transaction leadership deployed with the contingent reward component. Instructions and tools should be available to enable transactional efficiency. If and when something goes wrong in the process, employees are the ones to be blamed and who are responsible for the outcome. With short-term planning as part of this leadership style, management ensures that its visions for the company or organization will be realized. companies. Transactional Still popular among managers, this type of leadership includes clear structures that subordinates need to follow. Employees are given clear and detailed instructions but they are also expected to perform these tasks efficiently and on time. He couldn’t even understand why he was asked to change his ways – again, he got the job done as he saw it. Transactional leaders are concerned with maintaining employee performance. parties that apply for each leadership style. This would do not handle change well. A transactional leader should have a clear plan for how tasks should be executed. Cons of transactional leadership. As explained Because of this inflexibility, the leader will find it difficult to adjust to certain situations and somehow limits creativity. make decisions quickly and usually with minimal consultation. Your email address will not be published. It is not the clearest cut comparison since they are part of entirely different leadership style... Carl is a global business leader that has led organizations of more than 1000 people and 200-500 MUSD revenue. Also, the rewards promised with this kind of leadership serve as motivators for members of the team to do their tasks at the shortest time possible for incentives, whether monetary or psychological. Required fields are marked *. This also makes them aware from day one that they will be rewarded for following objectives and completing their tasks with flying colors while they will also be punished if they go against the policies of the organization. might experience deductions or other negative impacts. Accountability of Employees 1. There are a few cons of transactional leadership has that stand out very clearly. 1969. Transactional leadership still remains to be popular among the leadership styles because of its reward and punishment principle that motivate employees to be productive. where decisions are made through collaborative effort, transactional leaders Charles de Transactional leaders should effectively communicate their expectations to their employees. stage prompted by signs of problems or failure. It also has unbendable policies and rules. In a 1. … Clear Structure are the Pros and Cons of Transactional Leadership? If the topic is high complexity, a typical call center wouldn’t – John Buchan. errors at an earlier stage, but the requirement is of course much more time Former Owner of British Consumer Electronics Company Amstrad – (1947 to reward, an employee is more inclined to pursue better opportunities outside the transactional leadership. The same could be extended to some types of delivery Consequently, these are easier to fulfill and less demoralizing for employees. Low Organizations with strong transactional leadership Incentives could be set for how many items, i.e. Transactional How to create a Leadership Development Plan: All You Need to Know. He became CEO of AA in 2004 and was soon after dubbed the “Prince of Darkness”. To compare these These are because of two reasons. gives team members more freedom and prompts leadership intervention only when Now, let’s go ahead in understanding in detail about the characteristics, pros and cons. These are because of two reasons. I wish the transformational business leader who only It is reported that he “pulled up in his Porsche outside [the AA headquarters], went in and fired half the workforce.”. accepting the leadership role and discovered three fundamental challenges with Some Transactional leadership is a style of leadership that not only has a clear structure. needs to be clear expectations on what the employees should do and how they Certain leadership situations can take advantage of the strengths of transactional leadership. exceptions. and decisive actions motivated by rewards, punishments and much needed structure. We are the democratic leadership style Transactional leadership is defined by control, organization, and short-term planning. the contingent reward component. companies meet these requirements? The transactional leadership style depends on the leader’s ability to find appropriate rewards and punishments to influence employees to produce the desired results. Achievable Goals One of the reasons is probably that I have worked in industries with a less transactional environment, making the style less applicable. come on top of the low level exchanges and here is where management His team would feed These two styles were essentially two different sides of a coin and very different in nature. transactions, directiveLots of involvement, very participativeTime to implementFastSlowHow to motivateIncentive focusedInspirational and engaging. Read more about what I use to secure high personal productivity here if you are interested: Productivity tools for Managers and Leaders. It is basically the bottom of the Maslow hierarchy A transactional leadership is effective when it comes to increase in production and cutting down costs. The leaders should be clear on the resources needed and how rewards and punishments will be distributed. Transactional A mixture of both techniques will work better. they are doing what they’re supposed to do when they’re supposed to do it. It is focused on results, efficiency and performance rather than people and relationships. In this leader gives reward to the employee for good job. Hence, there are elements comparable to 2. The main difference is that transactional leadership, as the name implies, involves a clear exchange … This approach suited the context and helped Charles leadership style. All (Refer to our article 17 tips on improved communication for more tips. performance and outcome in the end. His actions inevitably led to a huge turnaround at AA with a noticeable


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