The Leader-Member Exchange Theory

The Leader-Member Exchange Theory

Table of contents

Leader-Member Exchange [edit]

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.


Three Steps

This theory involves a three-step process:

  1. Role Taking
  2. Role Making
  3. Routinization


The first step - Role Taking - takes place when a new member joins a team and their abilities are initially assessed by the leader.

The second step - Role Making - is evidently where a role is created for the member. Building trust is also a key factor to this stage. Additionally, 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 with every member in order to work as an entire IN-group unit.

The final stage is - Routinization - where routines, norms and expectations are established and both parties get an insight into how you 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. Similarly, there are numerous benefits of having a high LMX relationship with members of your team – increased job satisfaction and productivity, increased confidence, stronger mutual trust, increased respect and recognition, more independence, easy and open communication and increased commitment to the job and business.