This article is written to provide you with an understanding of what Transactional Leadership is.
Transactional Leaders maintain focus on the status quo and generally spend less time looking forward to inspiring their team to accomplish goals that aim for future progress. These leaders work within the system, solve problems by fitting experiences to a known pattern, following the step-by-step process, and minimizing variation within the business.
This type of leadership style is important to the daily running and administration of a business’s current short-term goals. The advantages of transactional leadership are:
- Employees who deliver results are rewarded
- Rewards and punishments are clearly defined
- Short Term goals can be achieved quickly
- Leaders work intensely to maintain the structure and processes
These advantages may work for the short term, however, is not sustainable for the long term alone because these leaders are focused on maintaining the status quo without future vision and growth in mind. The leader can lose respect and trust because they are primarily focused on production output, which can cause complacency within their team because they work does not provide any new challenges since the leaders are not looking towards future changes and developments. Disadvantages of transactional leadership are:
- External motivation only works up to a point
- Creativity is discouraged
- Leaders and Employees are underdeveloped
- The Leader can become a bottleneck for progress
To be an effective leader, one should have the ability to balance transactional and transformation leadership styles (which will be discussed in part 2). Leaders who conduct business and direct transactionally are far less effective in creating a productive and positive work environment.
One contributing factor to this leadership style is when a person is put into a leadership role without displaying effective leadership skills and abilities, which can bring about negative outcomes and affect employee morale. Some signs someone has been put into a leadership role before they are ready include:
- Reinforcing without employee consideration
- A “Give and Take” relationship approach
- Focusing on contingent rewards and punishments to achieve compliance
- “Do as I say, not as I do.” Rather than leading by example
When someone is not yet ready to be a leader, they generally assert themselves as a leader rather than letting it happen organically and respectfully. Remember that transactional leaders focus on the short-term goals rather than the long term to inspire overall change. In order to be an effective leader, you have to be able to balance the daily running and administration of the business as well as looking towards the future for growth and development. To find out about Transformational Leadership, please see part 2 of this series.