Leadership

PSYCH 485 blog

The Independent Contractor Role in LMX Theory

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Until the last two years, I have held a traditional role as a direct employee to a company. After transitioning into an independent contractor role, I discovered that many benefits were being rewarded to employees that independent contractors were missing out on, most importantly the benefits from strong leadership. It seems that a huge gap exists in the interactions occurring between leaders and employees versus those between leaders and independent contractors. Much of these interactions, when further examined under the Leader-Member Exchange (LMX) theory, explain why such disconnected leader-follower relationships involving independent contractors continue to survive in corporate environments and are reinforced by the cultures developed from an antiquated view of leadership (e.g., trait approach) (Northouse, 2019). Fortunately, leaders can curb this type of dismissive mindset towards independent contractors. To achieve this, leaders must understand the types of groups (or dyads) residing in their work environments (Northouse, 2019), the effects that come from developing “high- and low-quality LMX relationships” (Northouse, 2019), and the LMX theory principles available to apply in the interactions occurring with independent contractors (Northouse, 2019).

Before describing and analyzing how leaders can strengthen a leadership process that involves independent contractors as followers, the LMX theory approach must first be explained. Northouse (2019) noted that the LMX theory focuses on the engagement process that a leader and follower establish. This means that the relationship that both the leader and follower decide to commit to will determine the strength of the leadership process (Northouse, 2019). Whereas other leadership theories focus on either the leader, follower, or situation in the leadership process, the LMX theory emphasizes the leader’s and follower’s chemistry (Northouse, 2019). With this fundamental knowledge, a leader can further examine the relationships they develop with followers, in this case, independent contractors.

LMX theory reveals that there are two different types of groups that form in an organizational environment: the “in-group” and the “out-group” (Northouse, 2019). The distinctions between these groups are not subtle (Northouse, 2019). The in-group will consist of followers considered to be the leader’s closest confidants (Northouse, 2019). This exclusive group will go above and beyond for the leader, winning their leader’s favor and approval (Northouse, 2019). In contrast, the out-group is considered to be a crew of outcasts when compared to the in-group. These individuals are meant to fulfill one purpose: to complete the task requirement they were appointed for (Northouse, 2019). Services performed by the out-group do not receive recognition or adulation but confirmation. Therefore, the out-group and leader merely participate in a transaction (Northouse, 2019). In other words, the follower provides a service, and the leader acknowledges that the work was completed and approves the compensation that is to be distributed to the follower.

This interaction between a leader and the out-group is a perfect example of how leaders interact with independent contractors. Independent contractors are contracted to provide a specific set of services and nothing else. Since independent contractors either work for themselves or a different company, corporate cultures have limited their scope and resources to only what is required to complete the task they are hired for (Northouse, 2019). Anything outside their work contract is irrelevant. That means any opportunity for professional growth is inaccessible to them, mentoring by a leader is non-existent, and communication is concentrated solely on the job requirements (Northouse, 2019). As a result, these constraints affect the quality of relationships developed between these leaders and independent contractors (Northouse, 2019).

According to the LMX theory, there are two types of quality LMX relationships: high-quality and low-quality (Northouse, 2019). The high-quality LMX relationship is most common in the exchanges between leaders and in-groups (Northouse, 2019). These LMX relationships lead to much more enriched work environments where followers thrive and effectively accomplish their goals (Northouse, 2019). Likewise, leaders demonstrate strong leadership due to their followers’ motivation and dedication to the harmonious relationship developed between them (Northouse, 2019). On the opposite end of the LMX relationship spectrum are low-quality LMX relationships. These types of relationships disclose the incompatibility between leaders and followers (Northouse, 2019). As researchers Harris, Wheeler, and Kacmar discovered, low-quality LMX relationships espouse mistrust, disengagement, and reticence (as cited in Northouse, 2019). Thus, out-groups will experience these types of LMX relationships the most since their only objective is to complete work based on their job roles’ expectations. Any benefits outside of these expectations are not offered to out-groups, which discourages any opportunity of strengthening the exchanges between leaders and followers as they are unnecessary.

