Transactional and Transformational Leadership
What Is The Difference Between Transactional and Transformational Leadership?
There are no rights and wrongs when it comes down to leadership styles and it’s a popular topic in the Leadership Development Programmes that we run.
There’s a need for both styles in any organisation but transactional and transformational leadership are poles apart when it comes to what they are and how they are applied.
Transactional v Transformational Leadership
Transactional leadership, in the main, is focused on the task and the process whereas transformational leadership is focused on the people and inspiring them to make a real difference within the business.
Therefore you can say that transactional leadership is all about getting work done and transformational leadership is all about how to motivate and inspire your people to get work done and to be engaged with their work – it’s all about winning the hearts and minds of your employees.
What is transactional leadership?
Wikipedia’s definition of transactional leadership is all about promoting compliance from the leader by either offering rewards or serving “punishment.”
It’s predominately a short-term motivational ploy because it’s not sustainable. It’s about the here and the now and getting work completed. It’s not about looking to the future for innovation and change.
Productivity is more important than creativity and the leader will trade tangible rewards or the threat of consequences for the work and the loyalty of their employees.
Traits of transactional leadership include:
• It’s a responsive leadership style
• It’s about following the rules
• It’s about rewards and punishments
• Productivity wins
• Culture fit – work within the culture
• Motivation by “what’s in it for me”
• Management by exception
• It’s a push leadership style
When is transactional leadership effective?
If your building goes up in smoke and your Fire Marshalls are in control then they need to lead in a transactional way.
This leadership style is excellent for emergency and crisis situations. There can be no creativity with this. Rules need to be following to get everyone out of the building and to safety.
Likewise, if there are strict HR policies that need to be followed in a discipline and grievance hearing then there is no place for bending the rules or innovation. Processes need to be adhered to and policies followed to the letter.
Transactional leadership is therefore appropriate when tasks, procedures, work, projects and policies need to be followed in a particular way with no deviation.
What is transformational leadership?
Let’s turn to Investors in People for their definition of what transformational leadership is. IIP state that it’s all about the needs of your people.
It’s about building the commitment of followers (i.e staff) through motivation and inspiration rather than through rewards and punishment.
Your followers do because they want to do rather than doing because they have to or are forced to.
Traits of transformational leadership include:
• It’s a proactive leadership style
• It’s about winning the hearts and minds of your people
• It’s about motivation and inspiration
• Creativity and long term change wins
• Culture add – people add to the culture through their ideas
• Motivation by “what’s best for the company”
• It’s a pull leadership style
Transformational leadership is not a new concept.
Back in 1978 James MacGregor Burns wrote about this leadership style and later in 1980’s this was expanded by Barnard Bass who added a layer of psychology to the approach.
What are the four elements of transformational leadership?
The main elements were created by Barnard Bass. He created the concept of the four I’s.
The four I’s are:
• Idealised Influence
• Intellectual Stimulation
• Inspirational Motivation
• Individualised Consideration
Idealised Influence
This is all about role modelling. Does the leader walk the talk and set the example to their followers? Does their behaviour reflect the vision that they have set out? Are they consistent in their behaviour?
The leader needs to act as a role model for the desired high performance behaviours so their followers get engaged with the vision and come with them on the ride.
Inspirational Motivation
This is all about bringing your people with you. It’s about motivating and inspiring your people to win their hearts and minds. You need to create a compelling vision, one worth pursuing and is greater than an individual task.
It’s about getting the best from each of your people through personal development, setting challenging goals and expectations and supporting them in all they do to realise their potential.
Intellectual Stimulation
This is all about challenging the status quo. It’s about creating ideas and innovative processes, products and services to drive the business forward.
Creativity is a key element within this. It’s about thinking “out of the box” and having a growth mindset to see the opportunities before them and to create them if they don’t exist.
Individualised Consideration
This is about treating everyone differently based on their needs, ambitions and fears in life.
It’s about tapping into the world according to your people so you can truly understand what they require and how to tailor your approach to get the best out of each person.
Why is transformational leadership effective?
Many say that it’s effective because it’s a pull leadership style. Does anyone really want to be ruled with a rod of iron each day? Instead, it’s more enjoyable if your employees feel that they are part of something bigger than just the task at hand.
With this, you will get better buy-in from them because they are invested in the cause. If you want to be a senior manager then visionary leadership is key trait that you’ll need. You’ll need to lead more in a transformational way.
