The leader-member exchange (LMX) theory focuses on a dyad relationship. This is a relationship between a leader and each subordinate which are considered independent, rather than on the relationship between the superior and the group. Each linkage, or relationship, is likely to differ in quality. Thus, the same leader may have poor interpersonal relations with some subordinates and open and trusting relations with others. The relationships within these pairings, or dyads, may be of a predominantly in-group or out-group nature.
A leader initiates either an in-group or an out-group exchange with a member of the organization early in the relationship. Members of the in-group are invited to participate in decision making and are given added responsibility. The leader allows these members some latitude in their roles. The leader and key subordinates negotiate the responsibilities in a non-contractual exchange relationship. Basically, an in-group member is elevated to the unofficial role of a highly trusted employee. In-group members enjoy the benefits of job and have influence in decision making, more open communication and confidence for the member. The subordinate typically responds with greater than required expenditures of time and effort, the assumption of greater responsibility, and commitment to the success of the organization.
In contrast, members of the out-group are supervised within the narrow limits of their formal employment contract. Authority is legitimated by the implicit contract between the member and the organization. The leader will provide support, consideration, and assistance outline by job description, but will not go beyond the limits. The leader is practicing a contractual exchange with the ...
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... and communication exchange. It forces the leadership levels to talk to one another in a constructive manner, exchanging ideas and best practices as well as needs for improvement. This low-stress approach to open communication will prove valuable as it too is catalogued and kept on record. In doing this the organization will be able to track trends in the good as well as intervene in potential road blocks based on feedback. Once all levels have completed both the feedback tool and Developmental counseling’s, those contracted individuals that also administered the MBTI will review each of the respondents answer and evaluate it according to their MBTI results. This will provide a “snapshot” of necessary and potential issues and provide a pathway for open discussion (anonymously) about the potential issues as well as highlight what is working for which directorate.
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