George B. Graen, Ph.D.
LMX LEADERSHIP: THE SERIES Millennial Spring: Designing the Future of Organizations
The world is changing fast, and the millennials – the generation of people who became adults around 2000, or in the decade or so after – have been right in the middle of it. From Independence Square in Kyiv to the streets of Caracas, from Taksim Square in Istanbul to Zuccoti Park in New York, and from Silicon Valley to Wall Street, it’s the 30-and-under crowd courageously leading the quest for different ways. Less invested in past approaches, tech-savvy to a fault, and painfully aware of the challenges left to them by earlier generations, they’re not willing to “settle” – to make the same compromises (and mistakes) they think their parents made. And although they sometimes get rapped for being self-centered, all the evidence I see – and I’ve taught thousands of them on two continents, and even have one in my own family -- suggests that the millennials represent real hope for the future. Consider this a call to all millennials – here, in the pages of this book, are some of the means. Get out there and create the under-30s revolution. Solve the problems your parents couldn’t. Do it together, with a conscientious eye to what works for all involved. Get out there and save the world.
Robert D. Austin, Professor
Management of Creativity and Innovation Copenhagen Business School
Co-author of The Soul of Design and Artful Making
~~This book is designed to bring you along on a flight into alternate futures. Please keep your seat harness firmly locked and your disappearing apps stored during take offs, landings and weightless periods. Our mission is to open your minds and hearts to the wonderful tools for improving our quality of life from educating perspective parents and their children in child rearing through college, career, retirement and the completion of life with dignity. We can make available to everyone better ways to do most everything. We know that most of our tools and ways to use them were the product of past trial and error. They were not designed (typically) by having empathy for the problem in depth and/or considering multiple possible alternatives. Man, by nature, is pragmatic and seldom initially designs the right tools for the job. This is changing. In an age when we have the tools to mine the secrets of the universe and see back to the beginning of time (Hubble Telescope), we are learning to leverage tools to explore what is an even more mysterious cosmos, our human capacities. Exploring these capacities and figuring out how to employ them in service of individual and organizational goals is the purview of leadership and, we would argue, the tool leaders can depend on to do this work is design. If you are willing to explore the notion that modern corporations are the most powerful institutions governing modern life, then what affects these institutions affects the whole. Designing organizational systems for the future, therefore, becomes vitally important work both for those working inside those systems and for the stakeholders.
~~In this book, we have asked a virtual team of organizational-designers, -engineers, - information technologist, - managers and – psychologists to look into the future and predict the impact design will have on organizational systems over the coming decade. A decade back, Richard Boland and Fred Collopy (2004) glimpsed the future employing something that they called the “design attitude.” They appropriately proceeded to acknowledge the pioneering work of Herbert Simon, (1976) Nobel Laureate in economics and thought leader in matters of the talents and limitations of both humans and computing devices. Simon’s work comparing human and artificial intelligence of computers enabled him to discover that the design of searching for the needle in the haystack made a difference employing either human or computer thinking. He had the breakthrough insight that the needle was the designerly identification of the root problems. As Boland and Collopy point out “a decision attitude carries with it a default representation of the problem being faced, wherever a design attitude begins by questioning the way the problem is represented” (2004, page 9). This insight proved meaningful for innovation.
~~This book, appearing a decade later, adds to the themes explored by our forefathers in 2004 with the benefit of hindsight and new tools. For example, when environmental change renders a faithful system obsolete, a decision must be made by management either to band-aid the old or innovate a new system. But, how can a new system be designed when a number of different conditions have changed? Which are the root causes of the present system failures? Fortunately, you can learn a design discipline that helps to avoid the default of needing to proceed by trial and error and repeatedly solving the wrong problem. This default may eventually succeed by a process of elimination, but at the expense of time, resources and overlooking the diamonds.
~~Systematic improvement of systems by creating new ones when old ones become obsolete using the design attitude is becoming accepted by business. We have developed new protocols for the discovery phase of research relations (Meehl, 1977). We have been searching for such systematic protocols for the discovery phase since we realized that careful observation of the secrets of the man-made world began to yield ideas that were consistently validated. This book suggests the breath and depth of the applications of the design attitude. An example of a minimalist description of this attitude might be systematically researching the question: What if we built a structure that would permit instant access to the world’s knowledge by households? Those employing the design attitudes begin by investigating all aspects of this question by describing the actors, their behavior and their context – the ABCs of specification. As we now know this process of development produced Wikipedia. Natural science’s strength is demonstrated in the search for man’s understanding of our world, where the design attitude strength is aimed at improving the operation of man-made adaptations to our world. Design questions become relevant when established systems become dysfunctional or obsolete due to changes in conditions. It is the search protocol for innovation in security, social service, health, education, psychology, economic, and world peace to name a few. Recent candidates for the design attitude would include health care, immigration, government collaboration, education, the design of work systems friendly to new generations of employees and the very careers of those who design. Too often our top leaders in the above arenas are certain they know what kind of innovative system they want only to find out latter that their new system does not work and it’s back to the drawing board. Proper design thinking as described above is designed to make the new system successful the first time, because it is based on proper investigation of its proposed context. For example when an artery bridge in Minneapolis on August 1, 2007 fell into the Mississippi carrying traffic, we witnessed a failure in design attitude. One size seldom fits all conditions.
~~Recall that the themes explored by Boland and Collopy’s set of thought pieces in their Managing as Designing (2004) were:
• Managers must solve problems and act on time and budget. • Design attitude is at the core of strategizing development, and collaborative cascading of execution.
• Managing design is a collaborative process. • Unmet challenges for the next decade on a global scale for better organizational environments.
• We are often trapped by our vocabulary.
• Using multiple models of design problems is helpful to stay fluid.
• Sketching, mapping and story telling also aid staying fluid.
• Beware of pet ideas. • Seek widely functional designs.
• Break from default! (adapted from pages 17 & 18)
~~As one major gift derived from Managing as Designing, to our book was that we could compare progress to the past decade of contributions to the art and science of design. Clearly, our authors stand on the shoulders of creative and purposeful talents. We have discovered that when “artistry” and “functional” describe a product or service people flock to possess it. We find that our understanding of this new approach has advanced significantly in the last decade. This marriage of the mysterious world of the artist and the wonderful world of science presents different means of understanding ourselves at work. Graen was trained in logical positive science and practiced the same throughout his career until he was introduced to the approach of design. Since then, he has incorporated the power of design thinking into his Leader-Member Exchange (LMX) collaborative research and theory development (Graen, 2013a, b). This book reveals the potential of whiz kids who will achieve “star” status from this marriage of art and math that we discuss as design. All of us have our inner artist struggling to be recognized. This idea is not new, but our improving understanding seems innovative. You, as a young or even a mid-career professional, can fast-track your career with these “collaborative-design” competences.
~~This book proceeds with Miriam Grace, Executive Information Architect at Boeing, looking into the future of organizational systems within a business context. She lays out the progress made in the last decade to evolve one of the few organizational competencies that is proven to directly drive innovative behavior. She provides a clear roadmap for how you can enhance your professional career opportunities by focusing on a strategic set of capabilities and framing them in a context of organizational systems renewal. As a master craftswoman of the art and science of creating and implementing innovative designs, she has seen both the triumphs and tears from designing new and improved man-made systems. She finds that the best designed products are the work products of networked collaborative design teams, who continuously learn from each other during the iterative process of designing. Miriam recommends practical methods, tools, and mental models you will need to contribute effectively inside an innovative design team culture. Ultimately, she challenges you to lead from a whole system design perspective and enable virtuous feedback loops in your organization to foster and sustain a holistic culture of innovation and creativity.
~~George Graen, Center for Advanced Study at the University of Illinois, C-U (ret.), suggests that new designs are being constructed for entire organizations to overcome inefficiencies and the dehumanization aspects of hierarchical power. He recommends that you realize the global value of collaboration through designed alliances in both business and voluntary enterprises. His leadership-motivated excellence processes of collaboration among people and across organizational boundaries allows people the respect and trust that underlies lasting interpersonal growth (Graen & Schiemann, 2013). This breakthrough approach Graen calls the “collaborative-design mindset”, promises improvements in global understanding through active team participation in purposive collaboration.
~~Andrea Cifor and Sarah Mocke from Microsoft discuss realities you are undoubtedly facing if you are in an organization that is feeling the whiplash of technological change – and who is immune from that in this new millennium? This chapter gives you an insider’s insight into the commitment to change and disruption that comes with a decision to pursue a technology-focused career direction. But, you also experience the angst of those who have achieved expert status in their fields and who still find themselves at-risk and vulnerable with ageing networks and shrinking options. The ability to be a versatilist, to diverge and consider situations from multiple perspectives, to develop deep empathy for the customer, to collaborate in all things may be counter-culture to your current organizational culture, but the authors identify them as competencies that can break a fall from expert status or accelerate your trip to that status – these are design competencies.
~~Min Basadur, a business consultant and professor at DeGroote University, gives us the practical application of his theory, bringing concepts to life through real stories of engagement. He details the process of inventing and learning that provides a roadmap to organizational survival in the new millennium. His synthesis of paradigm-shifting, learning and designing change through a structured innovation process beginning with problem finding, sensing, defining (prior to problem solving) and ending in implementing change makes this new technology digestible and very doable.
~~Colleen Ponto and Peter Coughlan from the Bainbridge Graduate Institute have designed a breakthrough composition of design and systems thinking, which is profound in its simplicity. They clearly make the case for the synthesis of design and systems thinking in order to address the human interaction dynamics and emergent problem spaces that populate today’s complex work environments. Ponto and Coughlin chart a path for effective leadership in this new world as a design-in-action model where leaders operate to develop and facilitate a constantly in-work design to achieve organizational direction. The example they provide of how they are evolving this method designed to shift organizational forms is easy to follow and replicate and provides techniques that you can immediately apply in your work.
~~Jim Hazy and Tomas Backstrom describe their collaborative leadership design that they developed from their work at Mälardalen University in Sweden. Their chapter expands the conversation by bringing forward the complexity perspective. They posit that the reality of malleable and ever-changing processes, structures, and technologies that drives the need to continually reshape perceived problems requires a new kind of leader for this new millennium.
~~Deborah Gibbons from the Naval Postgraduate University promises to uncover your cultural predispositions about managing across cultures and to educate you on how to influence your organization to make a positive impact on its international employees, partners and communities. This chapter is a deep dive into a cultural competencies knowledge base that composes the essential elements of this multidimensional subject, and it’s an easy read.
