Leader-Member
Exchange Theory
AGED 3153
Good leaders develop through a never-ending
process of self-study, education, training, and
experience.
~ Manual on military leadership
Overview
LMX Theory Approach Perspective
 Early Studies
 Later Studies
 Phases in Leadership Making
 How Does the LMX Approach Work?

LMX Theory Approach Description

Focuses on interactions between leaders
and followers

First described in 1975 by Dansereau,
Graen and Haga, and Graen and Cashman

Changed the idea that followers are a group
and looks at followers as individuals
LMX theory


Conceptualizes leadership as a process centered in the
interactions between leaders and followers
Dyadic relationship is focal point of leadership process
Dyadic
Relationship
Early Studies

Vertical Dyads
– Focused on the nature of the vertical linkages
leaders formed with each of their followers
 leader forms unique relationship with each
subordinate
The
Vertical
Dyad
L
Dyadic Relationship
S
Linkages

In-group/out-group status based on:
– how subordinates involve themselves in
expanding their role responsibilities with the
leader
– how well subordinate works with the leader
– how well the leader works with the
subordinate
 Becoming part of the in-group involves
subordinate negotiations in performing activities
beyond the formal job description
VDL Described
1.
2.
3.
4.
5.
Willing to do more
Demo. innovativeness
Get more
responsibility
More opportunities
Get time/support from
leader
Operate strict to
prescribed roles
2. Do only what is
required
3. Get fair treatment but
no special attention
4. Get standard benefits
1.
Linkages
InGroup
L
+3
L
+3 +3
S
L
+3
S
+3 is high-quality
relationship
+0
+0 +0
S
OutGroup
L
+0
S
0 is stranger
Later Studies

Addressed how LMX theory was related to
organizational effectiveness
– Related to positive outcomes for leaders, followers, groups and
the organization

Researchers (Graen & Uhl-Bien, 1995) found that
high-quality leader-member exchanges resulted in:
–
–
–
–
–
–
–
–
–
Less employee turnover
More positive performance evaluations
Higher frequency of promotions
Greater organizational commitment
More desirable work assignments
Better job attitudes
More attention and support from the leader
Greater participation
Faster career progress
Current Studies

Focus on how leader-member exchanges can be
used for leadership making
– Emphasizes high-quality exchanges with all
subordinates

Leaders create networks of partnerships
throughout the organization
 benefits organizational and personal goals/progress

Occurs over time through 3 phases
 Stranger
 Acquaintance
 Mature partner
Phase 1
Graen & Uhl-Bien (1995)
• Interactions rule bound
• Rely on contractual relationships
• Relate to each other within prescribed
organizational roles
• Experience lower quality exchanges
• Subordinate motives directed toward
self-interest
Phase 2
Graen & Uhl-Bien (1995)
• Offer by leader/subordinate for improved
career-oriented social exchanges
• Testing period of taking on new roles and
leader providing new challenges
• Shift from formalized interactions to
new ways of relating
• Quality of exchanges improve along with
greater trust and respect
• Less focus on self-interest, more on goals of
the group
Phase 3
Graen & Uhl-Bien (1995)
• High-quality LMX exchanges
• High degree of mutual trust, respect, and
obligation toward one another
• Tested relationship that is dependable
• High degree of reciprocity
• May depend on each other for special assistance
• Highly developed patterns of relating that
produce positive outcomes
Phases of Leadership Making
How Does the LMX Theory
Approach Work?
LMX Theory Approach
Describes leadership  Prescribes leadership
– Best understood within
 Essential to recognize
leadership making model
existence of in-groups &
– Leaders should:
out-groups

– how goals are
accomplished
– Relevant behavior
differences
 create special relationships
with all subordinates
 treat every subordinate
equally
 nurture high-quality
exchanges with all
subordinates
 focus on ways to build trust
What are strengths of
LMX theory approach?
What are weaknesses of
LMX theory approach?
How do we apply the
LMX theory approach?