Which of the following is not a reason followers become part of the in-group?

Most of the leadership theories discussed thus far have emphasized leadership from the point of view of the leader (e.g., trait approach and style approach) or the follower and the context (e.g., situational leadership, contingency theory, and path-goal theory). Leader-member exchange (LMX) theory takes still another approach and conceptualizes leadership as a process that is centered in the interactions between leaders and followers. As the figure below illustrates, LMX theory makes the dyad, the dyadic relationship between leaders and followers the focal point of the leadership process. LMX theory was first described in 1975, mainly by Graen. Since it first appeared it has undergone several revisions, and it continues to be of interest to researchers who study the leadership process.

Prior to LMX theory, researchers viewed leadership as "something" leaders did toward their followers. This assumption implied that leaders treated followers in a collective way, as a group, using an average leadership style. LMX theory challenged this assumption and directed researchers' attention to the differences that might exist between the leader and each of her or his followers.

Early studies

In the first studies of exchange theory, which was then called vertical dyad linkage (VDL) theory, researchers focused on the nature of the vertical linkages leaders formed with each of their followers. A leader's relationship to the work unit as a whole was viewed as a series of vertical dyads (see graph below). In assessing the characteristics of these vertical dyads, researchers found two general types of linkages (or relationships): (1) those that were based on expanded and negotiated role responsibilities (extra-roles), which were called the in-group, and (2) a set that is based on the formal employment contract (defined roles), which is called the out-group.

Note: The leader forms an individualized working relationship with each of his or her subordinates. The exchanges (both content and process) between the leader and subordinate define their dyadic relationship.

Within an organizational work unit, subordinates become a part of the in�group or the out-group based on how well they work with the leader and how well the leader works with them. Personality and other personal characteristics are related to this process. In addition, becoming part of one group or the other is based on how subordinates involve themselves in expanding their role responsibilities with the leader. Subordinates who are interested in negotiating with the leader what they are willing to do for the group can become a part of the in-group. These negotiations involve exchanges in which subordinates do certain activities that go beyond their formal job descriptions, and the leader, in turn, does more for these subordinates. If subordinates are not interested in taking on new and different job responsibilities, they become a part of the out-group.

Subordinates in the in-group receive more information, influence, confidence, and concern from their leaders than do out-group subordinates. In addition, they are more dependable, more highly involved, and more communicative than out-group subordinates. Whereas in-group members do extra things for the leader and the leader does the same for them, subordinates in the out-group are less compatible with the leader and usually just come to work, do their job, and go home.

Later studies

After the first set of studies, there was a shift in the focus of LMX theory. Whereas the initial studies of this theory primarily addressed the nature of the differences between in-groups and out-groups, a subsequent line of research addressed how LMX theory was related to organizational effectiveness. Specifically, these studies focused on how the quality of leader-member exchanges was related to positive outcomes for leaders, followers, groups, and the organization in general (1995). Researchers found that high-quality leader-member exchanges produced 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, and faster career progress over 25 years.

In essence, the above findings clearly illustrate that organizations stand to gain much from having leaders who can create good working relationships. When leaders and followers have good exchanges, they feel better, accomplish more, and the organization prospers.

Leadership making

The findings from the later studies were the impetus for the most current research on LMX theory, which focuses on how exchanges between leaders and subordinates can be used for "leadership making". Leadership making is a prescriptive approach to leadership that emphasizes that a leader should develop high-quality exchanges with all of her or his subordinates, rather than just a few. It attempts to make every subordinate feel as if he or she is a part of the in-group and, by so doing, avoids the inequities and negative implications of being in an out-group. In general, leadership making promotes building partnerships in which the leader tries to build effective dyads with all employees in the work unit. In addition, leadership making suggests that leaders can create networks of partnerships throughout the organization, which will benefit the organization's goals as well as their own career progress.

Graen suggests that leadership making develops progressively over time in three phases: (a) the stranger phase, (b) the acquaintance phase, and (c) the mature partnership phase. 

During Phase 1, the stranger phase, the interactions within the leader-subordinate dyad are generally rule bound, relying heavily on contractual relationships. Leaders and subordinates relate to each other within prescribed organizational roles. They have lower-quality exchanges, similar to those of out-group members that we discussed earlier in the chapter. The subordinate complies with the formal leader, who has hierarchical status for the purpose of achieving the eco�nomic rewards the leader controls. The motives of the subordinate during the stranger phase are directed toward self-interest rather than the good of the group.

Phase 2, the acquaintance phase, begins with an "offer" by the leader or the subordinate for improved career-oriented social exchanges, which involve sharing more resources and personal or work-related information. It is a testing period for both the leader and the subordinate to assess whether the subordinate is interested in taking on more roles and responsibilities, and to assess whether the leader is willing to provide new challenges for subordinates. During this time, dyads shift away from interactions that are strictly governed by job descriptions and defined roles and move toward new ways of relating. As measured by LMX theory, it could be said that the quality of their exchanges has improved. Successful dyads in the acquaintance phase begin to develop greater trust and respect for each other. They also tend to focus less on their own self-interests and more on the purposes and goals of the group.