~~Marcus Jahnke and Ulla Johansson Skoldberg from the University of Gothenburg enlarge the context by discussing the creation of meaning in design praxis. In a recent field experiment funded by the Swedish Governmental Innovation Agency, they studied “non-designerly” companies from a variety of industries in the act of integrating design as an approach to innovation into their daily operations. In these experiments artistically trained designers involved multi-disciplinary groups in experiencing design hands-on. The question of what design as a practice brings the rationale for engaging designers in the processes of business, and the far-reaching challenges for managers are discussed in relation to stories from the different cases. Their research is one of the few recent explorations of the value-add of design within operations processes and in varied business contexts.
~~Ben Zweibelson, (MAJ. US Army), Grant Martin, (LTC. US Army), and Chris Paparone, (Col. US Army), officers in the U.S. Army, share how design thinking is still very much a “toe in the water” of Army operational art, but also describe how it is misinterpreted as design seeps into Army manuals. These authors describe their efforts to heighten understanding of design thinking and how well the design mindset better suits the patterns of disruption that characterize modern warfare. Their stories, some of which come fresh from the battle fields of Afghanistan and Iraq, tell of teachers who are serving as “early adopters” of design science. They share their journey to enable the Army to see and exploit the competencies of design methods and the adaptability of a design mindset – a survival skill-set for the next generation of military practitioners.
~~Skip Rowland, a whole systems designer who consults with entrepreneurs and multicultural small business owners in the urban core, took on a project intended to help military service members transition out of the military and successfully enter civilian life and the civilian workforce. Skip shares his personal story and some of the stories of the soldiers he works with who are essentially mid-career professionals They may be like you, who have a very different work experience from most people in the job market, and who are getting that sinking feeling that finding a living wage job may be the toughest fight they’ve ever been in. Skip helps veterans understand and adopt an “entrepreneurial mindset” to meet the challenges of shifting cultures. He works through existing organizational structures in military and civilian organizations to create a bridge of shared responsibility between military and civilian cultures and values, which in turn, creates a bridge to jobs for veterans.
~~Collopy and Boland revisit their ideas of a decade ago and conclude that design has been strong, but not strong enough. They suggest that we probe deeper into our human-made world and develop and employ our creativity to improve our future. They advocate for “strong design” that emphasizes a synthesis of design action with design thinking for an integration of left brain and right brain functions into holistic solutions. Their message for the millennial manager is to develop a strong design attitude, with strong design skills and a strong sense of design space. With those three qualities, the new millennial generation can indeed do better than we have done before.
~~Michael Erickson is saved for last. He created our cover design. Michael is from Boeing. He describes himself as a “systems analyst that draws” and he will inspire you to improve your visual communications skills. The relaxed style of this chapter and the graphics that punctuate the pages fly cover for the author who has flipped the script on himself, recording his ideas and reflections in text and revealing how his thoughts run all the time he is creating visual representations of others. His direct style will engage you and his graphics are fun. He takes you on a flow of consciousness of a design-artist. When you’re done, he will have taught you how to recognize and surrender to the emergent dynamics in life. Design doesn’t just happen! “Come ride with him into the other side of the creative element, to a place that may be a little less academic, and certainly more experiential, where we may see if we too can catch a glimpse of the potential we all have to leap beyond our egos, certainly beyond our fear of ridicule, into dimensions where, if we dare, join with those unruly elements of our existence (that terrifying aspect we call ‘the chaos’) where we begin to co-create in it the answers that are beyond our expectations.
~~Projecting the nonlinear future is a risky venture for a new approach from art and architecture such as collaborative design. Designers must get it right the first time for their patrons and stakeholders or suffer historic abuse from present and future generations. When a tower leans too much or falls or becomes a white elephant, the designers reputations also crash. Designers have learned by their mistakes and success that the design must be right the first time. Unfortunately, those who design special purpose work environments for people typically copy what someone tells them is the “best practice” and design one to fit all. Sponsor’s gut feelings often establish the parameters. The good news is that in the last 10 years, design thinking has emerged to question “best practices” as universals. Designers realize that what may work in a particular environment may not work even in similar environments. Moreover, today’s designers emphasize who the actors will be, what they will be doing, and where they will be doing it. To accomplish this, designers must empathize with these actors, the behaviors in their home organizations and ask, what conditions would enable the workers to make their space more friendly and productive?
WHY MILLENNIALS RESIGN
~~“It will be necessary to transform the core dynamics of the workplace”. (PwC, 2013). The time has arrived to design large firms friendly to the colleagues who were treated as gifted from the cradle through professional education. Alerted by alarming trends in resignations of new hires at two years, Price-Waterhouse-Cooper, LTD. contracted with the University of Southern California and the London Business School to perform the largest (over 40,000) survey of a private firm. They found that there has been a sea change which requires a new design for the millennials entering the work force because:
• Design of careers was unattractive
• Concept of work should be a “thing” not a “place”
• Workplace culture should create “teamwork and community.” (adapted from PwC, 2013, pp 8-9)
~~Gratifyingly, the recommendations of this comprehensive investigation generally are supportive of those described in this book.
~~Today, large corporations are buying entire design firms (Hurst, 2012). They think that their customers and their mother organizations require full range and continuous design service. Rather than form a business alliance with a design firm, corporate executives find that design thinking is the future. They are placing design people on their top management teams (TMT). Moreover, this trend is international and local. Even the decision systems content of MBA programs is experiencing pressure to enhance the content and new tools of design thinking (Grace & Graen, 2014). This book introduces new perspectives of understanding the world as if it were a new ride into a wonder filled future for patrons that are not seeking simple thrill rides, but are composed of readers like you . . . readers that are ready to buckle in for a new experience to take your minds to different slipstreams of understanding reality. This is the essence of game-changing design!
~Boland, B. J. & Collopy, F. (2004). Managing as designing, Stanford University Press.
~Grace, M. & Graen, G. B. (2014) What if We Designed A MBA for the Future? Decision Science.
~Graen, G. B., (2013a). Overview of future research directions for team leadership. In M. G. Rumsey (Ed.) The Oxford Handbook of Leadership, Oxford, UK: Oxford University Press, (pp. 167-183).
~Graen, G. B. (2013b). The missing link in network dynamics. The Oxford Handbook of Leadership, Michael G. Rumsey (Ed.). London, UK: Oxford University Press, 359-375.
~Graen, G. B. & Schiemann, W. (2013). Leadership-Motivated Excellence Theory: An Extension of LMX. Journal of Managerial Psychology, 28, 5, 452-469.
~Hurst, N. (2012). Large corporations are buying design firms. Industry Week, May.
~Meehl, P. E. 1977. Specific etiology and other forms of strong influence: Some quantitative meanings. Journal of Medicine and Philosophy, 2, 33-53
~PwC. (2013). PwC’s next Gen: A global generational study. www.pwc.com.
~Simon, H. A. (1976). Administrative behavior: A study of decision-making processes in administrative organization (Third ed.). New York: The Free Press.
POSITIVE INDUSTRIAL AND ORGANIZATIONAL PSYCHOLOGY:
DESIGNING FOR TECH-SAVVY, OPTIMISTIC AND PURPOSEFUL
MILLENNIAL PROFESSIONAL COMPANY CULTURES
Center for Advance Study
University Of Illinois, C-U (Ret.)
10819 Gram B Circle
Lowell, AR 72745
Senior Technical Design Fellow
The Boeing Company
6116 South 296th Court
Auburn, WA 98001
The purpose of this rebuttal to Costanza and Finkelstein (2015) is (1) to examine findings surrounding the new generations at work, (2) to suggest the risks of not responding to change in generations with new talent strategies, and (3) to propose a new theory about the development of a new millennial culture and how practitioners and researchers may capitalize on the promise of a more positive and joyful workplace culture. We propose to accomplish these points by (1) citing recent global findings showing that Millennials (born after 1980) are turning away from companies with cultures that were designed for 20th century workers, (2) presenting a theory on the development of an emerging millennial culture that is based on positive industrial and organizational psychology, and (3) recommending that the method of innovation design teams be used to render workplaces compatible with the emerging culture.
Millennials are a force to be reckoned with. In the years from 2002 to 2006, “Millennials [grew] from 14% of the [US] workforce to 21% - nearly 32 million workers” (Hirschman, 2006) and in 2010 the US Bureau of Labor Statistics reported there were 40 million millennial-age workers, out-pacing Baby Boomers, whose numbers in the workforce are declining. Any trend affecting that significant portion of the working population must be given attention.
In 2011, leading companies began discovering such a trend and the problem was with their talent management capabilities. Millennials they had happily hired into top-pay positions were leaving their employ before completing two years on the job (Grace & Graen, 2014; Graen & Schiemann, 2013; Price-Waterhouse-Cooper, 2013; Sujansky & Ferri-Reed, 2009). When these leading companies discovered that they were losing their future leaders, they had the issues researched by professionals.
In 2013, big data studies were completed by the University of California and the London School of Business focusing on what Price-Waterhouse-Cooper identified as a critical generational problem (PwC, 2013). Results of these two-year global studies concluded that existing 20th century talent strategies were incompatible with the values and expectations of millennial professionals and recommended designing a profoundly different approach (PwC, 2013; 2014; 2015).
In addition, large studies by Delloite, (Brooks, 2015; Brown, 2013) Johnson Controls (Johnson, 2010), Clark University (Schutte, 2014) and Duke University (Graham, 2014) and others supported the conclusions of these studies (Graen, Grace & Canedo, 2015). Moreover, studies of Google's company culture further tested and supported the talent strategies designed to attract and retain the best young people (Graen & Grace, 2015). Although the new talent strategies remain works-in-progress, their results globally have been encouraging (PwC, 2014). In sum, this movement to new talent strategies is likely to be a differentiator among leading firms in the near future (Grace & Graen, 2014).
The big data studies are impressive for both their scope and depth. For example, the studies of Price-Waterhouse-Cooper claimed to be the largest generational investigation ever conducted. This investigation involved 20 global territories, 44,000 web-based surveys, 1,000 millennial professionals and 45 managers in on-line "jam" sessions, 300 interviews and 30 focus groups (PwC, 2013). Recommendations from the study are shown in Table 1.
