Leadership-motivated excellence theory: an extension of LMX George B. Graen University of Illinois C-U (Retired), Champaign, Illinois, USA, and

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1 The current issue and full text archive of this journal is available at JMP 28,5 452 Received 13 November 2012 Accepted 14 November 2012 Leadership-motivated excellence theory: an extension of LMX George B. Graen University of Illinois C-U (Retired), Champaign, Illinois, USA, and William A. Schiemann Metrus Institute, Sommerville, New Jersey, USA Journal of Managerial Psychology Vol. 28 No. 5, 2013 pp q Emerald Group Publishing Limited DOI /JMP Abstract Purpose The purpose of this paper is to review and extend leader-member-exchange theory (LMX). It also describes the new Leadership-Motivated Excellence Theory (LMX-T), and its implications for managing members of new generations. Design/methodology/approach This is a conceptual paper and does not employ research methods. Findings Recent findings included in this review and extension of LMX theory suggest that members of the millennial generation (born ) are having difficulties in finding a common ground with their chosen career organization after college. The new LMX-T suggests that forming unique strategic alliances with team members may increase the inclusion of these generational members, and help them tackle common organizational problems. Practical implications The review of the new Leadership-Motivated Excellence Theory suggests that managers may want to redesign their managerial leadership climate to make it more millennial friendly. Originality/value This review provides a unique perspective on the employee development needed for new generations of employees. Keywords Millennials, LMX theory, Strategic alliances, Employees Paper type Conceptual paper This year s 40th anniversary challenge for the new Leadership-Motivated Excellence (LMX-T) research program is to apply what we have discovered regarding the managerial leadership development process to enhance employee engagement and team performance. The LMX-T team began our program of research at the University of Illinois, by testing the Ohio State theory of leadership dominant at that time, namely, the two-factor theory of managership style (Stogdill, 1963). This theory defined managerial leadership as the behavior of the person in charge. It also prescribed that the most effective management of talent in complex, hierarchical organizations was to lead direct-reports employing the proper amounts of both structuring of their job duties and responsibilities and providing consideration of their problems and growth needs related to their work. Consequently, direct-reports were assigned follower duties by virtue of their lower level of job responsibilities and the bureaucratic requirement for a downward flow of formal power. This was part of a modern theory of a bureaucratically structured, complex work organization (Graen and Graen, 2008). The authors wish to thank all those researchers and managers who created the answers over the last 40 years to the question of why Johnny and Jane cannot lead their employees and Joan A. Graen for acting as Mother Superior to the LMX research program.

2 The new post-modern LMX-T defines managerial leadership as the art of solving the wicked problems of forming unique strategic alliances (USA) with instrumental people to jointly tackle common problems (Graen, 2012c). It also suggests that developing USA with members of one s team may lead to excellence in performance. These USA are the proposed missing links twisting together the bottom-line interests of instrumental people. USA is a interpersonal career alliance between two or more people whose career aspirations are interdependently linked by their organizational relevant performance. Strategic alliances have been recognized as an option to gather additional resources toward achieving a mutual objective without purchasing them (McCarter et al., 2011). The difference is that with interpersonal alliances one may enlist resources that are priceless, e.g. mutual trust, respect, commitment, loyalty and family-like protection. USA is a wicked problem to be solved by both parties, but methods designed to solve it can be learned (Graen et al., 1982, 1986). In this paper, we argue that such learning by managers may be useful in changing our current managerial climate to make it more friendly to the new generations of professionals. In the 1970s, the original LMX team began searching for the essential elements of managerial leadership in complex organizations (Graen, 1976). This began with a pilot research endeavor to first understand and then build effective leadership practices in a new organization of over 400 employees serving over 20,000 clients. This organization had mostly new direct-report relationships. A new organizational leadership team was charged with the responsibility of forming and operating a huge, multi-structure housing complex using a management hierarchy of 60 managers. Our team was asked by the new CEO to collaborate in the birth and maturation of his organization. Our team was introduced at the first organizing retreat to the top 60 and came to know them very well over the nine-month life of the organization. We were to help ease organizing difficulties in exchange for research data gathered over the complete life-cycle. The plan was to interview 60 managers eight times (as managers and direct-reports) over nine months: at two, four, seven, and nine months. We first measured the emerging manager s style in terms of various modern measures of structuring and consideration as well as patterns of communications, delegation, support, rewards, respect, trust, and commitment. All of our data were focused at the leader-member dyadic level (both up and down), but we analyzed at both the business unit and dyadic levels. The average style of managing in terms of structuring and consideration showed no pattern of meaningful contributions to engagement or enrichment or performance over the entire life cycle. Clearly, managers differed in their average structuring and consideration style between different business units but these average styles were unrelated to any unit-level outcomes contrary to the predictions of the two-factor modern theory (Stogdill, 1963). Examining the data within business units revealed that managers had forged strategic alliances with only a subset of all direct reporting employees. When managers were interviewed about this, they informed us that not everyone was eager to go beyond business as usual for the good of the organization and its customers. Those that did were rewarded as more valuable human resources (HR) that should be tested for dependability and asked to go beyond business as usual once they passed. The results of this study alerted us to the reality of the concept of leadership in organizations. It was not about the romantic notions of Hollywood s heroic leaders nor was it about transforming people through a leader s words into believing followers. It Extension of LMX 453

