Transactional leadership is a type of leadership in which the leaders awards the employees who perform their tasks required and punishes those employees who are unable to perform effectively. This leadership style is based on transaction or exchange in between the leaders and the employees.
What is Transactional Leadership?
It is a type of leadership style in which the employees are bound to follow the instructions of the leaders and work accordingly.
Principles of Transactional Leadership
Transactional leadership consists of ten principles in order to produce a successful output at their workplace. The points are listed below with brief descriptions:
1. Extrinsic Motivation
A transactional leader can motivate their employees only through promotions, increased payments and praises for their work. Even though it might seem as an advantage at the beginning in certain situations, it may cause the leaders to be too dependent on external variations of motivation. The leaders may not give attention to the failure of the incentives by the creative people of the organization.
2. Practicality
The transactional leadership is realistic and practical in nature. It does not approve anything innovative and should be planned based on real-life situations. The leaders also take a practical approach by considering the obstacles that the organizations might face. The leaders keep this in mind as they have to take the risks and the blames of their organization and handle them singlehandedly.
3. Opposed to Change
As the leaders of a transactional leadership always depend on ordering their employees, they do not accept the idea of bringing changes at their workplaces. The leaders will be able to focus completely on the goals of their company, which is why they struggle to maintain their current status rather than transitioning the workplace frequently.
4. Conventional Decision-Making
The transactional leaders may not encourage individual decisions to reduce the risks of an organization. Everyone in the organization is rewarded when they perform according to what has been expected. This shows the delivering of the desired outcomes and keeping the individuals on track. Quick decision making is essential on situations where there is an increased chance of risks.
5. Performance-Oriented
A transactional leader keeps an eye on the performance of the workers that is rooted to the goals and the targets of the workplace. They notice when an employee achieves the fixed goals and will award them accordingly. On the other hand, they also pay attention to those employees who perform poorly and do not achieve their goals. Their rewards may be retained or they may be punished for not fulfilling their targets by the leaders.
6. Linear Thinking
The leaders of this leadership style excel on attaining the objectives of their organization inside the existing systems and the restrictions. The leaders always refer to think according to their intelligence and do not ask anyone for advices or solutions. Although some of them may be excellent in managing the daily affairs of the organization, they may strive hard in finding a satisfactory solution.
7. Just-in-Time Management
The leaders prefer to handle and manage the different constraints that arise in an organization, other than solving those issues actively. They also do not prefer to lessen the risks or recognize any new opportunities for the issues to be solved. The importance on the numbers and the bottom line may keep the leaders so glued to the attributes that they do not acknowledge the bigger problems of that issue.
8.Directive
The transactional leaders are the reliable and the sole decision-makers, and they welcome this characteristic as a major factor of their authority. The employees who perform outstandingly follow the clear instructions and the commands that are provided by the leader itself. The employees are not encouraged to provide any ideas and are only paid to increase the motivation for their work.
9. Structured
10.Individual Effort
The inspirational style of the transactional leaders may look interesting to individual employee. Even though the performers are assigned in groups, the flexible structure of the organization that the leader prefers may offer limited importance to collaborations, which is required to achieve broader organizational targets. The individual efforts of each employee are significant to measure the performance of them.
Transactional Leadership Example
The key function of transactional leadership is to maintain the workplace with strict rules and guidelines. For instance, this type of leadership styles are applicable in places that deal with legal and security issues. These leadership style works best in these places as most of the employees do not keep any important information within them, and follows the leaders’ commands. This style also works well as there is a sense of respect and trust of the employees towards the leaders. The roles are clearly divided among the subordinates for example; one of the employees has to deal with the data of the organization, while another employee has to inform the leaders of the amount of productivity of the organization and so on.
Some of the Popular Transactional Leaders
1. Bill Gates: Bill is one of the most famous software developers who followed transactional leadership before changing it into a transformational leadership. When he appointed new subordinates in his company, he used to visit his new teams frequently. He would test his employees by asking them tough questions by drilling them. He would only be satisfied until the employees came to track and realized their goals, which is the quality of a transactional leader.
2. Vince Lombardi: Lombardi signed a five year contract with Green bay, and became a transactional leader. He was the coach and the team never lost while they were under his leadership. He led the team towards winning a record and five championships as well. This is a quality of a transactional leader in which the subordinates follow what the leaders say and show respect to the leaders.
Transactional Leadership Advantages and Disadvantages
Advantages
1. Creates a sense of fairness: In a transactional leadership, all the employees are treated equally and are provided with a fair feedback. The rewards and the punishments of the employees are also given in the same manner. The managers or the leaders of the organization can look at the data and decide on whom to reward and whom to punish according to their performance. The leaders can use the data to address the facts and will not seem as an opinion or a feeling.
2. Easy-to-understand system: The system of rewarding and punishing is very easy to understand and is not open for interpretation. The employees know what they need to attain in order to succeed and when to attain the goals if they are to be rewarded. They also know the consequences that they may face if they do not meet their goals or objectives.
Disadvantages
1. Lack of focus on building relationships: The transactional leader focuses on the rewards to encourage the employees so that they produce a positive output. They do not focus on the relationships among the employees and does not create a friendly environment at the workplace. There have been reports that most of the employees quit their jobs as the managers only want their workers to meet their goals, but does not emphasize on the working environment and the relationships among the subordinates.
2. Discourages creativity: The transactional leaders are focused on either rewarding or punishing their employees for not attaining the goals. There is no room left for creativity, neither are they motivated to come up with new ideas. As a result, the leaders stick to their strict rules and carry out the tasks that the workers are assigned with.
Transactional Leadership FAQs
What are the Roles of a Transactional Leader?
The role of a transactional leader is to focus on the structure of their organization. They also set the standards and assign the workers with different tasks with expected outcomes. They have a look at the performance of the employees and decide on whether to award the employees or penalize the employees.
What is a Good Example of a Transactional Leader?
Norman Schwarzkopf is a great example of a transactional leader and was an advisor to the South Vietnamese Army. He was also a commander-in-chief in the U.S forces, and took the responsibilities of thousands of troops in Iraq and Kuwait. He applied the rules and conditions of the military to organize the operations in several continents, which is a trait of transactional leadership.
The Bottom Line
The transactional leadership that emphasizes on the possible chances is a successful type of leadership styles that can be used to tackle the capacities of an employee. It is also important to make sure that the operations are carried out regularly and should be effective in order to increase the level of creativity at an organization.
Related Readings
- Leadership Style and Traits of Henry Ford
- Leadership Styles and Skills of Jamie Dimon
- Leadership Styles and Traits of Sheryl Sandberg
References
- https://searchcio.techtarget.com/definition/transactional-leadership
- https://www.verywellmind.com/what-is-transactional-leadership-2795317
- https://yscouts.com/10-transactional-leadership-characteristics/
- https://harappa.education/harappa-diaries/transactional-leadership/
- https://www.iedunote.com/transactional-leadership
- https://online.stu.edu/articles/education/what-is-transactional-leadership.aspx
- https://www.fool.com/the-blueprint/transactional-leadership/
- https://www.iedunote.com/transactional-leadership
- https://www.ckju.net/en/dossier/transactional-leadership-using-contingent-rewards-boost-performance
Tamanna is working as a content writer at The Strategy Watch. She has recently completed her graduation from a reputed university in Bangladesh. Tamanna was immensely interested in knowing about leadership and has written about different kinds of leadership till now. She has gathered a vast amount of knowledge regarding the topic and is looking forward to work on more leadership related topics in future. Moreover, she is intended to dive deep into the different sectors of the business world and explore them.