Transformational Leadership and LMX

6 GroupCentered Theories “In crowds we have unison, in groups harmony. We want the single voice but not the single note; that is the secret of the group.”

MARY PARKER FOLLETT

Groupcentered leadership theories strongly emphasize the process dimension, examining how leadership unfolds in teams and in particular the role of leaders in shaping this. Follett's quote that opens the chapter recognizes the central thrust of this cluster of theories: the importance of moving from simple groups acting in unison to increasingly complex understandings of teams acting synergistically. Theories comprising this cluster include leadermember exchange theory (LMX), team leadership, and shared leadership, each of which represents an evolution of thinking about how groups and teams function. It is important, here, to set up a key differentiation between groupcentered theories explored in this chapter, and relationshipcentered theories discussed in Chapter 8. With groupcentered theories, any investment in process is functional and in service of organizational goal achievement rather than the deeper understanding of relationships, interdependence, and mutual development that characterize relationshipcentered theories. Thus, synergy in groupcentered theories remains in service of productivity.

LEADERMEMBER EXCHANGE THEORY LMX holds an important place in the leadership literature and serves as a point of departure from earlier theories that treated followers as an aggregated work group rather than unique individuals, each with distinctive needs. It shifted leadership from being viewed as the unidirectional influence of a leader on a group of followers to bidirectional relationships between leaders and each of their subordinates. Why, then, is LMX included in a cluster defined by its attention to groups if it stresses individual, dyadic relationships? This is an astute question. LMX offers both a richly descriptive picture of how dyadic relationships play out in organizational life contributing to the formation of ingroups and outgroups as well as prescriptive recommendations on how to shape these groups in service of goal achievement.

I should state up front that I have a love/hate relationship with LMX—and yes, I know this represents a false dichotomy. The truth is that LMX in its earliest forms unabashedly described inequitable social and organizational realities. The creation of hierarchies of in and out groups, whether consciously or subconsciously constructed, may not seem fair but are all too often an accurate depiction of what transpires in life everywhere from the playground to the boardroom. Early iterations of the theory capitalized on this to the advantage of the leader and the organization. Gross. The challenge, then, becomes disrupting these dynamics with later iterations of the theory offering insights on how to do so. The history and roots of LMX as a

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tool of social stratification remain, though, and require us to avoid solely engaging with contemporary versions that wash out or sometimes mask uncomfortable language and intentions.

Overview The seeds of LMX originated with the vertical dyad linkage (VDL) approach (Dansereau, Graen, & Haga, 1975), which moved away from earlier theories of production and effectiveness that proposed using an “average” leader style to meet the needs of a work group perceived to be homogenous. VDL stressed the importance of establishing individual links between a leader and each direct report. LMX built on this assumption by defining effective leadership as a result of incremental gains in influence that emerge “when leaders and followers are able to develop mature leadership relationships (partnerships) and thus gain access to the many benefits these relationships bring” (Graen & UhlBien, 1995, p. 225). Over time, the theory has evolved in response to both empirical research and changing social conditions.

LMX, although marketed as a relational theory of leadership, was originally conceived as a way to maximize efficiency by directing a leader's finite resources toward a select subset of productive team members. The descriptive approach to LMX represents its earliest incarnation, emphasizing the formation of organizational in and outgroups into which leaders actively classify subordinates. Ingroup members receive a disproportionate amount of time, energy, and investment on the part of the leader, taking on additional responsibility and reaping greater organizational rewards. These rewards include increased influence, greater access to information and resources, and more opportunities for mentoring and learning (Erdogan & Bauer, 2014). Outgroup members, on the other hand, are managed based on minimal contractual obligations functioning largely “like a part in a complex machine” (Dansereau et al., 1975, p. 49). It is important to note here that the theory never calls for out group members to be treated poorly, but they are also not treated equitably. Dansereau et al. (1975) suggested leaders engage with ingroup members using the principles and skills of leadership while supervision is all that is necessary to work with outgroup members. Figure 6.1 provides a visual depiction of LMX relationships between the leader and subordinates based on the descriptive approach.

