1. Industrial-Organizational Psychology Learning Module Leader-Member Exchange (LMX) Theory

2. Lesson Objectives At the end of this lecture, you should:
Understand the elements of LMX theory
Know the precursors and outcomes of LMX
Know how gender influences fairness in LMX relationships
Understand the role of perspective taking in LMX

3. Leader-Member Exchanges
Leaders develop relationships with each member of work group
High quality relationship
member is part of “in-group”
more responsibility, higher satisfaction
Low quality relationship
member is part of “out-group”
less responsibility, lower satisfaction
Leader-Member Exchange (LMX) theory asserts that leaders develop relationships with each member of their work group. A high quality relationship is characterized by the member having high levels of responsibility, decision influence, and access to resources. Members who enjoy a high quality LMX relationship are said to be in the IN-GROUP. A low quality LMX relationship is characterized by the leader offering low levels of support to the member, and the member having low levels of responsibility and decision influence. Members who have a low quality LMX relationship are said to be in the OUT-GROUP.
The quality of the leader-member exchange relationship is theorized to be related to work and attitudinal outcomes. For example, exchange quality has been demonstrated to predict such outcomes as employee withdrawal or resignation, salary and promotion, productivity, job satisfaction, and organizational commitment.
For example, imagine a writing class where students must interact with their teacher. Those students who are considered to be in the In-group may have a great deal of interaction time with the teacher. For example, if Chris's writing style is similar to the teacher's writing style, then the teacher may spend extra time meeting with Chris to discuss writing. This high level of interaction may increase the likelihood that Chris will be in the In-group. Additionally, those students within the In-group may be given extra responsibility in the classroom.
Those students in the Out-group, on the other hand, may be given relatively little interaction time with the teacher. For example, perhaps the teacher disagrees with Jamie's opinions and writing style. The teacher may interact very little with Jamie because of the dissimilarity of their opinions. Thus, it is likely that Jamie and the teacher will develop a low quality LMX relationship.

4. Theoretical Overview of LMX
Relationships develop from series of exchanges or interactions
Phase 1: Role-taking
member enters organization
leader assesses member’s abilities/talents
Phase 2: Role-making
informal, unstructured negotiation of role
Phase 3: Role-routinization
social exchange pattern emerges
becomes routine
The theoretical development of LMX is based on the premise that leader-member relationships emerge as the result of a series of exchanges or interactions during which leader and member roles develop.
This role formation process involves three phases. During the first phase, role taking, the member enters the organization and the leader assesses his or her abilities and talents. Based on this assessment, the leader provides opportunities for the member to "take" a specific role. During the second phase, role making, the leader and the member engage in unstructured and informal negotiation. It is during the second phase that the member begins to "make" a role. During the third phase, role routinization, an ongoing social exchange pattern emerges or becomes "routinized." This entire role formation process is expected to occur early in the member's tenure with the leader.

5. Precursors of LMX Member attributes influence relationship
extroversion
abilities
ingratiation behaviors
Leader provides social support
Affective responses influence relationship
perceived similarity
attraction
leads to increased interaction
trust
Perhaps the most interesting influence on the development of a high quality LMX relationship is affect. The role formation process develops through a mechanism referred to as "negotiating latitude.” This negotiation is hypothesized to occur through the series of exchanges or interactions between the leader and the member. The exchanges, or interactions, of interest were assumed to be primarily work-related in terms of content. However, recent empirical findings suggest that person-related variables may contribute to LMX in addition to, or instead of, competence and performance.
Thus, in addition to work-related variables, the leader's and the member's affective responses to their initial interaction may be important components in the development of the LMX relationship. The affective responses are influenced by the perceived similarity between the leader and the member. The more the leader and the member perceive that they are similar, the more they will like each other and the more likely they are to develop a high quality LMX relationship. Persons who perceive themselves to be similar will be attracted to one another, and therefore will like each other. It is this level of attraction, or liking, during the initial interaction that often dictates the quality of the LMX relationship.
Additionally, attraction might be affected by the amount of interaction that occurs between the leader and the member. Persons who are similar are more likely to interact frequently causing an increase in the level of familiarity, which might also influence the level of attraction within an LMX relationship. In addition, leaders and member who share a high quality LMX relationship tend to interact more about personal topics than about work related topics. This may occur because these leaders and members may develop a high level of communication comfort and they may feel that they can broach any topic with each other.
The increased interaction may result in higher levels of trust. Leaders tend to trust In-group subordinates and therefore empower them with decision making authority. Leaders use delegation, not as a test of the member's abilities, but as a reward for excellent past performance and as a sign of respect and consideration. Therefore, as trust between the leader and the member increases, the number of delegated responsibilities from the leader to the member, and consequently, the quality of the LMX relationship also increases.

6. Outcomes of LMX Job satisfaction Organizational commitment
Moderated/affected by other factors
type of task matters
level of challenge
situational factors
size of group
workload
financial resources
As mentioned above, many work-related outcomes have been predicted by LMX quality. For example, LMX quality has been found to predict job satisfaction. Specifically, as the reported quality of the LMX relationship increases, so does the follower's report of job satisfaction. Other research has indicated that LMX-outcome relationships are moderated by several variables.
Task characteristics as moderators of the LMX-outcome relationship were examined. By taking into consideration the level of complexity and challenge afforded by the task, a wider variety of outcomes were more strongly predicted than by using LMX quality alone. For example, LMX quality was found to be correlated positively with high quality performance when the task challenge was extremely low or extremely high. Additionally, job satisfaction was found to be related more strongly to LMX quality when the type of task was taken into account than when it was not considered.
Situational factors, specifically unit size, work load, and financial resources, have also been examined as moderators. These factors, in conjunction with LMX quality, were able to predict organizational commitment, and to more strongly predict job satisfaction.

