Leader-Member Exchange Theory (LMX) presents the idea that leadership is essentially a dyadic relationship between a subordinate and immediate supervisor (PSU WC, 2020, p. 2). Leaders have one dyadic relationship between themselves and each of their employees. This means that leaders have multiple dyadic relationships – one for each of their subordinates. The dyadic relationships are classified in one of two ways: as part of an in-group or an out-group (PSU WC, 2020, p. 2). Subordinates who are part of the in-group are those who consistently engage in behaviors that go above and beyond those described in the outline of their job duties (Northouse, 2016, p. 138). This may include staying late, taking on extra projects, or doing whatever it takes to meet the goal of the team/organization. These behaviors are most likely to lead to positive relationships between the subordinate and the supervisor which is expressed by the supervisor providing greater social support, pay raises, promotions, and other benefits. In contrast, those individuals in the out-group do not go above and beyond the normal job requirements. Instead, they only do what is outlined in their job description – no more, no less (Northouse, 2016, p. 138). These individuals are often met with fairness from their supervisor, however they do not receive any added benefits that are typically seen in leader-member relationships with individuals in the in-group. There is a great amount of support and criticisms for LMX including it’s support in organizational studies and its lack of a fully-developed theory (PSU WC, 2020, p. 5).
Researchers Robert Liden, Lynn Shore, and Sandy Wayne (1997) investigated how LMX interacted with another theory called Perceived Organizational Support (POS). Where LMX describes the interactions between leaders and members, POS describes the interactions between an employee and the employing organization (Liden, Shore, & Wayne, 1997, p. 82). Both LMX and POS are theories that operate on the social exchange theory framework. In social exchange theory, “each party must offer something the other party sees as valuable and each party must see the exchange as reasonably equitable or fair (Liden, Shore, & Wayne, 1997, p. 83))”. Therefore, in both LMX and POS the employee offers something that the leader (or organization) sees as valuable – this may be performing normal job duties or engaging in extra job responsibilities as described in the description of in-group characteristics. In return, the employee receives benefits from the supervisor (or organization) such as raises, promotions, social networking, and/or social support. When the exchange between employee behaviors and organizational benefits as seen as fair, both the organization and employee benefits.
Despite their similar descriptions, Liden, Shore, and Wayne (1997, p. 82) posit the idea that POS and LMX are two distinctively different theories that influence different outcomes. However, that is not to say that the two do not influence each other. In fact, LMX directly influences employee perceptions of organizational support (Liden, Shore, & Wayne, 1997, p.104). Support for this idea comes from the fact that immediate supervisors may be viewed as a direct extension of the organization. Given the fact that leader recommendations are often the direct cause of benefits such as increased pay and better benefits distributed by the organization, employees may view their positive relationship with their supervisor as a positive influence on the perceived support they receive from the organization (Liden, Shore, & Wayne, 1997, p. 104). The downside of this interaction is that it is a two-way street. Speaking from my own personal experience, I can attest to the fact that when negative commands are passed down from the organization through the leader, it may negatively impact the employee’s view of both the leader and the organization. In return, they may view the social exchange as no longer “reasonably equitable or fair” and begin to transition to members of the out-group. When employees, feel that they are not being compensate fairly for their expended effort, they may begin to dedicate less time and effort to their work performance in order to bring the exchange back into an equitable balance. Therefore, we can see why it may be extremely effective for a leader and an organization to provide consistent support, benefits, and recognition to employees who consistently perform behaviors aligned with in-group characteristics. In this way, all three parties directly benefit from the continually cultivated positive relationships between organization, leader, and subordinate.
References:
Liden, R. C., Shore, L. M., & Wayne, S. J. (1997). Perceived organizational support and leader-member exchange: A social exchange perspective. Academy of Management Journal, 40(1), pp. 82-111. Retrieved from https://s3.amazonaws.com/academia.edu.documents/30610192/perceived_org_support.pdf?response-content-disposition=inline%3B%20filename%3DPerceived_organizational_support_and_lea.pdf&X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Credential=AKIAIWOWYYGZ2Y53UL3A%2F20200309%2Fus-east-1%2Fs3%2Faws4_request&X-Amz-Date=20200309T070725Z&X-Amz-Expires=3600&X-Amz-SignedHeaders=host&X-Amz-Signature=ff088a4c4b12f20ea370888c79f76c868f46240c1a11ecfe93ecd8fc59b87a6b
Northouse, P. G. (2016). Leadership: Theory and Practice. 7th Edition. Los Angeles, CA: Sage Publications.
Pennsylvania State University World Campus. (2020). PSYCH 281 Lesson 8: Leader-Member Exchange Theory. Retrieved from https://psu.instructure.com/courses/2040131/modules/items/28001769