The Leader-Member Exchange Theory (LMX) emphasizes the importance of the reciprocal relationship between leaders and each of their followers. Early studies of LMX found that there are two kinds of relationships in work groups: in-groups and out-groups. Employees who get along with the leader and yearn for more responsibilities at work are categorized as in-group. In-group employees benefit from more information, commitment, involvement, and communication. They receive rewards in return for their extra work and more support from the leader. Employees who only satisfy the responsibilities outlined in their employment contracts are put into an out-group. These employees do not get any special treatment; instead, they are trusted less and communicate less with the leader (Northouse, 2013). More recent studies stress that leaders should strive to have in-group relationships with all of their employees, eliminating out-groups, to create more organizational success. This process is called leadership making (Northouse, 2013). However, it may not be possible or desirable to completely eliminate out-groups from the workplace.
There are two reasons why the elimination of out-groups is not possible or desirable. Firstly, some employees may not want to be in an in-group (PSU WC, 2014, L. 8). During the second phase of leadership making, called the acquaintance phase, either the leader or employee initiates a desire to increase the quality of their exchange. Employees can initiate this, looking for leaders who are able to give them more responsibility. Leaders look for individuals who are out-going and enthusiastic, then offer them opportunities to expand their roles in the organization (Northouse, 2013). At this point, if employees have not initiated the process, and deny the leader’s invitation to the in-group, then there is nothing further that can be done. Employees who do not want to be in the in-group have to remain in the out-group, and there are always individuals that only want to do what is required of them, nothing more. Employees cannot be forced to expand their roles. They are getting paid to satisfy the requirements of their employment contract and are not obligated to do more if they do not want the benefits of being in the in-group.
Secondly, the elimination of out-groups would make in-groups the new norm (PSU WC, 2014, L. 8). If it was possible to get every employee in the in-group, then the preferential treatment that in-groups used to get would become how all leaders treat all employees. This would eliminate groups all together, redefine employment contracts, and increase the amount of information shared at an organizational level. Organizations and groups need different levels of employees in order to dictate how relationships are carried out.
According to Northouse (2013), a major criticism of LMX is that it does not take fairness into consideration. The benefit of realizing that leadership making is not entirely possible or desirable is that the fairness issue of LMX would be erased. The leader can try to have a reciprocal relationship with all employees, trying to treat them all fairly, but if they reject, it cannot be said that the leader is being unfair, or preferential. The employee who rejects in the invitation to the in-group has no interest in being treated like the employees in the in-group, thus cannot complain about being treated differently. Fairness is not an issue if some employees do not want the benefits of being in the in-group.
When I was a general manager of a pizza place, I tried to have a high-quality exchange with all my employees. However, given that it was a demanding job paying minimum-wage, many of my employees were not interested in going above their job description, let alone even satisfying that description. These employees did not need extra information, communication, or support from the managers of the company because they simply wanted to come to work, do the minimum that they had to do, and leave. The contrast between these employees and the employees in the in-group led to even higher-quality exchanges with the more motivated, enthusiastic and participative employees. Seeing the preferentially treatment, rewards, and support they received in contrast to what others did not receive motivated them even more. Without having both groups, no one would feel like they were getting treated better in direct relation to how hard they are working. At the restaurant, the existence of both out-groups and in-groups built confidence, security, and satisfaction for those who went above-and-beyond what was outlined in their employment contracts.
References
Northouse, P. G. (2013). Leadership: Theory and practice (6th ed.). Los Angeles: SAGE.
Pennsylvania State University World Campus (2014). Psych 485 Lesson 8: Leader-Member Exchange. Retrieved from https://courses.worldcampus.psu.edu/fa14/psych485/001/content/08_lesson/printlesson.html