Leader-Member Exchange Model and Its Effects

Unarguably, the contemporary business environment is extremely challenging due to the rapid changes in technology, consumer preferences, and other external factors. Multiple qualitative and quantitative studies emprise the need to use different models and styles for organizational leadership (OL), although most of the contemporary businesses use transformational and transactional methods. Leaders have to develop and adopt strategies that would help them foster an appropriate environment within their organizations to ensure success.

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Article Analysis

Both business ventures and non-profit organizations depend on proper leadership in their work because it determines the efficiency and outcomes of daily tasks. The title of the article by Hassan and Hassan (2015) is appropriate for the focus of the study because it provides an understanding of the scope of research. The problem is clearly stated in the paper and is connected to a need for motivating employees in the changing business environment.

A theoretical rationale for the problem is based on the leader-member exchange model (LMX) according to which attitudes towards one’s job are affected by the unique relationship that each person has with his or her manager (Hassan & Hassan, 2015). It can be argued that the problem studied in this article is significant because companies depend on the productivity of their personnel.

The article in question contains a review of relevant literature. In general, Hassan and Hassan (2015) use studies that explain the theoretical implications of their argument. Thus, this section of the paper provides an explanation of prior research on LMX, which suggests that the significant leadership implications consist of communicating role expectations to subordinates and providing them with incentives, both material and intangible, that help ensure successful work.

For this research, the approach of the survey was chosen by the authors. Therefore, the questioner was created and distributed among the sample of 355 employees working in the manufacturing businesses (Hassan & Hassan, 2015). Additionally, Hassan developed a scale that contains 17 items to evaluate the results; thus, the approach is quantitative. The tools include Bentler and Chou’s formula for determining the reliability of findings, Janssen and Yperen’s questioners (Hassan & Hassan, 2015). The population was selected by choosing organizations from the Karachi Stock Exchange and selecting companies based on their size and sales.

The hypothesis of the paper is that LMX, together with perceived organizational support, empowering leadership, and organizational justice have an essential role in determining the efficiency of an organization’s work. The objective is to determine the exact effect of these factors on the success of a company by using data from a Pakistan manufacturing industry (Hassan & Hassan, 2015). Both the objective and hypothesis were stated clearly in the paper.

One source of error that could have affected the results of this study is the number of answers that are required to receive correct data. Hassan and Hassan (2015) used ratio method developed by Bentler and Chou that involves obtaining at least five responses per each parameter that is being studied. The statistical technique of regression analysis and mediation were used to analyze data, which is appropriate considering the implications.

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The results of the study suggest that there is a significant connection between LMX and positive employee attitude and improves productivity. The results were presented clearly through several tables that illustrate that quantitative data and textual explanations of the findings. Hassan and Hassan (2015) state that the limitations include a connection to a particular time frame and model of analysis that uses one scale. The conclusions for the paper include the acknowledgment of the impact that leadership styles and approaches have on employees and their work, which is supported by the data that shows a connection between different components of leadership and perception of workers.

The researchers do not over generalize the findings because they make summaries findings and make recommendations for Pakistan manufacturing only. The results and conclusions of this study can be applied in my work because as a leader, I can use the results of this research, as well as its theoretical implications to create an efficient work environment.

Leadership in Organizations

Organizational leadership (OL) can be defined as an approach to managing a business or non-profit ventures that allows reaching specific goals and objectives by fulfilling daily tasks. Thus, leadership has a direct impact on the employees and specific models that the executives use can affect the outcomes of their work. The primary goal of any executive is to establish a proper environment within a company and an adequate relationship with employees, which will allow a business to operate successfully.

Implications of Leadership

Firstly, it is necessary to clearly define the role of a leader in a company and the impact he or she has on the work performed by employees. Pirouz (2017) states that executives “need to take tough decisions and act quickly,” which requires them to have superior knowledge of both their organizations and people working in it (para. 2). Thus, the primary implication of leadership is the trust that employees have that should be sufficient in order for them to follow the direction set by this executive.