The PwC Study Recommends
1. A flexible work culture based on unique talent and engagement
2. Access to the best tools for collaboration and operation
3. Transparent performance and reward decisions
4. Building workplace culture maintained by unit (team) managers
5. Greater opportunities as expats
6. Improving the impact of Millennials as contingency workers
7. Connecting and staying connected with all employees
8. One size does not fit all
From Graen & Grace, 2015
In agreement with these recommended features, the results of a year-long, embedded study of Google showed why they are so successful in attracting and retaining the best young innovators. The following attributes were identified (Steiber, 2011):
An innovative and flexible culture and management system that replaces rules with guidelines, and commands with peer-oriented negotiating among associates across pay levels.
A company strategy that values employees and customers equally and demonstrates that belief by selecting the best and treating those employees as main contributors by providing proper career opportunities and rewards, and trusting them with inside information.
Encouraging and training managers at all levels to work with individuals in appropriate ways by tailoring, mentoring and coaching activities and clearing away impediments.
Balancing the emphasis on innovation and operational excellence by fostering the development of subcultures that are equally valued.
Extending strategic networks for externally developed technical innovations, forming cooperative alliances with leading universities/researchers, and investing in new technologies and ventures.
Designing collaborative communities of professional peers learning from each other.
Overall emphasis on having fun while serving the greater good.
In a recent editorial, the editors of the Academy of Management Journal point out that the “Generation Y workforce (aka Millennials) . . . who tend to be well-educated, well-networked, multilingual, and self-determined, are looking for jobs that enable personal growth and development of self, and yet in their job search, typically encounter workplaces that are suffering from restrictive hierarchies, high levels of routinization, and do not offer the preferred flexible and multifaceted activities [they desire]” (Gruber, deLeon, George & Thompson, 2015, p. 4).
This raises questions: (1) What were the driving trends that permitted such an innovative culture to develop and take hold of those born after about 1980? (2) What are the identifying characteristics of this new culture? (3) How may a more compatible talent strategy be designed and implemented? (4) How will this new culture change as the driving trends continue to transform our youth?
THE MAKING OF MILLENNIAL CULTURE: A THEORY
The authors of the lead paper suggest that no theory is feasible for explaining the Millennials' reaction to the existing workplace culture. We respectfully disagree. Cultural experiences make every generation unique (Espinoza, 2012, p. 23) and each generation plays a role in the cultural theatre. Humans are an adaptable species and there is ample evidence in our history books of movements that caused us to adapt our cultures to address opportunities and threats as they emerged across time and across the globe. As context for this paper, we studied the defining events that happened during the formative years of those born since 1980 and found three powerful culture-shifting movements that doubtless have impacted the psyche of Millennials, in the Western world, but globally as well: positive psychology, information technology and innovation. We argue that a key to the explanation of the “culture shock” being experienced by Millennials in the workplace can be found in the nexus of these movements.
“In the early decades of the 20th century, the scientific management of workers (Taylorism) and the standardized, industrial, mass production of goods (Fordism) redefined not only the nature of the workplace but also the entire operation of organizations. In a similar vein, the process re-engineering of the 1990s and early 2000s that focused on operational effectiveness created business processes that were engineered rather than designed” (Gruber et al, 2015, p. 3). These Academy of Management editors identified the drivers for this “new workplace experience – NWX” as the “competition for talent, with companies designing [their] employee experiences and the services that support them in order to enable them to deliver value to clients” (p. 4).
What is called the “experience economy” (Gruber et al, 2015) where businesses “orchestrate memorable experiences for their customers” (p.3) is mirrored in the recent view that employees have value equivalent to customers in the business value chain. The “switching economy,” (ibid), characterized by the switching of product and service providers by their customers is a parallel phenomenon to the switching of employers by Millennials when they encounter a less than compatible work culture. This is an emergent talent management challenge. The movements that framed and contributed to the formation of the millennial mindset are discussed next.
Positive psychology movement
The positive psychology movement took hold globally about 1980. One of its tenets was the importance of the early development of a positive self-image. Adults were encouraged to treat children as "special" individuals and prioritize praise for participation (Drew, 2015). This movement encouraged adults to treat youths as peers and to protect children from damaging their positive self-concepts in their personal interactions. Not only were child-rearing practices changed dramatically during this period, but schools, churches, social activities and finally the universities were changed (Graen & Grace, 2015).
Based on published research, the new culture concerned the development of self-concept knowledge and positive feelings (Bandura, Barbaranelli, Caprara, & Pastorelli, 2001; Craig, 2006). It has been described as a positive psychology of growth. One objective is to protect the individual's feelings of respect for one's self. It prescribes that participation should be given priority over defeat and that individuals should not experience failures that may lead to a loss to one's self-concept. In that age, adults were instructed to treat youth as peers by engaging in rational discourse at the proper level. As children matured, they were encouraged to be entrepreneurial. They were educated to be sensitive to individual and cultural differences. And, ultimately, make this a better world. Later, as they entered the workforce, this entrepreneurial mindset encouraged them to be “self-starters” and to “think outside the box.” Around the same time, business practices were being transformed and decision making began shifting from management to professionals working in flexible teams of peers. Cross-functional teams brought together diverse knowledge and began to use the latest information technology tools that brought the world’s knowledge to their computer screens.
In spite of published research showing negative or null relationships, the positive psychology movement has grown into a global force in industrialized nations. It has established the rules for proper education of children. It began in the late 1960s with the publications of professor of psychology Stanley Coopersmith from California, and John Vasconcellos, State Assemblyman, persuading the California Governor to establish a self-esteem taskforce which resulted in legislation. Today, the positive psychology of development and maintenance is taught in schools, churches, social programs, government organizations and universities globally. Academic research finds that the millennial generation has shown higher self-esteem ratings and beliefs than did their parents at the same time in college (Twenge, 2000). As Craig (2006) states, the real question is "about how relevant self-esteem issues are across different domains such as education and work." Twinge’s big data research showed that in a sample of 40,000 children, the Coopersmith Self-Esteem Inventor (SEI) decreased between 1965 and 1979 and then increased from 1980 to 1993 (Campbell, 1993). Moreover, this trend was only shown for children but not college students. This seems reasonable in view of facts that the self-esteem movement became a fixture of educational systems about 1980 and the children's self-esteem innovators (SEI) considers specific areas, including family, peers and school. When correlations are found between social indicators and self-esteem, Campbell finds it involves children and not adults.
Positive psychology has two concepts, namely, the idea of feeling good and doing well. The general idea is that positive reinforcement of each other's self-concepts will lead to psychologically stronger people who experience feelings of joy and efficacy. The objective is to teach children from birth to maturity to respect and treat others with ego-boosting opportunities. Available institutions of socialization, namely, schools, churches, social groups, health organizations and other agencies were employed to educate parents and children based on this prevailing theory. They aimed to create a kinder and gentler culture; one in which everyone is valued and expects to be positively reinforced for participating and there by contributing something positive no matter how small (Seligman, 2006). During the same period, the middle class grew and further provided a sense of self-confidence and economic security. Finally, children were told that they were the promise of a far better world.
Information technology movement
In parallel, computer and internet applications exploded in the 1980s and thereafter with ever increasingly powerful products and capabilities that eventually became available to anyone with a smart phone. This disruptive technology permanently shifted the concept that one person can change the world from myth to reality. Considering only the inventions of Steve Jobs since 1980, the list includes: Apple III, MacG3, USA Mouse, iPod, MHCG4, iPod GUI, Power Adapter, iPhone, Magic Mouse, iPod Shuffle, iPhone 4 and iPad (Grace & Graen, 2014). Children born during 1980 and thereafter grew up with the computer as a best friend and companion. The rapid improvement in computer applications frustrated their parents' generation and many refused to learn how to operate yet another application language. In contrast, young people were attracted to these tools and integrated them into their social lives 24 hours a day and 7 days a week. One side-effect of this was that children earned higher status because they were more tech savvy than their parent's generation and could help adults with the ever-changing products. Gradually, social customs evolved making the computer applications necessary for nearly all social activities. The hardwired appliances were rendered obsolete. New social rules and norms were invented to routinize the new culture. These changes were gradually accepted as the reality of the millennial culture. And the beat goes on, as Millennials’ culture crashes into the culture of their parents.
If we look at just one area of information technology, data analytics (the process of discovering useful knowledge from data), we can see profound changes impacting the relationship between managers (who are still largely of the Baby Boomer generation) and Millennials. Researchers have argued that “the quality of rapport that is established between Millennials and their managers directly impacts both short-term and long-term personal and organizational effectiveness” (Espinoza, 2012, p. 53).
“As more and more activity is digitized, equipment and storage costs become ever cheaper, and technology tools that operate to explore and mine valuable insights become easier to use, a new era dawns where business insights can be gleaned on any topic of interest. Business and technology management are at a point of convergence. Technology has become integral to business, in either its products and services or its internal processes or both” (Grace, 2014, p. 23). A data-oriented culture, which is a “pattern of behaviors and practices by a group of people who share a belief that having, understanding, and using certain kinds of data and information plays a critical role in the success of the organization” (Kiron, Ferguson, & Prentice, 2013, p. 18), is becoming the norm and Millennials represent the nexus where organizational design strategies and business value creation intersect. 21st century business is paying attention.
A tension point is clearly developing in decision making in business, an area that has traditionally been the purview of managers. Information technology has brought the power of computing to decision making and the availability of vast oceans of data on any subject requires powerful modeling and simulation capabilities that have only recently been taught in universities. The quandary of how to extract value from data is driving a management revolution that is fundamentally changing “long-standing ideas about the value of experience, the nature of expertise, and the practice of management” (Brynjolfsson, E. & McAfee, A, 2012, p. 62). “We are on the cusp of an analytics revolution that may well transform how organizations are managed [as well as the] societies in which they operate” (Kiron et al, 2013, p. 2). “Decision makers across the globe who have been highly compensated for their intuitive and experience-based business knowledge are engaged in a serious paradigm shift as they learn to accept as input to their decision-making process evidence that is compiled by young millennial data experts who study patterns in vast datasets and translate those patterns into business insight. This will drive serious changes to organizational cultures and structures” (Grace, 2014, p. 22). Tension necessarily results when traditional habits and patterns of decision making, upon which careers have been built, are challenged by new ways of thinking and a constant barrage of new tools. It can be understood in such a context that “a manager’s response to points of tension with Millennials determines managerial success or failure” (Espinoza, 2012, p. 53). Job satisfaction for both manager and employee in this situation can be affected. “Data analysis [shows that] Gen Y (millennial) groups [are] different from both Gen X and Boomer cohorts concerning generational preferences of leadership behaviors and levels of job satisfaction” (Carley, 2008, p. 136). Similar findings came from Linda Dulin’s (2005) research on preferences of Millennials for leaders that are welcoming of those with new skills, who can serve as a sounding board for ideas and strategies, who are cheerleaders and boosters of employees’ self-esteem, and who can broker access to challenging assignments. These are clearly expectations of Millennials for a different kind of manager and a different kind of workplace design than they are typically encountering.
