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 individual subordinate or group of subordinates. The exchange between supervisors and subordinates will be inconsistent between each individual member of the group. A supervisor may be very kind and supportive to one employee/group and be very critical and insensitive to another employee/group. Because of this type of interaction, LMX theory suggests that leaders classify subordinates into two groups, in-group members and out-group members (Gibson, Ivancevich, Donnelly, & Konopaske, 2012, p. 334). Leaders often separate in-group members from out-group members based on similarities between the in-group member and the leader. Other characteristics that can influence are a member's age, gender or even personality. A member may be granted group status if the leader believes the member is competent and is going above and beyond to perform the job functions. As mentioned, the two groups that members can fall into are the in-group and the out-group. Group members are those who share similarities with the leader. These similarities can be in personality, work ethic, common interests, or even alma mater. Team members often go above and beyond their job description, and the leader does more for these members. In-group members will have their opinions and working ideas considered with greater consideration than out-group members. Group members typically have higher job satisfaction within the group and are less likely to experience turnover. Team members are often promoted within the organization to… middle of paper… leaders in individualized consideration support the needs of each individual subordinate. There are also some pros and cons of transformational leadership. Some of the advantages are that it is a widely studied theory. It is a theory of leadership that the general public can understand; you don't need to be an I&O psychologist or an HR director to understand the principle of the theory. Some of the disadvantages associated with transformational theory are that it can be difficult to measure parameters. The four factors discussed above overlap in some respects and it can be difficult to distinguish them from each other. Some think of theory as a characteristic and not a behavior. If an organization is well established and set in its ways, this means that there will not be much change in the organization; then transformational theory may not work very well.