Organizational leadership is achieved through proper management of internal processes that requires one to set strategic goals and develop plans for reaching them. Next, OL predefines the level of engagement that employees have within a firm. Research by Popli and Rizvi (2016) provides an understanding of the connection between strategies that executives apply and attitudes towards tasks that need to be performed. In general, this impacts the productivity of work and thus has a significant meaning for any organization.

Fostering creativity can be especially crucial for companies that operate in challenging environments and strive to achieve an advantage, which can be obtained through OL. Odoardi, Montani, Boudrias, and Battistelli (2015) state that companies “relied on employees’ innovative contributions to preserve or enhance competitiveness, effectiveness, and continuous improvement in uncertain and dynamic environments” (p. 545).

The primary aspects that affect the component in question are objectives of work, reward systems that a venture uses, exchange of information, and training practices. In addition, Odoardi et al. (2015) argue that a shared vision that a specific department or team have can significantly impact the process of work. Thus, it is the responsibility of leaders to analyze the components described above and formulate a strategy that would contribute to the success of a business.

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Motivation and retention of employees is another aspect of proper leadership within a company. Shanafelt et al. (2015) conducted a study in which they evaluated the approaches to leadership and its impact on the burnout of employees. The objective was to determine whether executives can have a positive effect on their staff members and ensure that they are satisfied with their work. The findings of the research by Shanafelt et al. (2015) suggest that organizational leadership has an impact on the well-being of its workforce, which is a critical success factor. Companies that are unable to manage their human resources adequately cannot achieve full productivity.

Thus, they lose their competitive advantage as well as financial resources, when compared to their competitors that apply appropriate strategies. Based on these implications, it can be concluded that the concept of OL helps define goals that would align with the strategic planning of a company and development plans of people working for it.

Achieving OL

Proper leadership can help companies achieve sustainability and grow continuously. Niphadkar (2016) argues that it is impossible without an appropriate culture, which would encourage both managers and subordinates. The concept is based on the assumption that business ventures have developed specific social structures within them, in which people interact, exchange information, and perform tasks. According to Niphadkar (2016), it is “a pattern of shared basic assumptions that was learned by a group and it’s solved its problems of external adaptation and internal integration” (p. 24). A leader of an organization has a significant impact on the culture; thus, he or she can shape it depending on the goals that need to be achieved.

One aspect of this is the concept of leader-member exchange (LMX). This model defines the specific relationship of an executive and his personnel, which predetermines the attitudes towards work and outcomes of it. From this perspective, it is the responsibility of executives to clearly define the roles of each individual, which will provide them with an understanding of expectations (Hassan & Hassan, 2015). It is evident that a leader should perform an assessment of skills and abilities to define the roles. Next, it is crucial to work on developing the capabilities of individuals that are a part of a particular company, in accordance with LMX (Hassan & Hassan, 2015). From the perspective of LMX, leaders are vital to organizations because they guide individuals and help them achieve their goals.

Additionally, different styles of leadership exist that help creates a specific structure and culture within a business. This can help an executive choose a model of behavior, depending on the external and internal environment of operations. For instance, a newly established company that hires employees without prior experience will benefit from supportive leadership that can guide people. However, in other cases, when individuals can work independently, such approach will restrict their creativity and lead to adverse outcomes.

Various Approaches to OL

Different styles of leadership exist and can be adopted by managers in different fields of work. Regardless of a specific approach, it is crucial such person to have a clear objective and understanding of the vision and values that exist in a particular setting. For instance, Odoardi et al. (2015) describe a participative framework, in which managers allow their subordinates to freely voice their opinion or vision of a specific task and support them in their work. Collaboration is the primary feature that enables the success of this method and ensures that personnel can enhance their creativity.

Another approach is transformational leadership, in which executives work together with their employees on achieving strategic objectives, which helps improve motivation and collaboration. Additionally, this model involves “setting an example at the executive level through a strong sense of corporate culture, employee ownership and independence in the workplace” (White, 2018). However, OL in this approach does not constrain employees, on the contrary, they are encouraged to be responsible for their assignments and goal achievement. Company culture, which was discussed in the previous paragraph is especially important for this concept.

