The Influence of Interpersonal Relationships on Organisational Career Growth in. the Workplace

Page 1 of 17 ANZAM 2014 Stream 11 - Organisational Behaviour Competitive Session The Influence of Interpersonal Relationships on Organisational Career Growth in the Workplace Adam Robertson Griffith Business School, Griffith University, Queensland, Australia Email: adam.robertson2@griffithuni.edu.au Herman H. M. Tse Griffith Business School, Griffith University, Queensland, Australia Email: h.tse@griffith.edu.au

ANZAM 2014 Page 2 of 17 Stream 11 - Organisational Behaviour Competitive Session The Influence of Interpersonal Relationships on Organisational Career Growth in the Workplace ABSTRACT This paper aims to propose a conceptual model that delineates the boundary condition of how leadermember exchange (LMX) - the strength of their dyadic relationship with their direct supervisor influences organisational career growth. Specifically, we explain how LMX can be related to three dimensions 1) career goal progress, 2) professional ability development and 3) organisational rewards of organisational career growth. We also discuss how leader-leader exchange (LLX) - the strength of the direct supervisors relationship with their boss can play a moderating role within the relationships. We conclude with a discussion of implications of our model for theory, research and practice. Keywords: Leader-member exchange, Leader-leader exchange, organisational career growth INTRODUCTION The dyadic leader-member exchange (LMX) relationships between employees and their supervisors have implications for many work-related attitudes and outcomes (Dansereau, Graen, & Haga, 1975). Organisational leaders are required to develop their subordinates in an effort to increase productivity and effectiveness. The LMX relationship is reciprocal and is built upon mutual trust, respect and obligation toward each other (Graen & Uhl-Bien, 1995). Without employees receiving additional resources, information and satisfaction from their supervisors, it is unlikely that employees will feel that they are growing and reciprocate the relationship. Employees perceive growth within an organisation through a self-narrated process, which interprets how they come to see themselves and make sense of their experiences (Sonenshein, Dutton, Grant, Spreitzer, & Sutcliffe, 2013). These

Page 3 of 17 ANZAM 2014 experiences help determine one s perceptions of the chances of development and advancement within an organisation (Jans, 1989). The aim of the current research is to understand whether a strong LMX can influence the way in which an employee perceives their individual career growth in the current organisation. Organisational career growth has been described as a multi-dimensional concept consisting of an employees perception at meeting career goals, developing their professional abilities and the rewards they receive from their current organisation (Weng & McElroy, 2012). This can be beneficial not just to an employee but also to the organisation in its connection to increased affective occupational commitment, reduce turnover intention and increased employee voice behaviour (Wang, Weng, McElroy, Ashkanasy, & Lievens, 2014; Weng & McElroy, 2012). However, the ability for the organisations to increase and foster this growth is not entirely known. LMX has been found to be related to promotion and salary growth (Wakabayashi, Graen, Graen, & Graen, 1988) and career satisfaction (Wayne, Liden, Kraimer, & Graf, 1999) over an employees entire career. However its ability to foster and grow an individual s career within one organisation has not been empirically studied. Without prior literature investigating if such LMX relationships within each organisation contribute to organisational career growth for an employee, there is relevance for an investigation. Research Question 1: Is there a relationship between Leader-Member Exchange (LMX) and Organisational Career Growth? LMX has been criticized for its inability to adequately examine contextual moderators of circumstances under which LMX has a stronger or weaker influence on employees (Tangirala, Green, & Ramanujam, 2007). Leader-Leader Exchange (LLX) (i.e., the dyadic relationship between supervisors and their bosses) has been described as a linking pin connecting the resources and support from upward exchange relationships (i.e., supervisor-boss) with lower level LMX relationships (i.e., employee-supervisor) (Cashman, Dansereau, Graen, & Haga, 1976). As empirical research has found LLX to be an effective moderator in increasing the effect of LMX relationships on organisational outcome variables (Tangirala et al., 2007; Venkataramani, Green, & Schleicher, 2010; Zhou, Wang, 2

