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Transactional Leadership Role in Organizational Change

South Texas College

Dr. Blanco

ORGL-4342-VF2-Organizational Change

April 24, 2023

Karina Martinez
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Transactional Leadership

Transactional leadership is a contingent-reward leadership in which followers and leaders

engage in constructive dialogue and receive rewards. In other occasions they are awarded for

achieving predetermined goals. These awards could imply appreciation from their boss for pay

raises, incentives, and job success based on merit. Positive encouragement can be traded for

excellent work, promotions, improved performance, and collegiality are all rewarded with cash.

Transactional leaders adhere more to realism than idealism. They value the system that promotes

free thinking. Transactional leaders are loyal to their company structure, their procedures, and

policies. Transactional leaders, however, do not act as catalysts for growth and change within the

organization. They are more focused on maintaining it and enforcing current rules and their

expectations. Transactional leadership is a leadership style that is mostly based on the exchange

between followers and their leader. The rewards and punishments used in these leadership are

contingent upon the performance of the followers. The leader views the relationship between

managers and subordinates as an exchange. For example, you give me something in return.

Primary focus is on the completion of tasks and achieving their specific targets (Transactional vs

transformational leadership: Understanding the key differences 2023). Transactional leadership

is often referred to as managerial leadership because it emphasizes the importance of structure,

organization, performance, supervision, and outcomes. Like I mentioned the goals and the tasks

for the groups are highly structured. The members are going to be rewarded when they achieve

these goals, and they will be reprimanded if they ever miss the deadlines of the project. The

rewards and the punishments are what motivate workers to work correctly. Transactional

leadership was first described by the sociologist Max Weber, and it was further explored by

Bernard M. Bass in the year early 1980s.

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Literature Review

Transactional leadership has three dimensions that are considered independent variables which

are people orientation, namely task orientation and shared leadership (International Journal of

Multidisciplinary and Current Educational Research (IJMCER) 2020). It also consists of eight

productivity measures: namely efficiency, effectiveness, value addition, quality defects,

employee satisfaction on supervision, labour turnover employee absenteeism and overall, the

productivity index This dimension is considered the dependent variable. Originally every

leadership theory proposed different strategies to help ensure organizations maximum

productivity. Transactional leaders are the most effective in situations where problems are mainly

simple and clearly defined. Despite this information it can also work well in crisis situations

where indeed the focus needs to be on accomplishing certain objectives or tasks. In some

situations of crisis transactional leaders tend to maintain the status quo and keep things afloat.

People in transactional leadership can perform their best when their chain of command is definite

and clear. Going back to how rewards and punishment motivate workers is based on obeying the

instructions and commands also of their leaders. Followers set this as their primary goal. Based

on this theory it takes on a behavioral approach to leadership by basing it on the system of

rewards and consequences. Transactional leadership is mostly used in businesses. The use of this

leadership theory is when employees are successful. Transactional behavior of leadership is

mostly capable of managing large corporations or maybe even leading international projects.

Tasks that require rules and regulations to complete objectives on time. This theory pertains to

formal authority and holds positions of responsibility in an organization. It focuses as well on

results and measures success on the rewards system of an organization like mentioned
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previously. It is responsible for managing individual performance and or group performance in

any organization.

Transactional leadership behavior creates the foundation for specifying expectations,

clarifying responsibilities, negotiating contract and at last providing recognitions and rewards to

achieve the set objectives, and the performances expected between leaders and followers (Betz,

The transactional leadership style still has a place 2021). Leaders having transactional behavior

may implement the commitment of employees to new ideation. This will occur by having

tangible recognition or rewards for thriving initiatives and the help of developing new ideas. The

value of this is communicating directly to the followers about leader attachment in their

organization participation. To understand the organization’s focused ideation importance to their

followers, one transactional leader must be good in explaining the desired target to reach. This

will put importance of self-efficacy when followers achieve their goals. Transactional leadership

style is best suitable for followers who are in need of motivation to contribute and participate in

the organizational ideation programs. Transactional behavior may be the best in an

institutionalized setting. Instead of managing old ideas, new ideas can be managed by focusing

on efficiency and standardization. It is the most effective in terms of refining and reinforcing.

Transactional leadership plays a role in knowledge sharing. The leaders play a crucial vital role

in managing the organizational knowledge sharing (Transactional leadership and organizational

creativity: Examining the mediating role of knowledge sharing behavior 2017). The rewards and

recognitions from transactional leadership encourage knowledge sharing in organizations. This

leadership style found that leaders foster knowledge in organizations. The reason for dynamic

economy and gain competitive advantage. Knowledge sharing is critical in organizations and

competitive. It is beneficial for knowledge sharing within or across teams, and employees. This
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allows for capitalization on knowledge-based resources. Transactional behavior leaders will also

be the most effective in the process of coordination, for managers to work with employees in

establishing the goals, the rewards, and other specific assignments.

