To what extent is LMX theory still relevant in contemporary organisations

This essay explores the relevance of Leader-Member Exchange (LMX) theory in contemporary organisations, highlighting key ingredients of high-quality relationships and factors that contribute to effective leader-follower interactions.

HRM11120
Leading Strategic
Decision Making
Assessment

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
To what extent is LMX theory still relevant in contemporary organisations..............................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Strategic decision making could be termed to a process of understanding interactions of
decisions along with impacts on business for gaining benefits. Likewise, leadership is an action
in which a person makes use of their potentiality and competence for influencing addition to
directing others for goal attainment (Chernyak-Hai and Rabenu, 2018). It is accomplishment of
objectives by providing proper direction to human assistants. Organisational leaders with specific
styles and theory help self as well as others for performing right things. In the real world,
businesses opt suitable leadership approach to communicate essentials, provide directions along
with encourage personnel for acting actualisation of goals or objectives. Convincing workforce
for making positive changes, including changing habits for better sustaining the planet wherein
they live is major responsibility of a leader. It is considered as integrative together with
multidimensional The aim of the writing the essay is to gain insights about specific leadership
topic.
The essay highlights extent to which Leader-Member Exchange theory is relevant in
contemporary organisations.
MAIN BODY
To what extent is LMX theory still relevant in contemporary organisations
Information observation related to leadership behaviour states that actions of leader is not
similar to all subordinates. Significance of potential differences in the context is brought into
sharp emphasis through Leader-Member Exchange theory of George Graen that is also termed as
vertical dyad linkage theory that views leadership as combination of number of dyadic
relationship that links leader with follower. As per the theory, leaders form variant types of
relationships with ample number of groups as subordinate (Fourie and Mystris, 2021). It
contends that interaction among leaders together with members at workplace assist leaders to
establish effective and healthy relationship which impacts or influences employee behaviour
together with outcomes.
In a company, Leader-Member Exchange theory is still relevant as it enables a leader to
identify where they might be unfair along with assist people to avoid unconscious bias (Sarti,
2019). With this, the water can be tested in slow manner through offering similar development
opportunities. For example, with Leader-Member Exchange theory, leaders of Unilever frame
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effective communication medium for attaining development, growth addition to maintaining
exchanges. Through the communication, leaders with this theory also accompany features
including devotion, trust and respect that results in effective leadership.
In a contemporary organisation, use of LMX theory aids leader to form respect, high
quality and trust based relationship with team members that enhances interpersonal relationship.
High quality relationship at a company is characterised by significant things that comprises
empowerment, providing others sense of trust, respectful and allowing others to be authentic self
(Megheirkouni and Mejheirkouni, 2020). In a corporate, for example, Unilever, healthy and
positive relationship are key for career success. At the time of building relationships with
subordinates, leaders of the company analyses enhancement in productivity addition to overall
job satisfaction.
One of ingredient of high quality relationship at workplace is open communication. Leaders
of Unilever encourages open communication through asking questions as well as develop
insights about team members or coworkers to make them feel secure and comfortable to carry
out operations. With this, organisational leaders ensure that all people must have chance to share
opinions, complaints, feedback, ideas and questions (Kapil and Rastogi, 2019).
Another ingredient concerned with high quality relationship is trust. The potential of
trusting coworkers as well as feeling on which a leader can rely is something considered by
leaders of company while building workplace relationship. Trust among leaders and employees
reflects that workforce enjoy culture of mutual respect, psychological safety and honesty (Siyal
and Peng, 2018). At Unilever, trust is the element in relationship among leaders and employees
that assist manpower to feel secure in occupations that results in decline of turnover.
At a company, role routinisation is also considered as key ingredient for healthy
relationship among leader and employees at workplace. In this, leader and team member
establishes pattern of social exchange and carry out hard working for maintaining reputation
addition to relationship with leader. Within Unilever, members on in-group carrying out
practices very hard for forming meaningful and healthy relationship with leaders (Liao, Chen and
Hu, 2018). At same time, out group members of the company find it complex to establish
meaning relationship with managers. It has been analysed that it is very complex to move from
out groups towards in groups because managers work in static manner for opinions of followers.
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The routinisation ingredient becomes form of permanence between healthy relationship among
leader and employees.
