Leader Member Exchange Theory

Leader-Member Exchange Theory

It is known, that leaders cannot treat all members of their team equally. For example, there are situations when leader develops more reliable relationships with those who are more hardworking, dependable and responsible. While other people cannot reach the same level of manager’s trust. These situations are examined in Leader-Member Exchange Theory (LMX).

The Leader-Member Exchange Theory focuses on the relationships that occur between leader and members of his team. It states that manager develops different level of relationships with various groups of subordinates; and contends how these relationships can lead to the success or failure of the individuals.

According to the theory, there are three main stages, which influence on the development of relationships between leader and subordinates:

• Role-Taking – occurs when new team member joins the organization. Manager evaluates the diligence and cognition of the new member and gives him opportunity to declare himself.

• Role-Making – occurs when new subordinate starts to work on the projects. During this stage, it is expected from the individual to show his knowledge, loyalty and trustworthiness. The theory states that during this stage, manager decides whether new worker is going to be ascribed to in-group or out-group members.

o In-Group

The individuals who met the expectations of the leader and proved themselves as responsible, experienced and pro-active in completing the tasks are classified as In-Group. The level of trust, decision influence and access to resources is very high for this group. Manager entrusts them the most challenging and interesting work, and offers opportunities for additional training and promotion. Moreover, In-Group members receive higher performance evaluation, more desirable projects and have higher chances for promotion. More often individuals, who form the In-Group, have same personality and attitude toward work as their leader.

o Out-group

The...