González-Cruz, Botella-Carrubi, Martínez-Fuentes (2019), state that based on the regulatory focus approach one can argue each of the models described above would have a different impact on the organization and outcomes of its work. The concept is based on the assumption that individuals focus on various components of behavior and its interpretation. Thus, some styles of leadership may not have a significant impact on individuals due to the fact that they are not subjected to the effects of specific models. Thus, contextual factors, such as the personality of employees or external environment of an industry can affect the outcomes of work significantly.

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Finally, it is necessary to acknowledge that OL determines the systems used by a company that helps track performance and measures strategic objectives. Nguyen, Mia, Winata, and Chong (2017) state that “leadership style can influence a firm’s strategic priorities and implementation of formal control systems” (p. 202). Therefore, an evaluation of decisions that a company makes should consider the leadership approach that is used because it predetermines the major factors described above.

Styles of Leadership

As was mentioned above, transformational leadership is widely applied by contemporary organizations because it results in better work performance, while, transactional style is also standard as it focuses on the relationship between executives and their employees. However, the theory of OL distinguishes other approaches as well. For instance, autocratic leadership is characterized by Niphadkar (2016) as the one in which managers present clear guidelines of work tasks to individuals and control their subordinates.

Unarguably, with this model, creativity, and ability to work independently is limited due to the nature of it and the decision-making process depends solely on the executives, without input from other members. This approach is the opposite of the participative style that was previously discussed because such leaders help their followers achieve goals.

The laissez-faire style is another concept that characterizes a leader as a person who does not participate in teamwork. Thus, the person receives no guidance in their work, which is the main downside of this style. Niphadkar (2016) states that in most cases this method is not practical because most individuals struggle with performing tasks without having clearly defined goals and objectives.

It should be noted that in companies with highly trained professionals that are experts in their fields this approach can be beneficial. Finally, situational leadership model is consistent with the research that was presented in this paper in regards to the impact of circumstances on the OL. From this perspective, individuals should choose a specific model based on the context of internal and external environments.


Overall, this paper provides an understanding of organizational leadership and its impact on the performance of companies. This concept has an effect on the performance of companies because through appropriate strategies executives can affect the productivity of the individuals and their motivation, as well as prevent burnout. A proper OL results in the development of a culture that enables sustainable growth. Additionally, in such environment roles are clearly defined, and individuals are able to improve their skills and knowledge, which contributes to operational outcomes.


González-Cruz, T., Botella-Carrubi, D., & Martínez-Fuentes, C. (2019). Supervisor leadership style, employee regulatory focus, and leadership performance: A perspectivism approach. Journal of Business Research. Web.

Hassan, S., & Hassan, M. (2015). Testing the mediating role of perceived organizational support between leadership styles, organizational justice and employees’ behavioral outcomes. Pakistan Journal of Commerce and Social Sciences, 9(1), 131-158.

Nguyen, T., Mia, L., Winata, L., & Chong, V. (2017). Effect of transformational-leadership style and management control system on managerial performance. Journal of Business Research, 70, 202-213. Web.

Niphadkar, C. (2016). Building organizational leadership: Leadership through learning and effective organizational development interventions. Chennai, India: Notion Press.

Odoardi, C., Montani, F., Boudrias, J. S., Battistelli, A. (2015). Linking managerial practices and leadership style to innovative work behavior: The role of group and psychological processes. Leadership & Organization Development Journal, 36(5), 545-569. Web.

Pirouz, A. (2017). The impact of leadership on business success. Web.

Popli, S., & Rizvi, I. A. (2016). Drivers of employee engagement: The role of leadership style. Global Business Review, 17(4), 965-979. Web.

Shanafelt, T., Gorringe, G., Menaker, R., Storz, K., Reeves, D., & Buskirk, S., … Swensen, S. J. (2015). Impact of organizational leadership on physician burnout and satisfaction. Mayo Clinic Proceedings, 90(4), 432-440. Web.

White, S. K. (2018). What is transformational leadership? A model for motivating innovation. Web.

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