In successful and heathy business relationship, credibility plays key role. In context to
Unilever, credibility is essential ingredient as workforce have desires for having assurance which
when leaders are managing them along with assessing performance, leaders themselves are
competent and trustworthy (Montorio-Archer, 2021). For establishing healthy relationship,
leaders of a company, for example, Unilever, leaders need to be a trusted source of information
addition to decision making among members of team. It fosters reputation for facilitating
communication with transparency, honesty as well as sincerity.
A leader has the power to strengthens position of an organisation by effectively leading
workforce. In order to successfully lead a group of people, a leader must have excellent
interaction with them so that they understand how to encourage them to contribute in achieving
organisational goals. For this reason, organisations demand a strong leader at workplace who can
make others do tasks that are crucial for company's growth (Chang, Son and Pak, 2020). There
are numbers of factors that contributes in creating and maintaining impelling leader-follower
interactions within organisations. For example, leaders in Unilever follows several measures to
strengthen communication with their followers first of them is independent critical thinking. As
followers plays significant part in company's success by working together as a team which
transforms ideas into actions. Thus, an individual with critical thinking ability create new
opportunities for both company and themselves.
A leader must encourage their followers to come up with ideas and suggestions to
maximise interactions as well as to motivate them to come up with solutions of problems they
face. This way leaders build sense of answerability in their followers which further increases
their performances. Another factor is robust listening skills as for an interaction to be effective it
is important for both the parties to listen it actively (Zhang and Li, 2022). For example, in
Unilever both leader and followers actively participate in conversations related to operations and
decision making process of firm. Being an active listener allows leaders to better able to
understand follower’s personal goals and in same way they effectively communicate
organisational determined goals to them.
Group of people working as a team will result in failure if they do not work in unity or if
their actions are not in harmony. For example, within Unilever all the followers work together in
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direction assigned by their leader as well as the leader projects all the efforts of their followers in
direction of attaining company's goals. This practice of working in unison results in increased
productivity and strong interaction between leaders and followers (Miller and Miller, 2020). This
factor assists them to share their perceptions and point of view confidently without sabotaging
other team mates which further builds strong trust and respect among leaders and followers. Next
factor is motivation where good leaders boosts their followers to do better in order to grow both
professionally and personally. For example, in Unilever leaders motivate their followers by
providing them necessary training, teaching new skills and giving them diverse types of
responsibilities. Leaders follow this practice to incite their followers to proactively takes
participation in company's interests. Providing opportunity to be creative is another factor to
boost interaction between leader and followers as it can increase their level of enthusiasm in day
to day workings. Leaders encouraging followers to take on new innovative ideas offers them
unique point of view and results in more productivity.
The leader member exchange theory is associated with leaders and employee’s
relationship as well as it is relationship based theory which focuses on the both side relationship
among leaders and their followers (Khaola and Rambe, 2020). For example, in Unilever the
leaders use this theory to maintain strong and healthy relationship with their members in order to
achieve the organisational goal effectively. The manager suggests to the leaders of organisation
to make better relation and coordination among their team members to achieve the target of the
task on time. This theory states that to retain the employees in the organisation for long run as
well as improve the efficiency of their performance the leader must provide better environment
and use effective communication with the employees.
LMX theory define the importance of strong relationship among leader and followers for
the growth of both employees and company (Wallis, 2020). The leader can listen the problems of
the followers and give them chance to share their idea related to the task in the organisation they
can create feeling among employees to be valued and retain them in order to gain competitive
advantage. By interacting better with employees and make most effective and easier policies for
their working they can build trust among them and engage them towards the achievement of
organisation goal.
The leader and followers make efforts to develop better understanding among each other
so they can share all the issues and suggestions related to the organisational culture, working
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policies as well as task in order to make effective changes to solve the problems together. They
can make their place work better and create coordination among team for the overall
improvement of business performance and productivity. By making effective plan and
conducting coordinating working they can achieve the target of company meet the demand of
customers by providing better quality of food and services in less time (Bryant and Merritt,
2021). The leader uses many leadership style to involve all the employees in the planning of task
so they understand their part in the task as well as perform their duty with full dedications to
reduce the cost, time and wastage in order to increase profit margin of the company.
