ADM 612 Leadership

1
ADM 612 - Leadership

• Lecture 9 Leader-Member Exchange (LMX) Theory

2
Introduction

• Most leadership theories emphasize leadership
  from the point of view of the leader (trait,
  skills, style) or the follower and the context
  (situational, contingency, path-goal).
• Leader-member exchange (LMX) theory focuses on
  leadership as a process of interactions between
  leaders and followers.

3
Introduction

• Older theories assume that leaders treated
  followers in a collective way using an average or
  group leadership style.
• LMX theory assumes that leaders interact with
  their followers individually.

4
Early Studies

• In examining the vertical linkages between
  leaders and followers, researchers found two
  basic patterns of linkages
• In-group based on expanded and negotiated role
  responsibilities (extra-roles).
• Out-group based on the formal employment
  contract (defined roles).

5
Early Studies

• Subordinates become a part of the in-group or the
  out-group based on how well they work with the
  leader and how well the leader works with them.
• Personality and other personal characteristics
  play into this.

6
Early Studies

• Also depends on how subordinates seek to expand
  their role responsibilities.
• Subordinates willing to negotiate with the leader
  to perform activities beyond their job
  description may join the in-group.

7
Early Studies

• Subordinates not interested in new and different
  job responsibilities become part of the
  out-group.
• Subordinates in the in-group receive more
  information, influence, confidence and concern
  from their leaders than do out-group subordinates.

8
Early Studies

• In-group subordinates are also more dependable,
  more highly involved, and more communicative.
• Out-group subordinates are less compatible with
  the leader and tend to come to work, do their
  job, and go home.

9
Early Studies
10
Early Studies
11
Early Studies
12
Early Studies
13
Later Studies

• Later studies focused on how the quality of
  leadership exchanges influenced organizational
  effectiveness.

14
Later Studies

• High-quality leader-member exchanges produced
  less employee turnover, more positive performance
  evaluations, higher frequency of promotions,
  greater organizational commitment, more desirable
  work assignments, better job attitudes, more
  attention and support from the leader, greater
  participation, and faster career progress over 25
  years.

15
Leadership Making

• How can exchanges between leaders and
  subordinates be used for leadership making?

16
Leadership Making

• Leadership making is a prescriptive approach to
  leadership that emphasizes that a leader should
  develop high-quality exchanges with all of her or
  his subordinates. Make all employees part of
  the in-group.

17
Leadership Making
18
Phases in Leadership Making

• Stranger phase
• Interactions rule-bound, relationships determined
  by role, lower quality exchanges. Subordinates
  concerned with self-interest.

19
Phases in Leadership Making

• Acquaintance phase.
• Improved career-oriented social exchanges,
  assessment of additional role responsibilities,
  improved quality of exchanges, shift from
  self-interest to group interests.

20
Phases in Leadership Making

• Mature partnership.
• High-quality leader-member exchanges, high degree
  of mutual trust, mutual interdependence,
  reciprocity, more egalitarian.

21
How Does LMX Theory Work?

• It both describes and prescribes leadership.
• Important to recognize in-groups and out-groups
  in an organization.

22
How Does LMX Theory Work?

• Working with in-group members increases
  organizational effectiveness.
• The prescriptive model urges leaders to develop
  high-quality exchanges with all subordinates.

23
Strengths

• Strong descriptive theory it makes sense to
  talk about in-groups and out-groups.
• Only theory to make use of dyadic relationship
  between leader and follower.

24
Strengths

• Directs our attention to importance of
  communication in leadership.
• Empirical evidence to link high-quality exchanges
  to better organizational functioning.

25
Criticisms

• Descriptive LMX theory runs counter to basic
  understanding of human fairness. Focuses
  overwhelmingly on in-groups versus out-groups.
  Does not address other fairness issues
  (distributive, procedural, interactional).

26
Criticisms

• The basic ideas of the theory are not fully
  developed. How do we initiate and maintain high
  quality exchanges?
• The measurement of leader-member exchanges not
  standardized.

27
Application

• Directs managers to assess leadership from a
  relationship perspective.
• Can be use at all levels of an organization.
• Can be used to explain the development of
  leadership networks.
• Can be applied to different types of
  organizations.