Examining the “Exchange” in Leader-Member Exchange

Topic: Leader-Member Exchange and Turnover

Author(s), Title and Publication

Sherman, K. E., Kennedy, D. M., Woodard, M. S., & McComb, S. A. (2012). Examining the “Exchange” in Leader-Member Exchange. Journal of Leadership & Organizational Studies, 18(1), 1–17.

Summary

According to leader-member exchange theory (LMX), leaders develop separate exchange relationships with each of their members, with the quality level of relationship ranging from a high quality and interpersonally supportive relationship (i.e., “in-group”) to a low-quality and formal relationship (i.e., “out-group”). This study expanded understanding of the impacts of various leader-member relationships on employees’ turnover intentions and actual turnover behavior. Four types of LMX relationships were tested: 1) M-in/L-in (members and leaders both perceive high-quality relationships); 2) M-out/L-out (both perceive low-quality LMX relationships), 3) M-in/L-out (member perceives a high-quality relationship while leader perceives low-quality relationship), and 4) M-out/L-in (member perceives a low-quality relationship while leader perceives a high-quality relationship).

From two insurance and two retail companies, 375 supervisor-subordinate pairs completed a survey that assessed their perceived LMX relationships and turnover intention. Turnover behavior data were collected from the HR department of each organization six months after the survey was conducted; 79 of the 375 respondents had left their organizations.

Results indicated that employees in the M-in/L-in dyads reported the lowest turnover intention, followed by employees in M-in/L-out, M-out/L-out, and M-out/L-in relationships. In terms of turnover behavior, members in the M-out/L-in relationship reported the lowest turnover rate, followed by members in M-in/L-in, M-in/L-out, and M-out/L-out. Findings also showed that when employees perceived they were part of the in-group, the leader’s LMX rating contributed more to the employee’s intent to leave than the employee’s LMX rating. That is probably because employees who perceive an in-group relationship might expect more opportunities and other benefits, and the more the leader perceives the employee to be part of inner circle, the more benefits the leader might give to the employee, and the more committed the employee might become to the organization. In contrast, a member’s LMX rating explained turnover intention better than leader’s LMX rating when the member perceived himself or herself to be in out-group.

Implications for Practice

Leaders might reduce disagreement between leaders’ and employees’ perceptions of LMX relationships if they build two-way communication with employees, provide adequate and clear information, and care about employees’ perceptions of the relationship and their needs and expectations.

Location of Article

The article is available online at: http://jlo.sagepub.com/content/early/2012/04/25/1548051812442963 (free abstract, purchase full article)

 

 

Posted in [Research Library], Employee / Organizational Communication, Measures and Measurement and tagged , , , , .

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