LMX Theory

LMX Theory

DOI: 10.4018/978-1-7998-8950-2.ch003
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This chapter develops the background and use of a basic principle for the entire book: LMX. Defined in the introduction, LMX is a relationship-based approach for managing teams. It drives leader effectiveness through developing dyadic relationships with members, and even using these dyads to build effective groups. Leaders measure the dyadic relationships in terms of the level of loyalty, support, respect, and trust. The leader treats each member as a unique individual as a singular relationship is built. In role making, leaders tend to put people into groups: in-group or out-group. LMX is a powerful way to create and nurture relationships between the leader and each member supervised. It shines the light on leadership communication and demonstrates how trust, respect, and loyalty can improve work relationships.
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Figure 1.

Leader-Member Exchange Theory (LMX) focuses on dyadic (two-way) relationships with members, and on using those dyads to build effective groups.


The Leader-Member Exchange Theory (LMX) was discovered in the 1970s to focus on work relationships. A seminal article by Fred Dansereau, George Graen, and William Haga (1975) evolved LMX from vertical dyad linkage (VDL) theory. LMX employs the vertical dyadic interaction between leaders and members. The LMX term is used herein to signify the crucial team relationships that contribute to or detract from effective telework programs. This notion ties to the recommended emphasis on improving LMX quality to reduce the impact on negative effects of teleworking such as professional isolation (de Vries, Tummers, & Bekkers, 2019).

LMX theory is well suited to developing new teams or to team building during a major change. For the purposes of the current discussion, the major change is telework. COVID-19 forced a majority of the country into telework or some kind of remote situation, and today organizations and their employees are struggling with what to do about telework. Every day there is a post online or a TV news report or a board meeting or a conference that addresses why organizations do or do not want to telework, why employees will or will not come back to work, and whether telework can provide increased productivity or other benefits over an extended period of use. The world is dealing with these issues and this work suggests using LMX to guide the necessary communication and operations in pursuit of an answer.

It allows rapid evaluation of people’s current skills and promotes a convenient way to segment them into groups where the work is done. Putting the team into two groups, each possessing similar skills and abilities, is a way to get people working and possibly avoid some of the team-forming tensions that may arise using other leadership techniques. This segmentation is placing people into in-groups and out-groups, which we will discuss a little later in this chapter. LMX can be highly effective in these situations, but leaders must remember to avoid making the segmentation a permanent arrangement so that a member who shows progress can join the group that is performing the best. Also, as leaders grow their people and build their teams, they should look at mixing the groups to increase capability and allow within-group mentoring. Again, this will be explored later in the chapter.

So, LMX drives leader effectiveness through developing dyadic (two-way) relationships with members, and even using these dyads to build effective groups. Leaders measure the dyadic relationships in terms of the level of loyalty, support, respect, and trust. All of the business success factors – decision making, access to resources, responsibility, and member performance – are influenced by the quality of the dyadic relationships (Janse, 2019).

According to the theory, relationship building between leaders and their subordinates progresses through three stages: role taking, role making, and routinization. Role taking happens when members first join the group. This occurs when members demonstrate their skills and abilities and when the leader forms first impressions. Role making is when the leader creates a role for the new member, or when the member may assume a certain role based on their capabilities. Routinization is when a mutual commitment to the mission and objectives of the work unit gets shaped and reinforced.

Interestingly, an LMX research project analyzed differences in high- and low-quality relationships. High-quality is about the effectiveness gained by social exchanges and reciprocity where there is mutual trust and members are valued by leaders as great work relationships can develop. The low-quality relationships are considered strictly contractual and are characterized by members doing only what is required in their prescribed job while leaders provide members only what is needed to perform (de Vries et al., 2019, p. 577). For example, the relationship may be based on a limited-scope contract and once it is performed there is no more interaction. The leader does not seek more production of this project and the member does not receive, or expect to receive, a bonus for completing it.

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