g., Eden, 1992)
 DESCRIPTIVELY

How Does LMX • It is important to recognize that in-groups & out-

Theory Work? groups can exist

• May lead to...
⚬ Significant differences in how goals are
accomplished
⚬ Differences in in-group vs. out-group
behaviors
 PRESCRIPTIVELY

How Does LMX

Theory Work?
• Best understood within the Leadership Making
Model (Graen & Uhl-Bien)
⚬ Leader forms special relationships with all
subordinates
 • Follower attributes:
Factors ⚬ Commitment, trust, loyalty

Determining • Situational factors

⚬ Tryouts/tests to determine in/out-group status
LMX Quality
• Leader’s perceptions and behaviour
⚬ First impressions of group member’s competency often key
The Importance • Distributive justice (outcome fairness)

of Fair Treatment • Procedural justice (fairness of decision making)

• Interactional justice (quality of interpersonal treatment)

 LMX Theory
Strengths Applications
• Applicable to all levels of
• Validates our organizational management and different types of
experiences organizations

• Emphasizes leader-follower • Directs managers to assess their

relationships leadership from a relationship
perspective
• Draws attention to the
importance of • Sensitizes managers to how in-
communication
groups and out-groups develop
within their work unit