Low-quality LMX relationships are common between leaders and independent contractors hired to work on specific projects. Since the contract is temporary or short-lived, a leader will scrutinize each phase of the project to ensure that the independent contractor is fulfilling the objectives. This is indicative of the lack of trust that exists within the low-quality LMX relationships (Northouse, 2019). One would think that this thorough examination into a project would lead to a persistent engagement between independent contractors and leaders. However, leaders will generally withdraw from providing further direction on a project and follow up only for a status update when working with independent contractors. Because independent contractors are considered the subject matter experts on the assigned tasks, leaders also forgo collaborating with independent contractors. Regardless, this type of low-quality LMX relationship hampers the overall effectiveness of the leadership process between leaders and independent contractors.

As Northouse (2019) pointed out, the LMX theory provides areas of opportunity for leaders to analyze their interactions with followers and make appropriate adjustments in order to improve these relationships. Since independent contractors align closer to the low-quality LMX relationships that exist with out-groups, the following suggestions can help reform these types of interactions that are prevalent between leaders and independent contractors.

Leaders must understand that an organization’s restrictions on providing tangible benefits (e.g., insurance benefits, time off, company discounts, employee stock) does not mean that leaders are restricted from providing intangible benefits (e.g., positive work environment, job satisfaction, career growth advice). LMX theory teaches that positive outcomes follow strong collaborations between leaders and followers (Northouse, 2019). So, leaders should seek to increase their interactions with independent contractors and determine the best way to supply those intangible benefits. Satisfying this desire or need (which I have personally experienced) can set a solid ground for developing strong partnerships, which benefits the leader, independent contractor, and the organization as a whole (Northouse, 2019). Additionally, these partnerships help counter the shortcomings of low-quality LMX relationships and transform them into high-quality LMX relationships (Northouse, 2019). Above all, the most important element that must not go unnoticed in the LMX theory is communication (Northouse, 2019). Every interaction or engaged process requires some form of communication between leaders and followers (Northouse, 2019). Therefore, leaders should always make an effort to keep an open line of communication with independent contractors, as this benefits all those involved in the leadership process working towards a goal. As Northouse (2019) stated, strong communication develops the most effective interactions between leaders and followers.

The LMX theory provides guidance for strengthening the interactions between leaders and independent contractors by recognizing the types of groups and relationships present in a work environment (Northouse, 2019). High-quality LMX relationships are generally found in the interactions between leaders and in-groups (Northouse, 2019). Meanwhile, low-quality LMX relationships are experienced by leaders and out-groups, resulting in minimal interactions that leave much to be desired in the leadership process that involve followers such as independent contractors. It is up to leaders to establish strong communication levels with independent contractors, so they feel valued and accepted as part of the organizational team (Northouse, 2019). Maintaining an open communication line and establishing an environment of collaboration are a few ways to turn these low-quality LMX relationships into high-quality LMX relationships. Lack of employing these suggestions from the LMX theory will only result in stunted productivity and poor progress towards organizational goals. Thus, a positive level of engagement provides an incentive for the independent contractor to put their best effort into their work to produce top results for the leader and organization (Northouse, 2019), providing a win-win situation for all participating individuals in the leadership process.

Reference:

Northouse, P.G. (2019). Leadership: Theory and Practice. Thousand Oaks: Sage Publications.

Leader-Member Exchange Theory In-Group and Out-Group

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I would like to discuss an important topic that I have learned this week in psychology 485: Leadership in Work. As you can imagine, and I am sure you have seen there are several types of employees at your work place or organization, and some of those employees are going the extra mile to keep their employer happy. There are also those employees who clock in and clock out and do exactly what it is required of them, nothing more, and nothing less. This brings up the in-groups and out-groups of Leader-Member Exchange Theory.

