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Leadership Theory: Leader-member Exchange (LMX)

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3 Lessons
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About this course

This course provides information about leader-member exchange (LMX) theory, such as its definition, how it occurs in the workplace, what in-groups and out-groups are, the positive and negative aspects of each group, and what leaders can do to avoid in-group biases (including the similar-to-me bias, racial bias, and gender bias); it also touches on the idea of cultural fluency. Lastly, it provides steps leaders can take to have a better relationship with all their members, not just those similar to them, and create a large in-group in their organisation.

Leadership Theory: Leader-member Exchange (LMX) Lessons

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  1. Introduction to Leader-member Exchange Theory
  2. In-group and Out-group: The Pros and Cons
  3. How to Avoid In-group Bias

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Leadership Theory: Leader-member Exchange (LMX) course excerpts

Introduction to Leader-member Exchange Theory

This lesson will provide information about the definition, history, and three phases of the relationship between a leader and a member.

Leadership Theory: Leader-member Exchange (LMX) Course - Lesson Excerpt

Introduction to Leader-member Exchange (LMX) Theory

It can be observed that a leader’s actions are not the same towards all their subordinates. Leaders tend to be closer to some members and not to others; they tend to favour some and disfavour others.

This difference in the way leaders relate with their members is best described in the theory called the leader-member exchange theory or simply LMX.

Leaders need to be informed about this theory so that they will become aware of their own attitudes and actions towards their members. Then, they can change accordingly to benefit both their members and organisation.

LMX Theory This theory explores the relationship between a leader and their members. It views leadership as a process that is focused on the interactions or exchanges between leaders and members. It evolved from the Vertical Dyad Linkage (VDL) Theory, and it focuses on several dyadic relationships linking a leader to their members. This theory first emerged in the 1970s, and it was introduced by Fred Dansereau, George Graen, and William Haga. Unlike other leadership theories, LMX does not focus on a leader’s characteristics to determine the leader’s effectiveness. Instead, it considers the quality of the relationship the leader has with their individual subordinates. In this theory, leaders should aim to develop as many high-quality relationships within their teams as possible since high-quality relationships are expected to lead to increased job satisfaction, morale, and productivity among the subordinates.

Regardless of the reality that not all members are the same and some members may prove themselves to be more competent and more trustworthy than others, leaders must take the extra mile of reaching out to the out-group.

They must strive to form high-quality relationships with all their members and try to train and develop each.

Overall, leaders may use the LMX theory to identify any perceptions and biases they may have of their members and work on them accordingly to create a cohesive and high-performing team.

In-group and Out-group: The Pros and Cons

This lesson will provide more details about what it is like to become part of the in-group or the out-group. Also, it will explore the positive and negative impacts of the two groups on the members, leaders, and organisations.

Leadership Theory: Leader-member Exchange (LMX) Course - Lesson Excerpt

In-group and Out-group: The Pros and Cons

In general, members who are part of the in-group experience a lot of advantages that members from the out-group do not.

Benefits for Members of an In-group

Intangibles: increased support from their leaders, more open communication, greater confidence, increased level of trust, preferential treatment

Job-related: faster progression within the organisation, more trainings and development activities, more mentoring, ample access to the leader, increased performance-related feedback

Other benefits: They are usually invited to exclusive meetings and activities outside work (e.g., dinners, drinks, sports events, etc.), and thus, enjoy the perks of sharing personal information and building relationships with each other; they are usually the first ones to know the latest company news.

Benefits of Having an In-group for the Leader and the Team With good performing in-group members who don’t mind extra work and are always thinking of innovative ways to hit goals, leaders get to complete more work in less time and achieve goals faster. Leaders also see themselves with higher job satisfaction as they see good performance of their teams and increased initiative from members. In-group members display commitment to the organisation in response to the benefits they receive from being part of the in-group, and this contributes to the success of the organisation. As they work beyond contractual obligations, in-group members also help create and drive organisational changes. It also becomes easy for the organisation to identify emerging leaders since the relational focus of the LMX theory allows leadership to be recognised wherever it is evident. There is also low attrition rate from within the in-group members.

