Evaluating the Relevance of LMX Theory in Contemporary Businesses

This essay delves into the Leader Member Exchange (LMX) theory, evaluating its continued relevance in contemporary business environments. It explores how LMX influences employee performance, creativity, and team dynamics, using examples from companies like Tesco and McKinsey & Company. The essay examines key aspects such as the identification of high-quality relationships, the impact of workplace fun on creativity, the challenges of justice and equality within LMX, and the mediating role of self-efficacy. It further discusses the importance of leader mindfulness and its effect on employee creativity, as well as the impact of LMX differentiation on team voice, both promotive and prohibitive. The conclusion synthesizes these arguments, emphasizing the practical implications of LMX theory for modern leadership and organizational success.

LEADERSHIP STRATEGY
AND INNOVATION

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Leadership strategy refers to a practise in which for making the organizational operations
and management successful, a leader forms a plan for long term is known as leadership strategy.
Leader member exchange theory narrates that the relationship a leader develops with its
employees or other members of the organization is having its direct impact on the performance
of employees. The theory strongly believes that the social relationship between a leader and
members of the organization paves way for creating such a strong and affluent relationship
between leader and members (Young, Glerum, 2021)
The essay is based on the conviction that to which extent the LMX theory has shown its
relevance in the contemporary entities. For fulfilment of the required notion some practical
examples are used to demonstrate that how leader member exchanges are affectively working to
enhance the productivity of employees, which ultimately reflects better performance of the
organization as a whole.
In the essay along with some practical examples, some arguments will be presented describing
the role of Leader member exchange in the modern form of business and how it can influence the
entities to hike their performance. For brining better understanding the arguments shall be
critically evaluated. All relevant arguments such as role of leader and relationship between
workplace fun and high creativity of employees, justice, equality and conflicts in teams etc. are
discussed in the essay.
MAIN BODY
LMX is very relevant in the modern age of business since with the progress of time the
organizational structure is getting more complicated, now the toughest task is to manage human
resources in an organization, with this regard the role of LMX is very much relevant.
Identification of the ingredients of high quality relationship
This is a prominent role of a leader to identify sort of indications in order to develop
strong relationship with employees in the organization. LMX mainly focus on creating intensive
relationship between leader and members in the organization (Siddique, Siddique and Siddique,
2020)
For example TESCO which a global retail giant is working with a lot of employees
across the world so for development of high performance employees it executes LMX by making

sure the new entrants must fit in the organizational culture, for this purpose the company carry
out different programmes like induction, team games, providing support etc.
The other example is of McKinsey & company which has been given high ratings by its
employees (Kalyar, Usta and Shafique, 2020) since they believe that the LMX of the
organization is very impressive and incentivize them to reach their potential. For ensuring strong
Leader Member Exchange in the organization, some strategies like identification of employees,
selecting most appropriate one, then implementation of practices like Role making, Role taking
so can boost up better relationship which ultimately foster their performance.
Fun at workplace and surging employee creativity
Fun and promoting employee creativity are the best ingredients of high quality
relationship in an organization. As so many researchers have revealed that workplace fun and
creativity of employee are the factors behind better productivity and performance in an
organization. If a leader promotes creativity then somehow it promotes intensive relationship
with members and also impact the productivity factor.
But on the other hands some arguments have also raised concerns that workplace fun is not
directly related with high quality performance or developing good leader member relationship.
Their hypothesis show that there is no direct relationship between workplace fun and creativity.
Yet it would not be fair to say that the LMX theory is loosing its credential or usefulness in the
modern form of business since despite having some lacunas the approach is very affective in
hiking the outcomes of employees (Yuan, Morgeson and Wang, 2021)
Justice, inequality and conflict in the teams
Over the time various studies has shown that it is not possible for a leader to develop a
high quality relationship with every member of its team. They often select some people who are
having some specific qualities so on the basis of their qualities, ability, potential LMX is being
practised. People who are performing good take chance to form better relationship with leaders
and upper management. This not only promotes others to work hard and develop good strengths
but also escalate their potential, which is rigorously needed in the contemporary organization.
But the arguments were raised that it would not work in the contemporary business
environment where various laws favour justice and equality, labour equality. These elements are
utterly skipped in practising LMX which mainly focus on the relationship which can enhance
performance of the organization, irrespective or promoting equality and justice.