ANZAM 2014 Page 4 of 17 Chen, & Shi, 2012) it can be suggested that LLX may have a moderating role on the ability of LMX to influence organisational career growth. Research Question 2: Does Leader-Leader Exchange (LLX) have a moderating impact on the relationship between LMX and Organisational Career Growth? LITERATURE REVIEW Organisational Career Growth Researchers in career development have often attributed career success to the objective and subjective variables across an individual s entire work life (Seibert, Kraimer, & Liden, 2001; Wayne et al., 1999). Objective career success includes observable career achievements that can be measured such as salary and rate of promotion (London & Stumpf, 1982). Subjective career success is an individual s perception of career satisfaction including career advancement, salary growth and professional development (Greenhaus, 1990), as well as supervisors subjective assessment of employees promotability (Wayne et al., 1999). In an effort to reduce the unpredictable independent effect of career success on organisational outcomes, researchers such as Weng (2010) have attempted to shift the focus to organisational career growth. This is defined as the degree to which employees experience career growth within their current organisation (Weng, McElroy, Morrow, & Liu, 2010). It captures the results of one s efforts by defining one s perceptions of the chances of development and advancement within an organisation (Jans, 1989). Organisational career growth is more regular and closely associated with individual attitude and behaviour (Weng & Xi, 2010). In empirical studies, organisational career growth has been found to be correlated with affective occupational commitment and a negative relationship to turnover intention (Weng & McElroy, 2012). Wang et al. (2014) have also found organisational career growth to be correlated with an increase in employee voice behaviour. Weng and McElroy (2012) believe that organisational career growth is multi-dimensional which they found consistent with both Porter and Steers (1973) met expectations hypothesis and the psychological contract (Rousseau, 2004). Weng and McElroy (2012) describe three dimensions, career goal progress, professional ability development, and organisational rewards. Career goal progress is described as the degree to which one s present job 3

Page 5 of 17 ANZAM 2014 is relevant to and provides opportunities for one to realize their career goals. Professional ability development is described as the extent to which one s present job enables them to acquire new skills and knowledge. Organisational rewards are defined as an employee s perception of the rate and probability of being promoted and speed, amount, and likelihood of increases in compensation. Leader-Member Exchange (LMX) & Leader-Leader Exchange (LLX) Leader-Member Exchange was originally developed as an alternative to the average leadership style (Dansereau, Cashman, & Graen, 1973). Originally presented as Vertical Dyad Linkage theory, it was defined as differentiated relationships between leader and subordinate where some individuals were separated by in-group and out-group members (Dansereau et al., 1975). Ingroup members were classified as receiving higher negotiating latitude, more supervisor attention, higher supervisor support, higher job satisfaction and less dyadic conflict than out-group members (Dansereau et al., 1975). The mechanisms of this differentiation was the exchange of some of the positional resources of the superior for higher degrees of involvement from in-group members (Cashman et al., 1976). The in-group members responded by providing a greater willingness to contribute to the unit (Liden & Graen, 1980) and reported receiving higher performance ratings and higher involvement in administration duties (Cashman et al., 1976). Graen, Novak, and Sommerkamp (1982) found support for the differentiated dyadic relationships and found that higher-level dyadic relationships were correlated with increased motivating potential for the job, productivity, job satisfaction and less job stress. Wakabayashi and Graen (1984) provided a longitudinal study showing the existence of differentiating dyad relationships in a Japanese field setting. The theory then evolved to define exchange as being high-quality instead of in-group and low-quality instead of out-group (Graen & Uhl-Bien, 1995). Zalesny and Graen (1987) defined high-quality exchanges as trusted assistants to the manager and grew beyond their job descriptions. Low-Quality exchanges were defined, as hired hands that did only what was required by their job descriptions. However as trusted assistants required additional investment of the leaders time and social resources only a few higherquality exchanges could be maintained, thus leading to differentiation (Graen & Uhl-Bien, 1995). 4

ANZAM 2014 Page 6 of 17 Once the validity of vertical dyad linkage theory was established, research moved into investigating these differentiated relationships and their organisational implications (Graen & Uhl- Bien, 1995). LMX was found to be correlated and influence multiple organisational outcomes such as subordinate loyalty, performance, turnover, job satisfaction, organisational commitment, innovation, empowerment and career progress (Graen & Uhl-Bien, 1995). It is mutual trust, respect and obligation toward each other, which empowers and motivates both to expand beyond the formalized work contract and formalized work roles into a partnership based on mutual reciprocal influence (Graen & Uhl-Bien, 1995). One of the recent areas of LMX development over the last decade has been the analysis of leaders upward exchange relations and their impact on subsequent LMX relationships (Tangirala et al., 2007; Venkataramani et al., 2010; Zhou et al., 2012). Within organisations, supervisors act as the linking pin that connects employees with the upper levels of management (Argyris, 1990). Tangirala et al. (2007) describe organisational structures as representative of several convergent chains of dyadic relationships connecting an organisations top management with frontline employees. At the connecting point of each link is a supervisor who mediates the amount of information, resources and influence to a subordinate (Graen, Dansereau, & Minami, 1972). When leaders are perceived by their members to have higher quality exchange relationships with their bosses, members may believe that they have a greater access to a wide variety of resources that are not available to other organisational members (Venkataramani et al., 2010). Social exchange theory suggests that an actor s power over another increases with the value of that actors exchange with alternate partners (Molm, Peterson, & Takahashi, 2001). It also predicts that a person may receive resources from one relationship and offer them to a different person in another relationship (Molm et al., 2001). Venkataramani et al. (2010) believe that supervisor can utilize their influence within higher quality exchange relationships to help members solve problems in their work by reducing bureaucratic access constraints, provide members greater autonomy, support innovation, and provide strategic advice and information from above to support members in performing their jobs. These upward relationships may also provide a sense of protection to members against higher authorities, provide them with more challenging and unique 5

