Leader Member Exchange Theory: Ingredients, Factors, and Implications

This report explores the Leader Member Exchange Theory and its impact on organizations. It analyzes the ingredients and factors that contribute to effective leader-follower interactions, as well as the wider implications of the theory. The report also provides recommendations for improving the theory's implementation.

Leader Member Exchange
theory

TABLE OF CONTENTS
.........................................................................................................................................................1
INTRODUCTION ..........................................................................................................................3
LMX THEROY...............................................................................................................................3
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Leader member exchange theory is the one that suggest the leaders and followers must
develop the unique relationship to achieve certain organisational goals and objectives within the
specified time frame. Also, the present report will analyses in detail what is this theory and how
it impacts the organisation in the recent times. Also, it will help in understanding how this
theory plays significant role in big organisations like Tesco and marks and Spencer that is
running on large scale in UK. Furthermore, this theory will also helps in identifying certain
ingredients that are responsible for maintaining the high quality relationships within the
workplace and while carrying out various complex task at various levels.
Moreover, the study will also highlight the benefits of this theory in increasing the
employee satisfactions and self esteem and various other factors so that work is carried out not
only efficiently but also in best of manner. Furthermore, significance of certain factors such as
independence , courage , relevant knowledge existing within the leaders makes the performance
of the groups members and explains the success of this theory. Moreover, the study will also
help in understanding implication of this LMX theory carried out different workplace so that
management is able to develop better strategies and develop best of plans in the future for its
best implementation . Lastly, the study will also describe the in groups and out groups within
this theory along with providing relevant recommendation that might be used within this theory
in the future
LMX THEROY
Leadership member exchange theory (LMX) is relevant in the contemporary
organisations because of the fact that it helps in providing better explanations relating to various
teams, members and the organisation. Thus, it helps in building the unique relationships with the
members of the organisation that is essential for any firm to achieve better competitive
advantage and complete various challenging task in most efficient manner. Furthermore, LMX
theory is beneficial in contemporary organisation as business environment keeps on changing
and is unpredictable Anand, Vidyarthi & Rolnicki (2018).. Hence , strong relationships would
allow organisations in decreasing the employee turnover and develop better job satisfaction
that is essential for continuous growth and success. Moreover, the relevancy of LMX theory
might be explained through certain concepts that are described as follows

Ingredients of high quality relationships
It is known that LMX theory is one that helps organisation employees to find certain
groups within the workplace through creating mutual respect and trust. Also, through finding
such groups all the members feel proud of being part of the groups as they share certain common
interest and characteristics that allows them to work in more efficient manner and achieve the
team success within the specified time frame for various task assigned at the workplace. Fatima,
and et.al.(2020) Moreover, in context of Tesco it can be said that this theory had been proved
relevant in current times also as group of employees that are working hard towards certain
organisational projects tend to develop more positive attitudes and required self esteem so that
there is increase in the social bonding and best delivery of the projects Mumtaz & Rowley
(2020). Furthermore, the main reason that in Tesco these groups have been able to develop
high quality relationships is because of the reason that there is strong communication channels
between the members so that there is no confusion while carrying out certain responsibilities
in the group. Moreover, through these high quality relationships members of the groups are able
to understand each other in best of manner and thus chances of conflicts are also less.
Also, based on LMX theory Marks and Spencer that is British retailer have leaders
that are able to develop the quality relationships with more in group than the out group.
Moreover, under in group , relationships are developed more efficiently because both the leaders
and followers have the sense of strong obligation and mutual trust that allows them to assess the
talents and abilities each others and allows them to take certain responsibilities . Also, the
leader is very concern in providing full support and assistance to these in group members so
that task are carried in best manner Saeed and et.al. (2018). For instance: through existence of
the such quality relationship under in groups the quoted firm is able to launch the new product
line of food to various regions in UK to expand organisation operation and to identify market
challenges and make the best policies in the future.
Thus, it can be said that for any organisation the basic ingredient of developing the
quality relationships within the workplace in relation with LMX theory is that identification of
the groups that have similar thoughts and opinions towards certain task so that favourable
outcomes are derived in best possible way in the end.
Factors contributing to forming effective leader follower working interactions