This different kind of workplace is becoming known as “Digital Business . . . the creation of new business designs by blurring the digital and physical worlds. Digital business promises to usher in an unprecedented convergence of people, business, and things that disrupts existing business models” (Lopez, 2015, p. 1) by exploiting the innovation movement. Digital business runs on innovation.
The final piece of the theory of this emergent millennial culture is its relationship to the innovation movement as the business strategy of the future. Given the outstanding success in the market of the Goggle-like companies based on innovative products and services, business strategies changed from a focus on productivity and cost savings, exemplified by the "lean movement" to a focus on growth and revenue enhancements, exemplified by the innovation movement (Brooks, 2015) .
There can be no doubt that innovation in the 21st century is dominated by the disruptive forces of mobile, social, cloud, and information technologies and these disruptors are a main differentiator between the generations. Millennials do not know a world without technology; it is just part of their contextual reality and it is their reality that is taking over and just one metric can illustrate the situation: Smartphone ownership. Millennials are the largest segment of smart phone owners. In the second-quarter 2014, 85% of Millennials aged 18-24 owned devices and 86% aged 25-34 owned them, representing an increase from 77% to 80% respectively, in second quarter 2013 (Nielsen, 2015). So, why is this platform so important? “Smart phones have been unprecedented in their impact on a wide range of consumers, from individuals to global enterprises. When coupled with mobile networks for ubiquitous coverage and capacity, smart phones have the ability to commoditize innovation” (King, 2013).
Innovations were the ideas that the internet sent worldwide, opening new markets, breaking down trade barriers, and blasting through outdated business models. Now, smart phones are the vehicle for carrying the innovation movement worldwide. Clearly, it was not a single event, but a movement that caught on and changed everyday life. An explosion of research and business publications on innovation as the defining business movement of the 21st century has flooded media channels (Grace, 2009; Martin, 2004/2011; Brown, 2010; Grace & Graen, 2014) and made employees valued on a par with customers (Grace, 2014).
The linking of design principles and practices with innovation brought a method to the magic of innovation and enabled it to become a major driver of organizational culture. The evidence for the innovation movement’s global presence was presented in the publications of the UK Department of Business Innovation's Design Council. These publications point to "governments investing heavily in sponsoring and promoting design as a key to stimulating innovation, jobs and exports as a means to systematically address challenges." One such publication cites that "China's Prime Minister, Wen Jiabao stated a desire to move from 'made in China' to 'designed in China'. Over recent years, China has driven national and regional design policy, with investments in education and national promotion. Other Asian governments are vigorously committed to promotion of design, notably those in Singapore, Korea and Malaysia" (Temple, 2010 p. 1).
Twenty-first century business is embracing design methods as a way to access and leverage the creative consciousness of employees as they work to make the shift from the era of the expert individual to integrated and collaborative teams working together through a knowledge-creation paradigm. Design practice follows a qualitative, collaborative, and human-centered methodology, iterating through a process that begins with formation of a design team and development of shared empathy for the context, for the customer. The team then works toward and achieves a shared point of view or vision with all the stakeholders, uses modeling and non-verbal communication media as the language of design, employs synthesis and pattern formation as thinking tools, and leverages a “build to think” learning paradigm in the creation of rapid, low-fidelity prototypes that experiment with choices and drive out insights and shared meaning for more adaptable and flexible results. Design provides a comprehensive guide to one of the thorniest problems of the innovation movement; that is, how to do innovation.
Based on these movements and their impact on the life experiences of Millennials, our theory of a new cultural vision for millennial professionals follows. This new culture was described above based on recent trustworthy studies. This culture, as we see it, is what Millennials expect as normal life. They seek to continue this culture during their careers in their workplaces. Unfortunately, existing talent strategies may not have adapted to this new reality (PwC, 2013).
Judging from the reasons for Millennials quitting their dream career employer and the identified characteristics of the corporate culture that would encourage them to join and stay, those who resigned prematurely were suffering from a “culture shock” (Honore & Schofield, 2012). They were socialized from infants to college graduates under a positive psychology, tech- savvy innovation culture and were transported to a foreign culture where they were shocked by their bosses’ lack of understanding that creativity is encouraged by natural rhythms, not rules and restrictions. They were given no time for innovation or fun. The lack of balance between work and fun left them feeling that they had no private life. The lack of teams of peers learning from each other left empty feelings. Finally, they spread the word of their culture’s incompatibility with their parents work culture by quitting their career jobs and going home to welcoming families.
In concluding, we argue that (1) because the lead authors failed to find available and well-known research on generational differences in the workplace, their affirmation of the null hypothesis is not recommended practice, and of employing myths and stereotypes in the case of Millennials is unfounded, (2) Millennials have been found to demand a different talent strategy than those designed for baby boomers, (3) leading companies globally are changing their talent strategies to become more compatible with the millennial culture and (4) we recommend an innovation design team approach to make needed changes in constructing new talent strategies (Graen & Grace, 2015), (5) finally, we propose a new theory of three game-changing movements that have influenced the development and life experiences of Millennials (positive psychology, information product improvements and the innovation search). These three movements continue to be influencers and are contributing to a new culture for Millennials that is normatively different from their parents' culture. Our theory summarizes existing research finding in the workplace and hypothesizes new relationships. A few of these hypotheses are as follows.
H1 The new "Leadership-Motivating Excellence" (LMX) Team practices will be more effective with members of the millennial generation than traditional command and control management practices (Graen & Schiemann, 2013).
Millennial professionals demand more from their company culture, more than their preceding professionals in terms of the following:
H2. Flexibility based on unique talent and engagement.
H3. Access to the best tools for collaboration and operation.
H4. Transparent performance and reward decisions.
H5. A workplace of peers learning from each other.
H6. Opportunities and rewards for former employees.
H7. Opportunities as contingency workers.
H8. Connecting and staying connected with all coworkers.
H9. Continuous improvement.
Our first hypothesis was stated as referenced in 2013. The remaining hypotheses are stated herein. The first hypothesis is that LMX-Team practices are compatible with the new millennial culture (described by the editors of the Academy of Management as the “New Workplace Experience or NWX” (Gruber, et al, 2015). Hypotheses two to nine were based on empirical research findings reviewed above. “Factors that influence the [LMX/NWX] include the organizational design and related incentives and management procedures; the task and associated business process design; the support tools and information services that enable the execution of the task; the physical and virtual environment in which the task takes place; the internal interaction between employees within a business or organizational function, as well as between functions and the extended enterprise and its partners and customers; and the organizational culture and communications and human resource support programs” (Gruber et al, p. 4).
One question remains to be understood, namely, how is it that the lead authors did not find many of the studies reviewed herein? We speculate the following. The lead article was based partly on the junior author's doctoral dissertation with the senior author as chair of her committee. Academic doctoral committees tend to be extremely questioning about any research citations not published in a proper referred academic outlet. All of the lead paper's research citations were in such publications, whereas, most of ours are not. Many of our references are the result of company sponsored consulting research found on the internet under "Millennials at work," "Millennials quitting employment" and the like key words. We also employed SIOP standards to judge the literature in our internet research review (Knapp, 2003). By testing the references of both papers, the results are supportive of our speculation. The lesson we take from this disagreement is that we should review both academic referred journals and company sponsored internet research carefully before we publish conclusions that contradict the weight of the research evidence.
Our theory about the development of a new culture may be fruitful in designing innovative structures to render any existing dysfunctional talent strategy obsolete and replacing it by a more appropriate one for the "new game changers" (Graen & Grace, 2015).
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THE MISSING LINK IN NETWORK DYNAMICS
George B. Graen
The Many Sides of Leadership: A Handbook
Edited by Michael G. Rumsey
Oxford University Press, London, UK
George Graen, Center for Strategic Management Studies, Inc., University of Illinois (Retired), Champaign-Urbana.
The author would like to thank his personal editor Joan Graen, Michael Rumsey, Nina Gupta, Robert Hogan, Cynthia McCauley, and his colleagues at the Society of Organizational Behavior meeting at the University of Maryland for their helpful comments.
Correspondence concerning this chapter should be sent to firstname.lastname@example.org
Two most pressing problems confronting American business today involve a drought of leadership talent ready to replace top executives. This was the answer of 500 C-suite executives in a survey by the Society for Human Resource Management (2010). These top executives listed “Leadership Succession”, which meant that the pipeline developing prepared leaders to fill open top positions was failing and “Leadership Retention” which indicated promising leaders were finding their opportunities to lead elsewhere. These executives admitted that they needed to do a better job of identifying, developing and enabling their most needed high potential leadership talent for top positions. This chapter describes what we know about managerial leadership today, how we came to know it, and how leadership development protocols using the strategic alliance model can enable more business managers of human talent to become leadership competent.
In business and innovation, communications have one primary, overriding purpose - to build relationships. Not to inform or persuade, not to plan or contract, not to document or account, not to direct or report, not to buy or sell, but to build lasting relationships. Hard to accept, isn't it? That means that product brochures are not really about products. Business plans not about businesses. Project reviews not about projects. “Sales calls not about sales.” (Lundquist, 2006)
Hogan and Ahmad (2010) reviewed the progress of the field of leadership and concluded that it had largely failed to guide practice for four primary reasons. First, the leadership literature is awash with popular books and articles containing “minimal truth value”. Second, the research literature typically defines leadership mistakenly as the persons in charge. Third, the literature ignores followers. Finally, the literature ignores the issue of “return on investment” (Harter, Schmidt & Hays, 2002). In spite of this, Hogan and Ahmad (2010) conclude that leadership is a major contributor to a corporation’s health including turnover, customer loyalty, and financial performance. In addition to these misdirections, they might have added that most approaches to leadership provide no practical reason to become a follower for those below, above, or at the same organizational level. Without any reasonable driver for followers, such approaches can be dismissed easily by executives. One approach to leadership that has successfully avoided these problems will be presented in this chapter. This approach focuses on the dynamic that produces a realistic driver for business associates to join in leadership missions.
