Lead-Member Exchange (LMX) Theory

Ever wondered why roles are “unofficially” assigned to teams or staff members? What does is mean when you hear your boss say that a person is their “right hand man?” Or calls another their “go-to person” when things need to get done? These unofficial positions can garner a patina of weight, but most certainly they demonstrate varying degrees of favoritism. In this post I will explore what Lead-Member eXchange, or LMX, theory has to say about group behaviors.

LMX theory was developed to nurture staff feelings; as a bi-product, it also enhanced creativity. LMX theory can enhance staff positive behaviors and help foster good relationships, if used correctly. In order for LMX theory to work, management has to show a great deal of positive leadership skills.

What is LMX Theory?

LMX theory looks at dyadic relationships of leadership in management behavior, or more specifically, how an in-group member is treated in relation to the out-group.  

LMX uses Vertical Dyads to describe the relationships of in/out groups in unique ways. These vertical dyads evaluate the quality of the relationships between management and teams and divide them into 5 categories:

  • mutual trust
  • loyalty
  • support
  • respect
  • obligation

The Out-Group

The out-group are those who are behind on the work given to them, thus they need help completing tasks and require more attention or assistance (i.e. training, mentoring, follow-up). They may be tasked with jobs they do not like.

The In-Group

Those who can accomplish work in an efficient manner are considered the in-group. Outside of the obvious benefits to the organization, an in-group person can benefit personally by being assigned favorable tasks or gaining specialized skills.

Negative aspects of LMX theory

  1. Management not allowing underperforming team members to progress to more significant roles once they master the work put before them
  2. Lack of support from management
  3. Resentment
  4. The feeling of favoritism from the out-group

Positives aspects of LMX theory

  1. Upward mobility
  2. Greater rates of pay
  3. Lower turnover
  4. Increased job satisfaction

Thomas Hobbes wrote that the first rule of life is self-protection and that behaviors originate out of self-interest and happiness. My personal observation is that those working within the in-group are most happy and that by doing so become “protected” in ways the out-group have not garnered. Group members understand the strengths and weaknesses of their teams.

LMX theory recognizes the in-group from the out-group. All organizational cultures are aware of these behaviors. My question would be, is it ethical or moral to have in-groups and out-groups?  What are your thoughts on LMX theory?

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