Leader-Member Exchange Theory focuses on the inter communication between the leader and the follower. Up to this point I’d thought that the influence in workplace would be from the leader on the follower, however, the LMX theory interaction suggests that followers can also have some effect on the leader as well (PSU, 2018). There were two types of LMX that exist and the first one being the in-group which as I had mentioned earlier extra role responsibilities or doing extra stuff for the employer that is not in the job description. The second type of LMX would be the out-group which again as I have mentioned earlier were based on the formal employment contract.

As I have seen these, many times before and still do, I feel like those who believe that they are part of in-group are doing great at work and performing even extra duties. Unfortunately, many times it’s just the exact opposite. I have seen employees who choose to bring in coffee for their boss or run errands that is not part of their job description get treated unfairly better to those employees who do exactly what is required of them but do not choose to have personal relationship with their employer. In my opinion this is a main problem with having an in-group at a workplace. Of course, the bosses would love if everyone went that extra mile to keep them happy, even though that mile has nothing to do with the job or task at hand.

The research into LMX theory has also found that how exchange between leaders and followers can be used to make future leaders. Leadership making is a broad view to leadership pinpoint that leaders should develop high-quality exchanges with all their employees, rather than just a few. Leadership making can benefit the organization and even the career of the leaders as well (Northouse, 2013).

In my opinion LMX can be very beneficial to the organization and even the leaders. The in-group can produce some positive outcome for those who are part of it, however it can be unfair for those who choose to be part of the out-group for whatever the reason. Some individuals belong to diverse groups, it just happens that they don’t need to fulfill being part of a group at work for example. According to the lesson some of the weaknesses of the LMX theory is that there is no perfect measure of leader-member exchange. It also runs counter to the basic human values and fairness, especially true if the out-group does not get treated fairly and finally the ideas of LMX theory is not completely developed. IT does not describe how respect and trust is built into the relationships (PSU, 2018).

References:

Northouse, P.G., (2016). Psychology 485: Leadership: Theory and Practice. Lesson 8: Leader-Member Exchange Theory (LMX). Los Angeles: Sage Publications

 

Penn State University, (2018). Psychology 485: Leadership: Theory and Practice. Lesson 8: Leader-Member Exchange Theory (LMX).

LMX Importance.

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Imagine yourself within a company that the leader (your boss) is classified as someone who favors a specific group of people. This group is not based on gender, race, sexuality, religion, etc., it is simply based on your performance. How would you act in this situation and what would it say about your character in a company? Would you be someone who is actively trying to produce a higher performance or someone who slacks off? Well, within the company that I used to work for as a waitress, there was a manager who had an in-group and an out-group. What is this you ask? Well, this is a part of the Leadership- member exchange theory or better known as LMX theory (Northouse, 2016). LMX theory is based upon a specific process that is shown through leader and follower interactions (Psych 485, L.8). My companies General Manager, had these groups shown through everything she did. I believe that it both help and hurt the company. You could reach the in-group by three specific phases that are presented by Graen and Uhl-Bien (1991). These phases are; the stranger phase, the acquaintance stage, and the mature- partnership stage (Northouse, 2016).

The first phase, known as the stranger phase is “the fresh air” stage of the relationship. The leader and follower do not know much about each other when they first start working. The only thing that they know is the roles that they’re going to play. When I first stepped into this serving job, I met my general manager and she was a very charismatic individual. I started off just by doing my job and slowly increasing performance because she would encourage me. I would never do anything that was entrusting to her or the company. This would attribute to her positive attitude towards me and we would eventually turn into the acquaintance stage.

The next stage, the acquaintance stage is when the individual will receive career- enhancing benefits (Northouse, 2016). In other words, they will in the said in- group and be able to grow positively in the company. As for me, when I made it to this stage, my boss gave me special opportunities to advance. For example, she first had me promoted to bartender where I would be making much more money and have more experience. This would entail closing the restaurant by myself if I would need to, having the responsibility of alcohol and obviously having much more duties. I believe that this positively helped out relationship because I would close with her almost every night. She would eventually have me do manager duties as well to make sure I could advance even more.

