HRM11419 Leading Strategic Decision Making

Introduction 

This essay examines the usefulness of the leader-member exchange (LMX) theory and explains productive leader-follower relations. "Leader-member exchange (LMX) is a leadership theory that is based on the relationship between a leader and his or her followers and attempts to predict worker outcomes like productivity, turnover, promotion potential, and organisational commitment” ("Leader-Member Exchange Theory: Out-Groups", 2021).

The leadership-member exchange theory suggests that supervisors have relatively high-quality exchange relationships with some employees and relatively low-quality relationships with others. "LMX research categorized the relationship leaders could have with their followers into two groups: the in-group and out-group, more recently referred to as high-quality and low-quality exchanges” (Vossooghi, 2021). Transformational and transactional leadership play a dynamic role in the LMX theory. Leadership Quarterly vol. 6 no. 2 1995 states that LMX is transactional and transformational: it begins as a transactional social exchange and evolves into a transformational social exchange. 

The Global Health Services Corporation is an organisation that focuses on providing optimal healthcare services to an increasing population. It has demonstrated that the LMX exists and that it is not just a theory. The Corporation is staff with over 800 personnel, ranging from Environmental Services Technicians (lower hierarchy) to the Executive Team (top of the hierarchy). In between are the clinicians, nurses, technical, auxiliary, and administrative staff.

The Board of Directors and Executive Team serve a tenure of three (3) years, which has fostered LMX to be a fluctuating and variable component of desired organisational performance and employees' behaviour. This is due to the disparity between transformational and transactional leadership styles during each term served (Boyne, 2021).

The unknowing practice of LMX within the organisation has resulted in a variation of performances from different staff levels and, consequently, leads to high turnovers and the inability to retain the most experienced and dedicated personnel. These inadequacies occurred due to low-quality leader-follower relationships. On the other hand, productive leader-follower relations have encouraged desired productivity, exceptional performance, and improved morale for some personnel. 

LMX has created two groups within the Global Health Services Corporation: the in-group and the out-group. The essay will demonstrate a comparison to confirm that the LMX theory has advantages and disadvantages that can positively or negatively impact the staff and, by extension, the organisation's development.  

Effects of High-Quality Exchange Relationships and Transformational Leadership

Mrs. Mary Donovan, the former Director of Global Health Services Corporation was a transformational leader who was transparent, trustworthy and sociable. Mrs. Donovan was a leader who exhibited high emotional intelligence and was able to connect with her subordinates under the most extraordinary circumstances. Due to her unconventional leadership style, respect and trust was achieved by the staff. "Transformational leaders have been described as trying to foster emotional connections with others and as being more adept at reading, interpreting and expressing emotions—abilities that engender follower trust, respect, and positive emotions” (Garg & Dhar, 2014). Morale was at its pinnacle, as the staff would often receive communication on the organization's activities, developments and even shortcomings. 

The staff felt a sense of organisational citizenship because they were immensely recognized for their valuable contributions and were given the opportunity to be involved in decision making processes. As a result, productivity, performance and commitment were strengthened.  "Employees recognize the support they gain from their organisation, feel that they have an obligation to it, and acknowledge this advantageous treatment by showing valuable commitment” (Omilion-Hodges & Baker, 2021).

Various working groups were established and supported, which empowered the staff and resulted in high-quality exchange relationships. "The quality of the relationship is reflected by the degree of mutual trust, loyalty, support, respect, and obligation” ("Leadership-Member Exchange (LMX) Theory", 2021). The purpose of such group formations was to establish an effective liaison network and improve the relationship between employees and management. The Employee Advisory Committee (EAC) (in-group) consisted of representation from each department, whose responsibility was to communicate and bring awareness to their respective colleagues (out-group) of undertakings considered by management. Those members solicited endorsements from the out-group and subsequently conveyed their sentiments to management. Depending on the consensus of staff's feedback, decisions were implemented in short order, re-visited, or nullified. "Transformational leadership may be found at all organisation levels: teams, departments, divisions, and organization as a whole. Such leaders are visionary, inspiring, daring, risk-takers, and thoughtful thinkers” ("Transformational Leadership Theory - Meaning, Criticisms and its Implications", 2021).

With the approval of management, the EAC also planned and hosted workforce engagement activities such as health fairs, sporting events, talent competitions, and game nights. The in-group and out-group would participate and fellowship together. The out-group eventually developed a sense of organisational citizenship and trust in leadership because they appreciated the inclusion. The Director also gained respect and commitment from the employees, which was mutually beneficial in achieving the overall goals and success of the Global Health Services Corporation. "The idea is for a leader to develop as many high-quality relationships as possible. This will lead to increases in subordinates' sense of job satisfaction and organisational citizenship, as well as to increased productivity and attainment of organisational goals” (Power, 2013).

Another group developed was called Change Management Agents, which comprised chosen emerging leaders (in-group) who influenced and received endorsements from other staff (out-group) relative to organisational transformation undertakings. One of the initiatives which came to fruition was identifying persons with leadership qualities and assigned them as a "Lead" within each respective unit/shift. "Creating high-performance workforce has become increasingly important and to do so business leaders must be able to inspire organizational members to go beyond their task requirements” ("Transactional Leadership Theory - Meaning, its Assumptions and Implications", 2021).  

This programme fostered employee's commitment and empowerment and established a productive leader-follower relationship. Staff felt a connection with their leaders, which enhanced their communication and trust. "Employees engage in role behavior where their leader acknowledges efforts with receipt of organisational resources such as preferred tasks, information, flexibility or latitude, support, attention, and influence” (Fisk & Friesen, 2012). Training sessions were conducted for the identified Change Management Agents, who honed their skills, and the necessary resources were made available to them to encourage their optimal performance. 

