Key Takeaways
- Transactional leaders use rewards and punishments to motivate their followers.
- This leadership style is best when problems are simple and clearly defined.
- Transactional leaders focus on maintaining the status quo and following rules.
If you’ve ever had a boss who valued structure, had clear expectations, and used rewards (and consequences) to get results, then you’ve probably worked with a transactional leader. Transactional leadership is a leadership style that utilizes rewards and punishments to motivate and direct followers.
Basic Assumptions of Transactional Leadership
Sociologist Max Weber first described this theory of leadership, and Bernard M. Bass further explored it during the early 1980s.
Transactional leadership, also sometimes referred to as managerial leadership, emphasizes the importance of structure, organization, supervision, performance, and outcomes. The group’s goals and tasks are highly structured, and members are rewarded when they achieve these goals and reprimanded if they miss deadlines.
The core assumptions of transactional leadership are that:
- People perform their best when the chain of command is definite and clear.
- Rewards and punishments motivate workers.
- Obeying the instructions and commands of the leader is the primary goal of the followers.
- Subordinates need to be carefully monitored to ensure that expectations are met.
Transactional leadership is often used in business. When employees are successful, they are rewarded; when they fail, they are reprimanded or punished.
Athletic teams also rely heavily on transactional leadership. Players are expected to conform to the team’s rules and expectations and are rewarded or punished based on their performance. Winning a game might mean accolades and bonuses, while losing might lead to rejection and verbal castigation. Players often become highly motivated to do well, even if it means suffering pain and injury.
Unlike transformational leaders who tend to be forward-looking, transactional leaders are interested in merely maintaining the status quo. Transformational leaders try to sell their ideas and vision to followers. Transactional leaders, on the other hand, tell group members what to do and when to do it.
How Transactional Leadership Works
In transactional leadership, rewards and punishments are contingent upon the performance of the followers.
- The leader views the relationship between managers and subordinates as an exchange – you give me something for something in return.
- When subordinates perform well, they receive a reward (such as a bonus).
- When they perform poorly, they will be punished in some way (such as getting a verbal warning or a poor performance review).
- Rules, procedures, and standards are essential in transactional leadership.
Transactional leaders monitor followers carefully to enforce rules, reward success, and punish failure.
They do not, however, act as catalysts for growth and change within an organization. Instead, they are focused on maintaining this as they are and enforcing current rules and expectations.
These leaders tend to be good at setting expectations and standards that maximize an organization’s efficiency and productivity. They often give constructive feedback about follower performance, which allows group members to improve their output and obtain better feedback and reinforcement.
When Is Transactional Leadership the Most Effective?
Research has found that transactional leadership tends to be most effective when problems are simple and clearly defined. Transactional leaders don’t encourage group members to be creative or to find new solutions to problems.
It can also work well in crisis situations where the focus needs to be on accomplishing certain tasks. By assigning clearly defined duties to particular individuals, leaders can ensure that those things get done.
In times of crisis, transactional leaders can help maintain the status quo and “keep the ship afloat,” so to speak.
Transactional leaders focus on the maintenance of the structure of the group. They are tasked with letting group members know exactly what is expected, articulating the rewards of performing tasks well, explaining the consequences of failure, and offering feedback designed to keep workers on task.
Drawbacks of Transactional Leadership
Transactional leadership can also have some downsides that managers and organizations should consider. Some of these include:
- Reduced collaboration: The emphasis on completing individual tasks means that group members are sometimes less likely to work together to accomplish goals.
- Decreased creativity: Because this approach focuses on rewards and punishments, members are less likely to think outside of the box.
- Inhibited motivation: Relying solely on external rewards can often reduce intrinsic motivation.
- Lessened satisfaction: Team members often feel they are unable to grow creatively and professionally, which can lead to job dissatisfaction and burnout.
While transactional leadership can be helpful in some situations, it is often considered insufficient and may prevent leaders and followers from achieving their full potential.
Verywell Mind uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
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