LMX Leadership Is Independent Of Administration
According to the new LMX theory, administrative competence and leadership competence refer to different functions (Graen, 2009). As shown in Table 1, administrative competence is the degree of mastery of the art of operating and maintaining a set of business systems as efficiently as feasible within the parameters of business as usual. In contrast, leadership competence is the degree of mastery of the art of forging and maintaining strategic alliances and then using them to perform the four classic functions of group leadership (described later in this chapter) with the goal of innovating a change beyond business as usual. Administrative competence involves staying within the design parameters of business as usual; leadership competence is concerned with changing part or all of the design by going beyond business as usual. In terms of resources, administrative competence assumes adequate availability, but leadership competence requires the generation of supra-organizational resources.
Managers are trained to establish and maintain interpersonal tactical alliances with those associates specified. When these alliances are managed efficiently the result is performance that is expected for “business as usual”. This practice works satisfactorily when the corporation’s environment is calm. But, when conditions affecting the firm become turbulent, c-suite executives need performance “beyond business as usual”. This level of performance requires going beyond the limits of company know how and resources. It depends on finding resources that are unavailable through normal business channels. When a group of associates finds such resources and uses them to perform beyond business as usual, we call this an “emergence of leadership” and associates who are proactive in this achievement are called “leaders”. Our definitions are based on programmatic research focusing on what associates in business units practice that separates those performing at the business as usual (BU) level from those performing beyond business as usual (BBU). The theory based on our research program is called “LMX”. In this chapter, the problem of misguided leadership talent in companies is described; then the LMX theory is presented; the research base is discussed; future research is suggested; and finally, the summary conclusions are made.
The New LMX Leadership Theory
At a time when our corporate executives are most concerned about “leadership succession” and “leadership retention”, they deserve a clear protocol to develop leadership talent (Schiemann, 2009a). Unfortunately, much of our leadership literature is either in popular books by celebrities or academic work written in a technical language or in a journal unavailable to those responsible for filling the leadership succession pipelines or ensuring leadership retention. Our executives are searching for answers to the drought that has rendered their leadership pipeline inadequate. Executives generally agree that those proactive in groups that have performed beyond business as usual should be in their leadership pipeline. These people can forge multidisciplinary forces and get seemly impossible things done. LMX research indicates that forging a network of strong strategic alliances is a fundamental dynamic in the functions that we call “leadership” (Graen, 2009).
Resources for LMX Leadership
The new LMX theory postulates that only a part of the energy of employees who are driven by professional growth and contributions is engaged in the duties and responsibilities specified in their employment contracts. The remaining energy finds expression in other pursuits. Some are invested in improving the quality of their lives, including that part lived in the place where they are employed. Ways to improve one’s employment situation include: (a) identifying a higher mission than wages and benefits, (b) enlarging one’s social network at work, (c) increasing control over the job and its environment, and (d) seeking greater involvement in the organization (McGrath, 1962). Few people find that their employment offers adequate means to achieve the performance level they want. Some employees understand that one of the tested ways to increase their ability to bring about desired changes in their job situation otherwise beyond their power is to form strategic alliances with those of like disposition.
Interpersonal Strategic Alliance
Although the concept of an alliance between organizations has been used to describe interorganizational agreement for mutual benefit (Eisenhardt & Schoonhoven, 1996), it also is most appropriate to characterize the interpersonal agreements for mutual benefit. Alliances may be differentiated into those employed routinely for “business as usual” and those used for crisis occasions for “beyond business as usual” as shown in Table 2. A strategic alliance is a special agreement with specified rights and responsibilities. It is different from interpersonal friendship or satisfaction (Graen, Hui, & Taylor, 2006), because it is first and foremost an instrumental agreement that mutually empowers the alliance partners. It follows that characteristics of new targets for strategic alliance would be evaluated in terms of the unique utility offered. As with interfirm alliances, interpersonal alliances are divided into routine or tactical and special or strategic. Interpersonal tactical alliances are those specified by the formal position description, but strategic alliances are those selected by the position incumbent. In addition, tactical alliances are supported by employment contracts, but strategic alliances depend on appropriate actions by both parties. Those managers who forge and maintain proper strategic alliances possess the resources to become executive leaders (Graen, Dharwadkar, Grewal, & Wakabayashi, 2006).
Employment contracts specify both the job responsibilities and “tactical” alliances, among other things. Employees, by accepting a contract, agree to carry out the responsibilities and use the tactical alliances specified. In our dynamic information age, market turbulence shows increased speed of obsolesce of such alliances. Employees who do not enlarge their strategic alliances to cope with changes rapidly are overwhelmed. In response to this dynamic, employees search for strategic alliances with those who can assist when needed. Strategic alliances are instrumental agreements between two or more associates that go beyond the scope of tactical alliances, e.g., watch each other’s back for mutual defense and provide timely influence and resources to capitalize on special opportunities for contributions. Those employees who develop strategic alliances become those who make the deals and are called “power brokers”. At the level of employees, strategic alliances deliver extra-position resources to get things done that cannot be done with only the employment contract’s tactical alliances. Building strategic alliances is often a reaction to reaching out to tactical allies and being turned away. Without strategic alliances, employees' ability to get critical things accomplished and protect their backs is severely limited.
How do managers and professionals get their associates to communicate, cooperate and engage across the silos of organizations? They do it by building a strategic alliance network one person at a time, as follows. Employees can show their interest in such an alliance by going beyond business as usual. They do extra things to aid their boss, their peers, and the other people with whom they work. These people even assist those in different silos. These have been called “organizational citizenship behaviors”. These are not altruistic, but involve building strategic alliances. Once an alliance is built, those involved may provide persuasive introductions to those players in each other’s network of alliances.
Strategic alliances generate additional resources, both human and material, for participants. Not only do partners act to benefit and protect each other, but they may also share resources. When one party has unemployed resources that the other could use, loans may be made. Also, when one party needs a recommendation for a proposal, the other may provide a glowing one. In fact, the race to forge the more valuable strategic alliances can be very competitive, because the potential benefits of alliances determine one’s relative influence in the organization (Sparrowe & Liden, 2005). Lundquist (2006) disclosed that the fundamental objective of business and innovation actions is to build lasting relationships. And the kind of lasting relationship found most useful we call “strategic alliance”.
On what research base can the above radically different approach to managerial leadership be appreciated? To address this question, turn to a brief review of the research that directed our new LMX theory.
In Search of Leadership
In an early investigation directed at documenting the development of managerial leadership, we studied an organization whose entire life cycle was 12 months (Graen, 2002; 2003a). Each year the organization of 60 managers and professionals was staffed with many new people. In the year of our study, 95 percent of the direct reporting relationships contained at least one new person. We were hoping to find the dynamics of leadership over and above managership once and for all with hard data, but we failed abysmally (Graen, 1976). Not only did the employees not agree on the interpersonal dynamics of their manager in terms of the classic styles of “structuring of delegations” and “consideration toward employees”, but the descriptions by employees of their alliance with their manager were found to be a good predictor of going “beyond business as usual”, e.g., helping other employees with client problems and helping the organization with unexpected gaps in procedures.
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 seen as a more valuable human resource 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 nor was it about transforming people through a leader’s words into “believing” followers. It was a more humble human feeling of vulnerability in the face of the task of organizing a business unit in an organization that was staffed by many new faces. The expected human reaction to this threatening situation was to seek interpersonal strategic alliances. 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.
In the next early longitudinal investigation of managers and professionals of three organizations, 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 & Cashman, 1975). In a related 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 allow 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, Liden & Hoel, 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 & Wakabayashi, 1994). This career study included 85 college graduates from the best schools who were recruited in 1971. Human resource 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 and interviewed our sample in 1985. 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 alliance forging throughout.
Another study focused on enabling new alliances (Sparrowe & 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 that interpersonal strategic alliances were a reaction to felt inadequacy of influence in a position. These alliances with dependable fellow employees were seen as means of gaining greater control and engagement. The ability to get assistance from alliance members when needed allows a measure of personal confidence. The question arises: was leadership as a human process anything more than forging interpersonal strategic alliances and employing them 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 my career of searching for an intersubjectively testable definition of leadership in organizations, the conclusions arrived at are as follows. We can document that interpersonal strategic alliances are forged in organizations as a reaction to felt lack of adequate influence. 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, Dharwadkar, Grewal, & Wakabayashi, 2006). In fact, the number of desirable outcomes of alliances for both those involved and their organizations continues to grow (Graen, 2010). We find that both parties to the alliance must work hard to make it successful (Uhl-Bien & Maslyn, 2003). Managers who forge alliances with their employees also have been found to include these employees in their alliance pool (Sparrowe & 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 LMX theory development are presented in Table 3. The reader may use Table 3 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 on — turnover. The same findings that alliances 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 business units in both studies showed that only alliances within units predicted turnover of professionals. As shown in Table 3, ten years later the much anticipated first revision of the LMX theory was published in 1995, and the second revision followed in 2003. The first LMX team leadership theory was published in 2006.
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 & Day, 1997; Hackett, Farh, Song & LaPierre, 2003). In addition, Harter, Schmidt, and Hayes (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 .37 with a composite of performance that included financial performance, company loyalty, and turnover.
Forging 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, Novak & Sommerkamp, 1982). This result was replicated (Graen, Scandura, & Graen, 1986). At the team level, the percentage of productivity improvement for alliance-trained leaders was a 17% 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 & Oldham, 1976) reacted positively with productivity gains of about 50% 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 (BU) 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 & Simon, 1958). Apologies to Northouse (2001), but rewarding everyone the same regardless of relative contributions is not fair and does not motivate.
Alliances also foster team performance. Investigations of engineers in design project teams by Graen, Hui, and Taylor (2006) found that strategic alliances were related to augmented team functioning and overall team performance. Each of three studies involved forty or more project teams. In all three studies, team functioning and team project excellence was a positive function of the proportion of strategic alliances: The larger the proportion the better. The researchers concluded that when new design project teams find their team in danger of failure, they may forge strategic alliances and succeed, or not and fail (Naidoo, Scherbaum, Goldstein, & Graen, 2010).
Researchers testing hypotheses derived from LMX leadership theory span the globe (Graen, 2005), however, most research has focused on China, Japan, and the USA. Recently, Chinese researchers have concentrated on testing team leadership (Wang, Law, Hackett, R. Wang, & Chen, 2004) from which they found strong support for the LMX team theory. Leaders with teams with higher proportions of LMX alliances consistently perform significantly better than those without. Please keep in mind that these studies are not performed at old state owned enterprises, but are done at new private companies. Europe has recently joined the LMX team of researchers (Schyns, 2009).