Phase 3, mature partnership, is marked by high-quality leader-member exchanges. Individuals who have progressed to this stage in their relationships experience a high degree of mutual trust, respect, and obligation toward each other. They have tested their relationship and found that they can depend on each other. In mature partnerships, there is a high degree of reciprocity between subordinates and leaders; each affects and is affected by the other. In addition, members may depend on each other for favours and special assistance. Leaders, for example, may rely on subordinates to do extra assignments, and subordinates may rely on leaders for needed support or encouragement (and vice-versa...). The point is that leaders and subordinates are tied together in productive ways that go well beyond a traditional hierarchically defined work relationship. They have developed an extremely effective way of relating that produces positive outcomes for both themselves and the organization. In effect, partnerships are transformational in that they assist leaders and followers in moving beyond their own self-interests to accomplish the greater good of the team and organization (as will be seen extensively in the 'Mastery of Change' Works of your Hercules).

To evaluate leader-member exchanges, researchers have typically used a brief questionnaire that asks leaders and followers to report on the effective�ness of their working relationships. The questionnaire assesses the degree to which respondents express respect, trust, and obligation in their exchanges with others. At the end of this chapter, a version of the LMX questionnaire is provided for you to take for the purpose of analyzing some of your own leader-member relationships.

How does LMX work ? 

LMX theory works in two ways: It describes leadership and it prescribes lead�ership. In both instances, the central concept is the dyadic relationship that a leader forms with each of her or his subordinates. Descriptively, LMX theory suggests it is important to recognize the existence of in-groups and out-groups within a group or organization.

The differences in how goals are accomplished using in-groups as compared to out-groups are substantial. Working with an in-group allows a leader to accomplish more work in a more effective manner than working without one. In-group members are willing to do more than is required in their job description and look for innovative ways to advance the group's goals. In re�sponse to their extra effort and devotion, leaders give them more responsibili�ties and more opportunities. Leaders also give in-group members more of their time and support.

Out-group members act quite differently from in-group members. Rather than trying to do extra work, out-group members operate strictly within their prescribed organizational roles. They do what is required of them, but nothing more. Leaders treat out-group members fairly and according to the formal contract, but they do not give them special attention. For their efforts, out-group members receive the standard benefits as described by the job description.

Prescriptively, LMX theory is best understood within the leadership making model of Graen and of UbI-Bien. The authors advocate that leaders should create a special relationship with all subordinates, similar to those relationships described as in-group relationships. Leaders should offer each subordinate the opportunity to take on new roles and responsibilities. Furthermore, leaders should nurture high-quality exchanges with their subordinates. Rather than focusing on the differences between in-group and out-group members, the leadership making model suggests that leaders should look for ways to build trust and respect with all of their subordinates, thus making the entire work unit an in-group. In addition, leaders should look beyond their own work unit and create quality partnerships with individuals throughout the organization.

Whether descriptive or prescriptive, LMX theory works by focusing our attention on the special, unique relationship that leaders can create with others. When these relationships are of high quality, the goals of the leader, the followers, and the organization are all advanced.

Strengths

LMX theory makes several positive contributions to our understanding of the leadership process. First, it is a strong descriptive theory. Intuitively, it makes sense to describe work units in terms of those who contribute more and those who contribute less or the bare minimum to the organization. Anyone who has ever worked in an organization has felt the presence of in-groups and out�groups. Despite the potential harm of out-groups, we all know that leaders have special relationships with certain people who do more and get more. We may not like this because it seems unfair, but it is a reality and the LMX theory has accurately described this situation. LMX theory validates our experience of how people within organizations relate to each other and the leader. Some contribute more and receive more; others contribute less and get less.

Second, LMX theory is unique because it is the only leadership approach that makes the concept of the dyadic relationship the centerpiece of the leader�ship process. Other approaches emphasize the characteristics of leaders, followers, contexts, or a combination of these, but none of them addresses the spe�cific relationships between the leader and each subordinate. LMX theory underscores that effective leadership is contingent on effective leader-member exchanges.

Third, LMX theory is noteworthy because it directs our attention to the im�portance of communication in leadership. The high-quality exchanges advocated in LMX theory are inextricably bound to effective communication. Communication is the vehicle through which leaders and subordinates create, nurture, and sustain useful exchanges. Effective leadership occurs when the communication of leaders and subordinates is characterized by mutual trust, respect, and commitment.

Fourth, there is a large body of research that substantiates how the practice of LMX theory is related to positive organizational outcomes. In a review of this research, Graen and Uhl-Bien (1995) point out that it is related to performance, organizational commitment, job climate, innovation, organizational citizenship behavior, empowerment, procedural and distributive justice, career progress, and many other important organizational variables. By linking the use of LMX theory to real outcomes, researchers have been able to validate the theory and increase its practical value.

