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The Leader-Member Exchange Theory

Getting the Best From all Team Members


(Also known as LMX or Vertical Dyad Linkage Theory)

© Veer
MARKBZ

Do you refuse some team members access to your time and attention?

As a manager, it's not always right to treat everyone on your team in the same way.

For instance, you probably have team members that you've developed a great relationship with:
you trust them, they work hard, and they've never let you down. To you, these team members are
invaluable, and you make an extra effort to send challenging projects their way.

It's also likely that you have others on your team who you think less well of. They may not have
far-reaching career goals, they're less competent, and you simply don't trust them to the same
extent. These team members get everyday responsibilities, and are not considered for promotions
or challenging assignments.

However, have you ever stopped to analyze why you don't trust certain team members? Rightly
or wrongly, do you let that distrust, or the belief that they're unreliable, influence how you relate
to them? Do you, even subconsciously, withhold opportunities that might help them grow and
succeed?

This situation is at the heart of the Leader-Member Exchange Theory. This theory, also known as
LMX or the Vertical Dyad Linkage Theory, explores how leaders and managers develop
relationships with team members; and it explains how those relationships can either contribute to
growth or hold people back.

Understanding the Theory


The Leader-Member Exchange Theory first emerged in the 1970s. It focuses on the relationship
that develops between managers and members of their teams.

The theory states that all relationships between managers and subordinates go through three
stages. These are:

1. Role-Taking.
2. Role-Making.
3. "Routinization."

Let's look at each stage in greater detail.

1. Role-Taking

Role-taking occurs when team members first join the group. Managers use this time to assess
new members' skills and abilities.

2. Role-Making

New team members then begin to work on projects and tasks as part of the team. In this stage,
managers generally expect that new team members will work hard, be loyal and prove
trustworthy as they get used to their new role.

The theory says that, during this stage, managers sort new team members (often subconsciously)
into one of two groups.

 In-Group - if team members prove themselves loyal, trustworthy and skilled, they're put
into the In-Group. This group is made up of the team members that the manager trusts the
most. Managers give this group most of their attention, providing challenging and
interesting work, and offering opportunities for additional training and advancement. This
group also gets more one-to-one time with the manager. Often, people in this group have
a similar personality and work-ethic to their manager.
 Out-Group - if team members betray the trust of the manager, or prove that they're
unmotivated or incompetent, they're put into the Out-Group. This group's work is often
restricted and unchallenging. Out-Group members tend to have less access to the
manager, and often don't receive opportunities for growth or advancement.

3. Routinization

During this last phase, routines between team members and their managers are established.

In-Group team members work hard to maintain the good opinion of their managers, by showing
trust, respect, empathy, patience, and persistence.

Out-Group members may start to dislike or distrust their managers. Because it's so hard to move
out of the Out-Group once the perception has been established, Out-Group members may have to
change departments or organizations in order to "start over."

Once team members have been classified, even subconsciously, as In-Group or Out-Group, that
classification affects how their managers relate to them from then on, and it can become self-
fulfilling.

For instance, In-Group team members are often seen as rising stars and the manager trusts them
to work and perform at a high level. This is also the group that the manager talks to most,
offering support and advice, and they're given the best opportunities to test their skills and grow.
So, of course, they're more likely to develop in their roles.

This also holds true for the Out-Group. The manager spends little, if any, time trying to support
and develop this group. They receive few challenging assignments or opportunities for training
and advancement. And, because they're never tested, they have little chance to change the
manager's opinion.

Using the Theory


You can use the Leader-Member Exchange Theory to be aware of how you perceive members of
your own team.

To do this, follow these steps:

1. Identify Your Out-Group

Chances are, you know who's in your Out-Group already. Take a moment to note their names
down.

Next, analyze why these people have fallen "out of favor." Did they do something specifically to
lose your trust? Do they exhibit bad behavior at work ? Are they truly incompetent, or do they
have low motivation?

Analyze what they've actually done, and compare the facts with your perceptions. Do these
match, or have you (perhaps subconsciously) blown things out of proportion?
2. Reestablish the Relationship

It's important that, as the leader, you make a reasonable effort to reestablish a relationship with
Out-Group team members. Research published in the Leadership Quarterly journal in 1995
showed that team members who have high quality relationships with their leader have higher
morale, and are more productive than those who don't. So you, and your organization, can
benefit from creating a better relationship.

