Transactional Leadership Theory

DEFINITION
• Transaction is the act of transacting within or
between groups (as carrying on commerical
activities)
• Transactional leadership is a style of
leadership in which the leader promotes
compliance of his followers through both
rewards and punishments. Also known as
“Management theories”
• The transactional style of leadership was first
described by Max Weber in 1947 and then by
Bernard Bass in 1981. This style is most often
used by the managers. It focuses on the basic
management process of controlling,
organizing, and short-term planning.
 HISTORY
• First described by Max Weber in 1947.
Further developed by Bernard M. Bass in
1981.
• This style is most often used by the managers.
• It focuses on the basic management process of
controlling, organizing, and short-term
planning.
 Some Assumptions Related to Transactional
Leadership
• Employees are motivated by reward and
punishment.
• The subordinates have to obey the orders of
the superior.
• The subordinates are not self-motivated.
• The main goal of the follower is to obey the
instructions of the leader. The style can also
be mentioned as a ‘telling style’.
• Here, the exchange between leader and
follower takes place to achieve routine
performance goal.
• These exchanges involve four dimensions:
Contingent Rewards
• Active Management by Exception
• Passive Management by Exception
• Leissez-Faire
 Examples of Transactional Leaders
• Norman Schwarzkopf , Vince Lombardi
• Bill Gates , Howard Schultz
• Characteristics of transactional leaders:
• Focused on short-term goals
• Favor structured policies and procedures
• Thrive on following rules and doing things correctly
• Revel in efficiency
• Very left-brained
• Tend to be inflexible
• Opposed to change
 THE ADVANTAGES AND DISADVANTAGES OF
TRANSACTIONAL LEADERSHIP
• ADVANTAGES
• It can be very effective for motivating
subordinates and eliciting productivity.
• Clear structured
• Achieves short-term goals quickly
• Rewards and penalties are clearly defined for
workers
 DISADVANTAGES
• This type of leadership is flawed since it
motivates people only on the base level
• Creativity is limited since the goals and
objectives are already set
• Ego states are difficult to difine
• Does not reward personal initiative
 BENEFITS
• • It is easy for workers to complete tasks
successfully. This works because transactional
leadership is simple to learn and does not
require extensive training.
• • It is also easier to apply in a crisis situation,
where everyone must know exactly what is
required of them and how a task is to be done
under pressure.
 CONCLUSION
• The transactional style of leadership is viewed
as insufficient, but not bad, in developing the
maximum leadership potential. It forms as the
basis for more mature interactions but care
should be taken by leaders not to practice it
exclusively, otherwise it will lead to the
creation of an environment permeated by
position, power, perks, and politics.