Transactional leadership

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Transactional leadership or transactional management is the part of one style
of leadership that focuses on supervision, organization, and performance; it is an
integral part of the Full Range Leadership Model. Transactional leadership is a style of
leadership in which leaders promote compliance by followers through both rewards and
punishments. Through a rewards and punishments system, transactional leaders are
able to keep followers motivated for the short-term. Unlike transformational leaders,
those using the transactional approach are not necessarily looking to change the future.
Transactional leadership "occurs when one person takes the initiative in making contact
with others for the purpose of an exchange of valued things" (Burns, 1978).
This type of leadership is effective in crisis and emergency situations, as well as
for projects that need to be carried out in a specific way.[citation needed]
Transactional leadership is generally attributed to two factors. The leadership of the first
conditional reward is viewed as both an efficient and constructive relationship between
the leader and the followers. These followers get bonuses, merits, or recognition with
the organization that they are with when they meet certain goals depending on what the
company is (Bycio, P., Hackett, R.D., & Allen, J.S, 1995). The rewards, from this
contingent reward, is solely based on an agreement between the leader and follower.
The second factor of transactional leaders is management by exception. This can be
active or passive. Active leaders are always watching to evaluate performances of
employees. Passive management only assess after the task has been done and will
only let you know about problems after they occurred (Howell & Aviolio, 1993).

Contents

 1Maslow's hierarchy of needs

 2Characteristics
 3Transactional vs. transformational leadership
o 3.1Theory Y and Theory X
 4Examples
 5See also
 6References
 7Further reading

Maslow's hierarchy of needs[edit]

Main article: 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. [1] One
way that transactional leadership focuses on lower level needs is by stressing specific
task performance.[2] 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.
Transactional leaders are generally split into three dimensions: contingent reward,
management-by-exception: active, and management-by-exception: passive. [3] The type
of leader who focuses on contingent reward, also known as contingent positive
reinforcement, give rewards 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 rewards are also given when the employee engages in any
desired behavior. [4] Often, contingent punishments are handed down on a management-
by-exception basis, in which the exception is something going wrong. [5] Within
management-by-exception, there are active and passive routes. Management-by-
exception: active means that the leader continually monitors each subordinate's
performance and takes immediate corrective action when something goes wrong.
[6]
 Management-by-exception: passive leaders do not monitor employee performance
and wait for serious issues to come up before taking any corrective actions. [7] In addition
to the three dimensions of leadership above, another form of transactional leadership is
recognized, the laissez-faire dimension. Laissez-faire leadership indicates a lack of
leadership and a complete hands-off approach with employees. [8]
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.[5]

Characteristics[edit]
Transactional leaders use reward and punishments to gain compliance from their
followers. In any case, transactional leaders are not concerned with the well-being of
the workers as compared in transformational leadership. 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. Transformational leaders want followers to achieve intrinsic motivation
and job fulfillment..
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. On
the other hand, transformational leaders are pragmatic and think outside the box when
solving problems
Transactional leadership is primarily passive. On the other hand, transformational
leadership is interactive and inspiring. The behaviors most associated with this type of
leadership are establishing the criteria for rewarding followers and maintaining the
status quo.[9]
The overall effectiveness of transactional management is that it can be very practical
and directive. Through transactional management, an explicit measure of success can
be discovered through the consistent monitoring of managers. The model is also viewed
as very straightforward and understandable due to the simple reward and punishments
system.
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 subordinates do not meet acceptable performance levels, and initiates
corrective action to improve performance.[9]
The benefits of transactional leadership depend greatly on the circumstances – its
benefits will not be realized in all situations. Where it can be useful, there are distinct
advantages, but also some drawbacks. Some of the advantages include it rewards
individuals who are self-motivated and follow instructions, its benefits tend to be realized
quickly when quickly achieving short-term goals, workers have clearly defined rewards
and penalties, it encourages productivity, it provides a clear and easy to understand
structure, it is great for work environments where structure and systems need to be
reproduced (e.g., high volume manufacturing), and it serves to align everyone in large
organizations.
On the other hand, there are some down sides to transactional leadership: it does not
work well in flexible work environments, it only rewards workers with perks or money, no
other real motivators are used, it does not reward individuals who take personal
initiative, it can be viewed as limiting and not personal, creativity by employees is limited
or non-existent, the structures can be very rigid, and there is no room for flexibility with
goals and objectives.[citation needed]

Transactional vs. transformational leadership[edit]

Transactional and transformational are the two modes of leadership that tend to be
compared the most. James MacGregor Burns distinguished between transactional
leaders and transformational by explaining that: transactional leaders are leaders who
exchange tangible rewards for the work and loyalty of followers. Transformational
leaders are leaders who engage with followers, focus on higher order intrinsic needs,
and raise consciousness about the significance of specific outcomes and new ways in
which those outcomes might be achieved.[citation needed] Transactional leaders tend to be more
passive as transformational leaders demonstrate active behaviors that include providing
a sense of mission. Transactional leadership focuses on supervision and performance;
leadership is a task-oriented transaction. Transactional can be active or passive. Active
refers to leaders who actively monitor performance and take corrective actions when
needed. Passive refers to leaders who do not actively monitor follower behavior and
only take corrective action when serious problems arise. The two theories are said to be
on the opposite sends or this spectrum. It turns out that transactional leadership does a
better job with predicting the job itself, as opposed to transformational being best for the
organization behavior (Afsar, B., Badir, Y.F., Saeed, B. B.,& Hafeez, S., 2017).
Theory Y and Theory X[edit]
Douglas McGregor's Theory Y and Theory X can also be compared with these two
leadership styles. Theory X can be compared with Transactional Leadership where
managers need to rule by fear and consequences. In this style and theory, negative
behavior is punished and employees are motivated through incentives. [citation needed]
Theory Y and Transformational Leadership are found to be similar, because the theory
and style supports the idea that managers work to encourage their workers. Leaders
assume the best of their employees. They believe them to be trusting, respectful, and
self-motivated. The leaders help to supply the followers with tool they need to excel. [citation
needed]

Examples[edit]
Coaches of athletic teams provide one example of transactional leadership. These
leaders motivate their followers by promoting the reward of winning the game. [10] They
instil 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 US Senator from
Wisconsin, Joseph McCarthy, and 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.[citation needed] This leadership style is especially effective in crisis situations,
and 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.[citation needed]