TRANSACTIONAL LEADERSHIP

DEFINITION

Transactional leadership focuses on results, conforms to the existing structure of an

organization and measures success according to that organizations 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.

HISTORY

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

Webers theories. In his 1978 book Leadership, Burns argued that both transactional and

transformational leaders must be moral and have a higher purpose. In Burnss 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 teams 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.

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

SUMMARY

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.