3 JMP 28,5 454 was a more humble human feeling of vulnerability and aloneness in the face of the task of organizing and running a business unit in an organization that was staffed by many new faces. We found that the human reaction to this threatening situation was to seek USA (Graen, 2011). The decision as to who might be interested was based mainly on whose work responsibilities were interdependent and who else was seeking the personal insurance of an alliance. Only those who could promise relevant support and protection, and proved dependable became alliance members. Within each business unit, we found that interpersonal alliances were formed early and were strengthened over the life cycle of the organization. Members of alliances were found to do most of the important problem solving and dispute settlement in their business units. Both alliance members and nonmembers did about the same amount of business as usual. Alliance members also were more satisfied with their jobs and more engaged in their organization. In addition, they were rated as higher performers (Graen, 1976). In an early longitudinal investigation of managers and professionals of three organizations (Graen et al., 1977), we sought to answer the question: to what extent were the alliances, once established, transparent to all those in the business unit? The findings of this study were that the alliances were transparent to the members of the business units, but were not transparent concerning the business unit directly above. Managers ratings of alliance strength agreed with those of their employees and employees within units agreed with one another. In addition, those with fully developed alliances showed higher agreement than those without alliances (Graen and Cashman, 1975). In a related network investigation by Schiemann (1977), those managers and professionals with strong alliances communicated more with each other about the challenging new projects and new problems than those without alliances. In sum, interpersonal alliances allowed the members to combine their resources to engage in the more interesting and challenging work and report more satisfaction on their jobs. The next question was to what extent this stronger engagement would translate into lower turnover. Two independent studies found that this was the case (Graen et al., 1982; Ferris, 1985). At this point, we had the opportunity to begin a career-long investigation of alliance forging s impact on managers in real time over their careers in a multinational corporation (Graen and Wakabayashi, 1994). This career study included 85 college graduates from the best schools who were recruited in HR management alliances with our senior research partner permitted us to analyze confidential company data along with our specially developed measures. Thus, we used company selection test results from standard measures of intelligence and personality, and company evaluations of performance, promotability, and speed of promotions. In addition, we collected measures of alliance information and job experiences every six months for three years from the new hires and their managers. During the first three years, new hires averaged three different extremely demanding managers whose assignment was to teach the new hires the value of hard work and perseverance. The value of the strength of the alliance over three years was used as a measure of alliance competence. Fortunately, we were able to track the career progress for most of their careers. We found that strength of alliance was the best predictor of speed of promotion throughout their management careers. Management trainees who forged the strongest alliance with their tough managers over the first three years later experienced faster and more promotions. To answer the question about whether the alliance forging continued into higher management, we surveyed