Next, we consider the fundamentals of forging useful strategic alliances that should be included in managerial leadership training.
Instead of fighting the competition up the career ladder, one appropriately approaching an alliance partnership can gain greater career advantage. New alliance seeking emphasizes mutual benefit and sharing information. By comparing managers who use these fundamentals effectively with those who do not, we have found that a cadre of managers and professionals actively support their strategic alliance partners’, but decline non-partners’, requests for privileged assistance. Those who use the LMX protocol forge alliances with many office holders in diverse functional areas of business. These alliances can become so dependable that a manager can employ them as part of his/her strategic plans. This alliance-based credit is used wisely to capitalize on exceptional opportunities to improve the organizational quality of life for many colleagues and enhance performance. Such opportunities usually require the carefully planned and coordinated actions involving a number of different functions of the organization. These include successfully implementing new technology, closing gaps that disrupt business as usual, changing the game, and the like.
To clarify the concept, an example of leadership contrasted with no leadership is the following. Identical twins, Joe and Jake, attend the same schools, participate in the same activities, earn MBAs, and join the same company as management trainees. After a few years, Joe has developed a large and diverse group of colleagues who stand ready to assist him when he discovers an opportunity to improve his part of the organization. In contrast, Jake has spent his time learning new technical skills and working to upgrade the technical sophistication of his business unit. Both Joe and Jake are rated as outstanding performers, but Joe is promoted faster and further up the managerial hierarchy. The difference between Joe and Jake is that Joe learned the power of leadership produced by forging effective use of the protocol for interpersonal strategic alliances at work. As with alliances between companies, a protocol is followed closely and carefully.
This network of alliances that yields so much power may begin with two professionals who desire strategic alliances and who meet working on an interdependent project. They seek answers to three critical questions before they can reasonably consider an alliance. We call these the “big 3”. The first question is: Do we respect each other’s business competence? When the answer is negative, the courtship is terminated. The next question is: Do we trust each other’s motives and ethics? Again, a negative answer terminates the process. The third and final question is: Do we accept each other’s commitments to the organization and the alliance? A negative to any one of these three is an alliance killer. Three maybes allow an alliance to proceed. At the heart of an alliance should be the best interests of the organization and its people. In a time of severe turbulence in the organization’s environment, new and complex gaps may disturb or cease routine process. When this happens executives turn to managers and professionals with the relevant alliances, because only alliances can deliver the expertise and resources needed. Admittedly, contemporary organizations have not promoted this necessary process and these networks are in short supply. The question becomes, how can organizations change the game from what clearly is not working to something that can work?
For over forty years our research teams have studied the dynamic of forming strategic alliances between those of unequal position power (Graen, 2009). Our research has discovered the processes that are used by those who are not content to be limited to only the power of their office and profession to get things done. This dynamic that we called “alliance building” lies at the heart of many different forms of innovative, collective action including the phenomenon we call “leadership in organizations”. Alliance building begins with two or more people who understand the incremental power to get things done that strategic alliances can provide. When these people find each other, they begin the process of reinforcing the value of the alliance. They communicate about distinctively different issues concerning the details of their alliance (Fairhurst, 1993). Comparing those who had not begun the alliance building process with those who were beginning the process and those who had completed it, Fairhurst found three distinct patterns of communication content and style that were significantly correlated with the strength of their strategic alliance.
Forming strategic alliances must be done carefully, because some potentially powerful allies may not see the benefit or overestimate the risk. One way is to approach those whose work is interdependent and help them in ways that demonstrate one’s competence and trustworthiness. If they respond in a positive manner, the next opportunity to serve would be augmented. In this courting process, the target is served beyond any reasonable expectancy.
Senior managers who have acquired both business competence and interpersonal influence from a large and diverse network of strategic alliances get amazing things done in their companies. Mainly due to their alliances, they are commonly referred to as “leaders”. Comparable senior managers with equal business competence but without the extensive strategic network of alliances are not called “leaders”. Only those employees who engage in their organization to the extent of investing in and employing alliances should be designated leaders. This generally rules out managers and professionals who do not practice the collaborative style, because the directive style seeks few alliances. The difference between collaborative and directive management styles was described in detail by Kramer (2006). Three stages of the collaborative style were proposed: (1) Creating the collaborative alliance by communicating willingness to go beyond business as usual for mutual benefit and defense, (2) Creating strategies for maintaining an alliance, and (3) Developing methods to deal with tensions over the balance of collaboration. Finally, building strategic alliances works better when both parties invest energy (Maslyn & Uhl-Bien, 2001).
The Dynamic of Forging Alliances
Employees with strong needs for professional growth are driven to gather the available resources to get the right things done. They want to accomplish objectives that are beyond the scope of their job’s limits. They have discovered that to enlarge their resources requires that they form strategic alliances with those who possess the resources to help. Typically, the first choice for an alliance is the immediate manager. This position is higher in the power hierarchy and thus contains greater authority, information, and other resources. An alliance with one’s manager has been documented to be the most pervasive of all alliances. Without a well-established alliance with one’s manager, most attempts to accomplish a collaborative objective fall short. Therefore, we focused initially on the dynamic of forging alliances with one’s manager. The next alliance targets are direct reports.
The process begins with the growth-motivated employee making a comprehensive study of the manager’s aspirations, engagements, and frustrations on the job. The manager may want greater faith in his/her mission, more opportunity for friendship, enhanced control over the job situation, or opportunity to fully engage in making a more significant difference. Similar wants are expressed by the growth-motivated employee.
As the manager and employee work together on their assigned responsibilities, they learn about their respective competence, aspirations, trustworthiness, and ability to make career relevant commitments. Early in the process of working interdependently, the desirability of a strategic alliance is discussed. Either party may initiate the conversation. When each passes the tests of the other on the big 3, they have forged a strategic alliance. This alliance will be instrumental in achieving objectives beyond the scope of the two official positions. The increment in power to get extraordinary things done is created by both people serving beyond the limits of their jobs. Other subordinates of the same boss may or may not forge a similar alliance. Unless both parties work earnestly and pass each other’s tests, an alliance is not formed. Thus, the dynamic is fragile at the early stage and becomes more robust as the process advances to a fully established alliance. During the early stages, both parties are careful to judge the authenticity of the other. After the alliance is established, each party relies on the other’s commitments to lend a helpful hand and watch one’s back for attacks.
After the growth-motivated employee has forged an alliance with his/her manager, the next target persons can be identified by the manager from among those of his/her alliances. This facilitates the alliance building dynamic. As the alliance network is enlarged, the facilitation factor multiples. Soon the alliance network becomes pervasive and those people most central to the network are seen as most influential and most ready to initiate a leadership action to change a game that members of the alliance agree needs changing. Such leadership missions may include the closing of new gaps in routine work processes caused by the intense turbulence of the organization’s environment (Graen, 2010).
This alliance building dynamic can be truncated by management practices that discourage the growth-driven employee’s initial efforts to get their immediate manager to consider the idea of an alliance. When managers are not rewarded for encouraging the development of alliances, employees may have little interest. Without the active support of the manager, only the most growth driven employees would forge ahead. Even these people can become “burnt out” by lack of support from the organization. Those c-suite executives who see the lack of available leadership talent and failure to retain leadership talent as the top two issues facing their corporations should look at how their standard management practices encourage or discourage the development of those who possess the growth strengths to forge alliances — the building blocks of leadership.
After a substantial network of alliances is forged, the four classic functions of team leadership (McGrath, 1962) are performed by those who agree to become members of the team: (1) They collectively develop a plan to change a problem situation that they can only do with teamwork backed by strong alliances; (2) They collectively mold themselves into a leadership team; (3) They collectively acquire the needed new toys and training; and (4) They collectively prepare to adapt as needed during execution of the plan. These functions are needed to support execution of the plan. These functions are made feasible by the presence of established interpersonal alliances that have been tested and found dependable. Attempts to perform the four functions without the benefit of established alliances can be expected to fail. Without the big 3 between all team members, the four functions become too difficult. Clearly, leadership in organizations is not possible with strangers or even close friends without the big 3. Therefore, leaders should first work to forge the big 3 alliances with those who can help them create effective leadership teams when needed. Finally, leadership is a collective activity involving all four functions. We tend to give a single individual too much credit when we attribute the emergence of leadership to any one person and not the team.
The major components of the LMX theory are presented in Figure 1. As shown, the protocol starts with recruiting the people with the right 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 3, the four functions of leadership become empty gestures.
By way of review of LMX theory, the following points are provided. Each point has been elaborated in this chapter.
Attracting an Alliance
When we asked over one thousand managers in five leading manufacturing companies how they attempted to demonstrate their potential to be selected as alliance members (Graen, 2007), thirteen actions significantly (p < .01) distinguished between company-defined “high promotable” employees and their “low promotable” peers. They were as follows.
These findings suggest that from a highly promotable follower’s perspective, if you pass an initial test, you should seek another larger project. After a few of these exchanges, your partner will begin to respect your competence and to trust your promises. But, never make a promise that you cannot keep. When your target manager offers challenges, seek more and see the developmental process in terms of mutual benefit. If your target at first rejects your offer, keep working until hope is lost. If you continually reject the target’s offers, they will cease being offered. You cannot rightly complain after you reject a target’s offer, so be careful. You may opt back into the process later when you see the growth and achievements of your peers who completed the process from the first offer. These early adapters appear to be on “fast-track escalators” compared to the folks who only do business as usual (BU). The late bloomers generally progress beyond the BU bunch, but they seldom catch-up to the early alliance network builders.
Through these informal episodes of seeking and meeting appropriate challenges based on current work flows and the developing needs, getting support for your projects, and rewards after the projects are completed, the “big 3” of mutual trust, respect, and commitment grow. Over this process, the challenging projects become associated with higher levels of responsibility and the corresponding informal rewards become more significant. The process of building leadership-sharing teams and networks flows once the initial tests are passed and parties continue to construct ever-stronger bonds of mutual trust, respect, and commitment. Strategic alliance teams are built gradually by the process of mentoring and peer-to-peer training and experience on beyond business as usual projects.
Research investigations have shown that those who complete this process gain the advantages of the opportunity to learn to perform beyond business as usual (BBU), gain greater satisfaction and engagement in their jobs and their careers, and have mutual trust, respect, and commitment, and optimism about the future. Over their careers, they consistently develop these alliances with colleagues, as they rapidly move up the hierarchy of their companies until they find their dream job. Overall, college graduates who forge strategic alliances move up higher and faster than their peers do over their careers (Graen, Dharwadkar, Grewal, & Wakabayashi, 2006).
