LMX Theory: An Overview According to Northouse

LMX Theory: An Overview According to Northouse (2013), before LMX theory was developed, leadership was viewed as something leaders did 'to' followers. Thus the focus of most leadership theories was upon how to make leaders better leaders, versus the mutual exchange which occurs between follower and leader ideally in a transactional fashion (Northouse 2013:161-162).

The premise of LMX can be seen in the interconnected circles of 8.1 where the dyadic relationship of leader and follower meet in the middle and the mutual 'exchange' symbolized by the arrows going both ways in figures 8.3 and 8.4 suggests vertical dyads (Northouse 2013:162). LMX theory fundamentally views the workplace through a social lens, structured through 'in-groups' and 'out-groups.' The best employee-leader relationships are empowering partnerships based upon social and emotional ties much deeper than traditional work relationships.

For employees who secure these bonds of trust amongst the leadership, the benefits can be much greater than any formal human resource policies written on paper that give hard-working employees special treatment; for employees out-of-the-loop, however, the result can be isolation and frustration (Northouse 2013:161-168). Senge's concept of bridging theory-to-practice is fundamentally rooted in his concept of a 'learning organization' in which organizations are flexible and dynamic in relation to the environment and can adapt to different circumstances.

Senge (2006) speaks of the organization almost as a living entity -- an organization must 'know' when not to adhere to a set of rules in a very confined fashion and instead can adapt those rules to changing circumstances. Organizations are fundamentally based upon relationships, and without attention to the human elements of the organization, change cannot happen. An organizational leader cannot simply logically justify a change; he or she must also make the need for change persuasive to organizational members.

The foundation of 'systems thinking' is bringing people from different theoretical overviews and perspectives together when formulating organizational strategy. They are all part of the same 'system' yet view the organization and the environment from slightly different ways. One person may pick up on something another might not: the key is a bringing-together, however, and the 'whole' of the collective perspective is always greater than the part. This is instructive in light of LMX theory because, like LMX, Senge stresses the human component of strategic analysis that cannot be ignored.

Interpersonal relations affect strategy and organizational growth. However, in light of LMX concepts, Senge's advice suggests that basing relationships too much upon levels of personal comfort might inhibit organizational growth and be the source of creative roadblocks in business. It is all too common for managers to structure their inner circle with 'yes people' who think like them and do not challenge them, preventing the full benefits of holistic analysis to be enjoyed.

Agree or disagree? I have personally seen the 'dark side' of LMX theory in action, whereby in a workplace favoritism and a sense that certain people are 'like us' have resulted in talented people from being excluded.