The Leader-Member Exchange Theory
The Basic Idea
If you think back to a positive work experience, one of the first things to come to mind will likely be the relationships you cultivated. However, as the comedy Horrible Bosses highlights, oftentimes, we don’t get along with our bosses, which can be a primary source of discontent at work.
There are a number of obstacles that can prevent managers from having good relationships with their employees. There might not exist mutual respect between both parties, there could be a lack of trust, or it could simply be a matter of having clashing personalities. These factors do not only contribute to an employee being less satisfied at work; as Herzberg’s motivation theory demonstrates, being less satisfied with the relationships at work can cause an employee to be less motivated. Being less motivated leads to being less productive. Evidently, negative relationships between managers and employees isn’t beneficial for anyone.
That is where the Leader-Member Exchange Theory comes in. The theory assumes that good leadership is the result of dyadic (two-way) relationships between managers and employees. The leader must be connected to their employees, which is possible through trust, respect, support, and loyalty.1
The Leader-Member Exchange Theory also suggests that naturally, managers will form close relationships with some employees more than others. These employees might have repeatedly delivered quality work and maintained the good impression their manager had of them. However, their success at work might also be attributable to their manager’s willingness to give them greater responsibility.1
In a sense, those managers are falling victim to the confirmation bias. They believe an employee with whom they share a close relationship will perform well, so they give them a task that they succeed in, which then confirms their pre-existing belief. Alternatively, by not giving other employees the opportunity to take on greater responsibilities, those employees never have a chance to prove themselves.
The Leader-Member Exchange Theory, therefore, recognizes that there are both advantages and disadvantages to having close relationships with employees, as it creates an in-group and an out-group. The relationship a leader has with their employees can either promote growth or can withhold progress.2
According to LMX Theory, in most leadership situations not every follower is treated the same by the leader. Leaders and followers develop dyadic relationships and leaders treat each follower differently, resulting in two groups of followers — an in-group and an out-group.
– Project management professional Babou Srinivasan, in his personal blog Project Management & Leadership Champions3
