Leading Strategic Decision Making: LMX Theory in Organizations

This essay delves into the Leader-Member Exchange (LMX) theory, highlighting its relevance in contemporary organizations. It discusses how leaders and followers establish unique connections based on social exchange, influencing employee performance. The essay explores the significance of trust in building high-quality leader-member relationships, contrasting them with low-quality exchanges. It provides examples of organizations that have successfully integrated LMX theory into their structure, fostering employee loyalty and contribution to company profits. Furthermore, it emphasizes the importance of both leader and follower roles in maintaining these relationships through empathy, communication, and ethical standards. The essay also covers various communication techniques, such as open meetings, emails, and one-on-one discussions, that facilitate effective interaction in the workplace. It concludes that LMX theory is crucial for organizational growth, strengthening relationships, and fostering an open culture that encourages feedback and improved work quality.

Leading Strategic Decision Making

Leading Strategic Decision Making
LMX theory is Leader-Member Exchange conveys that leader and follower make a
unique connection which is based on their social interexchange and their quality will
determine the work of the employees. This essay will discuss the relevance of this theory to
contemporary organizations. As well as how this relationship can be maintained within the
leader and follower. Implications of this theory for the workplace will also be discussed
(Omilion-Hodges, and Ptacek, 2021).
Leader-member exchange theory states that knowing the influence leaders have on
their employees can only be recognized when we the type of relationship they have with each
other. Various types of relationships can be made between the employee and employer. The
trust factor is very important where an organization wants a high-quality leader-member
exchange relationship. This high-quality relationship is formed when they are supportive of
each other and understands each other problem, in a high-quality relationship they are ready
to help each other in every way possible for them so that they can maintain this relationship.
Low-quality leader-member exchange is just opposite to the high quality, in this both don’t
have trust in each other. In this low-quality relationship, they don’t support each other and
don’t understand each other which is not beneficial for the company. It is because if they
cannot work with each other then they will not be able to bring profit to the organization
(Graen, Canedo, and Grace, 2018).
This theory is the best suitable in the contemporary organization as the employer
wants to form a relationship with their employees so that they make employees work in the
organization easily. In contemporary organizations employers are very supportive to their
employees while they are working in the organization, they want to have a better relationship
with their employees. While the employees want to give their best to the organization as they
have high quality relationships with their employer. Here both the employers and employees
are satisfied with each other work as they are both giving things the other person needs. But
this theory has some points where the expectations have not been met. Some employees in
the organization don’t have a good relationship with their boss which may be because they
like the traditional work environment and are not able to adjust to the new environment (Bos-
Nehles, and Audenaert, 2019).
Various organizations have LMX theory in their structure for example HUL where the
organization thinks and do efforts to make working easier for the employees. While the

employees there are very dedicated and loyal to the company that they contribute to the profit
of the company. Some companies support their employees by arranging a playgroup floor for
the female employees who have children so that they can work without worrying about their
children. Also, some organizations give break in the career of an employee because of the
reasons stated by the employee and give them a job at the same position when they are ready
to join the organization again. These employees when they work in the organization give
their best to improve the profit of the company (Vuong, and et.al., 2021).
The main factors for the high quality relationship between leaders and followers
should be from both sides, as one side determinants cannot be beneficial for the organizations
as well as the employees. If the employer has to maintain the relationship, then they should
listen to their employee’s problems so that they can support them when they are in need.
Employers should empathize with the employee when employees are in a bad mental state,
this will give a reflection that the employer is concerned for them and they can form a
connection. They should spread awareness of working in a group by highlighting the
importance of working in a group. Employees should also be made aware of the companies’
goals and responsibilities so that they can make effort in that direction.
The employer should persuade their employees to work their best so that they can
grow in their knowledge and contribute to the organization. They should be made aware of
the new technologies adopted in the organization to support and make them effective. The
employer and employee should be able to communicate with each other as well know what
effective communication will benefit the organization as well as the employees. Employers
should be able to implement strong ethical standards and values in the employees so that
employees can remain loyal to the organization and employers.
The follower also has some responsibility such as they should know what knowledge
is required to fulfill a task which is given in the organization. They should be eager to learn
those things which they are not aware of but are important for the organization, this will help
the organization to reach its goals. They should influence the other employees of the
organization to complete their goals effectively and efficiently so that everyone in the
organization can grow and reduce the work of the employer. Employees should be able to
overcome barriers that are there in the way to reach the goal of the organization. They should
be realistic which means they should learn from the mistakes of the leader and should be able