Harvard Business Review identified an interesting pattern on what the best transformational leaders did and it’s something that we cover on our Management Development Programmes because it’s all about winning the hearts and minds of your people.
The main differences between transactional and transformational leadership summarised
In closing have a think about your own leadership style. Is it more of a command and control style and focused on the task?
Or are you more focused on the people and bringing them with you on the journey?
Take a look at the table below and for each category take a look at the traits for both styles. See which traits you employ the most.
The work needs to get done through your team for sure. But how you go about it is completely down to you. Your leadership style is critical. You can have two different managers get the same results but go about it in completely different ways. One might leave a trail of destruction behind them and the other might leave a team of motivated and inspired people ready to take on more.
The choice is yours.
Get in touch if you’d like to discuss our Management Skills Training and Management Webinars. We offer several different options for your Management Training requirements including a blended approach to learning.
We have a useful guide on what makes a good team leader that you can tap into and also Adair’s leadership model.
Transformational vs. Transactional Leadership
Transactional leadership is primarily based on processes and control, and requires a strict management structure. Transformational leadership, on the other hand, focuses on inspiring others to follow, and it requires a high degree of coordination, communication, and cooperation.
The difference can be summed up as follows: transactional leadership looks at how to get things done, and transformation leadership looks at how to motivate people to do things.
If you’re a leader in your field of work, you may wonder what these leadership styles look like in practice. Essentially, they are a continuum rather than opposites.
What is Transactional Leadership?
Characteristics of a Transactional Leader
According to a 2015 article about organizational leaders published in the International Journal of Science and Research, transactional leaders share the following characteristics:
Replace the wants of a leader for the wants of a follower
Emphasize development in setting goals, directing them and striving to control outcomes
Can make important decisions
Have a strong personality
The benefits and rewards issue of contingency comes up frequently in discussions about transactional leadership. Contingency means that workers know their reward is contingent upon them completing the tasks that have been assigned to them. So, the leader must set explicit expectations that are understood by the worker. If this transactional process is not clear, a leader might appear to be practicing coercion by not sharing common goals and tasks with an employee.
Transactional leaders usually use manage by exception, which means they won’t make changes or get involved if everything runs as expected. Negative exceptions, such as missing sales goals or production quality targets, get immediate attention. This leadership style can be noticed in various degrees of practice and vary by goals and vision.
Examples of Transactional Leadership
Transactional leadership works best in situations when rules must be followed and hierarchy is critical, and there’s not much emphasis on innovation. Types of organizations that employ transactional leadership are the military, big corporations and NFL coaching.
Transactional leaders can succeed in crisis or on projects that require specific processes. In fact, there’s a chance that you have encountered transactional leadership throughout your life without recognizing it. Teachers that offer good grades in exchange for high academic performance is an overlooked example, as well as a job promotion offer in exchange for excellent performance.
Educational and corporate environments can also be transactional in nature. University leaders use procedural systems to be able to grade students and motivate them to perform better for academic success. Corporations use a well-defined model to compensate for employee performance.
What is Transformational Leadership?
Characteristics of a Transformational Leader
Psychologist Ronald E. Riggio identifies four elements of transformational leaders:
Idealized influence: Leaders hold, share and demonstrate core values and trust.
Inspirational motivation: Leaders motivate workers by conveying confidence and a sense of purpose.
Individualized consideration: Leaders are concerned with people’s feelings and needs.
Intellectual stimulation: Leaders provide opportunities for creativity and innovation and allow people to learn, grow and try new things.
These components, called the Four I’s, have a substantial impact on a leader’s ability to enrich both the organization and the individual. Riggio writes “… transformational leaders hold positive expectations for followers, believing that they can do their best. As a result, they inspire, empower and stimulate followers to exceed normal levels of performance.”
Examples of Transformational Leaders
According to Leadership: Theory, Application & Skill Development by Lussier & Achua, Martin Luther King, Jr. exemplifies a transformational leader because he built follower confidence, challenged taken-for-granted assumptions, developed follower needs and upheld high moral values.
Oprah Winfrey is also classified as a transformational leader by the authors due to her vision and ability to transform any venture she embarks upon.
Transformational leadership may sound admirable, but it has some disadvantages. It can be ineffectual at some stages of business growth and may not take root in a bureaucratic environment. If there is no management structure already in place, transformational leadership is not equipped to create one.
Are Transactional and Transformational Leadership Mutually Exclusive?