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FIGURE 6.1 LMX relationships

Please add hyphen to highquality that comes below INGROUP

Understanding the differential characterization of in and outgroup members in LMX is important given the deficit perspectives often perpetuated by early iterations. Outgroup members are characterized as “less fortunate” (Graen & UhlBien, 1991, p. 35) or no more than hired hands (Zalesny & Graen, 1987). This is despite evidence that many outgroup members actually desire greater involvement and attention from the leader than what is offered (Dansereau et al., 1975). Conversely, ingroup members are characterized as trusted assistants who are selfinitiating, motivated beyond base expectations, and who demonstrate concern for supporting their leader's success (Graen & UhlBien, 1991, 1995). These polarizing characterizations result in more favorable treatment of ingroup members on the part of leaders.

Fairhurst (2007) described LMX as “based on a simple premise: leaders discriminate in their treatment of direct reports or ‘members’ in forming relationships” (p. 119). This discrimination was blatant and purposeful in early versions of the model, with the leader as the sole determinant of followers' classifications into in or outgroups. Later versions of the theory suggested that the goal of the leader should be to extend offers to build the highquality relationships characteristic of ingroup membership with everyone in an organization. Graen and UhlBien (1995) acknowledged that not all of these offers may be accepted, but that this

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would go a long way toward improving organizational perceptions as well as making LMX “more palatable to practitioners and students who may have been uncomfortable with the inequity issue” (p. 229). One of my students summed it up best when she reacted to this by sharing, “Oh, I get it. LMX is no longer about discriminating, but it's also not about not discriminating.” Damn that pesky “inequity issue.”

Applying the Concept LMX eventually adopted a more prescriptive approach exploring how leaders could influence dyadic relationships as a means to increase organizational success. This occurs through the leadershipmaking process and cultivation of highquality exchanges.

The LeadershipMaking Process The leadershipmaking process was conceived as a vehicle to cultivate highquality, dyadic partnerships between leaders and all members of an organization essentially attempting to create the largest possible ingroup. It is important to note, however, that with the introduction of the prescriptive approach LMX sought to move away from the descriptive use of ingroup and outgroup characterizations. That having been said, it is easy to see how the leadership making process contributes to the same types of social stratifications, simply altering the terminology and process by which individuals are classified.

The leadershipmaking process consists of three phases in which leaders and followers engage in increasingly reciprocal investments in one another that contribute to relational maturity (Graen & UhlBien, 1991).

The Stranger Phase

In the first phase, the leader and follower recognize an inherent interconnection between their roles but interactions are strictly contractual. The leader engages more formally and the follower adheres to duties as assigned and nothing more.

The Acquaintance Phase

The second phase represents a testing period based on mutual selfinterest in which increasing interactions result in the leader, the follower, or both individuals engaging beyond minimal contractual expectations. This may involve sharing more sensitive personal or professional information, opportunities for measured increases in responsibility, and/or provision of limited additional resources. The quality of the relationship is essentially being vetted through these actions to see how they are received.

The Partnership Phase

The third phase reflects a longterm, reciprocal investment that manifests through behaviors as well as emotional connection. It is characterized by mutual loyalty, support, and a high degree of trust, obligation, and respect that translates into going above and beyond personal and professional expectations for one another.

It is important to state here that movement through the phases in the leadershipmaking model Dugan, J. P. (2017). <i>Leadership theory</i>. Retrieved from http://ebookcentral.proquest.com Created from apus on 2017-06-23 08:16:17.

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is not based on coercion, authority compliance, or threat, but through a growing sense of interdependence between the leader and subordinate that emphasizes the needs of the larger team (Graen & UhlBien, 1991). The goal is to create the opportunity for relational maturation with all followers, but this may not universally occur. Some relationships may not move beyond the stranger phase, functioning solely based on contractual obligations. This could be because a subordinate has no desire to engage beyond contractual obligations or because interactions between the leader and subordinate never transition to the testing phase. Other relationships may shift into the acquaintance phase but stagnate there. Still others might progress to the second or third phases only to devolve back to earlier ones. Typically, however, those relationships that mature to the partnership phase are long lasting and stable (Liden, Wayne, & Stilwell, 1993; Nahrgang, Morgeson, & Ilies, 2009).

Cultivating HighQuality Exchanges The leadershipmaking process is premised on the concept that leaders should extend invitations to all subordinates to build highquality exchanges even if not all subordinates will accept those invitations. Graen and UhlBien (1995) suggested that invitations “will not be made and accepted without (1) mutual respect for the capabilities of the other, (2) the anticipation of deepening reciprocal trust with the other, and (3) the expectation that interacting obligation will grow over time as careeroriented social exchanges blossom into a partnership” (p. 237). These core tenets provide the foundation for cultivating the highquality exchanges that translate into relational maturation within the leadershipmaking process.

