The Leader-Member Exchange (LMX) Theory of leadership is often viewed as an entirely different methodology compared to other well-known approaches. A unique feature of this method is its focus on the actual interaction process between the frontrunner and followers, and in theory, it is often referred to as a dyadic relationship (Northouse, 2016). Firstly, LMX underlines the need to divide followers into in and out-group members (Northouse, 2016). On the one hand, this separation is advantageous since a leader can build trusting relationships with in-group members while boosting their creativity, motivation, and satisfaction. This aspect has a direct impact on their performance and, as a consequence, a reflection on the overall productivity of the organization. On the other hand, this exceptional feature is also a disadvantage, as dividing employees into groups may be a potential cause of tensions due to inequality and high power distance between the leader and out-group members. Generally speaking, LMX’s dyadic interactions may cause group saturation and disrupt integrity in the organization.
This theory and its dyadic relationships have a clear impact on leadership. Firstly, its advantages emphasize the importance of communication while explaining the necessity to divide the organization into different units depending on their productivity (Northouse, 2016). The central focus of this approach is not to describe the characteristics of the participants but to highlight the significance of exchanges between the leader and its followers (Northouse, 2016). In turn, its weaknesses portray negative aspects of leadership including making privileged groups and disregarding fairness. Along with that, this theory lacks specifics. For example, it does not provide factors that may affect LMX interactions. They may include attachment anxiety and avoidance and affect the quality of interaction between a leader and in-group in a negative way (Richards & Hackett, 2012). It could be said that the advantages and disadvantages of LMX theory have a critical impact on leadership, as they profoundly describe the behavior of the leader and provide a rationale for making a transition from autocratic to transformational leadership.
To continue this discussion, it is vital to determine the main features of transformational leadership, and they include the importance of charisma and being an inspirational role model, who cares about the performance and carefully monitors the results (Northouse, 2016). In this instance, the major differences pertain to the significance of dyadic relationships in LMX theory while transformational leadership promotes shared vision, integrity, motivation, and charisma and views followers and their development as definers of success (Northouse, 2016). Meanwhile, one of the similarities is the intention to reach the desired outcome by using communication with the followers as a tool. For example, LMX helps build a connection between team network and its identification while having a positive impact on the overall productivity and quality of interaction within the assigned group (Guan, Luo, & Peng, 2013). In this case, a transformational leader reflects similar features in his/her behavior and inspires others to seek improvement.
In the end, characteristics of LMX theory and transformational leadership are highly related. Both of them aim at creating a favorable environment for the development of the followers, but LMX attempts to reach better performance in-group than out-group while transformational leadership aims to achieve outcomes results but without division. For example, when having group assignments, the leader of the group distributes tasks based on the educational level of group members and defines the individuals, who can suggest innovative ideas. Meanwhile, in another group, a leader attempts to become a role model and gives an equal opportunity to every team member to express himself/herself. Eventually, apart from using slightly different approaches, the outcomes of both theories will be dependent on a variety of factors because the behavior of a leader is not fully defined as situational leadership.
References
Guan, K., Luo, Z., & Peng, K. (2013). Team networks identification: The role of leader member relationship. Social Behavior & Personality, 41(7), 1115-1124.
Northouse, P. (2016). Leadership: Theory and practice. Thousand Oaks, CA: SAGE Publications.
Richards, D., & Hackett, R. (2012). Attachment and emotion regulation: Compensatory interactions and leader-member exchange. The Leadership Quarterly, 23(1), 686-701.