Leader-member exchange theory (LMX)

Relationship at the centre

Most leadership theories describe the leader or the situation. LMX (leader-member exchange) theory, developed since the 1970s by George Graen and colleagues (initially as the VDL - vertical dyad linkage - model), focuses on the relationship between the leader and each individual.

In-group and out-group

Early studies showed that leaders do not treat everyone the same:

• with some people they form relationships based on trust, respect and mutual obligation - the in-group, which receives more information, influence and developmental tasks;
• with others the relationship stays within the formal contract - the out-group.

Research (e.g. meta-analyses by Gerstner and Day, 1997; Dulebohn et al., 2012) consistently shows that high-quality LMX is associated with better performance, greater commitment, satisfaction and lower turnover.

Building partnership

Graen and Uhl-Bien (1995) described the progression from “stranger” through “acquaintance” to mature partnership. The practical recommendation: leaders should deliberately offer a high-quality relationship to everyone, not only to those close to them.

Risks

• Dividing people into groups can be perceived as unfairness and favouritism.
• In communities, “inner circles” form around the leader, closing the way to others and making correction harder.

Jesus had an inner circle (Peter, James, John), yet he sent out all the disciples and reached out to those on the margins. A good leader builds close relationships while caring for justice and openness. See trust, psychological safety.