Leader-Member Exchange Theory, or LMX, is a two-way relationship between management/supervisors and their employees/subordinates. The theory assumes that leaders use different management styles, leadership styles, and behaviors with each subordinate or group of subordinates. The exchange between supervisors and subordinates will be inconsistent between each individual member of the group. A supervisor can be very kind and supportive towards one employee/group and be very critical and insensitive towards another employee/group. Because of this type of interaction, LMX theory suggests that leaders classify their subordinates into two groups, in-group members and out-group members (Gibson, Ivancevich, Donnelly, & Konopaske, 2012, p. 334 ). separate in-group and out-group members based on similarities between the group member and the leader. Other characteristics that may play a role are a member's age, gender, or even personality. A member may be granted membership status in a group if the leader believes he or she is competent and goes above and beyond to fulfill his or her duties. As mentioned, the two groups that members can fall into are in-group and out-group. Group members are those who share similarities with the leader. These similarities could be personality, work ethic, common interests, or even alma maters. Group members often go above and beyond their job description and the leader does more for these members. Group members will have their opinions and work ideas considered with more esteem than members outside the group. Group members generally have greater job satisfaction within the group and are less likely to experience turnover. Group members are often promoted within the organization middle of paper...... individualized consideration, leaders support the needs of each subordinate. There are also pros and cons of transformational leadership. Some of the advantages are that it is a theory that is extensively researched. It is a leadership theory that the general public can understand; you don't need to be an I&O psychologist or HR manager to understand the principle of the theory. Some of the disadvantages associated with transformational theory are that it can be difficult to measure the parameters. The four factors discussed above overlap in some ways and it can be difficult to distinguish one from the other. Some view theory as a character trait, not a behavior. If an organization is well established and set in its ways, it means that there is not much change in the organization; then transformational theory may not work very well.