Page 7 of 17 ANZAM 2014 work assignments, and provide greater praise to others about a members achievements (Venkataramani et al., 2010). This in combination with the greater access to resources provided through the supervisors upward exchange relationship could result in members reciprocating with high levels of performance and commitment, thus increasing the potential of forming high quality LMX relationships with such leaders (Venkataramani et al., 2010) MODEL and PROPOSITION DEVELOPMENT LMX and Career Goal Progress Weng and McElroy (2012) define career goal progress as the degree to which one s present job is relevant to and provides opportunities for one to realize their career goals. High-quality LMX relationships have been found to foster an environment where employees appeared more eager to succeed with more difficult learning goals by engaging in learning activities (Thierry, Bezuijen, Berg, & Dam, 2010). These high-quality relationships have also been found to be correlated with high goal commitment which was found to lead to higher performance (Klein & Kim, 1998). Employees received additional resources, support and attention, which helped to achieve their goals (Klein & Kim, 1998). Finally, high-quality LMX relationships have been found to be related to higher levels of career satisfaction (Erdogan, Kraimer, & Liden, 2004; Han, 2010; Sagas & Cunningham, 2004; Wayne et al., 1999). Career satisfaction captures individual s satisfaction with the rates of progress towards achieving career goals and is based on accumulated work experiences that span the course of their work life (Greenhaus, 1990; Judge, Cable, Boudreau, & Bretz, 1995; Seibert et al., 2001). As LMX has been empirically found to be related to higher goal commitment, setting more difficult goals and higher career satisfaction it is likely to be related to how an individual perceives their career goal progress. Therefore we hypothesize the following: Proposition 1a: LMX is positively related to career goal progress LMX and Professional Ability Development Weng and McElroy (2012) define professional ability development as the extent to which one s present job enables them to acquire new skills and knowledge. Some researchers found that 6

ANZAM 2014 Page 8 of 17 high-quality LMX relationships are positively related to an increase in member s self-efficacy (Mohr, Schyns, Paul, & Blank, 2005; Murphy & Ensher, 1999). This is defined as judgements of a person s capabilities to organize and execute courses of action required to attain designated types of performance (Murphy & Ensher, 1999). High-quality LMX relationships have also been found to increase employee empowerment which can provide additional negotiating latitude and self worth thus a richer work experience and the chance to improve their professional skills (Keller & Dansereau, 1995; Rosen & Gómez, 2001). Zalesny and Graen (1987) describe employees in high-quality LMX relations as trusted assistants, which Graen and Uhl-Bien (1995) stated should be found to have more challenging projects and the ability to move beyond their original job roles. Members should also be able to use the resources and benefits of high quality exchanges to take on additional responsibilities within the organization to develop (Graen & Uhl-Bien, 1995). As LMX has been empirically tested to be correlated with an increase in self-efficacy, higher empowerment opportunities and an increase in opportunities to move beyond ones job it is conceivable that it can be related to employees professional ability development. Thus, we hypothesize the following: Proposition 1b: LMX is positively related to professional ability development LMX and Organisational Rewards Weng and McElroy (2012) define organisational rewards as an employee s perception of the rate and probability of being promoted and perceptions of the speed, amount and likelihood of increases in compensation. Higher-quality LMX relationships have been found to be related to an increased speed and assessment of promotability as well as higher remuneration and salary progression than those with low-quality LMX exchanges (Wakabayashi & Graen, 1984; Wakabayashi et al., 1988; Wayne et al., 1999). Seibert et al. (2001) also found network benefits such as access to information, access to resources and career sponsorship to be positively related to variables of career success, namely current salary, promotions entire career and career satisfaction. Higher-quality LMX has been found to be positively related to career sponsorship, access to information and resources (Cashman et al., 1976; Graen & Uhl-Bien, 1995; Sparrowe & Liden, 2005) thus as per Seibert et al. (2001), leading to higher salaries, promotions and career satisfaction. Law, Wong, Wang, and Wang 7

