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Is Leader-Member Exchange Theory Harmful?

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Submitted By cwhelan
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“The Dynamics of Leader-Member Exchange Theory and the Impact to the Organization”

Introduction
The study of leadership includes many theories on leadership styles and what makes an effective leader. One such theory, the Leader-Member Exchange Theory (LMX), specifically focuses on the 2-way relationship between managers and subordinates, the impact on these individuals, and the and the resulting effect on the organization. Gaining an understanding of this theory has significant application to recognizing the dynamics of the supervisor-associate relationship and ultimately the level of success with attaining organization goals. The terms leader, supervisor, and manager are used interchangeably, as are the terms member, associate, and subordinate.
What is it and how does it occur?
The LMX theory states that leaders establish their “favorites” early in the leader-member relationship, determining whether a member is in the “in-group” or the “out-group.” Due to time concerns and pressures in the workplace, LMX relationships develop very early in the leader-member interaction, and tend to remain constant over time. Leaders have a tendency to reward in a variety of ways those associates with whom they want special linkage.
What does it mean for the member?
LMX refers to the quality of the leader-member relationship and describes the benefits of a strong LMX relationship, primarily to the associate. The theory proposes that the in-group receives a number of both intrinsic and extrinsic rewards and privileges that the out-group does not experience. The intrinsic rewards to the in-group member include social rewards, and friendship.
Members enjoying high LMX will likely also experience a number of extrinsic rewards. These would include challenging and interesting projects, exposure to upper-level management and other leaders across the organization, and opportunities

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