Keep in mind that this group will likely be wary of any attention or support from you; after all,
they may not have had it in the past.

First, meet each team member one-on-one. Take the time to find out if they're happy with their
job. What are their career goals? What can you do to make their work more challenging or
engaging?

A one-on-one meeting can also help you identify that person's psychological contract with you
- that is, the unspoken benefits they expect from you, as their leader. If they're in the Out-Group,
they may feel that the psychological contract has been broken.

You also need to discover what truly motivates them. Use McClelland's Human Motivation
Theory or Herzberg's Motivators and Hygiene Factor Theory to find out what drives them to
succeed.

Once you've had a chance to reconnect with your team members through one-on-one meetings,
do what you sensibly can to continue to touch base with them. Practice management by walking
around , or drop by their office to see if they need help on projects or tasks. Work on getting to
know these team members on a personal level.

3. Provide Training and Development Opportunities

Remember, the biggest advantage to the Leader-Member Exchange Theory is that it alerts you to
the preference you might unconsciously - and possibly unfairly - be showing some team
members; this allows you to offer all of your team members appropriate opportunities for
training, development, and advancement.

Your Out-Group team members may benefit from a mentoring or coaching relationship with
you.

You may also want to provide them with low risk opportunities to test and grow their skills. Use
task allocation strategies to make sure you're assigning the right task to the right person. Also,
take our Bite-Sized Training session, Setting Goals for Your Team, to learn how to set effective
and realistic goals for these team members.

You can also use the Nine-Box Grid for Talent Management to re-assess their potential from
time to time, and to give them the right development opportunities.
Warning:

A problem with the Leader-Member Exchange Theory is that it assumes that all team members
are equally worthy of trust, prestigious projects and advancement. Although we may like to think
that everyone is honest, hard-working and worthy of our esteem, the reality can be different!

Managers need to get the best possible results. This means putting the right people in the right
places, and it means developing and reinforcing success. Of necessity, this means that talented
people will get more interesting opportunities and may get more attention than less-talented ones.

Use the Leader-Member Exchange Theory to make sure that you're objective in the way that you
deal with people, but don't be naïve in the way that you apply it.

Key Points
The Leader-Member Exchange Theory first appeared in the 1970s. It analyzes the relationship
between managers and team members.

Team members typically go through three phases in their relationship with their manager: Role-
Taking, Role-Making, and Routinization.

Typically, during the Role-Making phase, group members are classified into one of two groups:
In-Group, and Out-Group. In-Group team members often receive more attention and support,
and more opportunities, from their managers. Out-Group members get very little face time, and
few opportunities.

You can use the Leader-Member Exchange Theory to identify and validate any perceptions that
you might have of people on your team.

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 Over a month ago MichaelP wrote

Mayc, i feel for you and I continue to wonder at how some managers got to be managers
at all! In the situation you describe ganging up on the manager may indeed be all it takes.
Confronted with a well performing and unifed team any manager is going to think twice
before throwing rocks!

In your situation giving the manager constructive feedback should have value...something
like. "name" i appreciate how you include me along with others in
your....confidence?...club? However i have observed "name" appears to be excluded, a
recent example being.....how can i help you include him?

Before writing the manager off it is always worth giving them the feedback and
opportunity to improve in my opinion.

Good luck

 Over a month ago mayc wrote

I think this is good information for everyone to use and follow, not just managers. It's
certainly made me more aware of how people in the out group feel and I'm wondering
what I, as a colleague, can do to help them get out of the "out" group. There is one guy in
particular who is a very competent worker but he's socially awkward. And he's very smart
and I think that intimidates our manager. So he does get treated differently and I don't
think there is anything that would motivate our manager to change his ways so it would
be up to his colleagues to help him be part of the "in" group. I'm wondering what I could
do to kick start this?? This is one of the main frustrations I feel at work - Here I am
learning new tools, developing my skills, gaining an understanding of effective
leadership and yet the "leaders" around me haven't a clue how they could make our
workplace so much better. I know change doesn't have to start at the top but it sure makes
things easier!!

 Over a month ago zuni wrote

Hi All,

What I find interesting with all theories such as this one is that they appear to be common
sense. That said, the U.S. adult educator, Myles Horton, often said, "There's nothing
common about common sense." How true.