Mediating role of self-efficacy
From the previous studies it has been concluded about positive relationship between
LMX and employee voice behaviour. It is found Self-efficacy is the mediator between LMX and
employee voice behaviour according to conduction of cross survey with sample of 295 leaders.
They performed structural modelling equation for analysing the data in which the results
appeared LMX has the positive relation with the employee voice behaviour whereas self efficacy
has maintained the link between both of them. By the research it highlights the mechanistic
processes by which LMX put impact on employee voice behaviour. It evaluates that
organizations must pay attention towards building good quality leader member relationships to
improve all over employee self-efficacy as with voice behaviour. LMX theory is applicable in
organizational terms as it is positive related with management of employee behaviour and
reciprocal exchange of relationship between leaders and the followers. Also, they play role in
decreasing their attitudes and behaviours. By moving further to research it has been identified
LMX boost the task performance and behaviour of citizenship in order to lower the counter-
productive workplace behaviour (Leithwood, Harris and Hopkins, 2020).
Some arguments raised where it has discussed employee with low self efficacy having
low confidence level in their working abilities, and they are not allowed to raise their suggestions
but previously it is shown self efficacy is important forecaster of voice behaviour of employee.
This is not useful because lower confidence brings negative results in working environment.
Everyone must have permission to raise their suggestions which positively impact on the
working abilities and overall performance (Crede, Jong and Harms, 2019). By support of leaders
can change followers confidence and the ability of performing task which also improves their
self-efficacy. In LMX trust, support and feedback are must comply the relation of leader and
followers. It is mandatory to have supportive working environment which bring work
effectiveness.
Importance of leader mindfulness and employee creativity
the results shows that LMX act as mediator of the between the relationship of leader
mindfulness and employee creativity. A survey was conducted to test hypotheses with 329
subordinates and 51 supervisors who were employed at huge manufacturing companies. It shows
the association of leader mindfulness with employee creativity was positive. The impacts of
these are observed with focusing on LMX as mediator. There are positives outcomes of

mindfulness like physical well-being or increased employee performance. Mindfulness is state of
awareness where leaders keep their mind into the current moments. Leaders with higher level of
mindfulness can easily understand the needs, wants, conditions of followers and show their
efforts in their care and concern (Fletcher, Friedman and Piedimonte, 2019). These are the signs
of ethical leadership while research also shown that there is interrelation of ethical leadership and
employee creativity. It is useful for organization and subordinates. Research states that
organization must apply leader mindfulness in the respective manner and managerial
interventions rather applicable to build high quality LMX relationships. This refers to the
relationship quality among supervisor and subordinates. Previously researchers provided credible
evidence which supporting mediating effect of LMX with the connection of leader and employee
performances. According to the LMX theory the useful impact of mindfulness which has on
social relationships express that mindfulness can bring the changes of improvement in quality of
leader and employee relationship.
In arguments of this which was raised the whole research of relationship of mindfulness
and creativity is insufficient, several areas required further investigation in more detail.
Researcher has paid attention to the intrapersonal effects of employee mindfulness. The major
topic of leader mindfulness influence over employee creativity has got little attention. Also, they
have argued the employee motivation and creativity in work is affected by the supervisors who
judge employee work effectiveness. Research states that organization must apply leader
mindfulness in the respective manner and managerial interventions rather applicable to build
high quality LMX relationships. It is identified the leader traits, such as personality, physical
characteristics and motives makes contribution in leadership effectiveness outcomes (Yusuf and
Irwan, 2021).
Impact of LMX differentiation and LMX mean on promotive and prohibitive team voice
Employee voice means the employee expression of constructive ideas and opinions upon
collective changes. Effective team is based upon the members of team are sharing information
and their views, speaking up with suggestions. Member voice culture in a team is termed to be
especial. Promoting Team performance can bring the change is it useful for organization in
working with good team on working scale. In prohibitive teams members are in fear of speaking
up with their suggestions and concerns. The theory focuses on effect of LMX differentiation is
uncertain (Boamah, 2018). This interacts with several indicators to impact on outcomes of teams.

