Leader-Member Exchange

The report highlights the issue of high turnover rate in company X due to low leader-member exchange. It discusses theories supporting LMX such as social exchange theory, leader-follower congruence, and self-determination theory. The report provides recommendations to solve the problem and limitations in implementing them.

Running Head: LEADER-MEMBER EXCHANGE 1
Leader-Member Exchange
Name
Institution Affiliation
Course
Date

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Table of Contents
Executive summary.........................................................................................................................3
1. Introduction..............................................................................................................................4
2. Problem statement....................................................................................................................5
3. LMX link to the high turnover.................................................................................................6
a. Social exchange theory.........................................................................................................6
b. Leader-follower congruence.................................................................................................7
c. Self-determination theory.....................................................................................................7
4. Recommendations....................................................................................................................8
5. Limitations..............................................................................................................................10
6. Conclusion..............................................................................................................................10
References......................................................................................................................................11

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Executive summary
The report is about the issue the issues that are affecting company X and how the
company can engage in solving such problems. The report highlights that the leader-member
exchange as the main issue that is causing the high turnover rate in the company. It provides the
relationship between the leader-member exchange and the turnover. The report also discusses
various theories that are in support of the leader-member exchange. The theories are self-
determination theory, leader-follower congruence, and social exchange theory. The report also
provides recommendations that the company needs to put in to place to solve the problem.

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1. Introduction
Employee turnover is the percentage or the number of workers who voluntarily leave the
organization they are working to search for a new job, and they are replaced with a new
employee. The turnover of any company affects the overall performance of the company since it
changes the ways of operation and how the organization responds to the demands of the
customers. To understand the reason for the high turnover it is necessary that the management
engages in measuring the employee turnover (Gholipour Soleimani & Einolahzadeh, 2017). The
measurement helps the organization to estimate the cost required to hire new employees for
budget purpose.
The reason for high job turnover is that the leader-member exchange is low especially in
the intelligence product department. Therefore, our great focus will be on the software
development department. The reason for giving a high concern on this is because it is the
initiation area of all the operation in the organization. Without the production of the software,
there is nothing to trade upon in the organization. The department deals with the most specialized
employees in the organization who have advanced skills related to software development (Jian,
2015). Therefore, in the incident that the employees in the organization and in that particular
department leave their job, it will cost the organization significantly.
The report covers the problem that is causing the high turnover in the company. It also
addresses how the identified problem has a relation to job turnover. There is also identification of
supporting theories that provide the basis for the problem and how it can be resolved. The report
as well provides various recommendations on what should be done to help the company

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overcome the challenge of the high turnover. There are also limitations that are identified in the
event of dealing with the recommendations provided.
2. Problem statement
The issue of great concern here is the leader-member exchange, and that is precisely what
we are focusing on in this report. The leader-member exchange is an aspect in an organization
where the leaders engage with the employees of the organization through meeting and face to the
conversation. The leaders and their team members share ideas that are essential for organization
growth. Therefore, the leader-member exchange is a two-way relationship that leaders have with
their subordinates (Lowe, 2017). The interaction between people in the organization has a
significant contribution to the success of the organization.
The reason for focusing on the leader-member exchange as a factor towards high job
turnover in the company is that it has the strongest negative correlation with turnover intentions
in the case study provided. It is also the factor that has the most significant standard deviation in
the software development department in the case study. Therefore, such evidence indicates that
the leader-member exchange has serious reasons why the company is experiencing high job
turnover compared to the other factors (Hagger & Protogerou, 2018). There is a need to
understand it better and try to solve the issues of the company from that point.
Another reason for focusing at this variable is that there is a high likelihood that the
organization can solve all the turnover issues by first addressing this issue. The organization
should put more concern to this factor since it will eliminate the doubt that the company is
unable to solve its problems. However, the other variables that are known to contribute towards
high turnover should also be considered and addressed as well to ensure that there is no loophole

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in the software development and that will lead to the overall success of the company (Martin,
2017). Therefore, it is necessary that every issue is considered to be of great importance since it
has its effect on the success of the company.
3. LMX link to the high turnover
The leader-member exchange theory is related to turnover. The approach contributes to
the certain level of turnover in a company. The leader-member exchange plays a functional
impact on staff turnover intentions. According to Gagné, Koestner, & Hope, (2014) in their
study, they proved that for the employees who perceive lower quality leader-member exchange
relationship with their leader has a higher intent of quitting their jobs than those who have a
higher LMX. Various theories support the relationship between leader-member exchange and
the rate of turnover (Gagné, Koestner, & Hope, 2014). The theories are social exchange theory,
leader-follower congruence, and self-determination theory.
a. Social exchange theory
The social exchange theory is a concept that deals with social changes as a process of
interactive changes between different people. The concept is used to explain the issue of
communication in business, and that explains the commercial transactions. The theory presents
the outcome of an individual within a social interaction. The result of the social exchange can be
determined by the exchange of ideas and other resources during the communication that occurs
within the social interactions (Erdogan & Bauer, 2013). The social exchange theory suggests that
social behavior occurs as a result of an exchange process between two people. There is a cost
that is incurred when two people interact, and as well there are attached benefits for the same
interaction.

