Skip to main content

The Leader-Member Exchange Theory

Completion requirements
View

The Leader-Member Exchange Theory (LMX) is a process that explores how leaders and members develop relationships that can either contribute to growth or hinder personal development. The theory is divided into a three-step process which will be outlined here.

What is the Leader-Member Exchange Theory (LMX)?

The Leader-Member Exchange Theory (LMX) is a process that explores how leaders and members develop relationships that can either contribute to growth or hinder personal development. The theory is divided into a three-step process, as outlined below.


The Three Steps of Leader-Member Exchange Theory (LMX)

This theory involves a three-step process:

  1. Role Taking
  2. Role Making
  3. Routinization


1. Role Taking

  • This takes place when a new member joins a team and their abilities are initially assessed by the leader.


2. Role Making

  • Evidently, this is where a role is created for the member. 
  • Building trust is a key factor in this stage. 
  • The member is classified into one of two groups - the IN-group or the OUT-group. With reference to these groups, the manager subconsciously categorises members into either group based on perceived similarity. 
    • Members that fall into the IN group are trusted by the manager and will, therefore, receive high-risk tasks, plenty of opportunities for career and skill development and ongoing support and guidance. 
    • Contrarily, employees that fall into the OUT group will be given unchallenging work as the manager doesn’t have a high level of trust in them and consequently, they will not be exposed to many opportunities for them to develop their skills and abilities. 
  • However, a leader should strive to get the best possible results from his/her team and therefore should aim to eventually have the same level of trust in every member in order to work as an entire IN-group unit.


3. Routinization

  • This is where routines, norms and expectations are established and both parties get an insight into how they both work.
  • The benefits from a manager's point of view are that this process enables you to identify where you might be unfair and help you in avoiding unconscious bias. 
  • From here, the water can be slowly tested by offering the same opportunities for development. 

The Benefits of Having High LMX Relationships

It is advisable for leaders to have a high LMX relationship with team members as there are numerous benefits of having high LMX relationships. Amongst others, a high LMX relationship has been shown to result in:

  • Increased job satisfaction and productivity
  • Increased confidence
  • Stronger mutual trust
  • Increased respect and recognition
  • More independence
  • Easy and open communication
  • Increased commitment to the job and business


About Us

BusinessBalls has been used by over 120 million people during the last decade. The website provides leadership, management, and compliance training for individuals and organisations. For over a quarter of a century, we have supported aspiring managers and leaders from all around the world — Find out more. The use of this material is free for self-development, developing others, research, and organisational improvement. Please reference authorship and copyright of material used, including link(s) to Businessballs.com and the material webpage. 

Disclaimer: Reliance on this material and any related provision is at your sole risk. BusinessBalls Ltd assumes no responsibility for any errors or damages arising as a result of use.

Key Partners

Accipio Logo

You are currently using guest access (Log in)