Activity

Chapter 7: Leader-Member Exchange Theory

Definition

 Some theories focus on leaders:  trait approach, skills approach, and style approach

 Other theories focus on the follower and the context:  situational leadership and path–goal theory

 Leader–member exchange (LMX) theory focuses on:  interactions between a leader and followers

Peter G. Northouse, Leadership: Theory and Practice, Seventh Edition. © 2016 SAGE Publications, Inc.

 In-group/out-group status based on how well follower works with the leader and how well the leader works with the follower

 How followers involve themselves in expanding their role responsibilities with the leader determines whether they become in-group or out-group participants

 Becoming part of the in-group involves follower negotiations in performing activities beyond the formal job description

Research findings:

Follower

In-Group – more information,

influence, confidence, & concern from leader

– more dependable, highly involved, & communicative than out-group

Out-Group – less compatible with

leader – usually just come to

work, do the job, & go home

In-Group & Out-Group Followers

Out-GroupOut-Group Leader

In-Group

F

F FF

F

FF

FFF

F

F

F

F

F Peter G. Northouse, Leadership: Theory and Practice, Seventh Edition. © 2016 SAGE Publications, Inc.

 Researchers found that high-quality leader–member exchanges result in  Less employee turnover  More positive performance evaluations  Higher frequency of promotions  Greater organizational commitment  More desirable work assignments  Better job attitudes  More attention and support from the leader  Greater participation  Faster career progress

Peter G. Northouse, Leadership: Theory and Practice, Seventh Edition. © 2016 SAGE Publications, Inc.

(from Graen & Uhl-Bien, 1995)

Leadership Making (Graen & Uhl-Bien, 1995)

Stranger

 Interactions within the leader-follower dyad are generally rule bound

 Rely on contractual relationships

 Relate to each other within prescribed organizational roles

 Motives of follower directed toward self-interest (paycheck or other benefit) rather than good of the group

Phase 1Phase 1

Peter G. Northouse, Leadership: Theory and Practice, Seventh Edition. © 2016 SAGE Publications, Inc.

Leadership Making (Graen & Uhl-Bien, 1995)

 Begins with an “offer” by leader/follower for improved career-oriented social exchanges

 Testing period for both, assessing whether  the follower is interested in taking on new roles  leader is willing to provide new challenges

 Quality of exchanges improves along with greater trust & respect

 Less focus on self-interest, more on goals of the group

Phase 2 Acquaintance

Peter G. Northouse, Leadership: Theory and Practice, Seventh Edition. © 2016 SAGE Publications, Inc.

Leadership Making (Graen & Uhl-Bien, 1995)

Mature Partnership

 Marked by high-quality leader–member exchanges  Experience high degree of mutual trust, respect, and obligation toward

each other  Tested relationship and found it dependable  High degree of reciprocity between leaders and subordinates  May depend on each other for favors and special assistance

Phase 3

Partnerships are transformational – moving beyond self-interest to accomplish greater good of the team & organization

Strengths, Criticisms, & Application

 Strength: LMX theory has a solid research foundation that describes work units in terms of those who go above and beyond (who are part of the in-group) and those who do the bare minimum (who are part of the out-group), having positive organizational outcomes

 Criticism: It runs counter to the human value of fairness.

 Applications: Directs managers to assess their leadership from a relationship perspective and sensitizes managers to be on the look-out for in-groups and out-groups developing within their work units