Transactional Leadership

Transactional leadership or Transactional Management is a part of a style of leadership that focuses on supervision, organization, and performance; it is an integral part of the Full Range Leadership Model. It 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 looking to change the future, they look to keep things the same. Leaders using transactional leadership as a model 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 for projects that need to be carried out in a specific way.

Transactional Leadership Characteristics

A transactional leadership style works best in a structured environment where there are established processes as well as defined roles with specific tasks to accomplish.

According to transactional leadership theory, transactional leaders work within an organization’s existing structure. He or she seeks to have subordinates deliver specific results that are well articulated and measurable.

A transactional leader evaluates subordinates on whether or not they meet defined requirements and expected results. Thus, transactional leaders appeal to the self-interest of their subordinates in order to keep them on track.

Difference between Transactional and Transformational Leaders

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.

Transactional leadership Transformational Leadership
Leadership is responsive Leadership is proactive
Works within the organizational culture Work to change the organizational culture by implementing new ideas
Transactional leaders make employees achieve organizational objectives through rewards and punishment Transformational leaders motivate and empower employees to achieve company’s objectives by appealing to higher ideals and moral values
Motivates followers by appealing to their own self-interest Motivates followers by encouraging them to transcend their own interests for those of the group or unit