Criticism

The most obvious criticism that can be made of LMX theory is that on the surface it runs counter to the basic human value of fairness. Throughout our lives, beginning when we were very young, many of us have been taught to try to get along with everyone (harmony) and to treat everyone equally. We may have been taught that it is wrong to form in-groups or cliques because they are harmful to those who cannot be a part of them. Because LMX theory divides the work unit into two groups and one group receives special attention, it gives the appearance of discrimination against the out-group.

Our world cultures are replete with examples of people of different genders, ages, cultures, and abilities who have been discriminated against. Although LMX theory was not designed to do so, it supports the development of privileged groups in the workplace. In so doing, it appears unfair, discriminatory and "elitist". Furthermore, the existence of in-groups and out�groups may have undesirable effects on the group as a whole. Whether LMX theory actually creates inequalities is questionable. If a leader does not intentionally keep out-group members "out," and if they are free to become members of the in-group, then LMX theory may not create inequalities. However, the theory does not elaborate on practical strategies for how one gains access to the in-group if one chooses.

A second criticism of LMX theory is that the basic ideas of the theory are not fully developed. For example, it fails to explain fully the way high-quality leader-member exchanges are created. In the early studies, it was implied that they were formed because a leader found certain subordinates more compatible in regard to personality, interpersonal skills, or job competencies, but these studies never described the relative importance of these factors or how this process worked. In more recent research, it is suggested that leaders should work to create high-quality exchanges with all subordinates, but the guidelines for how this is done are not clearly spelled out. For example, the model on leadership making highlights the importance of role making, incremental influence, and type of reciprocity, but it does not explain how these concepts function to build mature partnerships. Similarly, the model strongly promotes building trust, respect, and obligation in leader-and-subordinate relationships, but it does not describe the means through which these factors are developed in relationships (Herculeans will certainly notice that there is a steppingstone toward a.o. Berne's Transactional Analysis). 

Third, there have been questions raised regarding the measurement of leader-member exchanges in LMX theory. In past years, the measurement of exchanges was done with different versions of a leader-member exchange scale so the results were not always directly comparable. In addition, there have been questions regarding whether the standard scale used to measure exchanges should be single-dimensional or multidimensional (i.e. leader only, follower only, dyadic, or all members, including followers toward each other, as in some 360� feedback instruments, not to mention the aspects of the dyadic process and content) .

Application

Although LMX theory has not been packaged in a way to be used in standard management training and development programs, it offers many insights that managers could use to improve their own leadership behavior. Foremost, LMX theory directs managers to assess their leadership from a relationship perspective. This assessment will sensitize managers to how in-groups and out-groups develop within their own work unit. In addition, LMX theory suggests ways that managers can improve their work unit by building strong leader-member exchanges with all of their subordinates.

The ideas set forth in LMX theory can be used by managers at all levels within an organization. For example, LMX theory could be used to explain the way CEO�s develop special relationships with select individuals in upper man�agement to develop new strategic and tactical corporate goals. So, too, it could be used to explain how line managers in a plant use a select few workers to ac�complish the production quotas of their work unit. The point is that the ideas presented in LMX theory have application throughout organizations.

In addition, the ideas of LMX theory can be used to explain how high-performance individuals create leadership networks throughout an organization to help them accomplish work more effectively. A member with a network of high-quality partnerships can call on many people to help solve problems and advance the goals of the organization (see also McGregor's Theory X and Y).

LMX theory can also be applied in different types of organizations. It applies in volunteer settings as well as traditional business, education, and government settings. Imagine a community leader who heads up a volunteer programme to assist the elderly. To run the program effectively, the leader depends on a few of the volunteers who are more dependable and committed than the rest of the volunteers (there is no monetary reward). This process of working closely with a small cadre of trusted volunteers is explained by the principles of LMX theory. Similarly, a manager of a traditional business setting might use certain individuals to achieve a major change in the company's policies and procedures. The way the manager goes about this process is explicated in LMX theory.

In summary, LMX theory tells us to be aware of how we relate to our subordinates. It tells us to be sensitive to whether some subordinates receive special attention and some subordinates do not. In addition, it tells us to be fair to all employees and allow each of them to become as much involved in the work of the unit as they want to be. LMX theory tells us to be respectful and to build trusting relationships with all of our subordinates, recognizing that each employee is unique and wants to relate to us in a special way.

--- 

Copyright notice. This document is copyright and protected by intellectual property laws. This is NOT a public domain document; it is intended  for internal academic use by programme participants and faculty members at the Thierry Graduate School. This document may include excerpts or adaptations of other source documents. � 2005, 2011 The Thierry Graduate School of Leadership; where applicable on behalf of- or by courtesy of third party authors or editors. Further reproduction and publication are strictly prohibited. Commercial use is forbidden.

Which theory of leadership suggests that it is important to recognize the existence of in groups and out groups within an organization?

Which of the following leadership theories emphasizes the specific relationship between the leader and each subordinate?

Who is in the mature partnership stage of leader

Which of the following describes the leader