Leader Member Exchange Theory Leader-Member

Leader Member Exchange Theory

Leader-Member Exchange Theory (LMX):

Help or hindrance in organizational improvement?

Leader-Member Exchange Theory (LMX) or Vertical Dyad Linkage Theory analyzes group relations in terms of how the construction of an inner circle generates power within an organization. People want to be part of an 'in-group,' so they try to please the group leader to gain access to the leader's circle of trust. Leaders maintain their control by offering and withholding positions of influence and access to incentives such as promotions and pay. In exchange, they demand loyalty from their associates. LMX provides both a bureaucratic model of analysis, in that the leaders manage and enforce institutional processes, often using them to their advantage, as well as a political model. 'Who you know -- and who likes you -- is more important than what you know' according to this model.

LMX theory offers three critical stages that evolve every time an individual enters an organization. The first stage, defined as 'role taking,' is when someone joins a team and is first assessed for their abilities and talents as well as their suitability for the group. The second, 'role-making,' is a kind of informal bargaining process, whereby the "leader and member take part in an unstructured and informal negotiation whereby a role is created for the member and the often-tacit promise of benefit and power in return for dedication and loyalty takes place" (LMX, 2009, Changing Minds). The leader determines, often in a very subjective fashion how much he or she can trust the new individual, and how much the new individual is willing to ingrate him or herself into the existing power structure of the leader.

As relationships are established, one of the weaknesses of the approach is quickly manifested, in that the new individual may be evaluated, not on what he or she brings to the team or the organization, but how similar he is to the leader -- gender, race, culture, and ethnic differences from the leader may be unjustly viewed in a pejorative fashion. Even if racism is not a conscious part of the leader's outlook, unconscious biases may play an influence in the leader's determinant that the individual is or is not 'one of us.' Subjective comfort levels may mean that a new hire is quickly ostracized. One study determined that group membership distinctions had developed within ninety minutes of starting work. "Studies of the interview process show that strong impressions formed of applicants before and during job interviews probably influence job interactions from day one" (Manzoni & Barsoux 2000). The third and final phase of group development in the LMX model is how "a pattern of ongoing social exchanges" between the leader and the member becomes established according to a fixed set of roles (LMX, 2009, Changing Minds). These roles, also called the six indicators of group relationships, become fixed for both members of the in-group and outside group and become difficult to alter the longer the individual remains part of the organization

During early attempts to categorize leadership styles, "subordinate ratings of their bosses were systematically averaged out. In other words, deviations between subordinates' views of their common boss tended to be dismissed as errors of perception or errors of measurement (Manzoni & Barsoux 2000). However, LMX theory found profound differences in subordinates and leaders view of their interpersonal relationships that influenced access to power within the organization, regardless of job title. LMX theory discovered one in ten managers formed similar types and qualities of relationships, with their subordinates, ranging from trusted advisors to 'hired hands.' "Furthermore, the evidence suggested that the relationships were not evenly distributed from high to low, but tended rather to form two clusters: an in-group and an out-group" (Manzoni & Barsoux 2000).

Advocates of the theory stress that it is merely a portrait of reality, contrary to theories that present an idealized leadership style that is universally applicable or that is scientifically determined to suit certain organizational conditions. It also stresses how relationships, more so than tasks, determine levels of job satisfaction, and even subordinates in lower-level positions who feel like a valued part of an 'in group' report lower levels of perceived inequities. Higher-quality relationships are associated with higher levels of institutional loyalty that transcend pay or promotional incentives, and also higher degrees of employee creativity, according to employee performance ratings by superiors (Manzoni & Barsoux 2000). It could be that because the job becomes more of a second family to an employee, not merely a vocation, loyalty increases and high relationship satisfaction facilitates the creation a 'safe space' to take risks. According to this validation of the model, relationship satisfaction and job performance are correlated.

However, while relationship quality can act as a facilitator of high performance on the job it does not automatically generate high levels of job performance. In fact, other studies have determined that while high-quality relationships can encourage better job performance in some instances, performance quality is almost never the "dominant initiator of relationship quality," and subjective, non-job related qualities facilitate acceptance to an in-group (Manzoni & Barsoux 2000). High job ratings could be due to managerial bias, greater levels of institutional support and mentorship given to in-group members. Initial favoritism generates the loyalty and thus high job performance, not the innate excellence of the employee.

One study, in particular, looked at objectively measured performance, boss ratings of performance and relationship quality. The researchers found that poorly performing 'in-group' subordinates were given high performance ratings, regardless of their actual performance. Conversely, boss ratings of 'out-group' employees were consistent with actual performance. For the entire sample, the correlation between objective performance and relationship quality was virtually nil (0.07). Although objective performance is not all that bosses look at, one would not expect its effect to be wiped out by relationship quality" (Manzoni & Jean-Louis Barsoux 2000). Other studies have even suggested that the influence of in-groups may reduce rather than facilitate creativity. "Perceived attitude similarity - on issues of family, money, career, strategies, goals in life, and education- was strongly related to ratings of relationship quality. Perceived similarity can be reinforced by the subordinate's ingratiation efforts. Not surprisingly, upward praise ("I look for opportunities to show my respect/admiration") and opinion conformity ("In front of boss, I express values, opinions and attitudes similar to his/hers") are both associated with higher quality relationships" (Manzoni & Barsoux 2000).

In short, ingratiating one's self to the boss regarding work and non-work attitudes and issues is am 'in-group' relationship facilitator. It should be added that while studies of demographic similarities, such as age, gender, race, education, and job tenure do not always yield positive relationships; because individuals of shared demographics are more likely to have similar attitudes, lifestyles, and politics, these shared norms may indirectly reinforce the ability or inability to ingratiate one's self to a boss (Manzoni & Barsoux 2000). Demographic and attitudinal similarities can also facilitate the 'liking' of the subordinate which has also been consistently related to relationship quality. " Indeed, in two studies - one lab based, the other a field study in a bank - exploring the relationship between liking and quality of the working relationship found correlations of 0.74 and 0.73 respectively, suggesting a very close link" (Manzoni & Barsoux 2000).

Some defenders of Leader-Member Exchange Theory protest that likeability is not necessarily a bad thing for the organization, in terms of cohesiveness and generating a positive overall organizational attitude. If favored and successful members have positive interpersonal characteristics that facilitate likeability such as being hard workers, showing respect towards others, and being "empathetic, patient, reasonable, sensitive, and are good at seeing the viewpoint of other people" they are likely to be good leaders themselves someday, or at very least strong organizational assets (LMX, 2009, Changing Minds). However, the counter to this argument is that individuals may seem to have these traits towards the leader, but not necessarily other employees. While many leaders may value such positive characteristics, other leaders may place a higher premium on negative characteristics, such as competitiveness. Some leaders may dislike creativity or eccentric solutions, and reject employees who could be potential organizational assets. True, in many instances, "aggression, sarcasm and an egocentric view are keys to the out-group wash-room," but in some corporate cultures they may be necessary to gain entrance to the in-group (LMX, 2009, Changing Minds). or, some employees may excel at showing one face to their boss and another face to their colleagues and subordinates.