Are You In or Are You Out?: LMX Theory

Whether at school or at work you have probably noticed that there are certain cliques or groups or even individuals that are part of the “in” group.  If you aren’t part of this group, often times you might initially notice them because they receive more attention from superiors or teachers or that they seem to have a closer relationship than others. In looking at it from a leadership point of view, this could be studied through the Leader-Member Exchange theory, or LMX for short. This theory looks at the dyadic relationship that occurs between leaders and followers, and the differences between the relationships of some followers and others with their leaders (Northouse, 2016).

Originally called the vertical dyad linkage theory when researchers first began to study it, this theory focused on the vertical links between leaders and followers that make up in-groups and out-groups (Northouse, 2016). In-groups are made up of followers whose activities go beyond a formal job description and followers become part of an in-group based upon how well a leader and followers interact and work together. Followers will expand their roles beyond what is required of them by being dependable, more involved, more communicative, and doing extra things for their leaders, and in return, these followers will get more information, influence, confidence, and concern from their leaders (Northouse, 2016). On the other hand, those who are part of the out-groups are those whose role is based on a formal employment contract and are often less compatible with their leaders. These people seem to receive less preferential treatment as they have less interactions with their leader, less responsibilities, and less grooming for promotion.

While the differences between being part of the in-group or out-group may seem unfair, and at times it may be, these groups will continue to exist. For one, not all followers want to be part of an in-group. Some people just want to go to work and do their jobs and go home and aren’t interested in being part of an in-group (PSU WC, 2016). These people may not strongly identify with the in-group (Hogg & Terry, 2001, as cited by PSU WC, 2016), or might not even view being part of the in-group as a good thing (PSU WC, 2016).

In considering my own employment past, I once held a part time job for a woman that owned her own company in which I had no desire to be part of the in-group. Since the company was small there were only five employees. While the other four that worked for her all desired to be part of the in-group and be friendly with her because they received special treatment, I just wanted to do my job, collect my paycheck, and go home. This largely stemmed from the fact that this job was a part-time position in which I worked only a few hours a week and there was no room for advancement or promotion due to the size of the company.  On the flip side of this, every other job I have ever held has always been one in which I have attempted to form a positive relationship with my superiors and have gone the extra mile with the work that I have done and the roles that I have taken on in order to increase my candidacy for promotion or bonuses. Because this was something that I always found to be largely effective, it is a strategy that I have used repeatedly with much success.

However, as the LMX theory has evolved, so has the viewpoint on in-groups and out-groups, and more recent studies focus on organizational effectiveness (Northouse, 2016). The outcomes of these studies is that leaders and followers who have more high quality exchanges are going to result in followers who perform better, receive more promotions, be more committed to the organization, have a better attitude, and less turnover (PSU WC, 2016). In order to increase organizational effectiveness, leaders should try to develop high-quality exchanges with all employees through leadership making, thus eliminating the out-group (Northouse, 2016).

The question then becomes, how does one go about leadership making? According to Graen and Uhl-Bien (1991, as cited by Northouse, 2016), there are three phases to this. In the first phase, which is the stranger phase, the interactions between a leader and follower are mostly formal and contractual with low-quality exchanges in which the follower is motivated by self-interest to follow the rules set by the leader for the purpose of economic gains. In the second phase, the acquaintance phase, either the leader or the follower puts forth an offer that will help to improve the exchanges between the two that involves more resources and more information sharing between the two. At this point it becomes an assessment period to see if the follower is interested in taking on more responsibilities and expanding their role in exchange for new and greater challenges from the leader. During this phase the exchanges become of a better quality as trust and respect is gained while the follower’s focus is shifted towards the group’s goals and purposes. In the third phase, which is the mature partnership phase, there is a high degree of mutual trust, respect, and obligation between a leader and a follower in which the relationship becomes reciprocal as each is influenced and affected by the other. As a result of a phase three relationship, leaders and followers can rely on each other in ways that are mutually productive which benefits not only the leader and follower, but the organization as well. The result of a progression through the phases as high-quality exchanges is increased communication, preferential treatment, and more performance related feedback, while low-quality exchanges yield limited trust, support, and few additional benefits (Harris et al., 2009 as cited by Northouse, 2016).

In thinking back to a time when I was a leader of several employees in a retail setting, I went through these phases with my own followers. As someone new was introduced to my department, we would go through an initial period where we would get to know each other and the new employee would get an understanding of what was expected of them as part of their role. The longer a person stayed in my department, we would become not only more friendly as we learned about each other, but also this person would receive more support and encouragement from me to help them advance their careers and roles in order for them to be more likely to become promoted if that was what they wanted. When my followers would reach the third phase I had competent employees who were able to come to me if they needed help and that I could rely on to complete their jobs while I wasn’t there, which was my ultimate goal. I had an efficiently run department with satisfied employees who not only made my life easier, but were happy with their jobs. Even though I am no longer with the company, I am still friendly with everyone that used to work for me and all but one has chosen to move up the organizational ladder with the same company. Having high quality interactions and forming bonds through open communication with the people who worked for me not only made my job easier, but theirs as well.

 

References

Graen, G. B. & Uhl-Bien, M. (1991). The transformation of professionals into self-managing and partially self-designing contributions: Toward a theory of leadership making. Journal of Management Systems, 3 (3), 33-48.

Harris, K. J., Wheeler, A. R.,  & Kacmar, K. M. (2009). Leader-member exchange and empowerment: Direct and interactive effects on job satisfaction, turnover intentions, and performance. Leadership Quarterly, 20, 371-382.

Northouse, P. G. (2016). Leadership: Theory and Practice, (7^th ed.). Thousand Oaks, CA: SAGE Publications Inc.

Pennsylvania State University World Campus. (2016). Lesson 8: Leader-Member Exchange Theory (LMX). PSYCH 485: Leadership in Work Settings. Retrieved from https://courses.worldcampus.psu.edu/sp16/psych485/001/content/08_lesson/04_page.html.