Observing, leadership’s behavior in an informal manner shows that a leader’s action is different and dissimilar towards all subordinates. The importance of this differences and observation was brought into light by Graen’s leader-member exchange model which is also known as the vertical dyad linkage theory. This theory is also known as LMX theory in literature. This model suggests that the leader consists of a number of dyadic relationships which links the leader with the follower. The power of the relationship is shown by the amount of mutual respect, trust, loyalty, and obligation.
The Leadership-Member Exchange Theory states that a leader forms different kinds of relationship with their subordinates and various groups. One group, which is also known as the in-group is always favored by the leader. All the in-group members receive a considerable amount of attention from their leader and also these in-group members have accessibility to the organization’s resources. In contrast, all the other subordinates fall under the second group known as the out-group, which means that they have little accessibility towards organizational resources.
The leaders differentiate the in-group and the out-group member’s according to their personal characteristics, age, gender and personality. The leader may also grant a in-group status if he/she firmly believes that the fellow member is highly competent at playing his roles and performing duties. Thus, the relationship between the leaders and his/her followers follow three steps which are as follows:
To assess the degree of trust, respect for each other’s capabilities, a sense of mutual trust, strong obligation towards each other is scaled on a Leadership-Member Exchange 7 scale. All these various dimensions are taken together, which help in determining the extent to which the followers will be a member of the leader’s in-group or out-group.
Members of the in-group take the roles of assistants or advisers and have high quality personal exchanges with the leader in comparison to the out-group followers. These personal exchanges include to take part on assignments that involve interesting tasks, delegating important responsibilities, information sharing and participation in leader’s assignments and also benefits such as support, and favorable work schedules.
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