Page 9 of 17 ANZAM 2014 (2000) also found a relationship between higher-quality LMX relationships and giving subordinates higher bonus allocations. As higher-quality LMX relationships are found to be related to an increase in salary progression, salary amount, number of promotions and assessment promotability over ones career it is conceivable that an individual dyadic relationship within one organisation can be related to an individual s perception of organisational rewards. Hence, we hypothesize the following: Proposition 1c: LMX is positively related to organisational rewards The Moderating Role of Leader-Leader Exchange In an effort to determine the organisational outcomes of such upward exchange relationships, researchers began to measure these relationships in relation to other outcome variables. As social network theory states that ones power over another increases with the value of that actors exchange with another (Molm et al., 2001), it is possible an increase in LLX quality can have the ability to increase LMX quality. As those supervisors with higher LLX with their bosses will have more resources and benefits to share with their members. Tangirala et al. (2007) found that higher quality LLX relationships moderated the relationship between LMX and organisational outcome variables. Results showed that those employees whose supervisor had a stronger LLX relationship with his/her boss reported higher organisational identification, perceived organisational support and less depersonalization towards customers. In contrast, when LLX quality was lower, LMX was only marginally related to organisational identification, had a weaker relationship to perceived organisational support and was not significantly related to depersonalization towards customers. Erdogan and Enders (2007) found that increased levels of supervisor perceived organisational support (POS) was correlated with an increase in LMX quality, which led to higher levels of employee job satisfaction and performance. In contrast, when supervisor POS was low, the relationship between LMX, job satisfaction and job performance was no longer significant. Supervisor POS was found to explain 71% and 88% of the variance in the model respectively. Similarly, Venkataramani et al. (2010) discovered that an increase in supervisors LLX increased member s perceived status of the leader, which led to an increase in LMX. In contrast, when LLX was low, members perceived status of their leaders was diminished which was found to reduce the strength of the corresponding LMX. 8

ANZAM 2014 Page 10 of 17 When LLX is low, the ability of a supervisor to offer the member greater access to a wide variety of resources is diminished, thus LMX becomes less attractive with that supervisor. More recently, Zhou et al. (2012) also found that higher quality LLX relationships increased the effectiveness of LMX on organisational outcomes variables such as individual empowerment. It is therefore conceivable that LLX will have a moderating effect on the ability of LMX to influence organisational career growth. Therefore we hypothesize the following: Proposition 2a: Leader-Leader Exchange moderates the relationship between Leader- Member Exchange and employees Career Goal Progress such that the relationship is stronger when Leader-Leader Exchange is higher than when it is lower. Proposition 2b: Leader-Leader Exchange moderates the relationship between Leader- Member Exchange and employees Professional Ability Development such that the relationship is stronger when Leader-Leader Exchange is higher than when it is lower. Proposition 2c: Leader-Leader Exchange moderates the relationship between Leader- Member Exchange and employees Organisational Rewards such that the relationship is stronger when Leader-Leader Exchange is higher than when it is lower. DISCUSSION Implications for Theory and Research The current research project has the opportunity to advance the literature of social exchange relationships and organisational career growth. This present study developed a model that illustrates how two important types of social exchange relationships (LMX the quality of relationship between supervisors and their employees) and (LLX the quality of relationship between supervisors and their bosses) play major roles in employee career development process. The proposed model helps to increase our understanding of how LMX can be related to different dimensions of organisational career growth, and when LLX becomes an effective boundary condition to determine the strength and direction of the relationships. The proposed relationships have yet to be discussed or proposed in the literature. 9

Page 11 of 17 ANZAM 2014 Implications for Practice Organisational benefits include learning a valuable method at which to increase an employee s perception of their career growth within the organisation. This can lead to a more committed workforce with less intention to leave which should increase productivity and performance while reducing costs associated with training replacement personnel (Weng & McElroy, 2012). It can also foster an environment where employees voice their concerns and suggestions to fix organisational problems on a more regular basis (Wang et al., 2014). As discussed in the model, LLX is theorized to be a strong moderator in the relationship between LMX and organisational career growth. It therefore provides organisations with encouragement to not only focus on the relationship quality of frontline employees and their supervisors but also their immediate supervisors relationship with their boss in an effort to create higher organisational benefits. Limitations and Future Research Direction The present study suffers from a major limitation that should be addressed in future research. We focused on theorizing LLX as the key moderating variable in the relationship between LMX and organisational career growth, and believe it is the only mechanisms that could influence the relationship. Future research can consider exploring other potential moderating variables such as supervisors social network, perceived supervisor status or growth need strength in the LMXorganisational career growth relationship. Furthermore, future research can consider comparing and contrasting the relative importance of other potential mediators such as job satisfaction, job knowledge, or member centrality in order to advance our understanding of the precise mechanisms that explain the LMX-organisational career growth relationship well. For example, it is argued that increased member centrality may reduce the need for a stronger LMX relationship thus it has the potential to influence the LMX-organisational career growth relationship (Venkataramani et al., 2010). In regards to future research directions, as the current model is cross-sectional, a relationship will provide relevance to a future longitudinal study to further investigate the variables and prove direct causation. 10

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Page 17 of 17 ANZAM 2014 Figure 1: The Proposed Model of the Relationship between LMX and Organisational Career Growth 16