How Transactional Leadership Works?
When it comes to management, leaders are sometimes stuck at the point of using a suitable leadership style to supervise and keep employees motivated for both short-term and long-term achievement. Plenty of experts suggest that transactional leadership can work best in the specific tasks and defined roles in a structured business setting.
If you are wondering whether leveraging transactional leadership is your best choice, let’s check out more insights in this article.
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What is a Transactional Leadership Style?
Transactional leadership theory originated from Max Weber in 1947 and then by Bernard Bass in 1981, it involves motivating and controlling followers by nature through a give-and-take basis. However, this management style soon emerged during the Industrial Revolution in the 14th century by the rịch as a way of encouraging competitive advantage. For a time, the purpose of using transactional management style is an exchange of valued things” (Burns, 1978).
In addition, transactional leadership is a style of management that focuses on the use of perks and punishments to motivate followers to achieve their goals. This leadership style is based on the exchange of rewards and incentives for the completion of tasks or achieving specific goals rather than looking for progress in employees’ talents.
In this style of leadership, leaders set clear expectations, provide feedback, and reward followers for achieving specific objectives. The transactional leader also monitors progress, identifies problems and takes corrective action when necessary.
Similar to other leadership styles, transactional leadership has a range of advantages and disadvantages. Understanding these elements can help leaders find out the best techniques to work with employees in different situations.
Pros of transactional leadership
- Clear Expectations: This leadership style provides clear expectations and goals to followers, which helps them to understand their role and what is expected of them.
- Efficient: Transactional leaders focus on achieving results and maximizing productivity, making them highly efficient in their approach to leadership.
- Rewards Performance: This leadership style rewards good performance, which can help to motivate followers to work harder and perform better.
- Easy to Implement: The transactional leadership style is relatively easy to implement, making it a popular approach in many organizations.
- Maintains Control: The transactional leadership style allows the leader to maintain control over the organization, which can be important in certain situations.
Cons of transactional leadership
- Limited Creativity: This leadership style can stifle creativity and innovation, as it is primarily focused on achieving specific goals rather than exploring new ideas.
- Short-Term Focus: The transactional leadership style is often focused on short-term goals and objectives, which can result in a lack of long-term planning and vision.
- Lack of Personal Development: The focus on achieving results can lead to a lack of emphasis on personal development and growth for followers.
- Potential for Negative Reinforcement: The use of punishments to correct behavior or performance can create a negative work environment and lead to low morale among followers.
- Lack of Flexibility: The transactional leadership style is highly structured and rigid, which can limit flexibility and adaptation to changing circumstances.
Characteristics of Transactional Leadership
There are three approaches to transactional leadership styles as follow:
- Contingent Reward: This approach is based on the exchange of rewards and incentives for achieving specific goals or completing tasks. The leader sets clear expectations and provides feedback, and followers are rewarded for meeting or exceeding expectations. This approach focuses on the link between performance and rewards.
- Management by Exception (Active): This approach involves monitoring performance closely and taking corrective action when problems arise. The leader proactively identifies potential issues and intervenes to prevent them from escalating. This approach requires the leader to be highly involved in the day-to-day operations and to have a detailed understanding of the work being done.
- Management by Exception (Passive): This approach involves intervening only when there is a problem or deviation from the norm. The leader is not actively monitoring performance but rather waits for issues to be brought to their attention. This approach is best suited for situations where the work is highly routine and predictable, and the leader trusts their followers to perform their duties without constant supervision.
To become transactional leadership, there are some key characteristics of transactional leaders that you should focus on:
- Goal-oriented: Transactional leaders focus on achieving specific goals and objectives. They set clear expectations for their followers and reward them for meeting or exceeding those expectations.
- Results-driven: The primary focus of transactional leaders is achieving results. They are less concerned with the personal development of their followers and more focused on achieving specific outcomes.
- Analytical: Transactional leaders are analytical and data-driven. They rely on data and information to make decisions and measure progress.
- Reactive: Transactional leaders are reactive in their approach to leadership. They respond to problems or deviations from the norm rather than proactively seeking out potential issues.
- Clear Communication: Transactional leaders are effective communicators who can clearly articulate expectations and provide feedback to their followers.
- Detail-Oriented: Transactional leaders pay close attention to details and are highly focused on ensuring that tasks are completed correctly.
- Consistent: Transactional leaders are consistent in their approach to leadership. They apply the same rules and standards to all followers and do not show favoritism.
- Practical: Transactional leaders are practical and focused on achieving tangible results. They are not overly concerned with theoretical or abstract concepts.
What are Transactional Leadership Examples?
Transactional leadership is commonly found in various degrees of practice in both business and education, and here are a few examples:
Transactional leadership examples in business
- McDonald’s: The fast-food chain McDonald’s is often cited as an example of transactional leadership in business. The company uses a highly structured system of rewards and punishments to motivate its employees to meet specific goals and objectives, such as increasing sales and reducing waste.
- Sales Teams: Sales teams in many industries often rely on transactional leadership to motivate their employees. For example, sales managers may use incentives, such as bonuses or promotions, to reward top performers and motivate others to improve their performance.
- Call Centers: Call centers also often use a transactional leadership style to manage their employees. Call center managers may use performance metrics, such as call volume or customer satisfaction ratings, to evaluate employee performance and provide rewards or punishments accordingly.
Transactional leadership examples in education
- Grading Systems: Grading systems in schools are a common example of transactional leadership in education. Students are rewarded for meeting specific performance standards, such as getting good grades on tests or assignments, and may be punished for failing to meet these standards.
- Attendance Policies: Many schools also use attendance policies to motivate students to come to class and stay engaged in their studies. Students who attend class regularly and meet attendance requirements may be rewarded with better grades or other incentives, while those who miss too much class may be punished with lower grades or other consequences.
- Athletic Teams: Athletic teams in schools also often use a transactional leadership style. Coaches may use rewards, such as playing time or recognition, to motivate athletes who perform well and may use punishments, such as benching or disciplinary action, to address poor performance or behavior.
Who are Famous Transactional Leaders?
Steve Jobs is a legendary figure in the business world, known for his innovative leadership style at Apple. He was a visionary who was able to inspire and motivate his team to create groundbreaking products that revolutionized the tech industry. Before using transformational leadership style, he was known for his “reality distortion field,” where he would persuade his team to accomplish seemingly impossible tasks. He also used bonuses and stock options to reward top performers, while those who failed to meet his expectations were often fired or demoted.
One of the most famous transactional leaders in the world is former U.S. President, Donald Trump. Trump is known for his management style of setting specific goals, establishing clear expectations for his team, and using rewards and punishments to motivate his staff.
During his presidency, Trump frequently praised and rewarded those who he felt were loyal to him and met his expectations, while criticizing and punishing those who he felt were disloyal or did not perform up to his standards. He also placed a strong emphasis on achieving specific policy goals, such as building a wall along the U.S.-Mexico border, and was willing to use a range of tactics, including executive orders and negotiations with foreign leaders, to achieve these goals.
The Bottom Line
Many leaders nowadays are likely to move forward with transformational leadership style, however when it comes to accomplish short-term goals and daily tasks, transactional style can be more preferable. More flexibility in leadership and management can give leaders multiple perspectives to find the best resolve in different circumstances.
If you are looking for a new way to give perks and punishments without losing team spirit and fairness, don’t forget to design team building and meetings in a much funnier way. You should consider seeking support from online presentations like AhaSlides to make your activities more exciting and engaging.