Synthesizing a broad body of research, Erdogan and Bauer (2014) suggested that leaders can stimulate maturation through delegation and engaging in behaviors that communicate empathy, fairness, and ethical values. Above and beyond this, though, exactly how relationships are cultivated is less clear. The leadershipmaking process may be prescriptive, but its prescriptions are relatively vague, with more attention directed toward describing the quality of the relationships at each phase than specifics on what stimulates movement between phases.

Dyadic Relationships in Complex Organizations A final shift in theorizing on LMX acknowledged that highquality dyadic exchanges do not just occur between those with formal positional power and the subordinates who report directly to them (Erdogan & Bauer, 2014; Graen & UhlBien, 1995). Rather, these partnerships occur both inside and outside the lines of traditional organizational charts. Indeed, some of the most mature partnerships may function among peers at the same level of the organization or among individuals across organizational units. This disrupts traditional notions of where power lies organizationally through the recognition that multiple partnerships (as well as in and outgroups) operate simultaneously and often in overlapping ways in complex organizational systems.

How Research Evolves the Concept LMX continues to serve as a basis for a large volume of empirical research, although the

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interpretation of findings across studies is complicated by the lack of agreement among scholars about the most appropriate research designs and measurement approaches (Anand, Hu, Liden, & Vidyarthi, 2011; Graen & UhlBien, 1995; Yukl, 2013). Additionally, despite theorists' attempts to leave behind the descriptive approach's language of in and outgroup membership, the concepts still permeate contemporary research. Let's look at two themes from research on LMX.

Factors Contributing to HighQuality Exchanges Much of the research on LMX examines factors that contribute to low versus highquality exchanges between leaders and subordinates. Scholars agree that the leadershipmaking process is initiated quickly, with early interactions forming important foundations from which the relationship is assessed (Bauer & Green, 1996; Liden et al., 1993; Nahrgang et al., 2009). Research also suggests that exchange relationships are not always based on a person's level of competence but on perceptions of similarity in terms of values, attitude, and personality as well as “liking” (Bernerth, Armenakis, Field, Giles, & Walker, 2008; Dulebohn, Bommer, Liden, Brouer, & Ferris, 2012; Harris, Harris, & Eplion, 2007; Liden et al., 1993; Nahrgang et al., 2009). In other words, being liked by and sharing values and personality traits with the leader may trump subordinates' actual levels of competence and productivity in determining whether a leader invests in cultivating a highquality relationship with them. Just think about that for a minute.

Researchers typically report that demographic similarity based on race, gender, sex, age, sexual orientation, and educational level do not influence the relative quality of the relational exchange (Erdogan & Bauer, 2014; Liden et al., 1993; Matkin & Barbuto, 2012). However, scholars challenge this assertion, stating that the extent to which differences associated with gender and race along with other minoritized identities have been tested is insufficient and existing research should be considered inconclusive at best (Ayman & Korabik, 2010; Chattopadhyay, Tluchowska, & George, 2004; Chin & Trimble, 2015). This argument is supported by research indicating that similarity between leaders' and subordinates' implicit assumptions about the role and behaviors of leaders contributes to higherquality relationships (Engle & Lord, 1997; Epitropaki & Martin, 2005). As discussed in previous chapters, we know that implicit leader prototypes are consciously and subconsciously constructed based on lines of social stratification that preference some identity groups over others.

Interestingly, the level of political skill (i.e., the ability to navigate interpersonal dynamics effectively and leverage them to achieve desired goals) of subordinates is an important mediator of LMX relationships. Brouer, Duke, Treadway, and Ferris (2009) found that political skill could be used to compensate for dissimilarities in values, attitudes, and personality between the leader and subordinate that might otherwise reduce the quality of exchanges. Similarly, Epitropaki et al. (2016) found that individuals in environments with a strong differentiation between high and lowquality exchange groupings could use political skills to increase the quality of relationships with leaders above and beyond that achieved by peers. This positions political skills as an incredibly important form of capital that can be

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leveraged in organizational environments in the navigation of inequitable leadershipmaking processes.