4 and interviewed our sample in We found that the alliance forging continued and was related to engagement in more responsible duties with greater satisfaction: In sum, we found that our star performers were not more intelligent, did not have more beneficial personalities, and did not work harder than their slower peers, but their careers were characterized by their ability to forge unique strategic alliances (Graen et al., 2006). Another study focused on enabling networks of new alliances (Sparrowe and Liden, 2005). In this investigation, managers who forged an alliance with their boss were found to have alliances with their boss alliance partners. This suggests that the boss may enable new alliances that strengthen the overall alliance network. Not surprisingly, managers who had alliances with their boss and the boss alliance partners were seen as the most influential in the company. We concluded from this set of studies that unique strategic alliances were a reaction to felt inadequacy of defensive and growth opportunities in a position. These alliances with dependable fellow employees were seen as a means of gaining greater control and engagement. The ability to get assistance from alliance members when needed allowed a measure of personal confidence. The question arises: Was leadership as a human process anything more than forging unique strategic alliances and employing them as teams or networks to go beyond business as usual? Even if something more can be documented in the future, the process of forging strategic alliances must represent a critical dynamic. After years of searching for an intersubjectively testable definition of leadership in organizations, the conclusions we arrived at are as follows. We can document that USA are forged in organizations as a reaction to felt lack of adequate influence (Naidoo et al., 2010). We also can document that such alliances are used to go beyond business as usual. We find that those who begin the alliance building process early and well have an advantage in their career progress in terms of speed of promotions over their career (Graen et al., 2006). In fact, the number of desirable outcomes of alliances for both those involved and their organizations continues to grow over the life-cycle of the dyadic alliance (Graen, 2011). We find that both parties to the alliance must work hard to make it successful (Uhl-Bien and Maslyn, 2003). Managers who forge alliances with their employees also have been found to include these employees in their alliance pool (Sparrowe and Liden, 2005). Hence, the ability to go beyond business as usual expands outside of the business unit. Many of the remaining defining scientific moments of the Leader Member Exchange (LMX) theory development are presented in Table I. The reader may use Table I as a chronological event calendar beginning with the first formal statement of the theory in Dunnette s Handbook of Industrial and Organizational Psychology (Graen, 1976). Next, a linking-pin investigation found that the alliances of bosses LMX with their directly reporting managers and the managers alliances with their direct reports both influenced management and unit performance (three levels). In this study, the strategic alliances between one s boss and one s immediate supervisor was a significant contributor to one s job performance and resources. Following this was the first multilevel study of the leader s average style (between teams) and the leader s alliances within teams with an independent criterion turnover. The same findings that USA within teams, but not those at the between teams level, predicted turnover were confirmed by a completely independent replication by Ferris (1985). Results from all Extension of LMX 455

5 JMP 28,5 456 Table I. Brief history of LMX-T First proposed Added linking-pin First network First training experienced First multilevel Replication of multilevel Training experienced Management careers First revision First meta-analysis Social capital Meta-analysis of outcomes Meta-analysis of LMX and OCB Alliance building Second revision Graen, G.B. (1976), Role making processes within complex organizations, in Dunnette, M.D. (Ed.), Handbook of Industrial and Organizational Psychology, Rand-McNally, Chicago, IL, pp Graen, G.B., Cashman, J.F., Ginsburg, S. and Schiemann, W. (1977), Effects of linking-pin on the quality of working life of lower participants, Administrative Science Quarterly, Vol. 22, pp Schiemann, W.A. (1977), Structural and interpersonal effects on patterns of managerial communications: a longitudinal investigation, S. Rains Wallace Award doctoral dissertation, University of Illinois, Urbana, IL Graen, G., Novak, M.A. and Sommerkamp, P. (1982), The effects of leadermember exchange and job design on productivity and satisfaction: testing a dual attachment model, Organizational Behavior and Human Performance, Vol. 30, pp Graen, G.B., Liden, R.C. and Hoel, M. (1982), Role of leadership in the employee withdrawal process, Journal of Applied Psychology, Vol. 67, pp Ferris, G.R. (1985), Role of leadership in the employee withdrawal process: a constructive replication, Journal of Applied Psychology, Vol. 70, pp Graen, G.B., Scandura, T. and Graen, M.R. (1986), A field experimental test of the moderating effects of growth need strength on productivity, Journal of Applied Psychology, Vol. 71, pp Graen, G.B. and Wakabayashi, M. (1994), Cross-cultural leadership making: bridging American and Japanese diversity for team advantage, in Triandis, H.C., Dunnette, M.D. and Hough, L.M. (Eds), Handbook of Industrial and Organizational Psychology, Rand-McNally, Chicago, IL, pp Graen, G.B. and Uhl-Bien, M. (1995), Development of leader-member exchange (LMX) theory of leadership over 25 years: applying a multi-level multi-domain perspective, Leadership Quarterly, Vol. 6, pp Gerstner, C.R. and Day, D.V. (1997), Meta analytic review of leader-member exchange theory: correlates and construct ideas, Journal of Applied Psychology, Vol. 82, pp Uhl-Bien, M., Graen, G.B. and Scandura, T.A. (2000), Implications of leadermember exchange (LMX) for strategic human resource management systems: relationships as social capital for competitive advantage, in Ferris, G. (Ed.), Research in Personnel and Human Resources Management, Vol. 18, JAI Press, Greenwich, CT, pp Harter, J.K., Schmidt, F.L. and Hayes, T.L. (2002), Business-unit-level relationship between employee satisfaction employee engagement, and business outcome: a meta-analysis, Journal of Applied Psychology, Vol. 87 No. 2, pp Hackett, R.D., Farh, J.-L., Song, L.J. and Lapierre, L.M. (2003), LMX and organizational citizenship behavior: examining the links within and across Western and Chinese samples, in Graen, G. (Ed.), LMX Leadership: The Series, Vol. 1, Dealing with Diversity, Information Age Publishing, Greenwich, CT, pp Uhl-Bien, M. and Maslyn, J. (2003), Reciprocity in manager-subordinate relationships: components, configurations, and outcomes, Journal of Management, Vo. 29 No. 4, pp Graen, G.B. (2003), Interpersonal workplace theory at the crossroads: LMX and transformational theory as special cases of role making in work organizations, in Graen, G. (Ed.), LMX leadership: The Series, Vol. 1, Dealing with Diversity, Information Age Publishing, Greenwich, CT, pp (continued)