to overcome those mistakes. This will help them as well as the organization as the same
mistake will not be repeated twice.
They should be eager to learn something new from their leader and should ask as
many questions as possible so that they can give what the organization expects. They should
be the 1st ones to try and establish a relationship with their employer by providing honest
feedback, communication, etc. this will show the employer that their employees have the
same goals as the organizations.
There are various factors that will contribute to effective communication in the
workplace. Employers can keep open meetings which will help the employees to
communicate their feelings or concern with the employer, in this type of meeting other
employees will also listen and understand everyone’s problem while putting their point of
view or opinion. This environment will motivate the employees to talk to the whole team
when they are face-to-face, employees will also discuss various projects which will help them
to get innovative ideas to complete it.
Employers can also communicate with their employees with the help of emails when
the conversation is supposed to be professional. This also has a benefit for both of them as
employers will have a written prof as well as employees doesn’t have to leave their place for
everything small things. This can also be treated as a private way of informing the employee
which is not to be known by all members, it also ensures that the conversation will stay
between those who are supposed to know about the matter.
Employers can also conduct one on one meetings as this will help to explain some
things to the employees which are to be stated in private, this can also be done when someone
has committed a mistake which is to be corrected. This private feedback will be comfortable
for the employee as no one wants that they will be given wrong feedback in front of others.
This will also make employee and manager relationships strong as everyone needs to be
appreciated for the efforts employee put into the organization, this will motivate employees to
work harder to achieve the goals of the business. This one on one meeting will also ensure
that employers know about their employees’ goals both personal and professional so that the
employers can help their employees to reach those goals.
There should be a feedback policy within the organization whether positi9ve or
negative, it will ensure that both employer and employee know what they are supposed to
continue and what they are supposed to stop. This feedback will give various information

which can be very valuable through which some decision can be made, this will open the
door for the communication between those who are working in the organization. Employers
should be easily accessible for their employees so that they can solve their problems
effectively, it will encourage involvement with the team and build loyalty and confidence.
The relationship between employers and employees will become strong when the employees
know that the employer values them (Stamolampros, and et.al., 2019).
Employers should present every idea which can be benefitted for the
organization and employees through the presentation, this will engage the team and also
allow them to put their viewpoint. This will also motivate them for doing the work which will
be very helpful for the employees, and motivated employees contribute highly to the
organization. The employer should form a channel for communication so that every
employee can easily communicate with each other as well as with the manager.
There are various techniques that can be installed that will help the employees share
various types of information with everyone, this information can be work-related or their
personal lives like their birthdays. They should be able to express themselves so that the
employer can provide support to them when they are in need. Employees should bring some
new information to the organization so that the organization can utilize that information for
the welfare of the employees as well as the organization. Here improving communication will
also mean they should listen to others as well so that they can understand other employees’
feelings (Vanesa, and et.al., 2019).
Communication that involves listening as a part makes employees feel valued and
respected which encourages them to give their best of the work. There is various informal
communication that takes place in an organization such as gossip, advice, and various others.
This communication is not controlled by others as this happens very easily, where
management has no say in it. This also helps to spread some news in a fast manner so that
employer efforts can be reduced which circulating these pieces of information (Mousa, and
Puhakka, 2019).
Employers should be very interactive while communicating with the employees so
that they can become those important assets for the business which will contribute to the
future of the organization. If employees are satisfied then they will bring various employees
who are like them so that the organization can grow at a fast pace.

This theory also helps the employees to give the family time to their families as it
allows them to work easily, which is supported by the employer as they want to establish a
relationship with their employees. this theory also allows the employees to do something new
with their work so that they can improve their quality of work, this will also impress the
clients as the work quality is what the clients need to come again to the organization for the
work.
This theory is very important for the organization’s performance as this encourages
the employees to communicate freely and give feedback, which improves their work quality
and contributes to the success of the organization. This theory also allows the employees to
give a high quality of workplace outcomes so that they can grow with the organization. LMX
theory helps the employer form a very flexible work culture where employees are allowed to
express the problem they are facing during the work so that they can grab various ideas which
help them solve their problems and give an outcome that is very beneficial for both the
employer and employee.
It can be concluded from this essay that leader member exchange theory is very
important in an organization so that employees can contribute to the growth of the
organization. This theory also strengthens the relationship between employees and employers
as this enables them to communicate with each other. This essay also concludes that this
theory is very beneficial for the contemporary organization as this is very suitable for the
open culture organization.

References
Books and Journal
Omilion-Hodges, L.M. and Ptacek, J.K., 2021. What is the Leader–Member Exchange
(LMX) Theory?. In Leader-Member Exchange and Organizational Communication (pp. 3-
25). Palgrave Macmillan, Cham.
Graen, G., Canedo, J.C. and Grace, M., 2018. Adapting LMX theory to forthcoming changes:
Two different frameworks. Industrial and Organizational Psychology. 11(3). pp.531-535.
Bos-Nehles, A. and Audenaert, M., 2019. LMX and HRM: a multi-level review of how LMX
is used to explain the employment relationship. Elgar introduction to theories of human
resources and employment relations.
Stamolampros, P. and et.al., 2019. Job satisfaction and employee turnover determinants in
high contact services: Insights from Employees’ Online reviews. Tourism Management. 75.
pp.130-147.
Vuong, B. and et.al., 2021. Determinates of factors influencing job satisfaction and
organizational loyalty. Management Science Letters. 11(1). pp.203-212.
Diamantidis, A.D. and Chatzoglou, P., 2019. Factors affecting employee performance: an
empirical approach. International Journal of Productivity and Performance Management.
Vanesa, Y.Y. and et.al., 2019. The Influence Of Organizational Culture, Work Environment
And Work Motivation On Employee Discipline In PT Jasa Marga (Persero) TBK, Medan
Branch, North Sumatra, Indonesia. American International Journal of Business Management
(AIJBM), pp.37-45.
Mousa, M. and Puhakka, V., 2019. Inspiring organizational commitment: responsible
leadership and organizational inclusion in the Egyptian health care sector. Journal of
Management Development.