What is transactional leadership?Transactional leadership, also known as managerial leadership, is a leadership style where leaders rely on rewards and punishments to achieve optimal job performance from their subordinates. Show
The transactional executive leadership model is based on an exchange or transaction. The leader rewards workers who perform their tasks to the specified levels and punishes workers who do not perform to those set standards. This relationship between leader and subordinates is based on theories that assume individuals are not self-motivated and need structure, instruction and supervision to accomplish their jobs. The theory also postulates that workers will perform their tasks as the transactional leader wants them to do in exchange for the leader's offering something the workers want, such as pay. The three approaches to transactional leadership are the following:
These methods are used in combination with each other to achieve transactional leadership. Transactional leadership characteristicsTransactional leadership assumes that there are superiors and subordinates, and that subordinates demonstrate the following characteristics:
A transactional style of leadership works best in a structured environment where there are few deviations from established business processes and defined roles with specific tasks to accomplish. According to transactional leadership theory, this type of leader works within an organization's existing structure. A transactional leader seeks to have subordinates deliver specific results that are articulated and measurable. These are sometimes referred to as SMART goals , which stands for specific, measurable, achievable, realistic and time-bound. A transactional leader evaluates subordinates on whether they meet defined requirements and expected results. Transactional leaders appeal to the self-interest of their subordinates to keep them on track. Transactional leaders are often:
Transactional leadership implementations generally:
Brief history of transactional leadershipSome of the significant figures behind the development of leadership theory were the following:
The transactional leadership style was prevalent in the U.S. after World War II. Many modern businesses, with their focus on innovation and change, prefer other supervisory styles, such as transformational leadership. While these are more common in corporate culture today, transactional leaders remain valued in organizations such as the military and large companies where rules and regulations dominate.
Transactional vs. transformational leadershipTransactional leadership is frequently contrasted with transformational leadership. These styles are opposites and often seen as incompatible. Leaders in each model rely on a different set of leadership skills. Transactional leadersTransactional leadership is called a telling management style, because the leader tells subordinates what to do. A transactional approach upholds the status quo. Transactional leaders focus on achieving short-term goals and performing tasks correctly and to specifications. They typically don't drive change but follow established protocols and procedures. A transactional leader does not generally fit well in entrepreneurial environments where creativity and innovation are required. Transactional leadership works best in scenarios where there are set protocols and procedures and a more rigid structure. A transactional leader works well in an organization transitioning to a more procedural or linear style of management, like the waterfall model. Transformational leadersTransformational leadership is considered a selling management style. These leaders sell employees on their vision and motivate and inspire workers to challenge the status quo and work toward a larger goal. Transformational leaders have more personal connection with subordinates. They are often more hands-off and have a charismatic approach that intrinsically motivates employees without rewards and punishments. This type of leadership drives change. These leaders do well in situations where expectations aren't always clear and rigid, and there is more room to test and experiment -- such as in Agile and DevOps implementations. Servant leadersTransactional leadership also contrasts with servant leadership. This approach places service to others and the needs of others -- including other employees -- above the needs of the business and the existing work hierarchy and procedures. Advantages and disadvantages of transactional leadershipThe transactional leadership model has a range of benefits and drawbacks. Advantages
Disadvantages
Examples of transactional leadershipTransactional leadership is best suited to occupations that require a high level of structure or supervision. It is also suitable for emergency settings where careful monitoring and rapid intervention are necessary. For example, for a company that experiences a data breach, transactional leadership would be ideal for implementing the recovery plan and ensuring that sensitive assets are quickly secured and accounted for. Another example is in the armed forces, where the safety of the team and the mission rely on everyone following orders to a high degree of precision. Here, a mistake could endanger people's lives. Many organizations favor the transformational and servant leadership styles that prioritize the employee's input and experience over rigid, repetitive structure. Learn how human resources departments are using journey maps to better understand the employee experience and find out what matters to employees. This was last updated in August 2022 Continue Reading About transactional leadership
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In which ways do interpersonal skills help leaders in being effective?Strong interpersonal skills enable leaders to foster meaningful relationships with their team, engage and motivate employees, navigate setbacks, and address the root cause of poor performance. In fact, multiple studies have shown that leaders with high emotional intelligence create more connected and motivated teams.
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