6 Alliance pattern Sparrowe, R.T. and Liden, R.C. (2005), Two routes to influence: integrating leader-member exchange and network perspectives, Administrative Science Quarterly, Vol. 50, pp First team Graen, G.B., Hui, C. and Taylor, E. (2006), Experience-based learning about LMX leadership and fairness in project teams: a dyadic directional approach, Academy of Management Learning and Education, Vol. 5 No. 4, pp Career outcomes Graen, G.B., Dharwadkar, R., Grewal, R. and Wakabayashi, M. (2006), Japanese career progress over the long haul: an empirical examination, Journal of International Business Studies, Vol. 37, pp Item response analysis Scherbaum, C.A., Naidoo, L.J. and Ferreter, J.M. (2007), Examining component measures of team leader-member exchange: using item response theory, in Graen, G.B., Graen, J.A. (Eds), LMX Leadership: The Series, Vol. 5, New Multinational Network Sharing, Information Age Publishing, Charlotte, NC, pp Authentics only Lam, W., Huang, X. and Snape, E. (2006) Why doesn t my feedback seeking improve my relationship with my boss?, paper presented at the Meeting of the Academy of Management, Atlanta, August Longitudinal importance analysis Network change Resistance to change Performance focus Problem solving teams Naidoo, L.J., Scherbaum, C.A. and Goldstein, H.W. (2008), Examining the relative importance of leader-member exchange on group performance over time, knowledge driven corporation: a discontinuous model, in Graen, G.B. and Graen, J.A. (Eds), LMX Leadership: The Series, Vol. 6, Knowledge Driven Corporation: Complex Creative Destruction, Information Age Publishing, Charlotte, NC, pp Mehra, A., Marineau, J., Lopes, A.B. and Dass, T.K. (2009), The co-evolution of friendship and leadership networks in small groups, in Graen, G.B. and Graen, J.A. (Eds), LMX Leadership: The Series, Vol. 7, Predator s Game Changing Designs: Research-based Tools, Information Age Publishing, Charlotte, NC, pp Furst, S.A. (2009), Middle managers as game changers: strategies for reducing resistance and the role of LMX, in Graen, G.B. and Graen, J.A. (Eds.), LMX Leadership: The Series, Vol. 7, Predator s Game-changing Designs: Research-based Tools, Information Age Publishing, Charlotte, NC, pp Graen, G.B., Rowold, J. and Heinitz, K. (2010), Issues in operationalizing and comparing leadership contracts, Leadership Quarterly, Vol. 21 No. 3, pp Graen, G.B. (2010), Enhanced employee engagement through high engagement teams: a top management challenge, in Albrecht, S. (Ed.), Handbook of Employee Engagement, Edwin Elgar, Cheltenham Team performance Naidoo, L.J., Scherbaum, C.A., Goldstein, H.W. and Graen, G.B. (2010), A longitudinal examination of the effects of LMX, ability, and differentiation on team performance, Journal of Business and Psychology Latest meta-analysis Dulebohn, J.H., Bommer, W.H., Liden, R.C., Brouer, R.L. and Ferris, G.R. (n.d.), A meta-analysis of antecedents and consequences of leader-member exchange: integrating the past with an eye toward the future, Journal of Management, in press Leader motivated excellence theory Extension of LMX 457 Graen, G.B. (2012), The missing link in network dynamics, in Rumsey, M. (Ed.), The Many Sides of Leadership: A Handbook, Oxford University Press, London Table I.

