Leader-member Exchange Model Essay


            This paper was meant to study groupings in organizations, with emphasis on In Groups and Out Groups. It uses a situational business case study to analyze these groupings major differences and what makes them to come up. It also tries to assess the variations between managing and leading people. The proposal was that it is better to provide leadership than management.


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            This report is meant to tackle the issue of In Groups and Out Groups in organizations.

“Groups play the role of bringing about uniqueness in various types of modern organizations” (Bazerman, 2003). Groups arise as result of distinctions in characters, cultural orientation, social status and the roles people play in an organization. Thus in every organization people with similar attributes tend to coalesce together to form one group which could be the In Group, and view others not in their group as the Out Group. This report will use case situations to assess the main differences between these two groups and their resultant effects on the general leadership and management of the organization.

Group Business Environment.

            An example where I served as a member of an In Group in a business environment was when I was working in the sales department of a marketing firm. In the same business environment, there was an Out Group. This was another business that was doing similar business and we were competing with in the marketing world. An area where I served as a member of an Out Group was when I was promoted to be Assistant Head of marketing. I therefore joined another group with different roles to play that is the management. The management was therefore viewed as an Out Group while the other staff members were the In groups. The major differences between these two groups were in terms of their work definition as related to the goals and objectives that were set. The main difference was that the management was mainly charged with formulating marketing policies and strategies while the work of the In Group, that is the other staff was to implement those strategies. The same happened with the rival business whereby we interacted with its employees in a reserved manner, as compared to those from our firm.

            Presence of In Groups and Out Groups has significant effects on the overall functioning of organizations. One major effect is that they mostly serve as the sources of conflicts in organizations (Westbrook, 1993). Each of these two parties have their own goals and way of life which in most cases is contrasting of each other, potential for conflict is very high. Also, workers tend to put workers in their groups in a more positive way.

Most of these groupings were related to roles being played by each worker or collectively carried out. Thus the subordinate staffs were in the In Group. Thus the level or group at which a person could reach a certain group was based on performance of particular tasks. However, some level were as a result of non-task related attributes like education level and experience.

Leadership and Management

            Leading people is very different with managing those people. The role of leadership in settings like groups cannot be over emphasized and leaders tend to project loyalty leaders than managers (Oakley, 1992). Managers are more of rulers who through laid down procedures, put leading does not require any rules or laws to use to be able to read.

The best way to achieve organization’s goals is to provide more of leadership than management. Provision of leadership is crucial because the leaders are allowed the flexibility to choose and adopt new ideas to face changing. Therefore organizations should carry out change management to put more emphasis on leadership.


            All modern organizations have groupings of one type or the other. These groupings affect the way management carries out its mandate. What is important is the type of leadership that is displayed by the organization to address the interests of these groupings.


Bazerman, M. H. (2002). Judgment in managerial decision making (5th ed.).

                Hoboken, NJ: John Wiley & Sons.

Westbrook, J.D. (1993). Taking a multivariate approach to total quality management.

                Industrial Management, 35(2), 2-3.

Oakley, E. K. (1992). Modern Leadership and Management. Boston:  Harvard Business School            Press, 2003.