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The exchange theory attempts to explain human behavior and that they must participate
at the equal measure in the interaction and in the event of receiving and issuing ideas and
opinions. The social exchange explains how the leaders must exchange their ideas with the team
members and also receive feedback from them as well. When the social exchange theory is not
utilized well in an organization, it leads to relationship breakup thus causing employees to move
out of the area where their ideas are not valued (Chang, 2016). The social exchange theory shows
that leader-member exchange has a relation with the rate of turnover.
b. Leader-follower congruence.
According to Peng & Wang, (2016) they stated that the leader-follower congruence is the
state that is attained when a leader and their followers come together and is a condition that the
two have to agree. Therefore, the leader has to come into consensus with the team members on
how they perform their activities. The leader-follower congruence has the relationship with
turnover intentions. When the employees fail to enter into agreement with their leaders, there is a
possibility that the employees will leave the job resulting in a high turnover (Peng & Wang,
2016). Therefore, the leader-follower congruence has some relation to the leader-member
exchange.
By the application of leader-follower congruence, three results are likely to occur, and
that proves that there is a relationship between leader-member exchange and turnover. It is
evident that leader-member exchange rose as the issue of loneliness in the workplace fell while
followers had lower leader-member exchange when they were lonelier than their leaders. The
leader-member exchange in some way had some impact on the leader-follower congruence or
incongruence effect in the organization loneliness on followers’ turnover intention.

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c. Self-determination theory
The self-determination theory is a theory that integrates personality, the motivation of an
individual and how they function. The self-determination theory shows that two main types of
motivation occur as a result of the leader relationship with employees or on individual levels.
The two motivational types are intrinsic and extrinsic. The extrinsic motivation is a drive to
behave in certain ways, and that comes from external forces and is attached to external rewards
(Sypniewska, 2014). The external sources can be grading systems, employee evaluation, respect
and admiration of others.
Therefore, the self-determination theory supports the aspect of leader-member exchange
by the use of the extrinsic motivation factor. The motivation from the external forces shows that
the actions of their leaders can motivate the employees. The leaders need to interact with the
employees and exchange ideas with them. When the leaders exchange ideas with their members,
there is a likelihood that they are going to increase their productivity in the organization. Failure
to motivate your team members will lead to the failure of the members being productive and will
eventually lose focus with the job which ultimately leads to job turnover.
The leaders need to make use of all the theories that support leader-member exchange to
ensure that they get the best out of their employees. It is the responsibility of the leaders to
ensure that they integrate very well. The leaders of the company failed to heed to the feedback
and suggestions they received from their employees. The employees lost focus with the
organization since they noticed that they were not part and parcel of the organization (Zhang,
Wang, & Shi, 2012). It is essential for the company to ensure that their leaders engage their
employees in various forums that will make the employees feel like part of the organization.

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4. Recommendations
The recommendations that will be offered in this report will be meant to change the
current situation in company X and ensure that the high turnover rate is reduced to a level that
will not affect the productivity level of the company. The company needs to utilize such
recommendations since they are useful in changing the overall company performance (Sumiyati,
Masharyono, Senen, & Rahmawati, 2017). It is the responsibility of the leaders to analyze the
worthiness of the recommendations and is expected of them. There is a need to make effective
use of such recommendations for the benefit of the organization.
The leaders need to create new strategies on how they can engage their employees
through communication. Communication is a vital tool in the organization. From the case study,
it is evident that the leaders of the company have failed dramatically in communicating with their
employees and this has resulted in a high turnover (Mardanov, Heischmidt, & Henson, 2018).
The correlations between variables show that the leader-member exchange has the highest
negative value and that proves that the relationship between the employees and their leaders has
deteriorated.
Therefore, there is a need to improve in this aspect, and they will make the turnover rate
to reduce. There is a likelihood that the organization has devalued their employees and if they
can identify their problem, they can get a solution (Hesselgreaves & Scholarios, 2014). The
company management needs to train their leaders on how they can interact with their team
members and how to buy ideas from them instead of ignoring them.
Another recommendation is that the leaders should engage in training and mentoring their
team members. The training and the mentoring does not require to be formal, but they can
participate in informal mentoring and training to motivate the workers and to make them feel like