7 JMP 28,5 458 business units in both studies showed that only alliances within units predicted turnover of professionals. As shown in Table I, ten years later the much anticipated first revision of the LMX theory was published in 1995 by Graen and Uhl-bien, and the second revision followed by Graen (2003). The first LMX team leadership theory was published in Graen et al. (2006). According to the new LMX-T theory, the responsibility of managing people is a privilege and not a right (Graen, 2012b). Employees deserve to be managed by a professional who is certified to be a competent and accepted leader of people. Moreover, we understand that the position of manager consists of two parts: (1) the leadership of direct reports and other colleagues; and (2) the technical administration of the business unit in terms of its mission. The sad news is that today s managers often feel more competent with the technical administration part than the leadership part. Consequently, the engagement of members in the success of the business unit is too often sacrificed for the ease of command. This style can suffice when there is sufficient talent that does not need to operate at peak performance. Sadly, more significant performance opportunities are sacrificed, along with other outcomes such as higher turnover or less satisfied internal or external customers. Too often, managers of people have been allowed to drift into such command and control styles. The new threat is that this neglect of leadership by managers will infect the new millennial workers full engagement in their work. Recent data suggest that the leadership of people is not adequate work engaging millennial employees (Espinoza et al., 2010). We cannot afford to lose the creativity and other contributions of this generation as a result of less than friendly managerial climates. Leaders at all levels need to be aware of the consequences of not aligning the managerial climate and engaging the new worker higher turnover, lost creativity and innovation, lost productivity, poor customer-facing behaviors and lower financial performance (Schiemann, 2009). The biggest challenge will be in turning around managers who have been in traditional roles for a long time. A second challenge will be in preparing and training newly minted managers to develop and apply the LMX-T behaviors necessary to create the alignment and engagement of today s worker. Although it would be nice to simply have the CEO dictate this, experience teaches us that top down edicts rarely work. The new LMX-T theory prescribes three tactics that pull rather than push managers into the new leadership millennium: enhancing skills, changing rewards, and recognizing those who model effective behaviors (Schiemann, 2012). Enhancing skills First and foremost, managers need to be trained in the new LMX-T principles, skills and behaviors, framed within the context of the new workplace requirements. This will include understanding the basic exchange principles of building unique alliances. Research shows that when both parties commit to this USA and both test it on the job under pressure, these commitments become the building blocks for effective business unit teams and networks (Graen et al., 2006; Naidoo et al., 2010; Scherbaum et al., 2007). Every direct report should be invited to the team. Those who become connected to the team voluntarily do what is needed to make the business unit successful. In contrast, those who self-select out of the team are not expected to become fully engaged in their jobs.

8 Changing rewards According to the LMX-T theory, managers should change from a more command and control style (commanding the what ) to an effective followership style (by guiding the what with a more effective how ) without incentives to do so. We find it is more effective for top leadership and HR to create incentives to speed the process (Schiemann, 2012). For example, by creating leadership scorecards that are linked to promotion, career development and compensation, both established and new managers will be encouraged to adjust their behaviors. Such scorecards have been used by Schiemann (2012) as a way to uncover and change three key performance drivers: alignment, capabilities and engagement (ACE) within each leader s domain of influence. Extension of LMX 459 Recognizing role models Another way to create organizational visibility according to the LMX-T theory is to recognize leaders who have been able to create high levels of such alliances both within their unit and across functional relationships (Graen, 2012a). One of the biggest organizational challenges today is functional siloes. Leaders who are recognized for having built strong alliances should be properly recognized not only for their own pride but also as examples for other leaders to emulate. Implications for the new generations and new global marketplace The new global marketplace calls for rethinking how we manage human capital (Schiemann, 2012). Traditional management practices are increasingly ineffective under the demands of the new marketplace and with changing expectations among workers today. For example, our millennial generation (born ) already shows some assimilation issues to unfamiliar management practices (Cennamo and Gardner, 2008; Chen and Choi, 2008; Mackey et al., 2008; Ng et al., 2010; Smola and Sutton, 2002). Anecdoctal evidence revealed that they have enjoyed an entitled socialization process, and have seldom been subordinated by a command and control style from parents, teachers or other authority figures until perhaps their first organizational role. They value job engagement and enrichment and expect it to be central to their jobs. When they discover that managers often discount the value of such engagement and enrichment and act to control and command their direct supports (Graen, 2008), they may react by turning their enthusiasm to off the job activities. These characteristics are not limited to millennials as baby boomers in key roles often have a choice as to whether to retire or continue part or full time based on how engaged they are with the position and the organization. This is not to judge the new value system, but to develop leadership practices to address it. A recent report by PDI Ninth House (2012) analyzed 14,045 individual s evaluation on how present managerial leadership behaviors change as one advances from individual contributor to first-level supervisor to mid-level manager to business unit manager to senior executive. They found that existing management s practices were progressively to seek greater scope of duties at each step up the ladder and to seek much less consideration of ones subordinates. Clearly, we have degraded managerial leadership to the tipping point. Our argument is that we need to understand how to make our organizations more engaging and enriching not only for millennials but for other employees in this new

