LMX suggests that leaders create in-groups and out- groups that they decide at the beginning of their relationship with their subordinates or followers.15The leader then trusts the in-group members more than the others, consults and works closely with them, brings them to certain authority and responsibility positions, and also may reward them more in the form of their appraisals and promotions. In-groups can be formal or informal. In other words, they can take place in organizational charts or not.