Leader-

Member
Exchange
(LMX) Theory
Approach –
Wk 7- Chp 7
 What is LMX?
Leader-Member Exchange (LMX) is a theoretical concept in
leadership and organizational behavior that focuses on the
relationships between leaders and their followers.

Developed by Graen and Uhl-Bien in the 1970s,

LMX theory suggests that leaders form distinct and unique
relationships with each of their followers, influencing the quality
of these relationships and subsequently affecting various
individual and organizational outcomes.
 LMX, or Leader-Member
Exchange theory, focuses on

How does LMX

the relationships between
leaders and their followers,
emphasizing the quality of
these relationships and the
impact on job satisfaction,
performance, and
work?
1-Dyadic Relationships:
organizational outcomes. 2- In-Groups and Out-Groups:
3- Formation of LMX:
4- Leader Behaviors:
5- Impact on Followers:
6- Leadership and Organizational Outcomes:
7- Role of Trust and Communication:
8- Flexibility and Development:
 1-Dyadic
Relationships:(LMX)
LMX theory emphasizes the importance of individualized
relationships between leaders and each of their followers.
It recognizes that not all leader-follower relationships are the
same and that leaders often form unique, individualized
exchanges with different followers.
2-In-Groups & Out-Groups:
(LMX)
• LMX categorizes followers into two groups: in-groups &
out-groups.

• In-Group: Followers who have a high-quality exchange

with the leader. They typically have more responsibilities,
resources, and opportunities.

• Out-Group: Followers who have a lower-quality

exchange with the leader. They may have more limited
responsibilities and fewer opportunities.
 3-Formation of LMX:

• The formation of the in-group or out-group occurs

through a process of social exchange.
• Leaders and followers engage in social exchanges
based on trust, mutual influence, and reciprocal
commitment.
 4-Leader
Behaviors:(LMX)
• Leaders exhibit different behaviors with in-group and
out-group members.
• In-group members often experience more favorable
treatment, increased communication, and greater trust
from the leader.
• Out-group members may receive standard, more
transactional interactions from the leader.
5-Impact on Followers:(LMX)

• In-group members tend to have higher job

satisfaction, greater organizational
commitment, and better performance
outcomes.
• Out-group members may experience lower job
satisfaction and feel less committed to the
organization.
 6-Leadership and
Organizational Outcomes:(LMX)

• LMX quality has implications for overall team

and organizational performance.
• Higher-quality leader-member exchanges are
associated with better team cohesion,
communication, and overall effectiveness.
 7-Role of Trust and
Communication:(LMX)

Trust and communication play a crucial role in the development of high-quality leader-member
exchanges.
Trust is essential for building strong relationships, and effective communication helps in
clarifying expectations and fostering understanding between leaders and followers.
8-Flexibility and Development:
(LMX)

LMX recognizes that relationships can evolve over time.

Leaders can work towards improving the quality of exchanges with
out-group members, potentially moving them into the in-group
through increased trust, communication, and mutual commitment.
Summary (LMX)

In summary, LMX theory highlights the significance of the leader-

follower relationship and how the quality of these exchanges can
influence individual and organizational outcomes. It encourages
leaders to be aware of their interactions with each follower, fostering
positive relationships to enhance job satisfaction, commitment, and
performance.