Influences on Leadership Outcomes Researchers demonstrate the clear and positive impact of fostering ingroup membership and highquality exchanges on a variety of leadership outcomes, including follower attitude, satisfaction, and performance; role clarity; organizational commitment; organizational citizenship behaviors; trust in the leader; turnover intent; and unitlevel performance and goal attainment (Dulebohn et al., 2012; Gerstner & Day, 1997; Graen & UhlBien, 1995; Ilies, Nahrgang, & Morgeson, 2007; Martin, Guillaume, Thomas, Lee, & Epitropaki, 2015). Results from research also offer some words of caution. Although LMX suggests the importance of cultivating highquality relationships with as many members of an organization as possible, “most leaders tend to form exchanges of differing quality with their subordinates; only in rare cases do leaders establish similar quality relationship[s] with all subordinates” (Anand et al., 2011, p. 312). This is both a function of a leader's limited time, human, and material resources and a byproduct of how people successfully or unsuccessfully make connections with one another.

Thus, we find ourselves back at the reality that in and outgroup dynamics often constitute our organizational experiences. Several studies detail the risks associated with subordinates in lowquality relationships perceiving favoritism, which in turn can deteriorate interpersonal relationships as well as have an adverse effect on individual leadership outcomes such as work performance (Boies & Howell, 2006; Bolino & Turnly, 2009; Erdogan & Bauer, 2010; Ford & Seers, 2006; Hooper & Martin, 2008; Sias & Jablin, 1995; Van Breukelen, Konst, & Van Der Vlist, 2002). However, research also suggests that the negative impact on individual outcomes may or may not translate into an adverse effect on organizational outcomes (Henderson, Wayne, Shore, Bommer, & Tetrick, 2008; Liden, Erdogan, Wayne, & Sparrowe, 2006). In other words, just because some subordinates are unhappy with their outgroup status does not necessarily diminish goal accomplishment for the group as a whole. Whether this occurs is largely dependent on the context and factors such as the level of interdependence in work functions and the degree to which fairness, justice, and equity are valued. This is the type of disconcerting logic that raises equity issues as well as clearly situates LMX as a theory concerned with leveraging interpersonal linkages in service of outcome achievement. Yukl (2013) perhaps offered the best advice about how to navigate this dynamic by suggesting “not every subordinate may desire more responsibility, but each person should perceive an equal opportunity based on competence rather than arbitrary favoritism” (p. 225).

WrapUp LMX shepherded in a new wave of theorizing and research examining the reciprocal, dyadic relationships between leaders and individual subordinates. The theory examines the uncomfortable reality that most organizational experiences are characterized by varying qualities of relationships between a leader and each subordinate that influence levels of responsibility and commitment to the organization. This in turn contributes to the formation of

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organizational groups with differing levels of support. The question becomes: to what degree does a leader purposefully create opportunities for highquality relationships based on subordinates' desires, potential, and competence versus as a function of social stratification? Table 6.1 identifies additional strengths and weaknesses.

TABLE 6.1 Strengths and weaknesses of LMX

Strengths Weaknesses

Recognizes and increases the importance of dyadic relationships in the process of leadership

Realistically assesses the influence of social stratification in organizations and states the importance of equitable opportunities to develop highquality relationships based on competence

Extensive empirical research establishes the validity of the theory and the positive impact of highquality relationships on leadership outcomes

Insufficient attention toward movement between phases of the leadership making process and how leaders cultivate mature, highquality relationships with followers

Research overemphasizes hierarchical and authoritative relationships with little focus on other types of relationships (e.g., peer, crossunit) that exist in organizations

Left unquestioned the roles of similarity and affinity create potential for inequitable approaches to leadership reinforcing dominant narratives

Making Connections

LMX does not hide how it can contribute to social stratification. How might organizational ideologies exacerbate the creation and maintenance of inequitable in and outgroups?

What stands out as useful about LMX? What do you think needs to be addressed in the deconstruction and reconstruction processes?

TEAM LEADERSHIP The study of small group dynamics and how teams function is the source of abundant research and theorizing across a wide range of disciplines, from industrial psychology to communications. Its purposeful connection to leadership, however, was largely implicit until more recently. Increased attention is driven at least in part by the critical role teams now play in the workforce as a necessary vehicle for accomplishing complex goals. Although there is no universal conceptualization of team leadership, a strong basis of theorizing exists from which

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