What is Transactional Leadership?
Feb 1, 2023 • 16 min read
Transactional leadership is a style of managerial leadership where managers focus on getting things done rather than trying to improve the overall culture of an organization. This approach tends to be used in organizations where performance is measured against set targets and short-term goals.
In contrast, transformational leadership encourages employees to think about how they want to contribute to their organization and helps them develop their skills and abilities. Transformational leaders encourage employees to feel part of something bigger than themselves.
Transactional leadership styles can be seen in organizations such as Amazon, Shell and Walmart. However, it can also be found in smaller companies too. For example, one study showed that 70% of small businesses use transactional leadership.
You’ll learn:
- Transactional leadership characteristics
- Brief history of transactional leadership
- Characteristics of the Transactional Leadership Model
- Transactional vs. transformational leadership
- Advantages and disadvantages of transactional leadership
- Examples of transactional leadership
- When Is Transactional Leadership the Most Effective?
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Transactional leadership characteristics
Transactional leadership is based on the idea that people are motivated by rewards and punishments – extrinsic motivation. In contrast to transformational leaders, the transactional style focuses on the delivery of results rather than inspiring others. They follow instructions and deliver what they promise. This type of leader is concerned with efficiency and effectiveness. Transactional leaders are rule followers and do what they’re told.
In contrast to transformational leaders who inspire and motivate employees using charismatic leadership, transactional leaders focus less on motivation and more on employee performance and output. Transformational leaders inspire people to change themselves and become better versions of themselves. However, the transactional approach doesn’t necessarily inspire people to change, because they want to see results. For example, a leader might tell you to go out there and sell more products, even though he knows you won’t enjoy it. He wants you to make sales.
Brief history of transactional leadership
Transactional leadership is defined by Harvard Business Review as “the process through which an employer uses personal resources to achieve organisational goals.” This is different from other styles of leadership like transformational leadership, which is described by HBR as “a style of leading characterized…by idealised influence, inspirational motivation, and individual consideration”. While there is no clear boundary between the two types of leadership, transactive leaders’ management styles are often seen as controlling and punitive, whereas transformational leaders are viewed as motivating and inspiring.
The term transactional leadership was coined by Robert E. Quinn in his book Managing People. He argued that managers should focus on getting things done, and that this is what motivates workers. However, he believed that this could lead to unethical behaviour, such as bullying and intimidation. To avoid this, he suggested that managers adopt a more positive attitude towards their subordinates, and that this would motivate them to work harder. In essence, effective leadership is a combination of getting things done and a positive attitude.
Characteristics of the Transactional Leadership Model
1. Hierarchical
Hierarchy is one of the most powerful tools we use in our everyday lives. We see it everywhere — from the way we organize our homes to the way we organize our businesses. But hierarchy isn’t just about organization; it’s about power. And while you might think that having a boss gives you some sort of authority over others, that’s actually not true. In fact, hierarchy is a tool used to keep employees under control.
The reason why hierarchies are so effective is that they’re based on trust. When someone tells us what to do, we tend to follow those instructions without question. Even though we know that there could be consequences if we don’t, we still obey. This is because we believe that the person giving the command knows what he or she is doing.
In addition to keeping people under control, hierarchies help organizations function efficiently. They make sure everyone plays his or her part in carrying out the overall plan. For example, if you work in a large corporation, chances are that you’ll find yourself working within a department or division. If you work in marketing, you might report directly to a vice president.
2. Micromanaging
Micromanagers are bosses who try to control everything, even down to the smallest detail. They tend to micromanage employees because they don’t trust anyone else to do their job properly and believe this approach will improve organizational performance. These leaders often feel insecure about making decisions themselves, so they prefer to make sure that everyone follows directions exactly.
This approach works well when you’re dealing with small tasks, like ordering lunch or picking up dry cleaning. But it doesn’t work very well when you’re trying to lead a team of people into action. When you give someone too much direction, he or she might not understand what you really mean. And since no one understands what you want, there’s always confusion and miscommunication.
3. Passive Leadership Is Killing Your Organization
Passive leadership is like a slow poison. You might think it won’t do much damage over time, but the longer you are exposed to it, the worse off you’ll become. If you’re not careful, passive leadership will lead to poor decisions, low morale, and even turnover.
In fact, research suggests that most employees prefer transactional leadership—where managers focus on getting immediate tasks done—to passive leadership. Why? Because passive leaders don’t try to make changes to how things work in an organization; they just let things happen. This creates a culture where everyone feels powerless and disempowered.
