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Transactional Leadership

Last updated 29th Nov 2022

The transactional leadership style was first described by Max Weber in 1947, and again by Bernard M. Bass in 1981. Transactional leaders are on the opposite theory spectrum relative to transformational leaders. The former depends on a system of rewards and punishments, while the latter takes advantage of internal motivations.

Transactional versus Transformational Leadership Theory

The transactional leadership theory developed by Weber and Bass later became part of a three style model: transformational, transactional, and laissez faire. Bass believed each leader exhibited a style along a continuum, and he later developed the Multifactor Leadership Questionnaire, or MLQ, to determine where leaders fell on this continuum.

Transactional Leaders

The transactional leadership style developed by Bass is based on the hypothesis that followers are motivated through a system of rewards and punishment. The transactional leader's view of the leader / follower relationship is one of quid pro quo - or "this for that." If the follower does something good, they will be rewarded. If the follower does something wrong, they will be punished.

Transformational Leaders

The theory behind transformational leaders, on the other hand, is based on the hypothesis that leaders can exploit a need of the follower. These particular needs are not based on quid pro quo transactions, but higher order needs. These needs are those of the total person, and are closely aligned with the internal motivational factors of the follower.

So at one end of the spectrum are transactional leaders, making many "deals" with those being led. On the other end of the spectrum, are transformational leaders, which are looking to satisfy a greater need of an individual.

Laissez Faire Leaders

A third leadership dimension was eventually acknowledged by experts: the laissez faire leader. This type of approach allows for complete permissiveness, and the group often lacks direction because the leader does not help in making decisions.

While working for a laissez faire leader gives followers the opportunity to make decisions, the lack of direction can lead to anarchy. This is especially true if this form of leadership is allowed to remain in place for an extended period of time.

Transactional Leadership Agreements

At the extreme, the only relationship that develops between the transactional leader and the follower is an "unwritten agreement" to carry out all orders. In fact, this unwritten agreement may begin to form very early in the manager / leader relationship as demonstrated in the example that follows:

transactional leaders
Immediately after the hiring process, it may be clear the transactional leader is in charge, and the follower can hope to get better raises in pay by following orders. This type of agreement with the transactional leader may come about through consistent reinforcement of certain actions the follower takes.

When the follower completes an important assignment on time, and under budget, the transactional leader may reward them monetarily. If a deadline is missed, or a budget is "blown," the leader may make it very uncomfortable for the follower.

This is not to suggest that all managers that exhibit the transactional leadership style are locked into what might seem like extreme relationships. As mentioned earlier, leaders will likely fall on a continuum, and exhibit behaviors characteristic of other styles too.

As discussed in the articles on Leadership Style and Conditional Leadership, success is usually assured through the use of different styles. Effective leadership aligns the current work environment with the disposition of followers.

Types of Transactional Leaders

The types of transactional leaders described by theorists include categories such as Opinion, Group, Governmental / Party Leaders, Legislative, and Executive Leaders.

By examining these leadership categories more closely, it's possible to gain a greater appreciation for what makes the transactional style "tick." These are individuals that appear in the press all the time. They are constantly meeting new people, making deals (completing transactions), and moving on.

This is not to say that transactional leaders are "shallow." Under certain conditions, this style is extremely effective, and most leaders operate on a continuum as mentioned earlier.

Transactional Leadership and Women

An interesting study conducted by Northwestern University with respect to transactional, transformational, and laissez fair leadership styles revealed that women are more likely to use transformational methods than male leaders. This means most women were more interested in working with people holistically, not just making deals.

The study also found that when female leaders used the transactional style, they were more likely to focus on the rewards component. On the other hand, when men utilized the transactional style, they were more likely to focus on the punishment aspects.

Admittedly, the study found the differences between men and women to be small; however, the differences were consistent in one way. Women always exceeded men when it came to the positive aspects of a style, and men always exceeded women when it came to the negative attributes of the style. Translating: women always won when it was good to win, and men always won when it was bad to win.

Regardless of winners and losers, the important thing to understand are the strengths and weaknesses of the style used most frequently. To be effective in the workplace, it's important to realize that switching between styles results in a more effective leader too.

About the Author - Transactional Leadership

Moneyzine Editor

Moneyzine Editor