This is where the last stage of mature- partnership comes into play for me. This is when the leader and follower look out for one another (Northouse, 2016). This can also entail that they each understand each other and work well together. I was eventually given the opportunity after about 2 years, to become an assistant manager. Within this period of time, I learned how to close a restaurant, be a cook and a bartender. I was taught all of these things and enhanced just because of my performance of being a hard- worker at this job. This enhanced my career by learning all of these new responsibilities because I can classify myself as a leader now.

I believe that performance is the most important factor of a trait within an employee. It means that they are consciousness to the fact that it is important to obtain and withhold this persona. It will help the company and employees can get into this “in-group.” Within this group, they will be able to enhance their career, learn more about themselves and learn a lot more. I think that LMX theory does a great job of explaining this and should be looked at more seriously.

 

Works Cited:

Northouse, P.G. (2016). Leadership: Theory and Practice. Thousand Oaks, CA: Sage Publications, Inc.

Pennsylvania State University World Campus (2016). PSYCH 485 Lesson 8: Power and Influence. Retrieved from https://courses.worldcampus.psu.edu/su16/psych485/001/content/08_lesson/03_page.html

Eliminating Out-Groups

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LMX Photo

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

LMX at Work: Deciphering the “High School Drama”

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By: Susan Hicks

Recently I had the opportunity to disrupt my ‘status-quo’ at work. I got an amazing opportunity to ‘test drive’ a new position at work for 6 months to see if I liked the job and if I wanted to interview for the position. This opportunity was advantageous for me to see if I could handle the job with the enormous responsibilities of work and home. This ‘test drive’ was additionally beneficial for my employer to see if I could handle the job requirements that they would be expecting of me. Therefore, for 6 months I got to move to a different department and run my own team of individuals as their appointed manager. This experience is not about my leadership relationships with my followers, rather a shattering of the ‘status-quo’ in the relationship as me the follower to my leader – my new supervisor – in a foreign environment entirely unfamiliar to me which was the “High School Drama” that plays out behind the scenes amongst the management of my work.

Initially, I felt that I was being brought into the “in-crowd”, being accepted and taken under the wings of my new fellow co-workers. Everyone was vying for my attention, asking me about myself, my hobbies, my likes and dislikes and consequently being offered advice and guidance on job functions. The more I talked to co-workers, the more I found who I liked and those whom I really shouldn’t be talking to – the so-called ‘shunned ones’ who were not part of the “in-crowd”. At one point, I was actually given a dirty look from another co-worker for having lunch with someone they disproved of. This was playing out of a “high school drama” whereas there were cliques that if you wanted to advance and promote, you would incorporate into your network, and those who you talked to, yet remain cautious of long personal encounters for fear of retribution from your “group”. This biggest promoter of this popularity contest was our supervisor who acknowledged to me that if I had any questions or needed any help, to ask only from a small elite number of individuals – the approved ones.  Really, am I in high-school again?

As a member of the “in-group”, I found the task of fitting into their preconceived ideologies (how they treated each other and how they treated the followers in our teams) harder than just being myself and expressing my own opinions and viewing my own followers as my team instead of treating my followers the way they believed followers should be treated – like mules (now this really sounds like High-school now doesn’t it). I wanted to understand why those in the “out-group” weren’t making the promotions, weren’t leading the teams, weren’t getting the easy jobs within our group, and why they got lead around also like ‘a rented mules’.

To look at this situation from the leadership perspective of the Leader-Member Exchange Theory (LMX), we can gain insight in this “drama” and others like it, as to why this occurs and the strengths and weaknesses of this exchange in the efficiency of workplace task completion.