9 JMP 28,5 460 and constantly changing work environment. Therefore, the new LMX-T theory offers several suggestions for increasing team member engagement and team performance. For example, it emphasizes that forming USA between leaders-team members and others who are independent in organizations will enhance communication and problem solving in organizations. The development of these alliances should also increase team engagement and performance. Although the LMX-T theory is an extension of LMX theory, we believe that it is also unique because it emphasizes that leaders should:. enhance team member opportunities to achieve team excellence;. change rewards to encourage managers and their interdependent coworkers to form alliances and engage in new behaviors; and. recognize successful role models to motivate others to create these alliances. The model also shows how leadership influences team effectiveness by motivating members to develop team plans and protocols, and engaging them in the performance process. The processes associated with the LMX-T theory should be especially appealing to members of the new millienial generation, increase their engagement and retention in organizations. As noted throughout this paper, current management practices need to be changed by helping command and control managers develop new leadership skills rather than being functional experts and bureaucrats. Instead, the new marketplace calls for people experts. We proceeded by first presenting what we have learned about managerial leadership in the last 40 years (Graen, 2012c). Next, we discuss how to make it more engaging for new generations. Forging strategic alliances can be trained This brings us to the question of can the alliance building process be learned? Our research demonstrated solid improvements by accountants in their hard, computer-recorded productivity from before to after the trained supervisor s alliance negotiating interview (Graen et al., 1982). This result was replicated (Graen et al., 1986). At the team level, the percentage of productivity improvement for alliance-trained leaders was a 17 percent gain and the transformational trained control leaders showed no significant gain. When the organization supported the training of managers in technology and the enacting of the process over time in operating units, results showed strong improvement in overall team progress and hard measures of performance. Not all workers accepted the offer by their manager in the experimental group. However, those showing strong growth needs (Hackman and Oldham, 1976) reacted positively with productivity gains of about 50 percent without any quality losses in both the first and the replication study. Those with weak growth needs were not tempted by the manager s sincere offer. Nonetheless, teams integrated both strong and weak bonds in ways that allowed those who merely wanted to do their job (business as usual) to do so while those with developing alliances were allowed to grow out of their formal jobs for the benefit of the entire team and organization. Finally, fairness in alliances was based on inducement equated with contributions (March and Simon, 1958). Apologies to Northouse (2001), but rewarding everyone the same regardless of relative contributions may not perceived as fair and is not always motivating.

10 Overall, meta analysis studies find that LMX (our measure of the strength of the interpersonal alliance) is related to employee job satisfaction, organizational citizenship, engagement, and performance (Gerstner and Day, 1997; Hackett et al., 2003). In addition, Harter et al. (2002) demonstrated how employees view their work engagement with their supervisor is related to their overall level of satisfaction and business unit performance. This last investigation included 198,514 employees in 7,939 business units from all business sectors, and found that engagement at the business unit level correlated 0.37 with a composite of performance that included financial performance, company loyalty, and turnover. Alliances also foster team performance. Investigations of engineers in design project teams by Graen et al. (2006) found that strategic alliances were related to augmented team functioning and overall team performance. Each of three studies involved 40 or more project teams. In all three studies, team functioning and team project excellence were positive functions of the proportion of strategic alliances: The larger the proportion the better. The major components of the LMX-T theory are shown in Figure 1. As shown, the protocol starts with recruiting the people with team alliances. Next, selected alliance members collectively author a plan to achieve an objective beyond business as usual, which is beyond the upper limits of the group s employment contracts. This leads to recruiting the people with the right alliances. Using the plan and the right people as input, the right protocol is used to gather the right toys and the training as a team to execute the plan. Finally, these components require the right opportunity to adapt and change the game. The process requires intense communication, cooperation, and commitment that can come from the interpersonal alliance dynamic. Attempts to undertake the entire leadership process without first forging the appropriate network of interpersonal alliances is unlikely to succeed. The difficulties of the alliance forming dynamic tend to overwhelm even the best efforts. Without the big three, the four functions of leadership become empty gestures. Extension of LMX 461 Figure 1. LMX alliance leadership theory

