Leader-Member Exchange Theory

The leader-member exchange theory (LMX), which views leadership as the interaction between followers and leaders, can earn an organization success if applied effectively. Often, an organization’s success depends on the relationship between the leader and followers as one of the principal elements of success. The theory presents two types of leader-member relationships, in-groups and out-groups.

Within an in-group relationship, the leader and followers can share knowledge freely. Both are available for each other and communicate in a friendly manner. Since the leader may have more understanding than the followers, the leader can impact followers with the knowledge that can help them. On the other hand, an out-group relationship has no knowledge sharing.

In-group followers are committed to more than they are obligated than out-group members. Northouse (2015) explains that because of the friendly interaction between a leader and the followers, in-group members always do more than they are supposed because of their friendly commitment. It is opposed to out-group members who only do what they are obligated to do. Consequently, an in-group relationship becomes more productive.

Lastly, in-group relationships always lead to less turnover, especially in an organizational context (Nishii & Mayer, 2009). When employees are closely and friendly related to their leaders, they feel motivated and inspired to perform their duties. The relationship keeps them more connected to the leader and reciprocated to the organization. Hence, they tend to stay in the organization.

In summary, an interactive relationship between the leader and followers is vital for productivity. An in-group relationship leads to productivity over an out-group relationship through knowledge acquisition, motivation, low-turnover, and commitment. Hence, leaders and followers should strive to exhibit an in-group relationship to be more productive.  


Nishii, L., & Mayer, D. (2009). Do inclusive leaders help to reduce turnover in diverse groups? The moderating role of leader-member exchange in the diversity to a turnover relationship. Journal Of Applied Psychology, 94(6), 1412-1426. https://doi.org/10.1037/a0017190

Northouse, P. (2015). Leadership (7th Ed.). Sage Publications.