LMX Differentiation as a Detriment
to Group Functioning
Ronald F. Piccolo, Ph. D.
University of Central Florida
David M. Mayer
University of Central Florida
Jonathan Ziegert
Drexel University
The Current Study
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The purpose of this study is to examine the effects of
leader-member exchange (LMX) differentiation on
group functioning and performance among high
technology manufacturing groups.

LMX differentiation indicates the extent to which the
leader of a work group develops strong and
resourceful relationships with some employees but
not others, thus differentiating among members of
the same work group.
LMX Differentiation
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Original theorizing on LMX…
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This idea has gotten support in the literature (e.g., Liden,
Sparrowe & Wayne, 1997; Sparrowe & Liden, 1997) – primary
arguments that differentiation is beneficial to productivity
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Emphasized the value of differentiated relationships among
supervisor and his or her employees (Dansereau et al., 1975),
promoting the development of in-groups and out-groups of
employees as a means to increase work-group productivity.
Differentiation reflects a leader’s strategic decision to invest time and
energy in fostering relationships with high value, highly productive
employees, while limiting investment in employees who are either
unwilling or unable to achieve above average work results
Naidoo et al. (SIOP, 2009). A Longitudinal Examination of
LMX, Differentiation, and Team Performance

In 3 studies, LMX differentiation positively affects team performance
at certain time periods
However…
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Several recent studies (Graen & Uhl-Bien, 1995; Maslyn & UhlBien, 2005; Scandura, 1999; Schyns, 2006):
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Regard differentiation as a violation of fairness and justice
principles
Recognize the potential problems of low quality LMX
relationships
Suggest that differentiation will have an unfavorable influence
on group performance.
LMX differentiation is likely to result in a host of
negative outcomes, including conflict among members
and an unwillingness by less favored group members
to cooperate with their more favored counterparts.
The Current Study

We examine the impact of LMX differentiation on group functioning,
as measured by the quality of motivational, affective, and conflict
management processes in groups (e.g., Marks et al., 2001).

We examine the extent to which interpersonal justice perceptions
shape the manner in which differentiation affects group functioning
and performance.
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Perhaps, the negative effects of LMX differentiation are offset by
perceptions of fair interpersonal treatment by a supervisor.
We seek to extend LMX research beyond its traditional,
individual-level-of-analysis design, which often fails to
recognize the fact that supervisor-subordinate
relationships do not exist in a vacuum, but are embedded
in a rich social and professional context.

Examining LMX relationships in isolation, without consideration of the
social context in which these relationships exist, is insufficient to explain
leadership effectiveness and group-level phenomenon (House et al., 1995).
Proposed Model
Interpersonal
Justice
LeaderMember
Relations
LMX
Differentiation
Nature and
Quality of
Team
Interaction
Team Process
Group
Performance
Objective
Performance
Team Process
Marks, M. A., Mathieu, J. E., & Zaccaro, S. J. (2001). A temporally based framework and taxonomy of team processes.
Academy of Management Review, 26, 356-376.
Marks, M. A., Mathieu, J. E., & Zaccaro, S. J. (2001). A temporally based framework and taxonomy of team processes.
Academy of Management Review, 26, 356-376.
Marks, M. A., Mathieu, J. E., & Zaccaro, S. J. (2001). A temporally based framework and taxonomy of team processes.
Academy of Management Review, 26, 356-376.
Mission Analysis
Strategy Formulation
Transition Processes
Goal Specification
Monitoring Progress
Systems Monitoring
Action Processes
Team Monitoring
Group
Performance
Coordination
Conflict Management
Motivation Building
Interpersonal Processes
Affect Management
Hypothesis: The nature and quality of team interaction has a positive impact on
group performance (i.e., high quality interaction → high performance)
Team Leader-Member Relations
LMX Differentiation
How strongly do you agree with each of the following statements?

The team leader has an effective working relationship with some
employees, but ineffective working relationships with other employees.
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The team leader lets some employees get more breaks than others.
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The team leader prefers some employees more than others.
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The team leader is more likely to point out mistakes of certain employees
but not those of others.
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The team leader is more likely to express appreciation to some employees
but not others.
Why differentiation? 1) Time Constraints; 2) Multiple Jobs; 3) Personal Factors
Transition Processes
Differentiated
Relationships
between Team
Leader and Team
Members
Action Processes
Group
Performance
Interpersonal Processes
Hypothesis: Differentiated relationships between team leader and team members
has a negative effect on the quality of team interaction
(i.e., high differentiation → low quality team interaction)
Method
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Data Collected at All Employee Annual Meeting at
Large Defense Contractor (High Tech Manufacturing)
Individual Responses = 223
Groups (Teams) = 19
Team Size ranged from 6 to 18
Measures assessed in Survey:
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Team Processes
Team Leader Relations
Interpersonal Justice
Objective Performance Ratings collected in six
consecutive months
Multidimensional Team Process
Correlations with Objective Performance
r
Transition
.38
Action
.44
Interpersonal
.42
LMX Differentiation
Trans
Action
Inter
-.47
-.50
-.71
Subjective Objective
-.39
-.40
Note. Average Intercorrelation among team process dimensions = .93
When team members perceived high levels of differentiation by the team
leader, those perceptions were revealed in lower quality interactions among
team members – and lower scores on two indications of team performance
(Subjective & Objective).
Correlations
m
SD
1
2
3
1. LMX Differentiation
2.62
.60
(.94)
2. Team Process
3.24
.44
-.58*
(.90)
3. Interpersonal Justice
3.69
.42
-.76*
.79*
(.97)
4. Objective Performance
93.91
6.26
-.40†
.42*
.23*
Note. n=20. *p<.05. † p<.10.
Main effect of Differentiation on Objective Performance (p<.10)
is mediated by Team Process.
Interpersonal Justice
To what extent has your leader…
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Treated employees in a polite manner?
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Treated employees with dignity?
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Treated employees with respect?
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Refrained from improper remarks or comments?
LMX Differentiation x IJ
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Differentiation affects quality of team interaction,
but negative effects could be offset when leaders
treat all team members fairly (with dignity) – even
though relationship quality varies
LMX x IJ → Team Process
LMX Differentiation x IJ: b = -1.45†
Differentiation & Variability
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We had objective performance for six
consecutive months
Reliability, Consistency, and Efficiency are
particularly important metrics for these
manufacturing groups
How does differentiation impact performance
variability?
r LMX Diff – STDEV = .50*
Summary
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We examine LMX differentiation at the team level
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LMX Differentiation has negative effect on team
process and performance
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Is differentiation positive or negative in group context?
Perceived differentiation on the part of the leader may reveal
itself in low quality interaction and group performance
Differentiation might be detrimental in group context
Main effect is explained by the nature and quality of
interaction among team members
Multiple leader behavior might interact in shaping the
manner in which team members interact with one
another and ultimately perform
Limitations & Future Research
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Group-level Sample Size = 20
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Significance of conclusions is limited
High correlations between LMX Differentiation,
Interpersonal Justice, & Interpersonal
Facilitation
High correlations among Team Process
subdimensions
Future Research
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Theoretical Platform for examination of
performance variability
Alternative Leader or Team-oriented
characteristics that minimize the impact of
LMX Differentiation (e.g., cohesion, potency)
Alternative measure of Differentiation
Integrate individual-level outcomes (e.g.,
OCB, withdrawal, effort)
Thank You!