The transaction leadership style is a form of management which focuses on the basic management process of controlling or supervising, organizing, and short-term planning or assessing of performance. It was first described by Max Weber in 1947 and then later by Bernard bass in 1981. Weber believed that that leadership is situational by nature, and leaders worked in two basic paradigms: transactional and transformational.
According to him, transactional leaders are those who work within the existing system to achieve results. They are not the ones who would attempt to approach things from an entirely different perspective, something which transformational leaders do. Transactional leaders believe in motivating subordinates through a system of rewards and punishments. This means that if an employee does what is desired, a reward will follow. If he, on the other hand, does not go as what the leader desires, a punishment will follow. Joseph McCarthy and Charles de Gaulle are just a couple examples of transactional leaders.
How do you identify a transactional leader? The following are the key characteristics of this type of leaders.
Motivation is Extrinsic or External
As mentioned, transactional leaders operate in a reward and punishment system to motivate team members, and often, the motivation is external. This means that subordinates are rewarded with something ‘substantial’ (e.g. cash, gift certificate, etc.) for doing the desired behavior, and punished for any deviation. Motivation also tends to appeal to employee’s self-interest. For instance, if employees achieve a certain goal, they are personally rewarded – there is little emphasis on teamwork or the achievement of team goals.
Leaders following this management style are very practical or realistic. They tend to solve problems or deal with issues pragmatically, taking into account all realistic constraints and opportunities.
Uncomfortable with Change
“If it ain’t broke, don’t fix it!” Transactional leaders probably have this for their motto. These are the kind of people who can work with the existing system or environment without feeling the need to change a part or overhaul everything. They do not seek to transform things, wanting everything to remain exactly as they are.
Leaders are usually focused on maintaining the status quo, leading to passivity. They are not the proactive type; they often only react to things that happen.
Transactional Leaders want to make sure that everything go as planned. They believe that decisions were up to them and that everyone must follow those. Thus, expect to be micro-managed when working under this management style.
This leadership style places a lot of importance on corporate structure and culture. It often compliments rigid organizational hierarchy. For example, when reporting a problem or issue, the report is expected to pass through from the employee’s immediate leader before reaching the top management. Bypassing the hierarchy could be taken as insubordination.
What Are The Advantages Of Transactional Leadership?
1. Encourages Productivity
As the leadership operates on the system of rewards and incentives where employees receive remuneration if they complete a given tasks or reach the objective, employees are encouraged to perform well or produce well. Many companies and organizations use this strategy to boost productivity.
2. Clear Structure
A clear organizational structure benefits the company and its employees in many ways. First, it makes sure that individual roles are defined, enabling employees to know what is expected of him or her. Second, it facilitates attainment of organizational objectives through coordination of all activities. Third, it minimizes conflicts between employees as each person knows his or her job responsibility. It also eliminates overlapping and duplication of work, facilitates clear and easy communication at all levels, ensures fair and equitable salary schedule, and develops high-morale among employees because of clear-cut standards for recognition of performance and appreciation of organizational contributions.
3. Makes Goals Achievable
Under transactional leadership style, goals and objectives are often in the short-term, making them easier to fulfill and less intimidating to achieve. And because goals are easily attainable, employees are motivated to work.
4. Allows Employees to Control Reward
We have mentioned earlier that motivations under this leadership style are extrinsic in such a way that employees are motivated to produce with the goal of getting a promised reward. In addition to that, there are cases where the leaders or management gives employees control or say on what type of reward they want to receive.
What Are The Disadvantages Of Transactional Leadership?
1. Motivation Is on the Base Level
When your goal is to retain the best employee and ensure loyalty, transactional leadership may fail to deliver your desired result since motivation is created only on the base level. It is very simplistic and fails to account for employees’ individual differences. It is based on the premise that people will perform the desired action simply to get the promised reward and avoid the punishment. What if the incentives stop?
What if the promised reward is not so great or appealing? The system of rewards and punishments is only effective on tasks or projects where employees are capable of performing their work. It does not motivate on the higher plane of people’s thought and development; it is not strong enough to motivate people to go out of their way, to perform above and beyond expectation.
2. Can Be Rigid
Transactional leaders use their formal authority to instruct subordinates what to do, believing that the latters’ only role is to do what they are told. Leaders are often unwilling to consider other’s ideas, limiting their ability to adjust and take corrective measures when things go wrong.
3. Blaming Can Be a Problem
In transactional leadership style, supervisors or managers believe that once they have already assigned the task, that job is now the sole responsibility of the employees. Thus, when a problem occurs, accountability is relied upon the employee who was assigned to do the job.
4. Over Reliance on the Leader
One of the downsides to the reward-punishment scheme is that it puts leadership and employees on the different side of the fence, often leading to reward manipulation and game playing on the side of the employees in order to get the incentives and avoid penalties. The result is that employees are not motivated to achieve the organization’s overall mission (only their rewards), and they may feel unmotivated to work when the leader in not watching.
Transactional leadership style can be used effectively to boost performance; however, in order to avoid misuse and abuse and in order to maximize its effectiveness, it should be used alongside or in combination alongside other forms of leaderships.