The transactional leader works by creating unmistakable structures whereby it's clear that which is wanted of their subordinates, along with the rewards which they receive in exchange for complying with instructions. Punishments are not always stated, but they are also well understood and strict methods of discipline are regularly in place.
The early stage of Transactional Leadership is in negotiating the contract whereby the subordinate is given a salary and other benefits, and the company (and by implication the subordinate's manager) gets authority over the subordinate.
When the Transactional Leader allocates work to a subordinate, they are considered to be fully responsible for it, whether or not they have the resources or capability to carry it out. When things go wrong, then the subordinate is considered to be personally at fault, and is punished for their failure (just as they are rewarded for succeeding).
Often the transactional leader will work under the expectation that if something isn't broke, don't fix it. In other words, if a principle is operating to expectations, it doesn't warrant notice. Along with this is the expectation that anything above expectations merits praise and rewarding, and anything below expectations needs corrective action.
Whereas Transformational Leadership has more of a 'selling' style, Transactional Leadership, once the contract is in place, takes a 'telling' style. Transactional leadership is based in contingency, in that reward or punishment is contingent upon performance.
Many managers still hold the Transactional Leadership approach in high regard despite recent research which has highlighted some limitations. The fact that this approach skews towards Management rather than towards Leadership makes it far easier to implement for those light on talent, time, or training.
People are not simply driven by monetary rewards and cannot be assumed to be working examples of ideal rational individuals. Psychological theories that attempt to define and describe motivation and resulting actions are Pavlov's Classical Conditioning and Skinner's Operant Conditioning. These theories were devised using simplistic animal experiments and do not correctly model complex societal and human characteristics.
In practice, there is sufficient truth in Behaviorism to sustain Transactional approaches. This is reinforced by the supply-and-demand situation of much employment, coupled with the effects of deeper needs, as in Maslow's Hierarchy of Needs. When the demand for a skill outstrips the supply, then Transactional Leadership often is insufficient, and other approaches are more effective.
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Daiv Russell is a management and marketing consultant with Envision Web Marketing. Read more Articles about Small Business Management, learn about Abraham Maslow and the Maslow theory.