It’s tempting to debate which style of leadership is better, but that misses the point. Both styles are valid, and what matters is context. Some organizations need rigidity and a clear chain of command. Others work best in a fluid environment where leadership sets an example and establishes goals. Leadership styles that work for Google won’t work for the military — and vice versa.
In fact, both types of leadership styles might be needed in the same organization to counterbalance each other and help achieve growth and development goals. Transactional leaders make sure the team is running smoothly and producing results today, while transformational leaders spur innovation and look toward tomorrow. In either case education and training can be an effective tool in advancing one’s abilities as a leader.
Difference Between Transactional and Transformational Leadership
Last updated on March 6, 2019 by Surbhi S
Leadership is a trait of influencing the behavior of individuals, in order to fulfill organizational objectives. A number of leadership theories have been propounded by various management experts considering behaviour, traits, nature, etc. namely, Authoritarian, Laissez-faire, Transactional, Transformational, Paternalistic and Democratic. Transactional Leadership or otherwise known as management leadership, refers, to a leadership style which lays emphasis on the transaction between leader and its subordinates.
On the other hand, Transformational Leadership is a type of leadership which becomes a reason for the transformation (change) in the subordinates. In this style, the leader works with the subordinates to ascertain the desired change in the organization.
Many people have trouble understanding the difference between transactional and transaformational leadership.
Content: Transactional Leadership Vs Transformational Leadership
Comparison Chart
Definition of Transactional Leadership
A leadership style whereby the objectives and goals are predefined and the leader uses reward and punishment to motivate his followers is known as Transactional Leadership. It focuses on improving the current situation of the organisation by framing the steps and controlling the organisational activities. The basic purpose of this type of leadership is to revamp the existing corporate culture and to enhance current policies & procedures.
In 1947, the style was first proposed by Max Weber followed by Bernard Bass in the year 1981.
In this leadership style, the leader uses his authority and responsibility as his power as well as the style has a formal approach. Prize and penalties are the two primary tools employed by the leader to inspire his subordinates i.e. if an employee achieves the target within the stipulated time he is given initiative for his work, whereas if the task is not completed within the required time, then he will be penalised for the same.
Definition of Transformational Leadership
The style of leadership in which the leader uses his influencing power and enthusiasm to motivate his followers to work for the benefit of the organisation. Here, the leader seeks the requirement for a change in the existing organisation culture, gives a vision to his subordinates, incorporates mission and implement the change with the dedication of his followers.
In transformational leadership, the leader acts as a role model and as a motivator too who offers vision, excitement, encouragement, morale and satisfaction to the followers. The leader inspires his people to increase their abilities and capabilities, build up self-confidence and promotes innovation in the whole organisation.
James MacGregor Burns first proposed the concept of this leadership style in the year 1978. The main idea of this leadership style is that both the superior and subordinate work for lifting each other for improving their morale and motivation.
Key Differences Between Transactional and Transformational Leadership
The following are the major differences between transactional and transformational leadership:
Transactional Leadership is a type of leadership whereby rewards and punishment are used as a basis for initiating the followers. Transformational Leadership is a leadership style in which the leader uses his charisma and enthusiasm to influence his followers.
In transactional leadership leader, is lays stress on his relationship with followers. Conversely, in transformational leadership leader lays stress on the values, beliefs and needs of his followers.
Transactional Leadership is reactive whereas Transformational Leadership is proactive.
Transactional Leadership is best for a settled environment, but Transformation is good for the turbulent environment.
Transactional Leadership works for improving the present conditions of the organisation. On the other hand, Transformational Leadership works for changing the present conditions of the organisation.
Transactional Leadership is bureaucratic while Transformational Leadership is charismatic.
In Transactional Leadership, there is only one leader in a group. In contrast to transformational leadership, in which there can be more than one leader in a group.
Transactional Leadership is focussed towards planning and execution as compared to transformational leadership which promoted innovation.
Conclusion
According to some researchers, transactional leadership is best while some think that transformational leadership is better. So the debate is never ending, for the two leadership styles. In my opinion, there is no standard leadership style which is best suited to all the circumstances. So, an organisation should not rely on a single leadership style. It must employ the requisite leadership style as per its needs and prevalent conditions.
If you are searching for the best leadership style between transactional and transformational leadership, then you will end up saying that both are having its merits and demerits. It depends on the situation which leadership style will be most appropriate to it.
What is Transformational Leadership? How New Ideas Produce Impressive Results
Published On: November 25, 2014
Updated On: May 08, 2018
Transformational leadership inspires people to achieve unexpected or remarkable results. It gives workers autonomy over specific jobs, as well as the authority to make decisions once they have been trained.