In accordance with LMX theory forming effective leader follower working is
dependent on several factors that are briefly explained as follows :
Full engagement: It is known that in any organisation the leaders and followers are able
to work in best manner only when there is full support and guidance from the superiors to the
subordinates Seo and et.al. (2018). Moreover, the proper engagement allows in sharing of
various thoughts and ideas that might help in the smooth working and ensuring greater
efficiency in the tasks that are been assigned at any place. Also, the engagement might be
ensured when resources are made available to the groups in timely manner and all the queries
are solved immediately without wasting any time.
Independence: To make the certain group work and ensuring that they deliver highest
productivity it is required that certain independence is been provided so that they are able to
take certain decision on their won without being dependent on all time Kim and et.al. (2021).
Moreover, this type of independence helps the firm ensure more trust and the openness within
the members. Also, the greater level of respect is developed within the group and the leaders
that is essential for ensuring the best working environment.
Courage: This type of qualities in the leaders allows the group members to develop the
best relationships in longer run as the leader assure that challenging task would be solved in
effective manner if each member of the team completes it assigned task in responsible way
without committing the mistakes Jung, Song & Yoon, (2021). Furthermore, through these
challenging tasks best working interactions are formed and maintained within the team
members and leaders that allows in designing better strategies for similar tasks in the future.
Relevant knowledge: While working in changing business environment there are
higher chances that followers at any workplace are not able to understand the new concepts and
lack certain knowledge on how to carry out the task Khalifa, (2019). Thus, in these situations
leaders that are having the relevant knowledge tends to establish interactions with the followers
so that there are not many difficulties faced while working. Moreover, having such type of the
knowledge the leader is able to maintain long lasting relationships with its followers so that
more transparency and clarity in the task is established while undertaking any future projects.
Active in taking feedback: In the best leader follower relationship it is required that the
process of providing feedback is continuous Anand, S. and et.al. (2018). Moreover, best
relationships are formed on the basis of this factor as leaders that are able to provide the

constructive feedback at the end of each task tend to develop stronger relationships with all the
members. Moreover, sense of mutual commitment is also developed within the members that
allows them to take decisions are not only effective but also relevant in achievement of the
overall organisational objectives.
Addressing wider implications of the LMX theory
The major implications of LMX theory in context of organisational performance and
the workplace outcomes is that leaders are able to keep bets and high relationships with only
few of the employees as there is limited time and availability of resources. Furthermore, it is
only because of this reason that the leaders are not able to have the similar relationships with
all its followers at the workplace Moin and et.al. (2021) . Moreover, another implication based
on organisational performance is that LMX t theory is good only when positive behaviours are
developed within the individuals that helps in the satisfying the supervisors expectations. On
the other hand if such positive behaviours are lacking within the existing employees than
there are greater chances that this theory might not work out effectively. Also, the LMX
theory is related and is based on understanding the work related problems within the exiting
employees by the leaders so that working of the followers might be ensured in best possible
way Liu and et.al. (2020). Furthermore, the major limitation of this theory is that it does not
helps in analysing the basis of which the effective high quality exchanges are created .
Also, due to this reason sometimes this theory creates differentiation within various
groups within the workplace that started creating the process of comparison that is not good for
the strong worker relationship and achievement of various short and long term objectives within
the workplace (Pros and Cons of Leader-Member Exchange Theory, 2022). Moreover, in recent
reports it was seen that high performing LMX shows that subordinates enjoy more freedom in
performing their various task at the workplace than comparison to those that are not able to do
the same. Also, benefits of the LMX theory is that best outcome would in form of greater
employee performance and high levels of job satisfaction. For instance : High level of LXM
within Tesco has allowed in the achieving various short term objectives in planned manner.
Furthermore, LMX theory is helps in empowering employees to make the right decisions and
helps in continuous improvement Aggarwal and et.al. (2020). However, the major limitation of
the this theory is that it is based on the assumption that all the team members are created
equal and hence this is not the case all the employees are different in abilities and the

