Leader–member exchange theory

The leader–member exchange (LMX) theory is a relationship-based approach to leadership that focuses on the two-way (dyadic) relationship between leaders and followers. It suggests that leaders develop an exchange with each of their subordinates, and that the quality of these leader–member exchange relationships influences subordinates' responsibility, decisions, and access to resources and performance. Relationships are based on trust and respect and are often emotional relationships that extend beyond the scope of employment. Leader–member exchange may promote positive employment experiences and augment organizational effectiveness. It is widely used by many managers and is replacing many of its predecessors. The leader–member exchange (LMX) theory is a relationship-based approach to leadership that focuses on the two-way (dyadic) relationship between leaders and followers. It suggests that leaders develop an exchange with each of their subordinates, and that the quality of these leader–member exchange relationships influences subordinates' responsibility, decisions, and access to resources and performance. Relationships are based on trust and respect and are often emotional relationships that extend beyond the scope of employment. Leader–member exchange may promote positive employment experiences and augment organizational effectiveness. It is widely used by many managers and is replacing many of its predecessors. The latest version (2016) of leader–member exchange theory of leadership development explains the growth of vertical dyadic workplace influence and team performance in terms of selection and self-selection of informal apprenticeships in leadership. It suggests that leaders select the best and make offers and members of team accept or not. Apprentices who complete the program develop strong emotional attachments with their mentor-teacher. This is reflected in their descriptions by both of their relationship as one of mutual respect for competence, trust in character and benevolence toward each other. Those who complete the apprenticeship training are more collaborative, helpful to all team members, more deeply engaged in team activities and contribute more to team health and prosperity. This is seen as a win-win relationship by both parties, their team, network and overall organization. The goal of LMX theory is to explain the effects of leadership on members, teams, and organizations. According to the theory, leaders form strong trust, emotional, and respect-based relationships with some members of a team, but not with others. LMX theory claims that leaders do not treat each subordinate the same. The work-related attitudes and behaviors of those subordinates depend on how they are treated by their leader. Dulebohn et al. identify three primary groups of antecedents: leader characteristics, follower characteristics, and interpersonal relationships. Followers are evaluated by their competence, agreeableness, conscientiousness, extraversion, neuroticism, and openness, positive affectivity, negative affectivity, and locus of control. Leaders, on the other hand, are evaluated based on supervisor's expectation of followers, contingent reward behavior, transformational leadership, extraversion, and agreeableness. Although the leader takes a dominant role in creating an LMX relationship, the follower also plays an important part in creating the relationship. Interpersonal relationship variables that may affect this relationship are perceived similarity, affect/liking, integration, self-promotion, assertiveness, and leader trust. This variety of characteristics creates the basis for LMX and allows it to be successful or unsuccessful, depending on the present traits. Of the follower characteristics, competence, agreeableness, conscientiousness, extraversion, locus of control, and positive affectivity are all positively correlated with LMX. Negative affectivity and neuroticism are negatively correlated with LMX. All of the listed leader characteristics are positively correlated with LMX. With the exception of assertiveness, all of the interpersonal relationship variable correlated positively with LMX. In an experiment run by Dulebohn et al. that measured the effects of various characteristics on LMX and its outcomes, leader behaviors and perceptions explained most of the variance. This study suggests that it is up to the leader to form the relationships necessary for successful implementation of LMX. Whether LMX is successful can be measured by a multitude of consequences. Some of the consequences that can be measured include: turnover intentions, actual turnover, overall organizational citizenship behavior, affective commitment, normative commitment, general job satisfaction, satisfaction with supervisor, satisfaction with pay, procedural justice, distributive justice, empowerment, perceptions of politics, role ambiguity, and role conflict. LMX typically decreases turnover intentions and actual turnover, as well as role ambiguity and role conflict. LMX increases the other measures, particularly increasing perceptual and attitudinal outcomes. In their 1997 meta-analysis of LMX correlates and constructs, Gerstner & Day explain that research has generally found relationships between LMX and positive work performance and attitude measures, especially for members (as opposed to leaders). That is, especially for members, LMX is associated with higher performance ratings, better objective performance, higher overall satisfaction, more satisfaction with supervisor, stronger organizational commitment, and more positive role perceptions. Gerstner & Day's meta-analysis used 79 studies to examine the correlates of LMX. Their analysis found a positive correlation between the member's perceptions of LMX and the leader's ratings of the member's job performance. It also found an even stronger positive correlation between the leader's perceptions of LMX and the leader's ratings of the member's job performance. Fortunately for some subordinates, Gerstner & Day explain that supervisors may have a tendency to rate a subordinate more favorably due to a positive LMX relationship. They further explain that LMX perceptions may cause a leader to form positive or negative expectations about an employee which can then affect actual employee performance rather than only performance ratings. This meta-analysis also found statistically significant positive correlations between LMX and objective performance (as opposed to subjective performance ratings), satisfaction with supervisor, overall satisfaction, organizational commitment, and role clarity. It found statistically significant negative correlations between LMX and role conflict and turnover intentions. Rockstuhl et al.'s 2012 meta-analysis of LMX theory and national culture correlates found that in Western cultures LMX is more strongly correlated with organizational citizenship behavior (OCB), justice perceptions, job satisfaction, turnover intentions, and leader trust than in Asian cultures. This meta-analysis used 253 studies conducted in 23 countries to compare the differences in how LMX influenced work-related attitudes and behaviors such as task performance, OCB, distributive justice, procedural justice, interactional justice, job satisfaction, affective commitment, normative commitment, and turnover intentions between two different cultural configurations: horizontal-individualistic (Western countries) and vertical-collectivist (Asian countries). The analysis found that the relationships between LMX and citizenship behaviors, between LMX and justice outcomes, between LMX and job satisfaction, between LMX and turnover intentions, and between LMX and leader trust are stronger in horizontal-individualistic cultures than in vertical-collectivist cultures. The analysis also found that there is not a cultural difference in the relationships between LMX and task performance and between LMX and affective and normative organizational commitment. Ilies et al.'s 2007 meta-analysis of LMX theory and citizenship behaviors found a positive relationship between LMX and citizenship behaviors. The meta-analysis also found that the target of the citizenship behaviors has a moderating effect on the magnitude of the relationship between LMX and citizenship behaviors. That is, citizenship behaviors targeted at individuals are more strongly correlated with LMX than are citizenship behaviors targeted at an organization.