LMX theory in early research posited that there were “vertical linkages” between leaders and followers that resulted in either “in-group” (negotiated roles) or “out-group” (formal employment) relationships (PSU, 2014). These linkages occurred as relationships that resulted in those in the in-group that were found to receive more advice, concern, guidance, and in turn became more dependable, involved, and communicated with the leader (Northouse, 2013).

LMX-VDL

This is similar to my initial experiences in my “test drive” position as others (including the supervisor) brought me into their clique and took me under their wing. However, as perceptions of ideologies, work habits, and dissatisfaction for the treatment of others became misaligned with the others, the linkage became weak as I was compelled into the “out-group” that found less compatibility with the leader (and associates) and therefore turned my focus more on work related tasks (Northouse, 2013).

Later studies on this theory identify 3 phases that this relational exchange undergoes.

lmx-hypothesis

As I found myself progressing through Phase 1 (strangers getting to know one another), through Phase 2 (acquaintances providing “career-orientated social exchanges”), I found that the mature partnership of Phase 3 did not develop primarily due to differing ideologies and my temporary status in the position (Northouse, 2013). We did not have enough time to neither air our differences nor to fully understand each other’s moral and ethical backgrounds that brought us to the beliefs and values each of us hold to produce a relationship with the intensity that fosters in-group respect and admiration. Additionally, I never had the time to acquire the respect from my leader or co-workers to validate and understand that my ethical work perceptions were not going to be influenced from others to change how I treated people just because my title or in-group affiliation should accept this new perspective as my new status-quo. I fully understand that this tit-for-tat relational interplay allowed them to assess to which degree that I would perform task functions that would not see me as the freelancer, the loose cannon, or the troublemaker that could essentially bring turmoil to the department’s efficiency. They wanted to mold me to the structure of the group and trust that I would not in my temporary status bring shame to the department. These relationships of understanding that occur between the leader and the follower take time to develop in secure trusting mutual bonds of respect and trusting reciprocity that neither of us fully had time to cultivate. Instead of viewing this position as a “high school drama”, I have now come to appreciate and understand that respect is earned over time and cannot just merely be obtained in a six-month positional “test drive”.

I have since left this position to return back to my old job. There were no available interviews at the time of my return so I am left to the arduous task of using what I learned to decide in the future if I wish to re-enter this environment and to re-establish the leader-member exchange relationships in order to advance further in my career. I do not regret my journey. We must accept that in-groups and out-groups exist and in order to identify the in-group, there must be someone in the out-group to compare against. Furthermore, there are individuals who contribute more professionally and socially to the workplace experience (in-group ideology) and those who just come to work (out-group). This theory is descriptive in its ability to identify the presence of these groups and focuses primarily on leadership in this relationship. Interactions that are nurtured, cultivated, molded, and valued stem from a communicative process over time and research has provided us with a great deal of substantiating evidence to the effectiveness of followers in work related performance and satisfaction when this relational exchange is high. Conversely, on the surface we see that these relationships appear to be unfair in the promotion of those who we seemingly like or dislike according to the matching of work related ideologies on human treatment of superiors or followers alike. Therefore, this research doesn’t appear to explain why some are promoted more easily in the in-group. We can only surmise that this may involve access to knowledge, performance recognition, or the idea that leaders promote others inequitably based on the concept of advancing those most like themselves.

No one can answer if it is in one’s best interest to play in the “high-school drama” popularity contest and to go with the in-group. Only the individual can assess if they are willing to pay the price of relinquishing their moral and ethical work obligations to play in a shallow tit-for-tat relational exchange that on the surface appears to be childish in nature. However, the building of relationships over time that creates and builds with intensity, intrapersonal reciprocity of respect and trust that does not surrender basic tenants of ones principals, allows the cultivation of accepted understanding and leader-member exchange appreciation that can effectively allow everyone to advance within careers yet still remained focused on quality relationships and work related efficiency.

References:

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

Pennsylvania State University. (2014). PSYCH 485 Lesson 8: Leader-Member exchange Theory (LMX). Retrieved March 4, 2014 from

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