Some of the basic characteristics of transformational leadership are inspirational, in that the leader can inspire workers to find better ways of achieving a goal; mobilization, because leadership can mobilize people into groups that can get work done, and morale, in that transformational leaders raise the well-being and motivation level of a group through excellent rapport. They are also good at conflict resolution.
All of these traits make transformational leadership a good fit for many types of business.
Read more about transformational leadership:
Transformational leadership defined
Transformational leaders are sometimes call quiet leaders. They are the ones that lead by example. Their style tends to use rapport, inspiration, or empathy to engage followers. They are known to possess courage, confidence, and the willingness to make sacrifices for the greater good.
They possess a single-minded need to streamline or change things that no longer work. The transformational leader motivates workers and understands how to form them into integral units that work well with others.
Differences between transformational leadership and other leadership styles
There are marked differences between transactional leadership and transformational leadership.
Transformational leaders specialize in:
Working to change the system
Solving challenges by finding experiences that show that old patterns do not fit or work
Wanting to know what has to change
Maximizing their teams' capability and capacity
Transactional leaders do the following:
Work within the system
Start solving challenges by fitting experiences to a known pattern
Want to know the step-by-step approach
Minimize variation of the organization
Another way to put it: Transactional is a "telling" style, while transformational is a "selling" style.
History of transformational leadership
The term "transformational leadership" was coined by sociologist James V. Downton in 1973. Leadership expert James Burns defined transformational leaders as those who seek to change existing thoughts, techniques and goals for better results and the greater good. Burns also described transformational leaders as those who focus on the essential needs of the followers.
Examples of transformational leadership
Transformational leaders excel in a variety of sectors. Here are notable business leaders who used the transformational style.
William Edwards Deming
William Edwards Deming is known as the father of statistical quality control. After earning a doctorate in mathematics and physics at Yale in 1928, he spent most of his career working or consulting for the U.S. government. During World War II, Deming taught statistical process control techniques to military production workers.
After the war ended, the U.S. Department of the Army sent Deming to Japan to study agricultural production and related problems. He convinced Japanese officials of the potential for industrial uses of statistical methods. Deming's goal was to have Japan become a world industrial power in five years. Japan did it in four. Deming was asked to do the same thing for U.S. manufacturing firms, but his methods did not take root until the 1980s.
Peter Drucker
Peter Drucker was a professor and management consultant among other things. He predicted some of the 20th-century's biggest changes, such as the Japanese rise to a world economic power, the age where people would need to learn in order to keep their jobs or get ahead, and the importance of marketing and innovation. He coined the term "knowledge worker."
Drucker continually called for balanced management, which called for a balance between short-term needs and long-term plans, as well as profitability and other elements of business. He was very interested in how to mesh innovation and entrepreneurship.
He felt that entrepreneurship was a vehicle of innovation. Entrepreneurship was not just high technology, but high tech was a vehicle for change, in attitude, values, and behavior. The entrepreneur systematically looked for change, responded to them and took advantage of opportunities as they present themselves.
Ross Perot
H. Ross Perot started his career as a salesman for IBM. In the 1960s he started his own company, Electric Data Systems (EDS), one of the first businesses that built and serviced computer systems for other companies. In contrast to IBM, Perot trained his workers to do whatever needed to be done for a customer without waiting for approval. There was a strong bias toward action.In the beginning, Perot shunned strategic planning. Over the next few years, however, he hired military officers who could take orders and give orders. Perot's slogan was "Go, do."
If an employee took credit for someone else's work, they were out the door. The motto of Perot's company at one point was "We bring order to chaos."
John D. Rockefeller
John D. Rockefeller was the founder of Standard Oil. It started as a single oil refinery and grew to a huge company. Much of the company's growth came through acquisitions. But, Rockefeller also spent a considerable amount of time streamlining the organization as it grew.
Rockefeller built his company's early reputation by guaranteeing the quality of Standard's kerosene. He was known for his organizational tactics and for using disciplined strategies. One of the reasons for Rockefeller's success was he could align his company with one simple vision, then he held everyone accountable for their part in making that vision happen.
In business, transformational leadership is often the most effective leadership style.
Transformational leadership quotations
Edwards Deming: "A bad system will beat a good person every time."
Peter Drucker: "If you want something new, you have to stop doing something old."
Ross Perot: "Punishing honest mistakes stifles creativity. I want people moving and shaking the earth and they are going to make mistakes."
