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Transactional Leadership

Transactional Leadership is a style of leadership in which the leader promotes compliance of his followers through both rewards and punishments. Unlike Transformational leadership, leaders using the transactional approach are not looking to change the future, they are looking to merely keep things the same. These leaders pay attention to followers' work in order to find faults and deviations. This type of leadership is effective in crisis and emergency situations, as well as when projects need to be carried out in a specific fashion.

Maslow's Hierarchy of Needs

See: Maslow's hierarchy of needs

Within the context of Maslow's hierarchy of needs, transactional leadership works at the basic levels of need satisfaction, where transactional leaders focus on the lower levels of the hierarchy. Transactional leaders use an exchange model, with rewards being given for good work or positive outcomes. Conversely, people with this leadership style also can punish poor work or negative outcomes, until the problem is corrected. One way that transactional leadership focuses on lower level needs is by stressing specific task performance. Transactional leaders are effective in getting specific tasks completed by managing each portion individually.

Transactional leaders are concerned with processes rather than forward-thinking ideas. These types of leaders focus on contingent reward (also known as contingent positive reinforcement) or contingent penalization (also known as contingent negative reinforcement). Contingent rewards (such as praise) are given when the set goals are accomplished on-time, ahead of time, or to keep subordinates working at a good pace at different times throughout completion. Contingent punishments (such as suspensions) are given when performance quality or quantity falls below production standards or goals and tasks are not met at all. Often, contingent punishments are handed down on a management-by-exception basis, in which the exception is something going wrong. Within management-by-exception, there are active and passive routes. Active management-by-exception means that the leader continually looks at each subordinate's performance and makes changes to the subordinate's work to make corrections throughout the process. Passive management-by-exception leaders wait for issues to come up before fixing the problems.

With transactional leadership being applied to the lower-level needs and being more managerial in style, it is a foundation for transformational leadership which applies to higher-level needs.

Qualities of Transactional Leadership

Transactional leaders use reward and punishments to gain compliance from their followers. They are extrinsic motivators that bring minimal compliance from followers. They accept goals, structure, and the culture of the existing organization. Transactional leaders tend to be directive and action-oriented.

Transactional leaders are willing to work within existing systems and negotiate to attain goals of the organization. They tend to think inside the box when solving problems.

Transactional leadership is primarily passive. The behaviors most associated with this type of leadership are establishing the criteria for rewarding followers and maintaining the status quo. (textbook)

Within transactional leadership, there are two factors, contingent reward and management-by-exception. Contingent reward provides rewards for effort and recognizes good performance. Management-by-exception maintains the status quo, intervenes when suobrdinates do not meet acceptable performance levels, and initiates corrective action to improve performance. (textbook)

Transactional vs. Transformational Leadership

The transactional leadership theory has become part of a three style model: transformational, transactional, laissez-faire. Transactional and transformational are the two modes that tend to be compared the most. Transactional leaders tend to be more passive as transformational leaders demonstrate active behaviors that include providing a sense of mission.

Transactional
• Leadership is responsive
• Works within the organizational culture
• Employees achieve objectives through rewards and punishments set my leader
• Motivates followers by appealing to their own self interest
• Management-by-exception: maintain the status quo; stress correct actions to improve performance (BOOK.)

VS.

Transformational
• Leadership is proactive
• Works to change the organixational culture by implementing new ideas
• Employees achieve objectives through higher ideals and moral values
• Motivates followers by encouraging them to put group interests first
• Individualized consideration: Each behavior is directed to each individual to express consideration and support. (BOOK) • Intellectual stimulation: Promote creative and innovative ideas to solve problems

Examples of Transactional Leadership

Coaches of athletic teams provide one example of transactional leadership. These leaders motivate their followers by promoting the reward of winning the game. They instill such a high level of commitment that their followers are willing to risk pain and injury to obtain the results that the leader is asking for. Another example of transactional leadership is former Wisconsin state senator, Joseph McCarthy. His ruthless style of accusing people of being Soviet spies during the Cold War. By punishing for deviation from the rules and rewarding followers for bringing him accused communist infiltrators, McCarthy promoted results among followers . Because this leadership style is especially effective in crisis situations, another example of this type of leadership, was Charles de Gaulle. Through this type of reward and punishment he was able to become the leader of the free French in a crisis situation <ref name="7 Styles">.