The Leader Member Exchange Theory And Change Leadership

The leader-member exchange theory, also known as LMX, is a leadership concept that explains how leaders maintain control of an organization by developing unique working relationships with individual members in the group. The theory states that the leader should cultivate a special bond and mutual understanding with certain members of the organization. These members, also known as the "in-group", belong to the inner circle of the leader's sphere of influence. They are given more serious responsibilities, challenging tasks, and they are granted access to well kept organizational resources. In exchange, the leader "gives" them an unspoken promise of future benefit, promotion, or prestige.

The process of how the leader chooses people to belong into his inner circle can be sometimes complicated. Often, it is not the people with the most skill and expertise which make it to the inner circle, but rather those who are similar to the leader in attitude, personality traits, leadership style, and values. Eventually, this leader-member exchange can be beneficial to the organization, but it can also result in certain problems if not handled correctly by the leader of the organization.

The leader-member exchange, or the special relationship between leader and subordinate, has three stages:

1. Role taking. In this stage, the leader assesses a new member's capabilities and gives him or her certain tasks to "prove" effectiveness and efficiency. If the member performs the task well, the leader may start seeing him as a reliable person in that particular area of work. The member, on the other hand, gains an idea of the leader's style of management.

2. Role-making. This is the phase where the leader and member engage in an unspoken, unwritten and informal contract or agreement. The member is expected to demonstrate high levels of work output, loyalty, and dedication. In exchange, the leader gives a silent "promise" that the member will be rewarded in terms of material things, or even intangible rewards such as promotion, recognition and authority.

3. Routinization. The two phases mentioned above becomes a routine exchange between the leader and member.

How This Theory Relates To Organizational Change

Implementing organizational change can be one of the most challenging and stressful periods in a company or group's history. The leader should have a close-knit inner circle who are loyal to him and is willing to demonstrate a high work output even though higher compensation or recognition may be presently unavailable. The members of the inner circle must be motivated by higher ideals, and not just of tangible rewards. If the leader shows members of the in-group the benefits of the organizational change and state what special roles they will play, they will be committed to the very end.

On the other hand, the leader-member exchange can also impede organizational change if not handled correctly. For example, if the member is given too much responsibility, access to resources, and authority, he or she might turn against the leader and seize power. Thus, the leader should be careful not to give too much away of his leadership roles to members of his in-group.