Transformational Theory LMX to improve Performance in an Organization

Transformational Theory LMX to improve Performance in an Organization

Transformational Theory LMX to improve Performance in an Organization

How would you apply the transformational theory leader-member theory (LMX) to improve an organization’s performance?

LDR 600 Transformational Theory LMX to improve Performance in an Organization

How would you apply the transformational theory leader-member theory (LMX) to improve an organization’s performance? Discuss in the context of your own organization, an organization you have belonged to in the past, or another existing organization that would benefit from significant organizational improvement.

The impact that leadership has on the behaviour and performance of individuals, groups and organizations within which they function cannot be overemphasize in today dynamic business world (Judge, Piccolo & Ilies, 2004; Bauer & Erdogan, 2014). Leadership has been conceptualized as the ability to influence the behaviour of others towards the achievement of set goals and objectives (Bauer & Erdogan, 2014; Mullins, 2010; Robbins & Judge, 2013). There are very many leadership theories in the literature such as the traits theories of leadership, behavioural theories of leadership, the contingency theories of leadership, transformational theories of leadership, and leader-member exchange (LMX) theory of leadership etc. (Bauer & Erdogan, 2014; Mullins, 2010; Robbins & Judge, 2013). Among all of these theories, LMX theory, introduced by Dansereau and his colleagues in the 70’s (Dansereau, Graen, & Haga, 1975), which focuses on the quality of relationship between leaders and their subordinates is beginning to gain more and more attention and has been identified as one of the hallmarks of organisational efficiency and effectiveness (Northouse, 2010). It is also asserted that organisations that employ LMX theory into practice largely attain their goals (Harris, Wheeler, & Kacmar, 2009). The philosophy behind LMX theory is for a leader to develop as many high-quality relationships as possible, since this would lead a host of other organizational outcomes (Robert, 2013). The objective of this paper is to present a theoretical review of the concept of leader-member exchange and its implications on selected organization outcomes. 2.0 REVIEW OF LITERATURE 2.1 The Meaning of Leader-Member Exchange (LMX) Vertical Dyad Linkage (VDL), as it was initially described (Dansereau, Graen, & Haga, 1975), was originally used to designate the single-person mentoring that often occurred in organizations, and was later succeeded by leader-member exchange (LMX). LMX is known to be one of the main theoretical approaches in the study of leader-follower relationships (Graham & Witteloostuijn, 2010). LMX theory is premised on the assumption that the type of relationship leaders have with their followers (members of the organisation or employees) is the key to understanding the manner in which leaders influence employees (Bauer & Erdogan, 2014). LMX theory provides a background for researchers to evaluate the impact of superior-subordinate relationships on the behaviour and performance of the organization (both individual and organization) (Robbins & Judge, 2015). LMX is a term that refers to the quality of relationship between a leader and a subordinate and how the quality of such relationship impact on both
the leader and the subordinate in an organization (Yukl, 2005). In the words of Glynn and Dejordy (2010, p. 17), LDR 600 Transformational Theory LMX to improve Performance in an Organization“LMX theory stresses the relational bases and influence tactics that leaders adopt and how they vary in relation to followers: when followers are similar to leaders, LMX predicts that leaders will give them more responsibility, attention, and rewards, but when followers are different, leaders will tend to give them less attention, managing by relying more on formal rules and structures”. The main assertion of LMX theory is that, through different types of exchanges, leaders differentiate in the way they relate with their followers which eventually would result in different quality relationships between the leader and each follower (Dansereau, et al., 1975). The quality of these relationships would have impact on important leader and member disposition and actions (Ilies, Nahrgang, & Morgeson, 2007). According to the theory, leader will develop close working relationship with some of the subordinates which he refers to as the in-group (high quality LMX) and calls these leader-member interactions “leadership exchanges”. The remaining subordinates are managed through formal authority and are referred to as the out-group (low quality LMX) and these leader-member interactions are termed “supervisory exchanges” (Robbins & Judge, 2015). High LMX relationships tend to be characterised by mutual respect, liking, and trust. On the other hand, the “out-group” members, those subordinates who experienced low-quality leader-member exchanges, are not accorded special treatment and are left with little support from their superiors (Mullins, 2010; Robbins & Judge, 2015). These in-group and out-group members have also been referred to as “trusted assistants” and “hired hands” respectively (Cogliser, Schriesheim, Scandura, & Gardner, 2009). Moreover, supervisors have been shown to confer advantageous treatment upon subordinates with whom they have high-quality LMX relationships (in-group members). In return, subordinates have been shown to pay back favorable treatment by engaging in extra role, pro-social behaviours, and extra task effort (Greguras & Ford, 2006; Meyer, Stanley, Herscovitch & Topolnytsky, 2002). This position can be justified following the assertion of social exchange theory which posits that individual feels more obligated and indebted to others when they have received deliberate help and support from them. This sense of indebtedness forces them to reciprocate the received benefits in order to build, maintain and increase interpersonal relationship with the donors (Coyle-Shapiro & Shore, 2007).