How to Avoid In-group Bias

This lesson will provide information about the causes of in-group bias and the specific steps leaders can take to avoid it and create high-quality relationship among their members. It will touch on "similar-to-me bias," gender bias, racial bias, and cultural fluency.

Leadership Theory: Leader-member Exchange (LMX) Course - Lesson Excerpt

How to Avoid In-group Bias

From the previous lessons, you have learned the importance of relationships between leaders and members, and that in most organisations, in-groups and out-groups exist.

Members from these groups experience advantages and disadvantages. This leaves the big question of what leaders should do to avoid the negative effects of having out-groups and maximising the benefits of having a large in-group.

There are biases that cause leaders (subconsciously or not) to categorise members into in-groups or out-groups: Based on studies, people have ingrained tendencies to choose and affiliate with people who are like them. These are the people who have the same culture, religion, race, ethnicities, gender, even schools, and/or political beliefs as the leaders. This tendency is what is termed as **“similar-to-me bias,” “mini-me syndrome,” or “in-group bias.” ** For instance, a male leader will likely choose another male for a leadership position, thus also contributing to gender bias. There is also racial bias. Since childhood, people have developed an unconscious tendency to favour certain races. This results in systemic racism and lack of inclusivity that have become apparent in most organisations.

These ingrained tendencies may prove to be problematic in the workplace.

Organisations need diverse perspectives and ideas to become successful. It is not ideal for them to rely on purely men or women, people of the same race, or people sharing the same personalities and characteristics when making decisions in this quickly evolving world and industries.

Moreover, although working with people who may be like the leader can be comforting, the goal of leading is not to achieve comfort on an individual level but to achieve organisational success, which can be aided by diversity and inclusion.

Thus, it is good for leaders to put their personal biases aside and prioritise what will be best for the organisation.

Steps to avoid the tendency to hire and promote only people who belong to the same race as yours (Miller, 2020):

Acknowledge Inherent Biases Be aware of how you perceive different races. Make it a habit to examine your own perceptions, and check whether they are due to merit or in-group biases.

**Start Listening and Learning ** Change the way you think about the out-group members by listening and learning more about them. For instance, talk to people of colour and educate yourself about who they are and what they are going through. Be open to their perspectives and find ways to help them fight the stigma that surrounds their race.

Take Action Now that you’re more aware of your personal biases and you’ve adopted a new way of thinking about the issue, you can then take the necessary actions. For instance, you can easily spot biased behaviours and call them out when you see them.

Hyun & Conant (2019) use almost the same pattern in the steps they enumerated in helping leaders become culturally fluent:

Cultural fluency in leadership is one competency that is attributed to increased productivity and success of an organisation. It focuses on leaders encouraging all their members, not just those who are part of the in-group, to give their 100% for the workforce to achieve maximum value.

According to Hyun and Conant (2019), to achieve cultural fluency, leaders must follow these steps:

Reflect on your own behaviour: Assess your own competence level, and get expert guidance to identify blind spots. For instance, reflect on why certain people act the way they do, such as how their cultures shape them. Then, adjust strategies, such as the way you onboard new members, to fit different cultural backgrounds.

Act with intent: Learn new ways of leading your team. Consider how you can make it comfortable for them to contribute. For instance, match the "open door policy" with your intent to listen more than to talk. Then, instead of assuming things, ask questions regarding certain cultures. This will help avoid conflict while building trust within your team.

Practice: When conflicts arise, refrain from making judgements. Meet with the person one-on-one, and prepare before the meeting. Consider what the person might be thinking and the best way to connect with them. Also, analyse what the person might be feeling and how their culture might be affecting it. Then, make it clear that you want to help find a solution.

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Leadership Theory: Leader-member Exchange (LMX)


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