11 JMP 28,5 462 Hypotheses Although there has been some (albeit limited) research on the LMX-T model, we believe that our new model of LMX-T offers several directions for future research. The proposed relations in our model are shown in Figure 1. As can be seen in Figure 1, we believe that the formation of team alliances will be positively related to the development of team plans and protocols (i.e. strategies). In addition, we argue that when the right opportunity developments, team members will be more engaged when the team has formed unique alliances, and team plans and protocols. As a result, when team members are engaged, we believe that team performance will be much more effective than when team members are not engaged in the process. Thus, our new model of LMX-T shows how leadership influences team member engagement and team effectiveness. In order to foster additional research on the new LMX-T theory we offer several hypotheses below that can be used to guide future research: H1. The new Leadership-Motivating Excellence practices will be more effective with members of the millennial generation than traditional command and control management practices. H2. The new Leadership-Motivating Excellence practices will lead to higher levels of individual and team performance excellence than traditional command and control management practices. H3. Leaders who are trained to forge USA with team members will be more effective than those who are not trained to forge these alliances. H4. When leaders forge USA with members team performance will be more effective than when leaders do not forge these alliances with team members. H5. There will be positive relations between the formation of unique team alliances and the development of a (a) team plan and (b) team protocol. H6. There will be a positive relation between the development of a team protocol and team member engagement. H7. There will be a positive relation between team member engagement and team performance excellence. Discussion According to the new LMX-T, building USA are crucial to team and individual success. Particularly important in situations of unequal authority, the agreement commits both sides to proactively doing more than their share when the need arises. The soul of the alliance is contained in an accepted and validated offer. One of the parties makes an offer to the other in some form regarding helping them be successful in their role or even in their career. After this proposal has been authentically accepted, elaborated and tested, the alliance becomes a two-person team building mechanism. Such unique interpersonal alliances may be assembled into a larger structure by a process of mutual alliance augmentation. A three-person alliance structures has been found to be especially strong (Krackhardt and Hanson, 1993). As the network expands from two to three to more, the alliances add protocols. For example, when a three-person alliance

12 is reached, the question of team decision making arises. Agreement on other protocols for cooperative action needs to be found by some acceptable procedure. Teams may differ on their preferred action protocol. Such teams improve the longer they remain together and mutually learn and reinforce each other (Graen and Graen, 2012). We believe that the new model offers several implications for practice, future research and society as a whole. Each of these implications are considered below. Extension of LMX 463 Implications for practice One of the most important elements of the new LMX-T theory is the formation of USA between members, team members, and all those who are interdependent in organizations. As a result, the issues of how to form these alliances is critical to the implementation of this theory. The list of the dos and the don ts by McKenna and Davis (2009) is relevant to the forging of alliances (Graen, 2012c). Applying their same recommendations to the LMX-T process requires that managers be properly prepared (Graen, 2007). The potential targets for alliance should include all those whose work is interdependent with that of the manager (Naidoo et al., 2010). We will briefly comment from an LMX-T perspective on each of the main coaching recommendations of McKenna and Davis (2009). For example, leaders, team members, and others should consider the following questions: Q. Is your target of a strategic alliance ready for a partnership? A. If not, discuss the benefits and costs with target. Q. What else is the target doing to cooperate in alliance development? A. If nothing, suggest something. Q. Do you believe it s about your intervention? A. No, it is about your negotiation. Q. Is the target taking full responsibility for his/her part of alliance? A. If not, discuss with the target what you expect and what you are willing to reciprocate. Q. Do you have a growing alliance? A. If not, sit down face-to-face with the target and discuss goal alignment, and the rewards and consequences of a failure to build a strong interpersonal alliance. These discussions are important whether they be supervisor-subordinate, leader-follower, or peer-to-peer relationships. With new employees or new peers:. These individuals should make building the LMX-T alliance a high priority right from the start.. They should also organize their thinking and interaction with the alliance target around establishing the three elements of the alliance: goals, tasks, and bonds.

