In a recent Forbes article Brian Solomon (2013) examines how a family run Florida grocer is beating the competition and using its employee owned model to dominate a cut throat business that runs on relatively small margins. Publix is an 83 year old grocery chain started by George Jenkins and is still led by his grandson, a 4^th generation CEO. Jenkins ran a Piggly Wiggly in the 1930’s and was put off by a new corporate ownership that would not grant him a meeting even though he drove from Florida to Atlanta to present his ideas about running the store he managed in Winter Haven Florida. This lack of leadership helped launch the chain that now beats out all the competition in Florida including Piggly Wiggly.

            In reading this article one leadership theory and specifically one model stands out from the ones we talked about in Northouse (2013). That is leader-member exchange theory and specifically leadership making. Leader-member exchange theory is based on leaders that operate in an environment where there is an in-group and an out-group. The in-group has a closer relationship with the leader, is more involved, gets special treatment and has a reciprocal relationship with the boss that has benefits in both directions. The out-group in contrast does not have a close relationship with the leader and generally just comes to work for a paycheck and nothing more (pp. 163-164). This model can create tension between the in-group and out-group and can lead to problems.

            This is where the leadership making comes into play and Publix is a shining example of the model in practice. Northouse (2013) explains that this is an “approach to leadership emphasizing that the leader should develop high-quality exchanges with all of the leaders subordinates” (pp. 165-166). And from the beginning, Solomon points out that Jenkins did just that. From the time he started the company he gave shares to his employees to gain their loyalty. Today the company is 100% employee owned with 80% of that outside of the Jenkins family.

            Another key aspect of leadership building is giving employees the chance to expand their horizons within the organization. Northouse (2013) points out that the Graen and Uhl-Bien study on leadership making that “leaders should offer each subordinate the opportunity to take on new roles and responsibilities” (pp. 168-169). Publix does just that through its manager training program.  Almost all promotions are done from within the company and “every store displays advancement charts showing the path each employee can take to become a manager. Fifty-eight thousand of the company’s 159,000 employees have officially registered their interest in advancement (Solomon, 2013).

            Through leadership making Publix has shown that you can treat your employees fairly and compensate them well while still running a successful business that continually beats out the industry competition. Competition like Wal-Mart who is usually leading the pack in profits and market share in any area they are in but have a less than stellar record on employee relations. As Solomon (2013) shows “sales were up 6% in the last quarter and net earnings rose 15%-that people-first formula Publix inherited from George Jenkins is working”. This is not only good for the company and management but for the employees as well because as 80% owners they profit when Publix profits.

References:

Northouse, P. G. (2013). Leadership Theory and Practice. Thousand Oaks, CA: Sage Publications, Inc.

Solomon, B. (July 24, 2013). The Wal-Mart Slayer: How Publix’s People-First Culture Is Winning The Grocer War. Forbes.com. Retrieved from http://www.forbes.com/sites/briansolomon/2013/07/24/the-wal-mart-slayer-how-publixs-people-first-culture-is-winning-the-grocer-war/

The Leader-Member Exchange Theory looks at leadership through a unique perspective not yet discussed. It analyses leadership not through the specific actions or characteristics of the leader of a group but through the interactions of the leader and the group’s members. LMX research has found that there are two types of relationships that can occur in this dynamic. One where the subordinate has a close relationship with the leader with more flexibility and more responsibilities that place the subordinate in the “in-group” and another where the subordinate has a more structured and formal relationship with the leader and does not have an expanded role in the organization or receive preferential treatment. The out-group relationship represents a more distant and “by the books” relationship whereas the in-group relationship is a more friendly and laid back bond (Northouse, 2013, p.161-163). 

            For several years at my place of employment there was an in-group and out-group dynamic at work in our department. It wasn’t so much that our manager did this on purpose but that is occurred naturally over time through the actions of both the manager and team members. There were certain individuals who were always willing to step up and volunteer for new responsibilities and challenges. Those individuals were always wanted to learn new equipment and stay on top of the latest industry advances. There were others though that had a very close minded approach at work and never wanted to expand their knowledge or volunteer for new challenges. At a technology company this is not looked on favorably.

            After the recession hit in 2008 and our business began to fall off there was a need for a reduction of work force. Naturally those that were associated with the in-group and had taken on more responsibilities over the years became more valuable to the organization and eventually those in the out-group were let go or saw the writing on the wall and moved on to other companies on their own.

            In the middle of all this change at work our manager was moved to another department within the organization and a new manager was hired. Since the new boss joined the team when almost all of the out-group members had already moved on he was fortunate to find a group that was well trained, motivated, willing to rise to new challenges and over-all a lean and productive team. For that reason the relationship between the group and the new manager quickly took on a Leadership Making dynamic. Northouse (2013) states that through leadership making the leader tries to develop a “high-quality” relationship with all members in an effort to avoid the draw backs of out-group relationships and their impacts. Since our new manager was dropped into a organization that was essentially just an in-group that made his task very easy. It also help that he was a laid back and easy to get along with person.

Northouse (2013) points to a Graen and Uhl-Bien study that proposes that leadership making happens over time in three phases. Those stages are the stranger phase, the acquaintance phase and the mature partnership phase (p. 166). Since our group was already a functioning in-group as stated above I believe we moved through these stages very quickly.  Within a year our new manager had what I would consider a mature partnership relationship with almost the entire group. Many of the characteristics of the mature partnership presented themselves very rapidly. This phase, according to Northouse (2013), has a “high degree of mutual trust, respect and obligation toward each other” along with members that “depend on each other for favors and special assistance” (p. 167). Members of our team have a close relationship with our manager and we are always willing to jump in and help with anything he needs done. Just recently two of us flew to San Francisco de-installed several pieces of equipment and drove the equipment to San Antonio and re-installed it to meet the deadlines of an important project. Something like this, in my experience, is not common practice at most technology companies but is relatively commonplace in our group. The practice also works in the other direction. Anytime anyone in our group needs flexibility at work our manager bends over backwards to accommodate them. Time off for family, school or being sick is always granted.

            Leader-Member Exchange and leadership making has definitely brought some perspective in to the leadership structure at my job.

References:

Northouse, P. G. (2013). Leadership Theory and Practice. Thousand Oaks, CA: Sage Publications, Inc.