MSG Team's other articles

11129 The Role of Institutions in State Development

The Importance of Institutions and their Role in State Development The previous articles in this module have briefly discussed the importance of institutions in state building and state formation. The key themes that were introduced were how well functioning and stable institutions contribute to state development and state formation. When we talk about institutions, we […]

11127 Role of Innovation in Change Management

We have seen how various factors contribute to the propagation of change within an organization. For instance, change can be catalyzed through change agents and can be driven from the top as well as from the bottom. In this article, we will look at the crucial role of innovation in driving change. For quite some […]

12124 The Impact of Insurtech on Reinsurance

Traditional reinsurance companies have always made attempts to minimize risks associated with their business. Most reinsurance companies look at themselves as companies that hold on to risk on behalf of their peers. There are very few reinsurance companies that made investments in insurtech in the early stages of the industry. The few reinsurers which did […]

10356 Metrics to Measure Credit Risk

In order to manage any type of risk, it becomes important to measure it. Now, credit risks manifest in different forms within an organization and within its environment. It is for this reason, it is important to know that there is no direct way to measure credit risk. Instead, any organization has to look at […]

10148 Leadership and Management – Relationship & Differences

Leadership and management are the terms that are often considered synonymous. It is essential to understand that leadership is an essential part of effective management. As a crucial component of management, remarkable leadership behaviour stresses upon building an environment in which each and every employee develops and excels. Leadership is defined as the potential to […]

Search with tags

  • No tags available.

Informal observation of leadership behavior suggests that leader’s action is not the same towards all subordinates. The importance of potential differences in this respect is brought into sharp focus by Graen’s leader-member exchange model, also known as the vertical dyad linkage theory.

The theory views leadership as consisting of a number of dyadic relationships linking the leader with a follower. The quality of the relationship is reflected by the degree of mutual trust, loyalty, support, respect, and obligation.

According to the theory, leaders form different kinds of relationships with various groups of subordinates. One group, referred to as the in-group, is favored by the leader.

Members of in-group receive considerably more attention from the leader and have more access to the organizational resources. By contrast, other subordinates fall into the out-group. These individuals are disfavored by the leader. As such, they receive fewer valued resources from their leaders.

Leaders distinguish between the in-group and out-group members on the basis of the perceived similarity with respect to personal characteristics, such as age, gender, or personality. A follower may also be granted an in-group status if the leader believes that person to be especially competent at performing his or her job. The relationship between leaders and followers follows three stages:

  • Role taking: When a new member joins the organization, the leader assesses the talent and abilities of the member and offers them opportunities to demonstrate their capabilities.

  • Role making: An informal and unstructured negotiation on work-related factors takes place between the leader and the member. A member who is similar to the leader is more likely to succeed. A betrayal by the member at this stage may result in him being relegated to the out-group

The LMX 7 scale assesses the degree to which leaders and followers have mutual respect for each other’s capabilities, feel a deepening sense of mutual trust, and have a sense of strong obligation to one another. Taken together, these dimensions determine the extent to which followers will be part of the leader’s in-group or out-group.

In-group followers tend to function as assistants or advisers and to have higher quality personalized exchanges with the leader than do out-group followers. These exchanges typically involve a leader’s emphasis on assignments to interesting tasks, delegation of important responsibilities, information sharing, and participation in the leader’s decisions, as well as special benefits, such as personal support and support and favorable work schedules.

Strengths of LMX Theory

LMX theory is an exceptional theory of leadership as unlike the other theories, it concentrates and talks about specific relationships between the leader and each subordinate.
LMX Theory is a robust explanatory theory.
LMX Theory focuses our attention to the significance of communication in leadership. Communication is a medium through which leaders and subordinates develop, grow and maintain beneficial exchanges. When this communication is accompanied by features such as mutual trust, respect and devotion, it leads to effective leadership.
LMX Theory is very much valid and practical in it’s approach.

Criticisms of LMX Theory

LMX Theory fails to explain the particulars of how high-quality exchanges are created.
LMX Theory is objected on grounds of fairness and justice as some followers receive special attention of leaders at workplace and other followers do not.

Implications

According to many studies conducted in this area, it has been found that leaders definitely do support the members of the in-group and may go to the extent of inflating their ratings on poor performance as well. This kind of a treatment is not given to the members of the out-group.

Due to the favoritism that the in-group members receive from their leaders, they are found to perform their jobs better and develop positive attitude towards their jobs in comparison to the members of the out-group. The job satisfaction of in-group members is high and they perform effectively on their jobs. They tend to receive more mentoring from their superiors which helps them in their careers. For these reasons, low attrition rate, increased salaries, and promotion rates are associated with the in-group members in comparison to that of the out-group members.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles

Cultural Dimensions of Leadership

MSG Team

Continuum of Leadership Behaviour

MSG Team