By the way, research also suggests a word to the wise--that it’s not nice to attempt to fool your alliance targets (Lam, Huang & Snape, 2006). Those who were seen as being self-serving actors were rejected. Only those viewed as authentic were permitted to negotiate an alliance. Clearly, both appropriate values and performance are necessary. What motivates people is difficult to judge early, but becomes clear over repeated cooperation. Clearly, being authentic and taking career risks is the better way to forge strategic alliances. Next, we turn to a set of practical techniques that can be used to train managers in the art of forging strategic alliances.
The list of the “dos” and the don’ts” by McKenna and Davis (2009) is relevant to the forging of alliances (Graen, 2009). Applying their same recommendations to the LMX 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 (Graen, Hui, & Taylor, 2006).
Finally, let me briefly comment from an LMX perspective on each of the main coaching recommendations of McKenna and Davis (2009).
Q. Is your target of a strategic alliance ready for partnership?
A. Discuss the benefits and costs with target.
Q. What else is the target doing to cooperate in alliance change?
A. If nothing, suggest something.
Q. Do you believe it’s about your intervention?
A. No, it’s about your negotiation.
Q. Is target taking full responsibility for alliance?
A. Targets must do their parts.
Q. Do you have a growing alliance?
A. Ask yourself the big 3 questions.
Q. Is your reality shared by target?
A. Ask target the big 3 questions.
I especially recommend these points to managers learning to build alliances with their people, be they strangers or acquaintances. Clearly, this is no place for amateurs, and proper training and supervised practice for managers should be available. Additionally, training recommendations are:
When in doubt, refer to LMX Leadership: The Series (Graen, 2003b; Graen, 2004; Graen, 2005; Graen & Graen, 2006; Graen & Graen, 2007; Graen & Graen, 2008; Graen & Graen, 2009; Hackman, 1990; Orton, 2000; Schiemann, 2009b).
The progress of alliance team building can be tracked statistically and clinically employing the LMX-alliance measure. The psychometric characteristics of the LMX-alliance measure was documented for reliability using item response theory (Scherbaum, Naidoo, & Ferreter 2007) and validity using longitudinal importance analysis (Naidoo, Scherbaum, & Goldstein 2008).
Research to this point has revealed the hidden resources of LMX theory, namely, an instrumental set of strategic alliances. These alliances are supra-organizational and are generated by each individual’s need to perceive, predict, and control his/her environment. This generates a competition for strategic alliances as instruments. Once these alliances are forged and maintained, they become the drivers of leadership emergence. Those alliance partners that sell the most attractive cooperative plan toward a common objective to their partners are called ”leaders”. We now understand the sources of the hidden resource base of leadership over and above institutional authority. The new research challenge is to understand the decision models that alliance partners use to accept the most attractive cooperative plan. I have speculated (Graen, 1976) that the calculus includes the relative alternatives’ valence, instrumentality and expectancies. For practical application, research can identify leaders by studying those people who maintain strategic alliances and sell their plans to their partners. Also, research is needed to improve leadership training along the lines suggested in this chapter. Business associates can be trained to remain competitive in negotiating and maintaining a set of strategic alliances as a right of entry and can learn to develop attractive cooperative plans toward common objectives. Longitudinal research designs should be used to monitor the growth of strategic alliance structures and consequent leadership incidents over managerial careers. As managers move up the hierarchy, they tend to establish new strategic alliances that provide entry to new sets of alliances both inside and outside of the corporation. The more successful at these processes gain a reputation of strong leadership. These are the skills and experiences that top management teams are seeking. As the European handbook of leadership author, Ingo Winkler states:
I think introducing the concept of the strategic alliance contributes much to advance LMX theory. Particularly, as the concept includes the aspect of collaboration and cooperation but also leaves room for more strategic (or may I say interest related) thinking. That means, as I understand the new version of LMX, people in organisations form interpersonal strategic alliances first and foremost to reach an instrumental agreement that mutually empowers the alliance partners but also allows them to cope with challenges and to get their own interests through, at least to some degree. In this sense, I think it is very much up to definition (or perspective) whether leadership should be seen as alliance with shared direction and process or not. For the individual it could also be that he or she can perfectly live with the interpersonal alliance even if it is not necessarily serving the other party to the same extent that it serves the individual.
In sum, the new LMX indeed opens the black box in terms of providing reasons why to form such alliances. At the same time it points at issues that might be in play when the individuals evaluate their interpersonal alliance in terms of whether they have linked to the right partners or not. From my perspective, the new LMX comes closer to the experience reality leaders and followers perceive at the workplace and the actions that can be observed with organisational actors. (Winkler, 2010)
Agreement on Alliances
Some researchers have not found adequate agreement between the two parties on questions regarding their strategic alliances. Suggestions below are offered to improve the empirical agreement. A strategic alliance is between two business associates who agree to collaborate with each other when needed to perform beyond business as usual. Characteristics of strategic alliances include agreements to defend and support one another, and the “big 3” of mutual respect for competence, trust in motives, and commitment to the welfare of both the corporation and the alliance. These characteristics can be strengthened with beneficial experiences or weakened with negative ones. These characteristics can be assessed validly and reliably using the below protocol.
This assessment protocol’s first requirement is that the business associates of the strategic alliances to be assessed approve the use of such information. The second requirement is that the properly worded same questions about the alliance be asked of both parties. The third requirement is that only reputational reports be employed and not identity reports (Hogan, 2007). The fourth requirement is that when the alliance partners disagree significantly, the disagreement be resolved before being subject to analysis. The fifth requirement is that the alliance must be tested by both parties for effectiveness in delivering assistance when needed. The final requirement is that the respondent be informed that the alliance statement will be checked with the partner. This protocol, when properly followed, produces acceptable agreement between alliance partners (Graen, Hui & Taylor, 2006).
When a requirement is not met, this can contribute to lack of agreement. When no personal approval is obtained, socially desirable responses can be expected. When different questions are asked of each party, little agreement should be expected. When identity questions are asked of a manager and reputational questions are asked of a direct report, a mismatch occurs. A common mistake is to mix identity and reputation (Hogan, 2007). Reputation is a description by an observer of another person’s behavior. Identity is a self-report of a person’s self-concept. Reputation is used to predict future behavior and identity is used to explain one’s own behavior. When parties disagree on their alliance and the discrepancy is not resolved before the analysis, error is added. Until the alliance has been tested by both parties, the strength of the alliance is unknown. Finally, the protocol requires that a check for agreement will be told to both parties before the ratings.
The potential power of a set of strategic alliances maintained by a person may be estimated by the sum of the position power of all relevant strategic alliances that are confirmed as described above. Potential power of alliances permits the proactive involvement in needed leadership incidents. Therefore, the relationship between potential power of alliances and involvement in leadership incidents is positive. Other measures of this potential power that do not employ the above reputational methods may not tap this embedded power (Ng & Feldman, 2010). Simply asking for a self-report on one’s networking success at work is unlikely to reveal the reputational value of the potential power of the person’s set of strategic alliances are easy to claim but difficult to accomplish. In addition, adding a new name and address may count as networking, but it does not approach what is required to count as a new strategic alliance.
The recent adoption of network analysis in corporations should not be confused with the assessment of strategic alliances (Krackhardt & Hanson, 1993). Asking employees who they talk to or who they go to for advice on a work or personal problem are very different questions from asking about those with whom they have forged strategic alliances. Until the right questions are asked about the characteristics of reciprocated alliances, the potential power of network analysis remains ambiguous. Finally, the use of strategic alliances depends upon the cooperation of the respondents. This cooperation can be enhanced by corporate policies treating strategic alliances as additional productive resources for the corporation (Uhl-Bien, Graen, & Scandura, 2000) and by demonstrating to respondents that their information will be both protected and used properly. Strategic alliances are valuable yet fragile agreements which deserve to be protected from outsiders (Graen, 2009).
Progress in the field of managerial leadership has largely failed to guide the training of future executives because of several misguided practices. These include: failing to understand that administrative talent is independent of leadership talent for managers and that all competent administrators are not competent leaders. Administrators are hired to maintain a business unit at peak efficiency using a production system, a power hierarchy, and supplied resources. In contrast, leaders are developed to forge interpersonal strategic alliances and use them to make needed changes. As a consequence, administrators may legitimately command their subordinates; while leaders must persuade their followers. Thus, the administrative function and that of leadership are conflicting in terms of both source of influence and objectives. This suggests that the administrator who is also a leader has a delicate balancing task. All administrators have not mastered this balancing task. Those who have not eventually cease trying to become leaders.
Research that assumes all managerial influence is only due to leadership confounds administrative authority (power to command) with leadership (ability to forge and use strategic alliances). Moreover, business as usual does not require managerial leadership and can be adequately conducted through administrative management, but leadership is needed when business units must deal with crisis or change to remain competitive. In addition, the development of leadership by administrators is a long-term and insider procedure that is only visible when it is active. An administrator’s job behavior when no leadership development is in progress should not be interpreted as leader behavior. Consequentially, the game-changing discoveries presented in this chapter were only possible with our LMX approach, which avoided making the above false assumptions and employed appropriate long-term and insider research methods.
The fundamental process discovered by our systematic program of research was what we call “interpersonal strategic alliances leading to the four functions of leadership”. Without the forging of strategic alliances, little supra-organization innovation (leadership) is expected. As we sought the reasons employees become followers, we found that they seek to be more aware of, better predict, and gain greater control over their employment situation. Contrary to many models of leadership which assume that potential followers are passively waiting to be transformed (Burns, 1978), we find them to be actively searching for opportunities to achieve greater influence over the events at work. As each individual searches for influence mechanisms, a competitive process is initiated for strategic alliances. Each individual faces choices among alliances with different potential benefits and costs. Some individuals may opt out of the competition and go without any strategic alliance, while others compete for alliances with the most potential utility. As this chapter has shown, this dynamic of forging strategic alliances with colleagues has been the focus of the Leadership Motivated Xcellence theory. Once a set of strategic alliances is established by an individual, a program of action around which alliance partners engage can be recommended. This begins the leadership dynamic. When one or more individuals is able to persuade the required strategic alliance partners that a proposed action program’s mutual benefits are worth the costs, the four functions of leadership become feasible. The cycle is completed when a leadership group makes sense of its environment and convinces its members that it possesses adequate control. When new fears arise about their situation, the leadership group may re-emerge and take action.
