The LMX Theory

Have you noticed that managers often act differently toward their different employees? Do you sometimes see managers who have favorites? Well, if so, you are witnessing the workings of the LMX theory of leadership.

The leader-member exchange (LMX) theory holds that leaders have two different types of relationships among their followers. In essence, leaders establish a special relationship with a small group of their followers – known as the in-group – who are highly trusted and get a disproportionate amount of the leader’s time and attention. The other followers – referred to as the out-group – tend to get less of the leader’s time and attention and usually have a relationship that is based on formal authority interactions.

According to the LMX theory, in the early interactions between a leader and a follower, the leader – consciously or subconsciously – assesses and categorizes each of the followers into either the in-group or the out-group. It is not exactly clear how leaders determine who is placed into each category, but it appears that leaders tend to choose in-group members because the leader perceives that they have a higher level of competence or possess personality and attitude characteristics similar to the leader.

The research surrounding the LMX theory has been generally supportive. Research has found that leaders differentiate among followers and that a leader’s categorization doesn’t usually change over time. Research also shows that individuals with in-group status tend to have higher performance ratings, less turnover, and greater job satisfaction.

During my federal career and now as an executive coach, I have observed the LMX theory in action. I can think of several instances where a specific manager considered an employee to be a dud, but when the employee transitioned to a different job and a new manager, the employee inexplicably sprouted angel’s wings and began accomplishing miracles. In these cases, there was usually no significant change in the employee’s behavior or work performance. Rather, the change was often the new manager’s perception of the employee. In other words, the employee now had in-group status with the new manager.

So, based on your experience and observations, do you believe the LMX theory is valid? If an employee finds herself in the in-group, what should she do? If an employee finds himself in the out-group, what should he do?

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Definitely seen it in action. Reminds me a little of schooling where students go into different tracks – honor, college prep, standard – and all the studies show that students adjust to the track no matter there ability.

I think the trick is as a manager there is never enough time so it logically makes sense to favor some over others. My suggestion if you are the in-group – stay there and prove the positive things people thought of you. If you are in the out-group, figure a way in or find a new boss…

K. Scott Derrick

Steve – Good points. Some of this is a self-fulfilling prophecy. Managers often tend to give the resources to those employees they expect to perform the best. Those who have the resources often are able to get the job done. Then the cycle begins again.