LMX THEORY GUIDE
Members take on
tasks and work on
projects, during
this stage leaders
evaluatuate
members and
determine if they
are in the "in
group" or the "out
group"
Routinization
Person joins
group and leaders
gets initial idea of
what type of
worker they are,
and assesses their
skills and abilities
Role Making
Role Taking
The LMX Theory allows a leader to separate employees intro groups to try and identify the best, most
productive workers. LMX stands for Leader-Member-Exchange. The theory uses three stages to
separate and develop routines for employees. Below are the three stages.
Routines are
developed for
each group, in
groups receive
higher level tasks
and receive more
attention while
out groups have
simplier tasks,
less attention
Two main groups are developed and “in group” and an “out group”. Each groups tasks and tracks for
their future paths will be different. The chart below shows characteristics of each group.
In Groups
Out Groups
• More attention
• More challenging work
• Additional training opportunities
• Additional advancement
opportunities
• Less attention
• Less challenging work
• More restrictions
• Less advancement opportunities
Overall the LMX Theory identifies strong members and enables them to achieve more than the weaker
members. Dividing the members into the in or out group also allows high level employees to work
together.