By giving power to lead the task to the employees the leader can build trust among
followers as well as create motivation and confidence in them to give their best efforts for the
their or company's future development (Prysmakova and Lallatin, 2021). By understanding the
mind-set, values and behaviour of members who belong to different culture and background the
leaders can convince them to perform their job role in most effective manner. As well as the
followers give more focus on the information provided by the leader and listen them carefully
they can understand their motive behind the task.
CONCLUSION
Information presented in the essay concludes that leadership approaches are vital for
functioning of company in real world as it assists for direction of business resources in order to
improve efficiency addition to goal attainment. Within the company, effective leaders motivate,
influence and provide clarity of purpose for realisation of mission. With proper understanding of
leadership concepts, a leader works more effectively with the help of comprehending the ways,
reasons and what they do to adapt suitable style. Leader-Member Exchange theory when applied
in an establishment within real world, it results in increased confidence, more independence,
improved productivity and satisfaction of job. It states that employees and leaders develop
unique and healthy relationship on the basis of social exchange that further influences personnel
outcomes. It devises dyadic relationship among subordinates and leaders as focal point of
process. Key ingredients related to high quality of relationship are open communication, trust,
role routinisation addition to credibility. When there is high quality relationship among follower
and leader, they are more likely to work with prosocial behaviour including camaraderie along
with collaboration. Human capital are more likely to work with feeling of loyalty to company as
well as each other together with perceive psychological values in day to day working.
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Independent critical thinking, strong listening skill, work in harmony, motivation and creativity
are factors that contribute to forming along with maintaining effective leader-follower working
interactions.
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REFERENCES
Books and Journals:
Bryant, W., & Merritt, S. M. (2021). Unethical pro-organizational behavior and positive leader–
employee relationships. Journal of Business Ethics. 168(4). 777-793.
Chang, H., Son, S. Y., & Pak, J. (2020). How do leader–member interactions influence the
HRM–performance relationship? A multiple exchange perspective. Human
Performance. 33(4). 282-301.
Chernyak-Hai, L., & Rabenu, E. (2018). The new era workplace relationships: Is social exchange
theory still relevant?. Industrial and Organizational Psychology. 11(3). 456-481.
Fourie, W., & Mystris, D. (2021). Leader Influence beyond the Individual Leader: Group‐Level
and Member‐Level Factors that Affect Leader Influence. European Management
Review. 18(1). 115-124.
Kapil, K., & Rastogi, R. (2019). The relationship between leader-member exchange, work
engagement and organizational citizenship behaviour. Journal of Indian Business
Research.
Khaola, P., & Rambe, P. (2020). The effects of transformational leadership on organisational
citizenship behaviour: The role of organisational justice and affective
commitment. Management Research Review.
Liao, S. H., Chen, C. C., & Hu, D. C. (2018). The role of knowledge sharing and LMX to
enhance employee creativity in theme park work team: A case study of
Taiwan. International Journal of Contemporary Hospitality Management.
Megheirkouni, M., & Mejheirkouni, A. (2020). Leadership development trends and challenges in
the twenty-first century: rethinking the priorities. Journal of Management Development.
Miller, L., & Miller, A. F. (2020). Innovative work behavior through high-quality
leadership. International Journal of Innovation Science.
Montorio-Archer, C. A. (2021). Leader–Member Exchange and Employee Performance in
Nonprofit Organizations. Families in Society. 102(4). 450-467.
Prysmakova, P., & Lallatin, N. (2021). Perceived organizational support in public and nonprofit
organizations: Systematic review and directions for future research. International
Review of Administrative Sciences, 00208523211033822.
Sarti, D. (2019). Balancing organizational justice and leader–member exchange to engage
workforce: Evidence from social cooperatives in Italy. Journal of Workplace Learning.
Siyal, S., & Peng, X. (2018). Does leadership lessen turnover? The moderated mediation effect
of leader–member exchange and perspective taking on public servants. Journal of
Public Affairs. 18(4). e1830.
Wallis, N. C. (2020). Transforming in Relationship: When Leader–Member Exchange Theory
Meets Adult Development Theory. In Maturing Leadership: How Adult Development
Impacts Leadership. Emerald Publishing Limited.
Zhang, Y., & Li, J. (2022). How does a leader’s extrinsic relative to intrinsic goal orientation
affect subordinates’ subjective career success? A moderated mediation model regarding
leader-member exchanges and subordinate genders. Current Psychology, 1-13.
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