trustworthiness. Moreover, this theory might not be applied in right manner when certain task
or responsibilities are not assigned properly within the members as it would only create
conflicts and misunderstanding Lee and et.al. (2019). Although overall it can be said that this
theory is good as it helps in establishing one to one conversation and time with the leaders and
developed greater quality relationships at the workplace.
Recommendations
 It is recommended that to have maximum benefit of the LMX theory it is required that
leaders focus on understanding the strengths and weakness of each individuals in out
groups members so that proper level of motivation and skills might be developed in that
member also so that more positive outcomes are derived in the end Buch, Kuvaas &
Dysvik, (2019). Moreover, these groups need to be provided with various opportunities
so that better development and promotion might be gained that is good for the growth
of any organisation on vast level Bunin, Meyer & Durning, (2020). Also, it is required
that this theory followers must share manager traits so that leaders are able to make
certain changes for the future development and success. Thus, this theory is way through
which better relationships might be established within the workplace but it does not
defines how these relationships might be made stronger with followers with the passage
of time.
CONCLUSION
From the above report it can be concluded that leader member exchange theory is mostly
used in the organisations to carry out certain challenging task in most efficient manner . Also,
the study had identified reasons for the best and high quality relationships within the workplace
and had analyse certain factors that are responsible for the the successful relationships within
the members and leaders. Moreover, the report had also identified certain positive and negative
implications of this theory when applied in any workplace. Lastly, certain suggestions for the
improvement in this exiting theory had also been provided in detail under this study.

REFERENCES
Books and Journals
Mumtaz, S., & Rowley, C. (2020). The relationship between leader–member exchange and
employee outcomes: review of past themes and future potential. Management Review
Quarterly. 70(1). 165-189.
Aggarwal, A. and et.al. (2020). Leader–member exchange, work engagement, and psychological
withdrawal behavior: the mediating role of psychological empowerment. Frontiers in
Psychology. 11. 423.
Moin, M. F. and et.al. (2021). Leader emotion regulation, leader‐member exchange (LMX), and
followers’ task performance. Scandinavian Journal of Psychology. 62(3). 418-425.
Anand, S. and et.al.(2018). Leader-member exchange as a linking pin in the idiosyncratic deals-
Performance relationship in workgroups. The leadership quarterly. 29(6). 698-708.
Anand, S., Vidyarthi, P., & Rolnicki, S. (2018). Leader-member exchange and organizational
citizenship behaviors: Contextual effects of leader power distance and group task
interdependence. The Leadership Quarterly. 29(4). 489-500.
Saeed, B. B. and et.al. (2018). Leader-member exchange and innovative work behavior: The role
of creative process engagement, core self-evaluation, and domain knowledge. European
Journal of Innovation Management. 22(1). 105-124.
Kim, M. S. and et.al. (2021). When leader-member exchange leads to knowledge sharing: the
roles of general self-efficacy, team leader modeling, and LMX differentiation. The
International Journal of Human Resource Management. 1-28.
Bunin, J. L., Meyer, H. S., & Durning, S. J. (2020). Could application of leader-member
exchange theory have saved a residency mentorship program?. Perspectives on medical
education. 9(4). 264-267.
Jung, H. S., Song, M. K., & Yoon, H. H. (2021). The effects of workplace loneliness on work
engagement and organizational commitment: moderating roles of leader-member exchange
and coworker exchange. Sustainability. 13(2). 948.
Seo, J. J. and et.al. (2018). Not all differentiation is the same: Examining the moderating effects
of leader-member exchange (LMX) configurations. Journal of Applied Psychology.
103(5). 478.

Fatima, T. and et.al.(2020). Leader–member exchange quality and employees job outcomes: A
parallel mediation model. Eurasian Business Review. 10(2). 309-332.
Lee, A. and et.al. (2019). Leader–member exchange social comparisons and follower outcomes:
the roles of felt obligation and psychological entitlement. Journal of Occupational and
Organizational Psychology. 92(3). 593-617.
Khalifa, G. (2019). Intervening role of supervisor trust and leader-member exchange: an
investigation into the role of supervisor support on employee innovative
behaviour. Journal of Association of Arab Universities for Tourism and Hospitality. 17(3).
46-67.
Liu, X. and et.al. (2020). Solving workplace deviant behavior in construction by leader–member
exchange and leader–member guanxi. Journal of construction engineering and
management. 146(6). 04020061.
Buch, R., Kuvaas, B., & Dysvik, A. (2019). The role of other orientation in reactions to social
and economic leader–member exchange relationships. Journal of Organizational
Behavior. 40(3). 296-310.
Online
Pros and Cons of Leader-Member Exchange Theory. 2022. [Online]. Available
through:<https://sites.psu.edu/leadership/2021/04/30/pros-and-cons-of-leader-member-
exchange-theory/>.