"Leads" were subsequently promoted to supervisors for their respective units/shifts through coaching and career development. "The job satisfaction of in-group members is high, and they perform effectively on their jobs. They tend to receive more mentoring from their superiors which helps them in their careers” ("Leadership-Member Exchange (LMX) Theory", 2021).

The Change Management Agents (emerging leaders) were also identified through effective succession planning and became managers. These two accomplished outcomes transformed the job satisfaction and commitment of the workforce exceptionally.  Additionally, it created a high-quality exchange relationship between leader and follower. "The followers of such leaders demonstrate high levels of job satisfaction and organisational commitment, and engage in organisational citizenship behaviors” ("Transformational Leadership Theory - Meaning, Criticisms and its Implications", 2021).

Effects of Low-Quality Exchange Relationships and Transactional Leadership

Another Director, Mr. Tom Smith was appointed who possessed transactional leadership skills. Mr. Smith observed and targeted members of the organisation he can trust and rely on to get works executed and provide the necessary guidance during his tenure. "The transactional leaders tend to be highly directive and action-oriented and, their relationship with the followers tends to be transitory and not based on emotional bonds” ("Transactional Leadership Theory - Meaning, its Assumptions and Implications", 2021).

The chosen group of employees were established as the in-group and would report to the Director consistently and provides advice where needed, especially during his probationary period. The in-group followers were assigned to ensure that the Director met his mandate and achieve the organisational strategic goals. "In-group followers tend to function as assistants or advisers and to have higher quality personalized exchanges with the leader than do out-group followers” ("Transactional Leadership Theory - Meaning, its Assumptions and Implications", 2021). The in-group selection consisted of employees with social status, professional accolades, sound organisational knowledge, and experience. Some were deemed susceptible followers who supported leadership for ulterior motives such as job security, incentives, and status. University (2016), states that ambitious people seeking social status sometimes engage in exploitative relations. The other employees had a low-quality exchange relationship and were deemed as the out-group, as Mr. Smith had very little use for them, offered no incentives and treated them in a substandard manner to the in-group. "By contrast, other subordinates fall into the out-group. These individuals are disfavored by the leader. As such, they receive fewer valued resources from their leaders” ("Leadership-Member Exchange (LMX) Theory", 2021). The in-group were favored and given preferential treatment by leadership, which caused those members to go above and beyond the call of duty. Additionally, they were highly recognized for all their extraordinary efforts and received promotions, performance incentives, career development, and training opportunities. "One group, referred to as the in-group, is favored by the leader. Members of in-group receive considerably more attention from the leader and have more access to the organizational resources” ("Leadership-Member Exchange (LMX) Theory", 2021).

The low-quality exchange relationship (out-group) had two differentiations: 

Employees in the high and medium hierarchy were not concerned about being classified as an in-group or out-group member but complied with the organisational standards and their terms and conditions of employment. 

1. They were also highly skilled employees with the same characteristics as the in-group members but chose not to be categorized or manipulated by leadership. Leadership would often stereotype those persons and treated them stringently because they were deemed to be less cooperative, antisocial, not easily persuaded, and the "difficult ones." These employees never attended any workforce engagement activities, social functions, or anything outside their regular working hours. However, they complied with their employment contract where they came to work on time, performed their duties satisfactorily as assigned, and left promptly after their shift. "The only 'transaction' between the leader and the followers is the money the followers receive for their compliance and effort” ("Transactional Leadership Theory - Meaning, its Assumptions and Implications", 2021).

Eventually, some of these highly proficient out-group members left the organisation because they considered being treated inequitably. Consequently, they found employment where they felt a sense of appreciation and were duly recognized for their valuable contributions without being characterized as any specific leader- follower.

2. The other out-group members were in the lower hierarchy of the organisation and served little to no interest and commitment; those who had undesirable performance/behaviors and were considered substandard to others. "Out-group members are generally believed to be substandard both socially and professionally when compared with their in-group co-workers. Out-group members tend to have less desirable work attitude, behaviors, and performance” ("Leader-Member Exchange Theory: Out-Groups", 2021).

They often felt like the outcasts, which was one reason their morale declined, resulting in low productivity and unbecoming behavioral traits. They received little to no recognition, no advancement opportunities, and were not considered to participate in social events or organisational activities. These members were quickly targeted and bullied by their supervisors and colleagues, which caused them undue stress. In some cases, persons were referred to the Employee Assistance Programme (EAP) for counseling. Some of the out-group members were terminated for excessive low productivity and unbecoming behaviours. Others departed the organisation to seek employment where they would not be ostracized.

Conclusion

Leadership must recognise that sustainable elements such as motivation, appreciation, recognition, and respect of subordinates lead to organisational growth. 

Employees treated unfairly due to favoritism being shown to other colleagues can cause adverse effects on the organisation. The most qualified, experienced, and professional members (knowledge workers) sever ties in due course, which jeopardized the organization's overall performance, profitability, and development. Discriminatory leadership behaviors often decrease employees' fulfillment, morale, commitment, trust, productivity, punctuality, and cohesiveness. On the other hand, if all employees are treated impartially, leadership will accomplish their goals and gain support to manage a successful organisation effectively. University (2016) indicated that leader behaviours and traits contribute to that performance, either positively or negatively.

The performance of the organisation is a reflection of the leadership and contributions of the employees. Therefore, equitable behaviour should be established and practiced with the in-group and the out-group followers to provide superior healthcare services, promote optimum productivity, job satisfaction, and desirable organisational behaviours.

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