What is Transactional Leadership?

What is Transactional Leadership?: Leadership Skills Training Free lesson

Transactional leadership style was initially described in 1947 by Max Weber and again in 1981 by Bernard Bass. The leadership style is most frequently used by managers. It centers on the fundamental management of short-term planning, organizing, controlling.

Transactional leadership entails directing and motivating followers chiefly through interesting to their own advantage. Transactional leaders’ powers come from the formal authority that has been given to them and their responsibilities within the organization. The main objective of the leader’s follower is to follow or obey instructions given by the leader. The style can therefore also be considered as the “telling style.”

The transactional believes in using a system of punishment and rewards to encourage and motivate followers. If a follower or subordinate does not do as the leaders instructs, a punishment is given, and if the follower does as is desired by the leader, a reward is given. The exchanges between follower and leader occur in order to achieve regular performance objectives.

Exchanges consist of four elements:

Contingent rewards: Transactional leaders tend to relate goals to rewards, provide the needed resources, clarify expectations, and provide different kinds of rewards for achieving goals. Such leaders set goals that are specific, measurable, attainable, realistic, and timely (SMART) for their followers.

Active management by exception: Transactional leaders vigorously monitor the job done by their followers, they watch for any deviation from standards and rules, and they take remedial actions to prevent any mistakes.

Passive management by exception: Transactional leaders arbitrate only when standards have not been met or whenever performance has not been according to their expectations. These leaders may even decide to punish followers who have performed in ways that are unacceptable.

Laissez-faire: Transactional leaders provide environments where followers are given many opportunities to make choices or decisions. The leader relinquishes his or her responsibilities and evades making decisions and consequently, the team or group lacks proper direction.

 Transactional Theory Assumptions

  • Followers need to obey the leader’s orders or instructions
  • Followers are motivated by punishment or reward
  • Followers need to be closely controlled and monitored as they are not self-motivated

Transactional leaders tend to exaggerate standard procedures and rules, and detailed and short-term goals. Such leaders do not make an attempt to develop creativity or their followers and encourage new ideas. This type of leadership may be well suited where the organization has simple problems which are also clearly defined. These leaders tend to ignore ideas which do not fit with the groups existing goals and plans.

Transactional leaders are observed to be very effective in guiding decisions which are meant to improve productivity and cut costs. They tend to be very controlling and attack-oriented and their relationships with their subordinates tend to be fleeting and not based on any emotional bond.

The transactional leadership style is often viewed as inadequate, though not bad, when it comes to developing full leadership potential. Though it forms as the foundation of more mature dealings, care need to be taken by leaders not to use the style exclusively or it may lead to the emergence of an environment that is pervaded by politics, power, perks and position.

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Dr. Paul L. Gerhardt, PhD
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