13 JMP 28, They should set the target s expectation so that they will have regular conversations about the alliance itself and how it s working. Then follow up and ask them for their evaluation of the elements of the alliance. With existing relationships, they should:. Take stock of the quality and strength of your LMX-T alliances; ask yourself how the state of the alliance is affecting progress in each partner s engagement and what you can do to improve each relationship.. Assess your own strengths and weaknesses in building target alliances; where are your opportunities for improvement?. Recognize that they are half the equation in an alliance. They cannot be effective when distracted, fatigued, or unprepared. The LMX Leadership: The Series (Graen, 2003, 2005; Graen and Graen, ; Hackman, 1990; Orton, 2000; Schiemann, 2009, 2012) offers additional implications for forming effective strategic alliances. Table II shows the latest version of LMX-team 3608 survey measure and its psychometric characteristics. These items can be used to provide feedback on these alliances. Once analyzed appropriately, an organization can see graphically its Six item (short form) CITC M SD Max IIF How satisfied is your (colleague, supervisor, or subordinate) with your work? My (colleague, supervisor, subordinate) would help me with my job problem? My (colleague, supervisor, subordinate) has confidence in my ideas? My (colleague, supervisor, subordinate) has trust that I would carry my workload? My (colleague, supervisor, subordinate) has respect for my capabilities? I have an excellent working relationship with my (colleague, supervisor, and subordinate)? Table II. The LMX team measure on five-point agreement scales Notes: CITC corrected item total correlation, Max IIF maximum value of information; n ¼ 486; results of modified parallel analysis ¼ unidimensional scale; internal consistency of responses ¼ a ¼ 0.95; slight negative skewness ¼ do not interpret both mean and variance of LMX-SLX (results will be uninterruptable for variance); this skewness produces spuriously high correlations between LMX mean and variance within groups, and correlations of LMX variance within groups as a predictor are spurious; linear agreement correlation between supervisor and subordinate reports on same scales was 0.68 ( p, 0.001) indicating good agreement across the range; agreement between peers also correlated 0.68 ( p, 0.001); moreover, agreement for high LMX dyad is significantly better; LMX differentiation as measured by LMX variance within groups is an artifact of this skewness; finally, permission is granted by Dr Graen for all professional use of this 3608, LMX team measure (a summary of findings is expected in return)

14 network leadership effectiveness. These graphs will show executives where leadership training and mentoring is needed to reduce wasted talent. The progress of alliance team building can be tracked statistically and clinically employing the above LMX-team and other measures. The psychometric characteristics of the LMX-team measure were documented for reliability using item response theory (Scherbaum et al., 2007) and validity using longitudinal importance analysis (Naidoo et al., 2008). At this point, it should be emphasized that all leadership teams action is voluntary and cannot be ordered. At any time, team members may choose to not go along or even drop out. Therefore, true team leadership must be positive. Extension of LMX 465 Implications for society as a whole The fundamental process uncovered by the LMX-T research program over the last 40 years is the theoretical model that we name LMX-T. It argues that forming USA between leaders and team members or those who are interdependent in organizations will contribute to leadership performance, team engagement and team excellence (Graen, 2012c). Thus, we believe that this theory has important implications for individuals, organizations, and society as a whole. For example, in today s organizations upwardly mobile employees want to be able predict and gain some control over their turbulent employment situation. Jobs have lost all reasonable definition as a complete list of duties and responsibilities for incumbents (Graen, 2012b). As a result, employees often experience a great deal of role ambiguity and role conflict. Now, a new generation of employees with new reasons to become future leaders is descending on our workforce and the LMX-T theory needs to be employed to facilitate the changes in managerial practices to engage them. The Greatest Generation (born ) and early Baby Boomers (born ) worked in the bureaucratic period and had few work options if they did not adhere to its principles. Later Baby Boomers and Gen-Xers (born ) toiled under the command and control model, often frustrated with its inability to create high trust networks, and lack of flexibility, and poor transparency. Theirs was a confused generation trapped between legacy business models and the emerging fast-paced, global-technology-leveraged marketplace. Gen-Xers and Millennials have the benefits of skills that are needed in many professions: technological savvy, an ability to work in a truly global environment. This allows them almost compels them to different work expectations and desires, if they are going to be all they can be. The challenge for organizations is whether they can unleash this needed talent by using managerial models that optimize this talent. We have argued that we need to apply what we have learned over the last 40 years of LMX research to mainstream managerial practice. We have the knowledge and technology to mentor the millennials and enable them to ensure our future prosperity. It would be unfortunate indeed if this promising knowledge was not put into practice. Global competitors that can mobilize more leadership driven styles will quickly outpace command and control organizations. Thus, we recommend that organizations move quickly to create new leadership environments in which people are learning, growing, innovating and finding themselves engaged in their organization s mission, vision and values.

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