LMX differentiation internally acts with higher function interdependence for promoting team
performance while in low function to put down relations of co-workers. The LMX at team level
focuses on relations of leader with their followers. Research shows that LMX is single level
concept and shows dyadic relationship of leader with their followers. Team voice is more
effective than voice of individuals. Apart from this, from empirical research it has verified major
role of team voices affecting outcomes, it also has been proposed different implication on team
effectiveness. It is distinguished promotive from prohibitive team voice. Promotive and
prohibitive voices enables employee to adopt resources as with team leaders. It reflects
employees responsibility and attitude for the teams. If the good attention and attitude is
acknowledged so leaders will contribute resources for helpful suggestions for team functioning.
The arguments of this were LMX differentiation weakness the effect of prohibitive team
voice and suggestions are provided for team leaders to improve the leader managing style and
reduce LMX differentiation for encouraging behaviour of teams (van Diggele, 2020). The
theory focuses on effect of LMX differentiation is uncertain. This interrelates with several
indicators to impact on results of teams. LMX differentiation internally perform with higher
function interdependence for promoting team performance while in low function to put down
relations of co-workers. With effect of this on team prohibitive voice, negative issues were based
upon resource conservation motives in team members. Prohibitive voice is risky as compare
promotive voice as it offend interpersonal harmony with leaders.
CONCLUSION
According to above essay it has been concluded about conviction to which extent LMX
theory has shown its relevance in the contemporary entities. It has been focused on the LMX
theory in relevant to contemporary organizations. It has also evaluated the fulfilment of the
required nation with some practical examples used in demonstrating that how leader member
exchanges are affectively working in increasing the overall productivity of employees which
reflects performance of organization. Further, in discussion it had also shown essay with
practical examples and with arguments in which it describes the role of leader member exchange
in modern form of business and their influence on entities to hike their performance. The
arguments are critically evaluated for better understanding. It also consists of relevant arguments
such as role of leader and relationship between workplace, fun and high creativity of employees,

justice, equality and conflicts in teams. At last, it has covered the areas of mediating role of self-
efficacy, importance of leader mindfulness and employee creativity and impact of LMX
differentiation with LMX mean on promotive and prohibitive team voice. These topics are also
covered with relevant arguments which discuss the roles and relationships has been discussed in
essay.

REFERENCES
Books and journals-
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transformational leadership and workplace empowerment. Canadian journal of nursing
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Crede, M., Jong, J. and Harms, P., 2019. The generalizability of transformational leadership
across cultures: a meta-analysis. Journal of Managerial Psychology.
Fletcher, K. A., Friedman, A. and Piedimonte, G., 2019. Transformational and transactional
leadership in healthcare seen through the lens of pediatrics. The Journal of
pediatrics. 204. pp.7-9.
Kalyar, M. N., Usta, A. and Shafique, I., 2020. When ethical leadership and LMX are more
effective in prompting creativity: The moderating role of psychological capital. Baltic
Journal of Management.
Leithwood, K., Harris, A. and Hopkins, D., 2020. Seven strong claims about successful school
leadership revisited. School leadership & management. 40(1). pp.5-22.
Siddique, C. M., Siddique, H. F. and Siddique, S. U., 2020. Linking authoritarian leadership to
employee organizational embeddedness, LMX and performance in a high-power
distance culture: a mediation-moderated analysis. Journal of Strategy and Management.
van Diggele, C., 2020. Leadership in healthcare education. BMC Medical Education. 20(2). pp.1-
6.
Young, H. R., Glerum, 2021. A meta-analysis of transactional leadership and follower
performance: Double-edged effects of LMX and empowerment. Journal of
Management. 47(5). pp.1255-1280.
Yuan, Z., Morgeson, F. P. and Wang, X., 2021. I know how I feel but do I know how you feel?
Investigating metaperceptions to advance relationship-based leadership
approaches. Journal of Applied Psychology.
Yusuf, Y. and Irwan, A. M., 2021. The influence of nurse leadership style on the culture of
patient safety incident reporting: a systematic review. British Journal of Healthcare
Management. 27(6). pp.1-7.
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