7. Gender/Fairness and LMX
Gender differences influence interactions
Mixed gender relationships
supervisors rate performance lower
supervisors report liking subordinate less
subordinates experience greater role ambiguity
Opposite true in same gender relationships
Demographic differences in leaders and members accounted for 17% of the variance in LMX. It is likely that social categorization on the basis of gender explains a significant amount of LMX variance and it may have a negative impact on LMX relationships in diverse groups. Specifically, gender diversity in the workplace may have substantial impact on the way leaders and members interact and on the establishment of LMX relationships. For example, supervisors in mixed sex dyads rated the members' performance lower and reported more negative affect toward members than those supervisors in same sex dyads. Furthermore, the subordinates in mixed sex dyads rated their level of role ambiguity higher than subordinates in same sex dyads.

8. Gender/Fairness and LMX Process Phases
1: Role-taking - mutual respect essential
men and women define respect differently
social categorizing and stereotyping
2: Role-making - trust develops
single violation may destroy relationship
violations reinforce negative stereotypes
3: Role-routinization - mutual obligation
gender/fairness issues resolved by this phase
In the first stage of the LMX development process, role-taking, mutual respect is essential. Leaders and members must each understand how the other views and desires respect. This is especially difficult in mixed-gender relationships because men and women may interpret or define respect differently. The leader-member relationship will not develop and progress to the next stage if there is a lack of respect. This is common in gender diverse relationships because of social categorization on the basis of gender groups and the prevalence of stereotyping.
In the second stage of the LMX relationship, role-making, trust must be developed in order for leaders and members to further develop the relationship and influence each other's attitudes and behaviors. This role-making is critical in diverse dyads. If trust is violated even a single time in diverse dyadic relationships, the relationship may be destroyed. Trust is especially critical in diverse relationships because violations may reinforce prior stereotypical experiences and thus foster negative stereotypes and reinforce discriminatory practices.
The final stage of LMX development is role routinization, where mutual obligation is formed. Any gender relevant issues have already been addressed by this phase. Role-making has been established by this point and leaders and members have shared meanings.
Cultural competence and perspective-taking may also be very important to the LMX process. In order for a high quality LMX relationship to develop, leaders and members must be able to take each other's perspective. Cultural and gender barriers may naturally exist that hinder perspective-taking in mixed gender relationships. Better communication between dyad members and increasing education about other groups may avoid social categorization and the reliance on stereotypes and facilitate the development of high quality LMX relationships regardless of the leader's and the member's sex.

9. Perspective-Taking Ability to “read” leader or member important in LMX
Use role-taking skills to entertain the point of view of another
Associated with empathy, reasonableness, and sensitivity
Negatively associated with aggressiveness and sarcasm
Perspective-taking reflects a tendency to use one's existing role-taking capacities in order to entertain the psychological point of view of another person; a non-affective component of dispositional empathy. Empathy consists of empathetic concern, personal distress, and perspective-taking. Traits related positively to perspective-taking were patience, reasonableness, and sensitivity. Traits related negatively to perspective-taking were aggressiveness and sarcasm.
High perspective-takers were more accurate than low perspective-takers at judging others. Perspective-taking is likely to be important in the development of LMX relationships.
Three role-taking aspects related to high perspective taking have been identified. First, role takers must be accurate in their ability to perceive how other's understand and respond to the world. Second, role takers should have large role-taking ranges. That is, they should be able to view a situation from many perspectives. Third, role takers should be able to perceive the other's perspective in depth and have a full understanding of the other's perspective. When leaders and members are high on these aspects, then the role taking process may result in higher quality LMX relationships.
Perspective-taking, also involves suppressing one's usual egocentric point of view and viewing the world from the other's vantage point. Perspective-taking may influence a member's task motivation. As the member's level of perspective-taking increases with respect to his or her leader, then the member should be better able to "read" his or her leader. The member's level of perspective-taking may affect the quality of information shared between the leader and the member. Because perspective-taking has been shown to be related to understanding others, those high in perspective-taking skills may be better able to know what information needs to be discussed in order to reach a solution on the task.

10. Perspective-Taking I Questions
When you were drawing, did you draw toward yourself or toward your partner?
How do you think your score on the perspective-taking questionnaire might relate to your performance on this task?
How do you think one’s tendency or ability to take the perspective (i.e., point of view) of another might influence the ways in which leaders and subordinates interact?

11. Perspective-Taking II Questions
How difficult was it for you to imagine drawing from your partner’s perspective?
How do you think your score on the perspective-taking questionnaire might relate to your performance on this task?
How do you think one’s tendency or ability to take the perspective (i.e., point of view) of another might influence the ways in which leaders and subordinates interact?

12. Perspective-Taking Wrap-up
3 role-taking aspects related to perspective-taking
accurate in ability to perceive how others understand and respond to world
can view situations from many perspectives
able to perceive other’s perspective in depth
Leaders and members high on these aspects may have higher quality LMX