Transactional leaders, on the other hand, focus on what’s happening in an organization today. They look ahead and ask questions such as “What does our strategy look like?” and “How can we improve processes?” These types of leaders help organizations move forward by making sure they have the resources they need to succeed.
The problem is that many companies still rely on passive leaders to run their businesses. In fact, according to one study, 80% of Fortune 500 CEOs are considered passive leaders. And while some of those CEOs are good at delegating authority and empowering others, many aren’t. So why do so many companies choose passive leadership over active leadership? Here are three reasons:
1. Passive Leaders Don’t Try To Change Anything About How Things Work
When you hire someone to manage your team, you want them to take action. But passive leaders don’t try and change anything about the way something works in an organization. Instead, they just let things go as they are.
2. Passive Leaders Lead People To Believe There Is Nothing Wrong With The Current Situation.
4. Practical
The term practical refers to how leaders act in real life situations. In contrast, visionary leaders are often seen as idealistic and unrealistic. If you want to lead effectively, it pays to know what makes a leader “practical.”
5. Motivation by self-interest
Transactional leadership is about getting things done. This type of leader focuses on individual performance and is motivated by personal gain. They are often seen as selfish because they don’t care about what others think or feel. However, transactional leaders are actually very concerned about how they are perceived by others. They want to look good and make sure everyone knows it.
Motivating employees to do well requires motivating them individually. If you motivate someone based on helping others, you’re likely to end up with a lot of unhappy workers.
The key to motivating people is to give them something to strive for. You must show them why they should care about doing well. This will help them see themselves as part of a larger group rather than just one person working alone.
If you want to motivate someone to perform well, focus on his/her strengths. People tend to like those who praise them for their abilities. Give credit where credit is due.
6. Reactionary
Reactionary vs “Laissez Faire” Leadership Styles – What Is The Difference?”
A laissez faire leader doesn’t believe in controlling everything; he/she believes in letting people do what they want to do. He/she gives people freedom and responsibility. He/she prefers to let things happen naturally rather than pushing them along.
Hands off leaders are hands-off, and they don’t micromanage. They don’t give much feedback. Instead, they trust their team members to figure out ways to solve problems themselves. Hands off leaders allow employees to take initiative and develop personally.
Reactionary leaders believe in controlling every detail, making sure everyone follows the rules, and holding people responsible. They like to micromanage and give feedback. They prefer to tell others what to do and how to do it.
The reactionaries are the opposite of the laissez faire leaders. Both styles work well in different situations, but there are times when one style works better than another.
Transactional vs. transformational leadership
Transformational leaders inspire followers to achieve greatness. They are able to make you believe that anything is possible. They are able to motivate you to do things you never thought you could do. They help you see yourself in ways you did not think possible. They give you hope. They encourage you to dream big dreams. They show you how to live out those dreams. They help you overcome obstacles. They teach you how to deal with failure. They make you feel important. They build trust. They make you want to work harder because you know they care about you. They provide you with guidance. They challenge you. They push you to excel. They lead. They don’t just manage. They guide. They don’t just tell you what to do; they ask questions and listen to your ideas. They are honest. They are fair. They treat everyone equally. They respect your differences. They celebrate your successes. They understand your needs. They empower you. They recognize your strengths. They support you. They love you. They are there for you. They are always willing to go above and beyond. They are authentic. They are real. They are genuine. They are humble. They are trustworthy. They are trustworthy. And they are trusted. They are respected. They are liked. They are admired. They are loved. They are cared for. They are protected. They are nurtured. They are safe. They are secure. They are confident. They are comfortable in their own skin. They are proud of who they are. They are unapologetic. They are courageous. They are brave. They are bold. They are decisive. They are decisive.
Transactional leaders
A transactional leader is someone who works best in a large organization where there are clear standards, processes, and procedures. They like to follow rules and adhere to regulations. They don’t like ambiguity. If you’re looking for a transactional leader, look for someone who likes structure and consistency. A transactional leader tends to work well in organizations where there are clear expectations about what needs to happen next. In a small business, it might be difficult for a transactional leader to make decisions because there aren’t many rules to follow.
The term “transactional leadership” was coined by John Kotter in his book “Leading Change.” He defined it as follows: “Transactional leadership is a style of management that emphasizes getting things done rather than inspiring people.”
