Leader-Member Exchange

Retaining employees is a major goal of internal marketing. Internal marketing is often performed through direct interpersonal communication. Leader-Member Exchange (LMX) theory informs how such communication and retention may take place. The Leader-Member Exchange measurement model and a proposed structural equation model are tested. The test produced two factors, consistent with extant LMX-7 and LMX-6 measure, that combined into a second order factor. The model suggests that employees that communicate frequently with their immediate supervisor develop high quality LMX and will successfully negotiate different, and better, role and employment parameters, than those who do not engage in such communication, thus having less of an intent to turn. Findings regarding member pay appear counterintuitive. Multiple tests of the structural equation model using both ordinary least squares and maximum likelihood approaches were successful.