John D. Rockefeller: "Good leadership consists of showing average people how to do the work of superior people."
Transformational leadership style requirements
Here are some of the characteristics of transformational leaders:
Very well-organized and expect their followers to be creative
Team-oriented and expect that followers will work together to create the best possible results
Respected, and in turn respects followers
Acts as coach of the team. He or she provides training and motivation to reach the desired goals
Responsible for their team, but also instills responsibility into team members
Engenders respect through rapport and a personal influence
Advantages and disadvantages of transformational leadership
Transformational leadership works well in organizations where change is needed. Transformational leadership is not the right fit for new organizations where no structure exists.
Transformational leadership pros:
Excellent at communicating new ideas
Good at balancing short-term vision and long-term goals
Experience building strong coalitions and establishing mutual trust
They have integrity and high emotional intelligence (empathy with others)
Transformational leadership cons:
Ineffective in initial stage or ad-hoc situations
Require an existing structure to fix
Bad fit in bureaucratic structures
Benefits of transformational leadership
One of the best uses of this leadership style is in an organization that is outdated and requires serious retooling. It is also a perfect match for a small company that has big dreams and wants to change and adapt to get there. In both of these examples, the board of directors can bring in a transformational leader who will change the structure of the organization and also motivate the current workers to buy into the new direction.
What is Transactional Leadership? How Structure Leads to Results
Published On: November 25, 2014
Updated On: May 08, 2018
A transactional leader is someone who values order and structure. They are likely to command military operations, manage large corporations, or lead international projects that require rules and regulations to complete objectives on time or move people and supplies in an organized way. Transactional leaders are not a good fit for places where creativity and innovative ideas are valued.
Transactional leadership is most often compared to transformational leadership. Transactional leadership depends on self-motivated people who work well in a structured, directed environment. By contrast, transformational leadership seeks to motivate and inspire workers, choosing to influence rather than direct others.
Read more about transactional leadership:
Transactional leadership definition
Transactional leadership focuses on results, conforms to the existing structure of an organization and measures success according to that organization's system of rewards and penalties. Transactional leaders have formal authority and positions of responsibility in an organization. This type of leader is responsible for maintaining routine by managing individual performance and facilitating group performance.
This type of leader sets the criteria for their workers according to previously defined requirements. Performance reviews are the most common way to judge employee performance. Transactional, or managerial, leaders work best with employees who know their jobs and are motivated by the reward-penalty system. The status quo of an organization is maintained through transactional leadership.
Differences between transactional leadership and other leadership styles
Transactional leaders differ from charismatic and transformational leaders in both structure and method. Charismatic leadership emphasizes influencing a group or organization to make the world a better place. In transactional leadership, the emphasis is on managing the performance of the individual and determining how well he or she performs in a structured environment.
The difference between transactional leadership and transformational leadership is also quite large. Simply put, transactional is a "telling" leadership style, and transformational is a "selling" style. While the transactional approach features positive and negative reinforcement, transformational leadership emphasizes motivation and inspiration. Transactional leaders are reactive; transformational leaders are proactive. Transactional leadership appeals to the self-interest of individuals, while the transformational style prioritizes group progress.
History of the transactional leadership theory
Max Weber, a 20th-century German sociologist, made an extensive study of leadership styles and divided them into three categories: traditional, charismatic and rational-legal, or bureaucratic. In 1947, Weber was the first to describe rational-legal leadership — the style that would come to be known as transactional leadership — as "the exercise of control on the basis of knowledge."
Transactional leadership theory is based on the idea that managers give employees something they want in exchange for getting something they want. It posits that workers are not self-motivated and require structure, instruction and monitoring in order to complete tasks correctly and on time.
The transactional leadership style was widely used after World War II in the United States. This was a time when the government concentrated on rebuilding and required a high level of structure to maintain national stability.
Political scientist James McGregor Burns was one of the most prominent authors to advance Weber's theories. In his 1978 book "Leadership," Burns argued that both transactional and transformational leaders must be moral and have a higher purpose. In Burns's model, transactional leaders espouse honesty, fairness, responsibility, and honoring commitments.
In the 1980s and 90s, researchers including Bernard M. Bass, Jane Howell and Bruce Avolio defined the dimensions of transactional leadership:
Contingent reward, the process of setting expectations and rewarding workers for meeting them
Passive management by exception, where a manager does not interfere with workflow unless an issue arises
Active management by exception, in which managers anticipate problems, monitor progress and issue corrective measures
Many current leadership theorists agree that principals of transactional and transformational leadership can be combined for ideal outcomes for both management and the workforce.