Transformational leaders
Sales managers often struggle to motivate their teams because they lack transformational leadership skills. Sales managers must understand how to communicate effectively, inspire trust, build relationships, and lead by example. They must know how to develop a vision and plan a strategy for their team. These sales managers must also be able to motivate their team members to take action and innovate.
In addition to being a great manager, a transformational leader is charismatic and connects well with others. A transformational leader drives change through experimentation and innovation and inspires his or her team to do the same.
Servant leaders
are those who serve others, while “transactional leaders” focus on what’s best for the company and don’t care too much about the employees.
The difference between transactional leadership and servant leadership is subtle, but it’s important. In fact, there are three types of leaders: transactional leaders, servant leaders, and transformational leaders. Transformational leaders inspire and motivate people. They encourage growth and development. And they make sure everyone feels like part of something bigger than themselves.
Transactional leaders focus on what’s best for the company. They make decisions based on metrics, data, and numbers. They tend to be very practical. But they don’t always think about how their actions affect the people around them.
Servant leaders focus on serving people and helping them develop. They take pride in being helpful and supportive. They want to help others succeed. They show compassion and empathy toward others.
What does this mean for you? If you’re a leader, you need to understand what type of leader you are. You need to know whether you work better in a transactional environment or a servant one.
If you do decide to change jobs, you’ll probably find yourself in a different type of organization. So it might be worth considering where you’d fit best.
Advantages and disadvantages of transactional leadership
Transactional leadership is about getting things done. This type of leadership focuses on following procedures and processes, rather than inspiring employees to do great things.
In contrast, transformational leadership encourages people to think outside the box, develop others, and make decisions based on values. Transformational leaders focus on developing people, rather than controlling them.
The advantages of transactional leadership are that it gets things done quickly and efficiently, and it keeps everyone happy. However, there are some drawbacks to this style of leadership. For example, transactional leaders don’t take risks; they’re afraid to fail. They also tend to be less creative and innovative. In addition, they often lack empathy.
Transformational leaders, on the other hand, are able to motivate people because they understand what motivates them. They know how to connect emotionally with their team members.
Disadvantages
Transactional Leadership is a style of management where leaders focus on getting things done. They do not allow employees to make decisions because it takes too much time and effort to change direction. This type of leader prefers to work within a set process and structure. When you are working under a transactional leader, you are expected to follow directions without question.
Examples of the Disadvantages of Transactional Leadership
1. You cannot challenge authority.
2. You will never feel like you are making a difference.
3. There is no room for creativity.
4. Your job is to keep up with the status quo.
5. You will always be behind the times.
Examples of transactional leadership
Transactional leaders are those whose style of leadership is based on motivating people to work hard and following orders. They rarely offer praise or criticism. Instead, they reward success and punish failure. In contrast, transformational leaders inspire people to think outside the box and ignore rules. Transformational leaders provide guidance and support to help others grow and develop.
When Is Transactional Leadership the Most Effective?
Transactional leadership is often seen as a necessary evil. However, it doesn’t have to be. When used correctly, transactional leadership can help you build stronger relationships, improve productivity and increase loyalty among your team members. In fact, some studies show that organizations with high levels of transactional leadership are more successful than those with low levels.
The key to effective transactional leadership lies in understanding how people work best. This type of leadership focuses on ensuring that people follow directions and complete assigned tasks. It is most appropriate when there is little room for creative thinking and when employees must adhere to strict rules. Employees appreciate being treated like adults and having clear expectations set out for them. They also value knowing what is expected of them.
However, transactional leadership does not encourage people to think outside the box; rather, it tends to discourage innovation and creativity. It also discourages employees from taking pride in their work. Instead, transactional leaders focus on making sure that everyone follows the same procedures and adheres to the same standards. This approach is useful when there is no room for individualism or flexibility.
In addition, transactional leadership can lead to employee theft. If someone feels undervalued, he or she might try to steal something from the organization. This could include ideas, information or money. To avoid this problem, make sure that your employees know that they are appreciated and valued. Make sure that they understand why they do important things well. Also, keep track of everything that goes into the office. You don’t want anyone to feel like they can take advantage of you.
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Conclusion
Leading others requires courage, confidence, and conviction—all qualities that come naturally to some people while being foreign to others. In fact, there are many different ways to lead, depending on one’s personality type. Some leaders like to take charge, while others prefer to follow behind. Whatever style you try, make sure you keep your entire team and company objectives in mind!
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About DigiWorks
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