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part of the organization. The mentoring is helpful in solving the issue within the leader-member
exchange in that it helps the leaders to understand how the leaders will interact with their
employees (Baker & Baker, 2017). The leaders need to equip the employees with the skills they
require, and that motivates the employees to be engaged in their jobs.
Another recommendation to solve the problem in the organization is by the use of
rewarding forums. The employees are motivated by the aspect of being rewarded for the
achievements they make in the organization. There should be recognition of those show
outstanding results in the organization, and this will make them achieve greatly and feel that their
efforts are recognized. Those who fail will also be motivated by the rewards issued to other team
members, and this will increase competition in the organization. The leaders can also engage in
taking a cup of tea with their members (Gagné & Gagné, 2014). Such an aspect can be referred
to as the time to drink more tea. Such a forum of taking a cup of tea by the leaders and his team
members will increase their level of interaction, and they will be free to exchange ideas with the
leader. The recommendations mentioned above are meant to build good relationships between
the leader and the followers.
5. Limitations
In the standard deviation scale, the LMX has a high standard deviation. Trying to change
this scale will require a lot of effort from each part, and this poses a challenge in solving the
problems. The issues at the group level need to be addressed first, and this will pave the way for
solving the problems within the organization. Such efforts are regarded as the limitations to the
organization solving its problems.

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6. Conclusion
In conclusion, the report has tried to check on the issues affecting the organization. The
report has outlined how the problem in the organization is related to the overall turnover of
employees in the company. The report has also included some of the recommendations that are
useful for the company if they follow. The company needs to utilize such recommendation on to
solve the issue of high turnover in the organization.

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References
Baker, J., & Baker, C. (2017). Leader–Member Exchange Theory: Barack Obama.
doi:10.4135/9781526426680
Chang, Y. O. (2016). The Effects of Ethical Leadership and Resonant Leadership on Job
Satisfaction and Turnover Intention of Youth Workers. Korean Journal of Youth
Studies, 23(2), 175. doi:10.21509/kjys.2016.02.23.2.175
Erdogan, B., & Bauer, T. N. (2013). Leader-Member Exchange (LMX) Theory: The Relational
Approach to Leadership. Oxford Handbooks Online.
doi:10.1093/oxfordhb/9780199755615.013.020
Gagné, M., & Gagné, M. (2014). Self-Determination Theory in the Work Domain. The Oxford
Handbook of Work Engagement, Motivation, and Self-Determination Theory.
doi:10.1093/oxfordhb/9780199794911.013.026
Gagné, M., Koestner, R., & Hope, N. (2014). A Self-Determination Theory Approach
Goals. The Oxford Handbook of Work Engagement, Motivation, and Self-Determination
Theory. doi:10.1093/oxfordhb/9780199794911.013.025
Gholipour Soleimani, A., & Einolahzadeh, H. (2017). The mediating effect of leader–member
exchange in relationship with emotional intelligence, job satisfaction, and turnover
intention. Cogent Business & Management, 4(1). doi:10.1080/23311975.2017.1419795
Hagger, M. S., & Protogerou, C. (2018). Affect in the Context of Self-Determination
Theory. Oxford Scholarship Online. doi:10.1093/oso/9780190499037.003.0007

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Hesselgreaves, H., & Scholarios, D. (2014). Leader-member exchange and strain: a study of job
demands and role status. Human Resource Management Journal, 24(4), 459-478.
doi:10.1111/1748-8583.12042
Jian, G. (2015). Leader-Member Exchange Theory. The International Encyclopedia of
Interpersonal Communication, 1-9. doi:10.1002/9781118540190.wbeic195
Lowe, K. B. (2017). Expanding Perspectives and Outcomes of Leader and Follower Role
Congruence. Academy of Management Proceedings, 2017(1), 14961.
doi:10.5465/ambpp.2017.14961symposium
Mardanov, I. T., Heischmidt, K., & Henson, A. (2018). Leader-Member Exchange and Job
Satisfaction Bond and Predicted Employee Turnover. Journal of Leadership &
Organizational Studies, 15(2), 159-175. doi:10.1177/1548051808320985
Martin, J. J. (2017). Self-Determination Theory. Oxford Scholarship Online.
doi:10.1093/oso/9780190638054.003.0019
Peng, J., & Wang, X. (2016). I will perform effectively if you are with me: Leader-follower
congruence in followership prototype, job engagement and job performance. Acta
Psychologica Sinica, 48(9), 1151. doi:10.3724/sp.j.1041.2016.01151
Sumiyati, S., Masharyono, M., Senen, S. H., & Rahmawati, P. (2017). The Influence of Leader-
member Exchange to Employee Voice. Proceedings of the 2nd Global Conference on
Business, Management and Entrepreneurship. doi:10.5220/0007115501060109
Sypniewska, B. A. (2014). Evaluation of Factors Influencing Job Satisfaction. Contemporary
Economics, 8(1), 57-72. doi:10.5709/ce.1897-9254.131

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Zhang, Z., Wang, M., & Shi, J. (2012). Leader-Follower Congruence in Proactive Personality
and Work Outcomes: The Mediating Role of Leader-Member Exchange. Academy of
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