Examples of transactional leadership
The transactional model is likely to succeed in a crisis or in projects that require linear and specific processes. This model is also useful for big corporations, such as Hewlett-Packard, a company known for its extensive use of management by exception.
Many high-level members of the military, CEOs of large international companies, and NFL coaches are known to be transactional leaders. Transactional leadership also works well in policing agencies and first responder organizations. Here are four examples of transactional leaders.
Norman Schwarzkopf
Gen. Norman Schwarzkopf was born in 1934 and graduated from West Point. He went to Vietnam as an advisor to the South Vietnamese army. During that war, he was wounded twice and awarded three Silver Star medals. In 1978, he became a brigadier general; he attained a four-star ranking in 1988. General Schwarzkopf was commander-in-chief of the U.S. forces in Operation Desert Storm, responsible for tens of thousands of troops in Iraq and Kuwait. He used the rules and regulations of the military to coordinate operations on several continents.
Vince Lombardi
Born in 1913, Vince Lombardi is best known as the coach for the Green Bay Packers. He signed a five-year contract with Green Bay in 1959. Under his leadership, the team never had a losing session. Over the course of his career, he led the team to a 98-30-4 record and five championships. The Super Bowl trophy is named after him. He used to run the Packers through the same plays in practice over and over again. The team's opponents knew the plays Lombardi would run, but the team was so well trained that many teams had trouble defending against them.
Bill Gates
Bill Gates was born in Seattle in 1955. In his early teens, he met Paul Allen at the Lakeside School, where they both developed computer programs as a hobby. When Gates went to Harvard, Allen went to work as a programmer for Honeywell in Boston. In 1975, they started Microsoft, and by 1978, the company had grossed $2.5 million, when Gates was 23. In 1985, Microsoft launched Windows. Bill Gates is now one of the richest people in the world. As a transactional leader, he used to visit new product teams and ask difficult questions until he was satisfied that the teams were on track and understood the goal.
Howard Schultz
Howard Schultz was born in 1953 and grew up in the Brooklyn housing projects. He escaped the projects with a football scholarship from Northern Michigan University. After college, he started selling coffee makers to companies that included the Starbucks Coffee Tea and Spice Company, which originally sold coffee beans rather than made-to-order drinks. He was hired by the company in 1982. In 1984, Schultz opened the first Starbucks coffeehouse based on the concept of an Italian espresso bar.
Schultz wanted to grow Starbucks, but the owners wanted to stay small. Schultz left and opened his own company in 1985. With the help of investors in 1987, he bought Starbucks and merged the two companies. By 2006, Schultz was ranked 394 on Forbes magazine's list of the 400 richest people in America. As a transactional leader, he was responsible for the vision and implementation of the Starbucks model.
Transactional leadership quotes
Norman Schwarzkopf: "When placed in command, take charge."
Vince Lombardi: "The price of success is hard work, dedication to the job at hand, and the determination that whether we win or lose, we have applied the best of ourselves to the task at hand."
Bill Gates: "The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency."
Howard Schultz: "Starbucks is not an advertiser; people think we are a great marketing company, but in fact we spend very little money on marketing and more money on training our people than advertising."
Transactional leadership style
Here are some of the 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
Advantages and disadvantages of transactional leadership
Transactional leadership works well in organizations where structure is important. Transactional leadership is not the right fit for organizations where initiative is encouraged:
Transactional leadership pros:
Rewards those who are motivated by self-interest to follow instructions
Provides an unambiguous structure for large organizations, systems requiring repetitive tasks and infinitely reproducible environments
Achieves short-term goals quickly
Rewards and penalties are clearly defined for workers
Transactional leadership cons:
Rewards the worker on a practical level only, such as money or perks
Creativity is limited since the goals and objectives are already set
Does not reward personal initiative
Benefits of transactional leadership
There is definitely a place for transactional leadership in the world today. One of its best uses is in multinational corporations where not all of the workers speak the same language. Once the structure and the requirements are learned, it is easy for workers to complete tasks successfully. This works because transactional leadership is simple to learn and does not require extensive training. The transactional approach is easy to understand and apply across much of an organization.
The military, policing organizations, and first responders use this style of leadership so that all areas of the organization are consistent. 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.
To many people, money and perks are a powerful motivator. Many people need a job to pay the bills. They have other obligations and distractions and would just as soon know exactly how to do their job in order to keep it and reap the rewards.
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