2.2 Underpinning Theories of Leader-Member Exchange There are a number of theories that could be considered as very important to giving us a deeper insight into the concept of leader member exchange. These theories include: 2.2.1 Social Exchange theory This theory rests on the norm of reciprocity. The core assumption here is that high quality relationship is based on terms of reciprocity. That is, when one gives something, he/she expects something in return (Cropanzano & Mitchell, 2005). The theory posits that individual feels more obligated and indebted to others when they have received deliberate help and support from them. This sense of indebtedness forces them to reciprocate the received benefits in order to build, maintain and increase interpersonal relationship with the donors. The theory stressed that these exchanges would continue and as a result, feeling of mutual obligations between the parties are created (Coyle-Shapiro & Shore, 2007). It is believed that the exchange or reciprocation becomes stronger when parties are willing to provide resources valuable to each other (Sanman & Bin, 2015). This theory is purely different from economic exchanges because economic exchanges in most cases are one-time transaction (Lavelle, Rupp & Brockner, 2007). In the light of the foregoing, it is apparent that close interactions or relationships that anchor on trust, loyalty, and liking could develop between two employees because of exchange of resources in the first place. Hence, social exchange theory could be seen as a purely interactive transaction in which one person takes the initiative in making contact with another for the purpose of exchanging valuable things (Ivey & Kline, 2010). Exchanging things that are valuable to advance the agenda of another enhances trust and affect. By engaging in helping behaviour to identify and fulfil the interest, needs, and aspirations of leaders in return for favourable treatment received, the relationship in the dyad is enhanced (Nur, Mohd, Kamarudin, Jamaludin, Zacherawati & Nazni, 2012 cited in Igbinomwanhia, 2013). 2.2.2 Transformational Leadership Theory A transformational leader is an individual who stimulates and inspires followers to achieve phenomenal results (Robbins & Judge, 2015). Such individual pays attention to the concern and developmental needs of followers within the team; he/she changes followers’ awareness of issues by helping them to look at old problems in a new way; and is able to arouse, excite and inspire followers to put out extra effort to achieve the goals of the group (Odumero & Ifeanyi, 2013). Transformational leadership theory is a leadership theory that is mainly concerned with how leaders create positive change in the followers-
whereby they (the followers) take care of each other’s interests and act in a manner leading to the achievement of the group interests (Warrilow, 2012; Robbins & Judge, 2015). According to Jung and Sosik (2002) as cited in Odumero and Ifeanyi (2013), the concept of transformational leadership was introduced by James Macgregor Burns in 1978 in his research on political leaders, but the use of the concept has spread into organizational psychology and management. Bass and Avolio (1994) proposed four dimension of transformational leadership; Idealized Influence, LDR 600 Transformational Theory LMX to improve Performance in an OrganizationInspirational Motivation, Individualized Consideration and Intellectual Stimulation. Idealized influence is what Warrilow (2012) referred to as charisma. It means being a role model to employees and ready to sacrifice for the good of the entire group. Inspirational Motivation has to do with the leader’s approach to attaining goals through describing the goals in attractive and rewarding manner, which stimulates employees. Individual Consideration is also called personal and individual attention (Warrilow, 2012). It includes attention, encouragement and support of leader to followers. Intellectual Stimulation explain the ability of the leader to create an enabling environment for the followers to probe whatever problem they are facing in a new way that is easy and creative. 2.2.3 Role-Making Theory This theory posits that relationship in the dyad develops in the process of role making, meeting and fulfilling role expectations. The main tenet of the theory is that relationship between the dyad develops over time and is in stages: beginning with the leader initiating role and sending it to subordinate who then accept the role prescribed by their leader. The leader then evaluates the feedback reactions from subordinates based on the first role initiated and sent to the subordinates (Martin, Thomas, Charles, Epitropaki & McNamara, 2005). After this stage, relationship between the dyad then progresses to the role making stage where the direction of the relationship begins to be defined before they finally enter the role routine stage where clear mutual understandings and expectations develop and the nature or direction of the relationship stabilizes (Martin, et al., 2005). It is probably during this process of role initiation, role making, role routing that the leader discovers the relevant talents, motivations, and limits of the member in order to maintain stable relationship. However, this relationship may become stronger as the subordinates reciprocate in a fair manner. 2.2.4 Average Leadership Style Theory This theory postulates that the stylistic way a leader leads, and consistently displays certain pattern of behaviour among all works units trigger subordinate reactions resulting in either high or low relationship (Martin, et al., 2005). The average leadership style focuses on two functions of the leader: initiating structure (task structure) and consideration (employee-centered approach) to provide a link between the
job itself and the interactive human components (Hooper & Martin, 2008). The average leadership style theory further suggests that all subordinates within a unit respond similarly to the leader’s demand and concern and if a leader is supportive of his/her subordinates, the subordinates may reciprocate by showing loyalty and support for the leader (Hooper & Martin, 2008). 2.3 Dimensions of Leader Member Exchange Leader Member Exchange (LMX) was originally viewed as a unidimensional construct (Seers & Graen, 1984). Dienesch and Liden (1986) later recommended that the construct of LMX would more suitably be considered as multidimensional because a high-quality relationship can develop in numerous ways. They proposed the following dimensions of LMX: affect, contribution, and loyalty. Only later was a fourth dimension (“professional respect”) added by Liden and Maslyn to fully capture LMX relationships (Liden & Maslyn, 1998). 2.3.1 Affect This refers to the mutual affections or likings members of the dyad have for each other based on interpersonal attraction. It is based on a mutual liking of the leader and member. Some relationships between leader and follower may be dominated by affect, as they simply like each other and build a relationship of mutual friendship (Imen, Jose, Pep &Vicenc, 2018). For example, both the leader and member might have similar hobbies and interests- this may be outside of work. Hence, have more of a