Why Equal Treatment at Work Sometimes Backfires

By Frank K.Y. Chan

What if equality doesn’t make everyone happy? In research published in MIS Quarterly, myself and my co-authors Viswanath Venkatesh (Virginia Tech), James Y. L. Thong (Hong Kong University of Science and Technology), Kai Spohrer (Frankfurt School of Finance and Management), Ankur Arora (University of Memphis), Hartmut Hoehle (University of Mannheim), and Srinivasan Venkatraman (Boeing) explored how different levels of leader-member exchange impact team member satisfaction.

This research examines the pivotal role of leadership in information systems development (ISD) teams, emphasizing the critical influence of team leaders on developer satisfaction and the broader implications for software company performance. The advent of agile ISD methodologies, such as Extreme Programming and Scrum, has necessitated a shift in leadership behaviors.

The traditional model of formal and hierarchical control has given way to an agile model that advocates self-organization, collaboration, and the provision of feedback through intensive coaching. Yet this shift raises challenges regarding team leaders’ management of interpersonal relationships within teams, particularly in balancing the varying needs of team members and the allocation of limited leadership resources.

Our research delved into the concept of leader-member exchange (LMX) differentiation, highlighting its potential both to enhance and disrupt team dynamics and individual satisfaction. LMX differentiation, which describes the variability in quality of relationships between leaders and team members, can be perceived as either beneficial, by rewarding and directing resources efficiently, or discriminatory, leading to conflicts and reduced job satisfaction. The inconclusive findings in the extant literature underscore the complexity of its impact on ISD teams.

Against this backdrop, we investigated how LMX differentiation and team-member exchange (TMX) influence developer satisfaction within agile ISD teams and explores team processes that might mitigate the effects of LMX differentiation. Through a mixed-methods approach, including a survey of 1,894 software developers in 217 agile ISD teams and a case study consisting of 40 interviews of developers and team leaders from five agile ISD teams, we identified how specific team processes can leverage the benefits of LMX differentiation to enhance developer satisfaction.

The research findings offer significant theoretical and practical implications regarding leadership and team dynamics in agile ISD. Theoretically, it challenges and extends existing literature by highlighting the importance of LMX differentiation and its interplay with TMX in agile ISD teams:

1. LMX differentiation within teams: Contrary to prior research—which often assumed uniform leadership behaviors across all team members—this research underscores the importance of strategic differentiation of interpersonal relationships by team leaders. It reveals that LMX differentiation, when coupled with high-quality TMX, allows for a more efficient allocation of resources, where key team members receive more support but share these benefits with the team, thereby enhancing developer job and team satisfaction.
2. Context-specific team processes: This research identifies specific mechanisms embedded in agile practices that enable teams to benefit from LMX differentiation. These processes—collectivization of resources, visible appreciation of privileges, and freeing up leader capacities—are unique to agile ISD environments and suggest that agile practices may uniquely facilitate positive outcomes from LMX differentiation, unlike in other professional settings.

From a practical standpoint, the findings also offer guidance on how to manage agile ISD teams effectively:

1. Selective resource investment: Leaders should consider differentiating their investment in team members based on their roles and contributions. This approach, however, requires a balance to avoid perceptions of unfairness, particularly in teams with lower TMX quality.
2. Enhancing TMX quality: The success of differentiated leadership strategies is significantly influenced by the quality of TMX within the team. Leaders should cultivate an environment where resources are shared and collaboration is encouraged, maximizing the benefits of agile practices.
3. Leadership adaptation based on TMX: In environments where TMX is low, leaders might need to adopt a more uniform approach to leadership and resource distribution to maintain team cohesion and performance.

Overall, this research underscores the complexity of leadership within agile ISD teams and offers a nuanced understanding of how LMX differentiation and TMX can be leveraged to enhance team satisfaction and performance. It provides a compelling case for the strategic differentiation of leadership approaches, guided by the quality of team interactions and agile practices, offering valuable insights for both academic research and practice in the field of agile ISD.

This article also appears on ESSEC Knowledge.