Leader-Member Exchange Theory & Care and Growth

We often forget that the relationship between a leader and employee is just that, a relationship. People think of it as a market exchange. We think of it in terms of the positions each individual occupies in the organisational structure.

But, the problem with this sort of thinking is simple: Just because the organisation pays you a salary and your boss sits above you in the hierarchy; it does not mean that you have actually accepted that person as your leader. The status of “leader my leader” has to be earned in the eyes of the followers.

Leader-Member Exchange theory of leadership

The Leader-Member Exchange Theory (LMX) takes this insight one step further. According to LMX, team performance is explained by the selection of informal apprenticeships. Apprenticeship bonds form when a leader, explicitly or implicitly, offers to mentor a subordinate. And the person accepts and takes the role of apprentice.

LMX theory is based on quality relationships between leaders and subordinates. They say that relationships form over three steps:

  1. Role- Taking
  2. Role – Making
  3. Routinisation

During the role-taking stage, leaders assess employees’ skills and abilities. During the role-making stage, leaders, subconsciously, sort team members into an in-group and an out-group. The in-group includes members who have the leaders’ trust. Individuals in the in-group are prioritised.

Differences between the in-group and the out-group become routinised. This means that low-quality relationships form with the out-group. And high-quality relationships form with the in-group.

The Leader-Member Exchange Criteria

According to this theory, leaders do not treat everyone the same. Leaders will select the one on the basis of the following criteria:

  • Competence (their level of technical expertise).
  • Agreeableness (how accommodating others think they are).
  • Conscientiousness (how careful and diligent the person is).
  • Extraversion (how outgoing the person is).
  • Neuroticism (how likely is it for the person to feel anxious and distressed)
  • Openness (how easy it is to engage with the person).
  • Positive Affectivity (level of enthusiasm and optimism).
  • Negative Affectivity (how likely is it for the person to feel negative emotions).
  • Locus of control (the level which a person believes they have control over their lives).

LMX says that the leader is in charge of forming the bond of apprenticeship. Furthermore, it acknowledges that the subordinate is an important part of the equation. That is to say, the subordinate has to accept the leader as a mentor. Moreover, the subordinate rates the leader on the following criteria:

  • Expectations: what leaders expect from their subordinate. And how realistic these are.
  • Contingent reward behaviour: does the leader carry out reward and punishment?
  • Transformational leadership: inspire the team towards a new vision.
  • Extraversion: how outgoing the person is.
  • Agreeableness – how accommodating the person is to the viewpoints of others.

The power of High-Quality Relationships at Work

The growth of LMX relationships is influenced by the characteristics of both leaders and followers. Therefore, we can say that quality relationships are made through a role-making process. That means that both leader and follower consciously take the appropriate role. We should ask at this point whether there are benefits to this process.

And indeed, there are. Studies conducted in this area have shown that higher quality LMX relationships have very positive outcomes.

For us, this is unsurprising. The original research that produced the Care & Growth Model found that trust in management has a profound impact. It impacts operational performance and business success.

We know now that the leader has an immensely profound role to play in organisational life. It is the leader in the company who is tasked with keeping his/her people on their side. So, the quality of the relationship between leader and employee is immensely important.

Remember the role of Intent

The downfall of the Leader-Member Exchange theory is its behavioural focus. All of the characteristics and criteria of the theory are behavioural. This dismisses the single essential criteria that sit underneath them, Intent!

We know from Care and Growth that a leader stands or falls on their intent. The leader’s intent is primary. How the leader behaves is secondary. This is an important addition to LMX. We must understand that the core question for a follower is: is the leader genuinely willing to suspend his/her agenda for mine? The leaders we truly commit to are those that we know to interact with us always with the intention of doing what is best for us.

The real leadership failure, behind a low-quality relationship from an LMX perspective, is a lack of Care. The out-group, when routinised, become low-quality relationships because of neglect. That is to say, leaders who neglect team members who are not performing are making a grave mistake. But the mistake pre-dates the neglect due to poor performance. You make the mistake by caring only for those that perform.

Consciously developing high-quality relationships

The trick for any leader is to care sincerely about all those you lead, irrespective of how well they perform. This does not mean that we are at all tolerant of poor performance. But, our response to poor performance cannot be neglect and avoidance. Rather, deliberate processes of empowerment should be employed until a point at which the person is dismissed for refusal to meet the standard or is replaced because they lack capacity.

Originally LMX theory did not prescribe any measures to improve leadership performance, it just sought to describe what a good leadership relationship looks like. Theorists would go on to suggest that leaders should consciously and deliberately develop high-quality relationships with all employees. I think this is good guidance. I would rephrase it to say that leaders must be deliberate about caring about all of the members equally. Care is the foundation upon which growth is built. But, we should always remember that the sharp end of growth is accountability.

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Graen, G. B.; Uhl-Bien, M. (1995). “The Relationship-based approach to leadership: Development of LMX theory of leadership over 25 years: Applying a multi-level, multi-domain perspective”. Leadership Qujarterly 6 (2): 219–247.


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