Think back to your childhood. There were "in" and "out" groups all through your school
and university years and, perhaps, you have the same dynamics within your family. Not
surprisingly, when we take on manager responsibilities, we replicate these same social
dynamics in the work place.

I have been both a member of the "in" group and the "out" group at various stages in my
career. Being cast as an "out" was a demoralizing experience. From an "out" perspective,
it is very difficult to change/influence the perception of the manager. Once you are
typecast, the label sticks. For a time, I tried to understand why I was cast unfavourably,
asked the manager what I needed to do to exceed expectations and managed "up" to build
a positive relationship. When my efforts failed to change his/her opinion, I cut my losses
and found a position with another manager or left the company.

My experiences have helped me be a better leader. As they say, you often learn more
from your worst managers. When leading others, I constantly challenge my assumptions
about people. I ask, "Do I know this to be true?"

Michele
Leadership-Member Exchange (LMX)
Theory
inShare

Informal observation of leadership behavior suggests that leader’s action is not the same towards
all subordinates. The importance of potential differences in this respect is brought into sharp
focus by Graen’s leader-member exchange model, also known as the vertical dyad linkage
theory. The theory views leadership as consisting of a number of dyadic relationships linking the
leader with a follower. The quality of the relationship is reflected by the degree of mutual trust,
loyalty, support, respect, and obligation.

According to the theory, leaders form different kinds of relationships with various groups of
subordinates. One group, referred to as the in-group, is favored by the leader. Members of in-
group receive considerably more attention from the leader and have more access to the
organizational resources. By contrast, other subordinates fall into the out-group. These
individuals are disfavored by the leader. As such, they receive fewer valued resources from their
leaders.

Leaders distinguish between the in-group and out-group members on the basis of the perceived
similarity with respect to personal characteristics, such as age, gender, or personality. A follower
may also be granted an in-group status if the leader believes that person to be especially
competent at performing his or her job. The relationship between leaders and followers follows
three stages:

 Role taking: When a new member joins the organization, the leader assesses the talent
and abilities of the member and offers them opportunities to demonstrate their
capabilities.
 Role making: An informal and unstructured negotiation on work-related factors takes
place between the leader and the member. A member who is similar to the leader is more
likely to succeed. A betrayal by the member at this stage may result in him being
relegated to the out-group

The LMX 7 scale assesses the degree to which leaders and followers have mutual respect for
each other’s capabilities, feel a deepening sense of mutual trust, and have a sense of strong
obligation to one another. Taken together, these dimensions determine the extent to which
followers will be part of the leader’s in-group or out-group.

In-group followers tend to function as assistants or advisers and to have higher quality
personalized exchanges with the leader than do out-group followers. These exchanges typically
involve a leader’s emphasis on assignments to interesting tasks, delegation of important
responsibilities, information sharing, and participation in the leader’s decisions, as well as
special benefits, such as personal support and support and favorable work schedules.

Strengths of LMX Theory

LMX theory is an exceptional theory of leadership as unlike the other theories, it concentrates
and talks about specific relationships between the leader and each subordinate.
LMX Theory is a robust explanatory theory.
LMX Theory focuses our attention to the significance of communication in leadership.
Communication is a medium through which leaders and subordinates develop, grow and
maintain beneficial exchanges. When this communication is accompanied by features such as
mutual trust, respect and devotion, it leads to effective leadership.
LMX Theory is very much valid and practical in it’s approach.

Criticisms of LMX Theory

LMX Theory fails to explain the particulars of how high-quality exchanges are created.
LMX Theory is objected on grounds of fairness and justice as some followers receive special
attention of leaders at workplace and other followers do not.

Implications

According to many studies conducted in this area, it has been found that leaders definitely do
support the members of the in-group and may go to the extent of inflating their ratings on poor
performance as well. This kind of a treatment is not given to the members of the out-group. Due
to the favoritism that the in-group members receive from their leaders, they are found to perform
their jobs better and develop positive attitude towards their jobs in comparison to the members of
the out-group. The job satisfaction of in-group members is high and they perform effectively on
their jobs. They tend to receive more mentoring from their superiors which helps them in their
careers. For these reasons, low attrition rate, increased salaries, and promotion rates are
associated with the in-group members in comparison to that of the out-group members.

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