Leader Member Exchange How the LMX theory can solve PlasticCo’s leadership problems

By Georgina Michael George, ID: 000771065Mohammed Nassib, ID: 000806844Stefka Bodurova ID:000782412Idris Mayowa ID: 0007499345

LMX Theory Leader-member exchange (LMX) theory focuses

on the degree of emotional support and exchange of valued resources between the leader and the members (Kang and Stewart, 2007)

Thus, diagnosing this relationship can lead to a higher quality relationship and improved organisational performance

LMX Development Role Theory: role expectations of a

supervisor and the extent to which they are met by subordinated results on the exchange.

Social Exchange Theory: how power and influence among leaders and subordinates are conditioned by the availability of alternative exchange patterns

Critical Facts of PlasticCo Engagement problems lie with the factory workforce.

Lack of communication between the manager and his subordinates by using a ‘top-down’ leadership approach

Production process is 24 hours a day, 365 days a year, with strict working shifts of 12hours, (8pm-8am or 8am-8pm)

Diagnosing the problem,In-Groups, Out-Groups Craighead and Nemeroff (2001)

In-groupsPoor relationships created with managers by: Responding with negative

attitudes Showing signs of withdrawal Exhibiting aggressive

behaviour

Out-GroupsGreat relationships are created with managers by: Displaying trust Giving respect Expressing empathy Demonstrating persistence Links to social comparison

theory (Festinger, 1957, cited by Elliot, 2008), Leaders like to surround themselves around others who hold similar attitudes.

Diagnosing the problem,Social Exchange theoryBlau (1964)

12 hour shifts, makes it difficult to obtain a work life balance, factory conditions do not meet their salient goals.

Limited encouragement for decision making amongst employees, from the managers, and also employees are ignoring issues.

No social exchange, hence no high quality relationships

Managers do not trust the employees with any responsibilities

‘Reactive’ rather than ‘Proactive’ problem solving

Recommendations

Work social Clubs or leisure activities such as a staff lounge, which would meet their Social needs.

Appraisal systems: Arranging one to one meetings between the employees and line manager to discuss; performance, concerns, Objectives, personal goals such as progression and setting targets to achieve these goals.

This system will be the first steps in initiating Leader member exchange, in order to develop into a high relationship.

Social attraction, initial interactions, trust can be developed from the appraisal system, thus resulting in social exchange and a high quality relationship between member and leader.

Appraisal system will create more transcend out groups into in-groups

Conclusion

‘Change is not about driving employees to work harder, but about providing the conditions under which they will work smarter’ – Leadership and development manger

LMX and in particular, Social exchange theory allowed us to diagnose the problem and further understand the core of the problem which was the lack of significant communication between the manager and his subordinates

This has allowed us to identify a cost efficient, logical and effective way to solve the leadership problem which is by building the first initial interactions between employees and line managers through appraisal systems, which is already a well known tried and tested strategy.

This will aid in the development of the managing director's vision of a more involved culture, without necessarily changing the company’s shift structure.

References Blau, P. (1964), “Exchange and Power in Social Life” New

York: John Wiley and Sons. Craighead, E.J. and Nemeroff, C.B. (2001), “The Corsini

Encyclopedia of Psychology and Behavioral Science” New York: John Wiley

Eliot, A.J. (2008), “Handbook of Approach and avoidance motivation”, New York: Psychology Press

Phillips, A. & Bedeian, A (1994) Leader-Follower Exchange Quality: the Role of Personal and Interpersonal Attributes. Academy of Mnagement Journal. Vol. 37, p. 990-1001

Wayne, S., Handerson, D., Shore, L., Bommer, W. & Tetrick, E. (2008) Leader–Member Exchange, Differentiation, and Psychological Contract Fulfillment: A Multilevel Examination. Journal of Applied Psychology. Vol. 93, p.1208–1219