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Leadership Tip of the Month

November 2003

Copyright 2003 ã weLEAD, Inc.

Leader-Member Exchange Theory (LMX)

Leader-member exchange (LMX) theory examines the relationship and role processes between a leader and individual followers. The theory is based on the understanding that leaders establish individual and mutually exchanged relationships with those in a subordination position. A leader typically has one major prevailing style of leadership, but most don’t treat all followers the same way. The original theory was introduced in the mid 1970’s and continues to be revised over time.

According to the LMX theory, followers or subordinates fall into two different categories. The first category is composed of a group considered to be the “in-group”. These are individuals who have a special exchange relationship with the leader. They have greater access, influence and favor and are typically considered the trusted advisors, assistants or lieutenants of the leader. The other category is composed of a group considered to be the “out-group”. This group has a low level of favor or mutual influence with the leader. The “out-group” typically complies with the formal role expectations of the leader but lack the special relationship available to the “in-group”. What is the determining factor on whether you are a member of the leader’s “in” or “out” group? Unfortunately it is usually based on bias or perceived similarities rather than valid information!

Because of this special relationship with the leader, “in-group” followers have certain responsibilities and obligations beyond those required of others. They are expected to have a greater sense of commitment, deeper loyalty to the leader, and share difficult administrative responsibilities. Within this relationship both the leader and subordinates mutually gain more personal power because of reciprocal trust and respect for each other. Originally the theory proposed that these relationships were developed early in the leader/follower relationship and were due to perceived competence, dependability and personal compatibility. Later proposals interpreted this relationship as more of a “life cycle” model or one that has “up’s and down’s” like most relationships. Some research has indicated that those subordinates who have a positive exchange relationship with the leader are more likely to also have positive exchange relationship with those who report to them!

A most recent version of the LMX theory proposed by researchers George Graen & Mary Uhl-Bien has correctly added the recommendation that leaders who desire to be most effective will strive to create special exchange relationships with all their followers. It is not necessary to treat all subordinates exactly the same. The leader should have a deeper exchange relationship with those who have been entrusted with greater responsibility or administrative functions. Yet, it is possible and desirable that the leader cultivates a relationship of mutual supportiveness, respect, and trust with all subordinates. It is important that every follower is respected like a valued member of the team. They should be able to thrive in an environment of equal opportunity where their skills are evaluated because of their competence rather than because of obvious favoritism.

For weLEAD, this is Greg Thomas reminding you that it was Seneca who wrote, “Most powerful is he who has himself in his power.”

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