Transactional leadership contains five characteristics. The following are acting with

urgency. This type of leadership style is taking charge and turning things around. They are

specialized in dealing with times of crisis. The reason for this is due to the leader taking authority

to take decisive steps. They communicate their expectations with a lot of clarity. Employees

within a transactional leadership organization know exactly all the time what their leaders expect

from them. Which in fact makes the employees feel more productive in reaching their defined

goals and objectives in a clear manner. They have a direct communication style. Transactional

leaders have a transparent and a very direct communication style. These types of leaders follow

loyalty before anything. Transactional leaders tend to have their own approach to how their

organization must execute a task. They are most focused on short-term goals because they don’t

take long-term organizational goals into account. Teams working under the management of a

transactional leader will succeed at short-term goals.

Transactional leadership as an impact on organizational performance and change. Leaders

use leadership styles to improve their organization’s effectiveness to help them increase their

revenues. Transactional leadership style is mainly about passing an order to the employee that is

to be completed at any cost. Once completed employees are rewarded with incentives, bonuses,

and other different types of prizes. Like I previously mentioned this helps build motivation

among the employees being successful at their job. Transactional leadership style is mostly

followed in the organization with zero tolerance for errors or mistakes, within the operations or

employees. Transactional leadership is not used in the areas of organizations that require
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creativity or innovation. This leadership theory is used most to incur profits for an organization.

It is based on increasing their productivity levels. For employees their growth is minimal in

transactional leadership management.

Findings

Transactional leadership is more focused on attaining the objective of an organization and it

possesses positive and negative features only for those respective employees. Transactional

leaders provide the employees with two options that are pertaining to executing operations of the

company. Within the respective time to get the benefits and rewards they deserve. If they fail to

achieve their objective, they will receive several punishments which can be related to their

salary, promotions or extra bonuses. Transactional leaders demand performance from their

employees when regarding their monetary benefits and incentives that are offered by their

respective leaders. It is very clear that transactional leadership theory can increase the

performance of the employees, but it may not bring changes because it tends to work for only

short-term goals period. Transactional leadership is a managerial style of leadership that mostly

relies on reaching goals through structure and supervision and a system of rewards and

punishments. Transactional leadership like I mentioned does not focus entirely on changing or

improving an organization as a whole unit. It instead focuses on hitting short-term goals while

establishing unity and conformity with the organization. The tangible rewards or the punishments

are what are referred to as a transaction. This leadership theory is typically used by upper and

middle management in a medium or large sized organization. In certain companies it is used in

sales, when usually sharing a single goal that is met when the person performs at their highest

level of performance. Then the person is rewarded in a sales team they might use commissions as

a type of transactional leadership method. In other fields like advertising or marketing,

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transactional leadership might not be the best to work. In this case transactional leadership does

not offer creative ideas or flexibility. Transactional follows a strict rubric and leaves no room for

creativeness.

Conclusion and Future Research

Leadership is one of the most difficult and multidimensional phenomena. It has been studied

over the years and has taken on great importance, more than ever before, to today’s fast-paced

globalized world. Transactional leadership on the other hand tends to rely on authority to

motivate their employees. The leader will exchange reward for followers’ effort on reaching

objectives and punishment on any follower who fails to meet their goals or objectives. We have

learned that transactional leadership works best in mature organizations that are already defined

with clear goals and structure. These will force the organization to stay on track and reinforce the

status quo. An example of our transactional leaders could be our organization managers. They

focus on supervision and follower performance. Transactional leaders must bring their followers

together on a joint purpose of the desired goal. Transactional leadership was first described by

Wax Weber in 1947. He described it as, that leaders are always charismatic, authoritative,

traditional, and transactional by nature. Later this ideology was developed more by MacGregor

Burns and then later expanded by Bernard Bass in his own theory of leadership. His main theory

implements how the leader-follower instincts work together psychologically. This certain

leadership style can be most effective in achieving your daily targets and your short-term goals.

It is a very simple model and easy to understand and navigate. It is also very easy for

organizations to train the leaders in helping them understand the company’s requirement in

handling times of crisis. If you need an effective manager who can meet your company’s

demand, then offer some training in transactional leadership methods.

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Charts / Tables

Transactional Leadership

Is based on:

Rewards Punishments

Ex: promotions, bonuses Ex: blame, negative criticism

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Transactional Leadership

Management by
Maintain Status Quo
Exception

Contingent Rewards

Short-term goals Extrinsic Motivation

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References

International Journal of Multidisciplinary and Current Educational Research (IJMCER). (2020).

The Impact of the Transactional Leadership on Organizational Productivity: A Monographic

Study, 297–309.

Abbas, J., & Lei, S. (2017). Transactional leadership and organizational creativity: Examining

the mediating role of knowledge sharing behavior.

Betz, M. (2021). The transactional leadership style still has a place.

Communication Theory . (n.d.). Transactional Leadership Theory.

Transactional vs transformational leadership: Understanding the key differences.

interObservers. (2023, March 22). Retrieved April 22, 2023