CHAPTER SIX
EXCHANGE AND
RELATIONSHIP
DEVELOPMENT AND
MANAGEMENT
Learning Objectives
1.
2.
3.
Explain the key role of relationship
development and management in effective
leadership and use the concepts in
improving leadership effectiveness.
Discuss the Path-Goal Theory of leadership
and explain the role of the leader in
removing obstacles in followers’ paths.
Understand the role of attribution in the
relationship between leaders and followers
and how it can be used to manage
relationships.
Learning Objectives (cont’d)
4.
Present the Leader-Member
Exchange Theory of leadership
and clarify how the creation of ingroups and out-groups affects the
leadership process.
5. Summarize the impact of
leadership substitutes and identify
situations in which the leader’s
impact is decreased.
Path-Goal Theory of
Leadership
Leader
structuring and
consideration
Situational
contingencies:
Task structure
Employee need
for autonomy
Leader’s Actions:
 Focus on obstacle
removal
 Become comfortable
with both task and
consideration behaviors
Understand followers’
perception
Effectiveness:
Employee
satisfaction and
motivation
Managerial Implications Based
On Path-Goal Theory
Leaders must understand their followers’
perception of the task

Leaders must take their followers’ need for
challenge and autonomy into account

When followers need challenge or the task is
challenging, leaders must avoid being directive

When the task is routine, boring, or stressful,
leaders must be supportive to motivate their
followers

Attribution Theory
Employees Are More Likely To Be Held
Responsible When:
 The consequences of their
actions are severe
 When they have a mediocre
track record in other similar
situations
 When other employees are
successful in similar situations
Attribution Theory
Employees Are More Likely To Be Held
Responsible When:


When the employee is defensive
When the manager’s success
depends on the employee’s good
performance
Leader-member Exchange
Model
Out-group
F
F
F
In-Group
Leader
F
F
F
F
F
F
F
F Follower
F
F
Leader-Member Exchanges
Leaders develop relationships
with each member of work group
 High quality relationship

• member is part of “in-group”
• more responsibility, higher
satisfaction

Low quality relationship
• member is part of “out-group”
• less responsibility, lower
satisfaction
Theoretical Overview of LMX


Relationships develop from series of
exchanges or interactions
Phase 1: Role-taking
• member enters organization
• leader assesses member’s
abilities/talents

Phase 2: Role-making
• informal, unstructured negotiation of role

Phase 3: Role-routinization
• social exchange pattern emerges
• becomes routine
Precursors of LMX

Member attributes influence
relationship
• extroversion
• abilities
• ingratiation behaviors


Leader provides social support
Affective responses influence
relationship
• perceived similarity
• attraction

leads to increased interaction
• trust
Outcomes of LMX
Job satisfaction
 Organizational commitment
 Moderated/affected by other
factors

• type of task matters

level of challenge
• situational factors
size of group
 workload
 financial resources

Gender/Fairness and LMX


Gender differences influence interactions
Mixed gender relationships
• supervisors rate performance lower
• supervisors report liking subordinate less
• subordinates experience greater role ambiguity

Opposite true in same gender
relationships
Gender/Fairness and
LMX Process Phases

1: Role-taking - mutual respect
essential
• men and women define respect
differently
• social categorizing and stereotyping

2: Role-making - trust develops
• single violation may destroy relationship
• violations reinforce negative stereotypes

3: Role-routinization - mutual
obligation
• gender/fairness issues resolved by this
phase
Perspective-Taking
Ability to “read” leader or
member important in LMX
 Use role-taking skills to entertain
the point of view of another
 Associated with empathy,
reasonableness, and sensitivity
 Negatively associated with
aggressiveness and sarcasm

Perspective-Taking I Questions



When you were drawing, did you
draw toward yourself or toward your
partner?
How do you think your score on the
perspective-taking questionnaire
might relate to your performance on
this task?
How do you think one’s tendency or
ability to take the perspective (i.e.,
point of view) of another might
influence the ways in which leaders
and subordinates interact?
Perspective-Taking II Questions



How difficult was it for you to imagine
drawing from your partner’s
perspective?
How do you think your score on the
perspective-taking questionnaire
might relate to your performance on
this task?
How do you think one’s tendency or
ability to take the perspective (i.e.,
point of view) of another might
influence the ways in which leaders
and subordinates interact?
Perspective-Taking Wrap-up

3 role-taking aspects related to
perspective-taking
• accurate in ability to perceive how others
understand and respond to world
• can view situations from many
perspectives
• able to perceive other’s perspective in
depth

Leaders and members high on these
aspects may have higher quality LMX
Productive Use Of In-Groups
In order to use in-groups effectively,
leaders should:




Base in-group membership on current
performance and/or future potential
Review criteria for in-group
membership
Assign tasks to those with best skills
Set clear performance-related
guidelines for in- group membership
Productive Use Of In-Groups
(cont’d)




Avoid highly differentiated
groups
Keep membership fluid and
dynamic
Maintain different in-groups for
different activities
Consider culture in determining
membership
Leadership Substitutes:
Follower Characteristics

Experience and training substitute
for
leader structuring
Professionalism substitutes for
leader consideration and structuring

Lack of value for goals neutralizes
leader consideration and structuring

Leadership Substitutes:
Task Characteristics
Unambiguous tasks substitute
for
leader structuring



Direct feedback from the task
substitutes for
leader consideration and
structuring
Challenging task substitutes for
leader consideration
Leadership Substitutes:
Organizational Characteristics
A cohesive team substitutes for
leader consideration and structuring

Leader’s lack of power neutralizes
leader consideration and structuring

Standardization and formalization substitute
for leader structuring


Organizational rigidity neutralizes leader
structuring

Physical distance neutralizes leader
consideration and structuring
Leading Change:
The Medtronic Way
Company built on compassion
and service to inside and outside
constituents
 Former President, Bill George,
focused on balance
 Provide employees with means
to successfully balance their
work and life

Leadership In Action: The
Caring Navy Commander





Focus on removing obstacles for
the crew
Willingness to listen and change
Use of participation as a way of
getting the job done
Reliance on referent power rather
than only legitimate and reward
and punishment
Creates situations that serve as
substitutes for leadership
The Leadership Challenge
India is vertical collectivistic
and ascriptive
 Office manager acting in
accordance with his culture
 Carefully evaluate the
consequences of not hiring the
“cousin”
 In-groups are formed
differently in different cultures