An important point of this chapter is that before the potential leaders can progress, they need to forge a proper set of strategic alliances as defined and discussed. Colleagues do not follow even close friends without an established alliance (Graen, Hui, & Taylor, 2006). The missing sets of skills for individuals who seek executive leadership are those that are needed to forge strategic alliances with those above, below and across the hierarchy. These are the prerequisites. Guided leadership training should include: (1) opportunities to practice forging proper strategic alliances and avoiding false ones, (2) developing a program of action around which partners can be engaged, (3) organizing for change, (4) implementing the program developed, and (5) adapting as necessary.
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Graen, G. B. Dharwadkar, R. Grewal, R., & Wakabayashi, M. (2006), Japanese career progress over the long haul: An empirical examination. Journal of International Business Studies, 37, 148-161.
Graen, G. B., & Graen, J. A. (2006). LMX leadership: The series. Vol. 4. Sharing network leadership. Greenwich, CT: Information Age Publishing.
Graen, G. B., & Graen, J. A. (2007). LMX leadership: The series. Vol. 5. New multinational network sharing. Charlotte NC: Information Age Publishing.
Graen, G. B., & Graen, J. A. (2008). LMX leadership: The series, Vol. 6. Knowledge-driven corporation: Complex, creative, destruction. Charlotte, NC: Information Age Publishing.
Graen, G. B., & Graen, J. A. (2009). LMX leadership: The series. Vol. 7. Predator's game-changing designs: Research-based strategies. Charlotte, NC: Information Age Publishing.
Graen, G., B., Hui, C., & Taylor, E. A. (2006) Experience-based learning about LMX leadership and fairness in project teams: A dyadic directional approach. Academy of Management Learning and Education, 5(4), 448-460.
Graen, G., Liden, R., & Hoel, W. (1982). Role of leadership in the employee withdrawal process. Journal of Applied Psychology, 67, 868-872.
Graen, G.B., Novak, M.A., & Sommerkamp, P. (1982). The effects of leader-member exchange and job design on productivity and satisfaction: testing a dual attachment model. Organizational Behavior and Human Performance, 30, 109-131.
Graen, G. B., Rowold, J., & Heinitz, K. (2010). Issues in operationalizing and comparing leadership contracts. Leadership Quarterly, 21(3), 563-575.
Graen, G.B., Scandura, T., & Graen, M.R. (1986). A field experimental test of the moderating effects of growth need strength on productivity. Journal of Applied Psychology, 71, 484-491.
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Society for Human Resource Management, 2010
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LMX theory diverged from the traditional leadership style approach with the discovery that when managers begin working with new direct reports the leader and follower may form beyond business as usual understandings which contribute over time to positive perceptions, attitudes and performance. These productive understandings were called “leader-member exchanges”. As the theory evolved, it was discovered that two independent organizational processes were needed to describe administration of a business unit and leadership of a team. Moreover, the extra-organizational LMX strategic alliances may be with superiors, subordinates or peers. Now LMX theory refers to a new and more comprehensive process called “Leadership Motivated Xcellence.
Brief History of Leadership-Motivated Excellence Theory
Graen, G. B. (1976). Role making processes within complex organizations. In M. D. Dunnette (Ed.), Handbook of industrial and organizational psychology (pp. 1201-1245). Chicago: Rand-McNally. (FIRST PROPOSED).
Graen, G. B., Cashman, J. F., Ginsburg, S., & Schiemann, W. (1977). Effects of linking-pin on the quality of working life of lower participants. Administrative Science Quarterly, 22, 491-504. (ADDED LINKING-PIN).
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. (FIRST NETWORK).
Graen, G., Novak, M. A., & Sommerkamp, P. (1982). The effects of leader-member exchange and job design on productivity and satisfaction: Testing a dual attachment model. Organizational Behavior and Human Performance, 30, 109-131. (FIRST TRAINING EXPERIENCED).
Graen, G. B., Liden, R. C., & Hoel, M. (1982). Role of leadership in the employee withdrawal process. Journal of Applied Psychology, 67, 868-872. (FIRST MULTILEVEL).
Ferris, G. R. (1985). Role of leadership in the employee withdrawal process: A constructive replication. Journal of Applied Psychology, 70, 777-781. (REPLICATION OF MULTILEVEL).
Graen, G.B., Scandura, T., & Graen, M. R. (1986). A field experimental test of the moderating effects of growth need strength on productivity. Journal of Applied Psychology, 71, 484-491. (TRAINING EXPERIENCED).
Graen, G. B. & Wakabayashi, M. (1994). Cross-cultural leadership making: Bridging American and Japanese diversity for team advantage. In H. C. Triandis, M. D. Dunnette, & L. M. Hough (Eds.), Handbook of industrial and organizational psychology (pp. 414-446). Chicago: Rand-McNally. (MANAGEMENT CAREERS).
Graen, G. B. & 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, 6, 219-247. (FIRST REVISION).
Gerstner, C. R., & Day, D. V. (1997). Meta analytic review of leader-member exchange theory: Correlates and construct ideas. Journal of Applied Psychology, 82, 827-844. (FIRST META-ANALYSIS)
Uhl-Bien, M., Graen, G. B., & Scandura, T. A. (2000). Implications of leader-member exchange (LMX) for strategic human resource management systems: Relationships as social capital for competitive advantage. In G. Ferris, (Ed.), Research in Personnel and Human Resources Management (Vol. 18, pp. 137-185). Greenwich, CT: JAI Press. (SOCIAL CAPITAL)
Harter, J. K., Schmidt, F. L., & Hayes, T. L. (2002). Business-unit-level relationship between employee satisfaction employee engagement, and business outcome: A meta-analysis. Journal of Applied Psychology, 87(2), 268-379. (META-ANALYSIS OF OUTCOMES).
Hackett, R. D., Farh, J-L, Song, L. J. & Lapierre, L. M. (2003). LMX and organizational citizenship behavior: Examining the links within and across Western and Chinese samples. In G. Graen (Ed.), LMX leadership: The series. Vol. 1. Dealing with diversity (pp. 219-263). Greenwich, CT: Information Age Publishing. (META-ANALYSIS OF LMX AND OCB).
Uhl-Bien, M. & Maslyn, J. (2003). Reciprocity in manager-subordinate relationships: Components, configurations, and outcomes. Journal of Management, 29(4) 511-532. (ALLIANCE BUILDING).
Graen, G. B. (2003a). Interpersonal workplace theory at the crossroads: LMX and transformational theory as special cases of role making in work organizations. In G. Graen (Ed.), LMX leadership: The series. Vol. 1. Dealing with diversity (pp. 145-182). Greenwich, CT: Information Age Publishing. (SECOND REVISION).
Sparrowe, R. T., & Liden, R. C. (2005). Two routes to influence: Integrating leader-member exchange and network perspectives. Administrative Science Quarterly, 50, 505-535. (ALLIANCE PATTERN)
Graen, G. B., Hui, C., & Taylor, E. (2006). Experience-based learning about LMX leadership and fairness in project teams: A dyadic directional approach. Academy of Management Learning and Education, 5(4) 448-460. (FIRST TEAM)
Graen, G. B. Dharwadkar, R. Grewal, R., & Wakabayashi, M. (2006), Japanese career progress over the long haul: An empirical examination, Journal of International Business Studies, 37, 148-161. (CAREER OUTCOMES).
Scherbaum, C. A., Naidoo, L. J., & Ferreter, J. M. (2007). Examining component measures of team leader-member exchange: Using item response theory. In G. B. Graen & J. A. Graen (Eds.), LMX leadership: The series. Vol. 5. New multinational network sharing (pp. 129-156). Charlotte, NC: Information Age Publishing. (ITEM RESPONSE ANALYSIS).
Lam, W., Huang, X., & Snape, E. (2006, August). Why doesn't my feedback seeking improve my relationship with my boss? Paper presented at the meeting of the Academy of Management, Atlanta. (AUTHENTICS ONLY).
Naidoo, L. J., Scherbaum, C. A., & Goldstein, H. W. (2008). Examining the relative importance of leader-member exchange on group performance over time, Knowledge driven corporation: A discontinuous model. In G. B. Graen & J. A. Graen (Eds.), LMX leadership: The series. Vol. 6. Knowledge driven corporation: Complex creative destruction (pp. 211-230). Charlotte, NC: Information Age Publishing. (LONGITUDINAL IMPORTANCE ANALYSIS).
Mehra, A., Marineau, J., Lopes, A. B. & Dass, T. K. (2009). The co-evolution of friendship and leadership networks in small groups. In G. B. Graen & J. A. Graen (Eds.), LMX leadership: The series. Vol. 7. Predator’s game changing designs: Research-based tools (pp. 145-162). Charlotte, NC: Information Age Publishing. (NETWORK CHANGE).
Furst, S. A. (2009). Middle managers as game changers: Strategies for reducing resistance and the role of LMX. In G. B. Graen and J. A. Graen (Eds.) LMX leadership: The series. Vol. 7. Predator’s game-changing designs: Research-based tools (pp. 99-122). Charlotte, NC: Information Age Publishing. (RESISTANCE TO CHANGE).
Graen, G. B., Rowold, J. & Heinitz, K. (2010). Issues in operationalizing and comparing leadership contracts. Leadership Quarterly, 21(3), 563-575. (PERFORMANCE FOCUS)
Graen, G. B. (2010). Enhanced employee engagement through high engagement teams: A top management challenge. In S. Albrecht (Ed.), Handbook of employee engagement. Cheltenham, UK: Edwin Elgar Publishing. (PROBLEM SOLVING TEAMS).
Naidoo, L. J., Scherbaum, C. A., Goldstein, H. W. & Graen, G. B. (in press). A longitudinal examination of the effects of LMX, ability, and differentiation on team performance. Journal of Business and Psychology. (TEAM PERFORMANCE)
Dulebohn, J. H., Bommer, W. H., Liden, R. C., Brouer, R. L., Ferris, G. R. (in press). A meta-analysis of antecedents and consequences of leader-member exchange: Integrating the past with an eye toward the future. Journal of Management. . (LATEST META-ANALYSIS)
Graen, G. B. (2012). The missing link in network dynamics. In M. Rumsey (Ed.), The many sides of leadership: A handbook. London, UK: Oxford University Press (LEADER MOTIVATED XCELLENCE THEORY).