Several studies and analyses within the subfield of leadership theories have been conducted and written to explore and discuss the disadvantages of transactional leadership, especially when compared with transformational leadership.
However, the same subfield also includes discourses regarding the suitability of this leadership and management style under certain situations. Based on its inherent strengths, the applications of transactional leadership are also important to consider.
The Applications of Transactional Leadership
1. Suitable for Established and Large Organizations
Transactional leadership is usually dominant in large organizations and even mid-sized ones with established operational processes and human resource management practices because of its straightforwardness and adherence to keeping things the same. Note that this style of leadership is the most fundamental method of leading and managing people.
2. Managing Routine or Mechanized Tasks
Another application of transactional leadership is in overseeing people that perform standardized or routine and mechanized tasks. Examples include the production floors of factories or manufacturing facilities, call centers or customer support teams, teams or departments of administrative personnel, and military groups and organizations, among others.
3. Situations that Require Fast Decision-Making
There are situations that require quick and decisive actions or responses. Because of their focus on streamlined communication and adherence to a clear and straightforward chain-of-command, transactional leaders are better suited in time-sensitive and mission-critical circumstances that necessitate effective and efficient decision-making processes.
4. Inapplicable to New and Chaotic Organizations
Note that transformational leadership is largely suitable for newly-formed teams or startup organizations. However, in some instances, these teams and organizations can be chaotic due to the absence of rules, systems, and culture. A transactional style of leadership can provide the needed structure until a particular team or organization becomes more evolved.
5. For Self-Motivated and Independent Individuals
The applications of transactional leadership also include overseeing people who are self-motivated and require minimal supervision. Specific examples of these individuals include those involved in sales such as insurance agents and real estate brokers, financial advisors such as stockbrokers, and tenured educators and doctors, among others.
6. Basic Approach to Performance Management
A transactional style of leadership primarily depends on rewards and punishment to motivate people and ensure that they are performing their tasks. Transactional leaders are passive leaders that determine the performance of their people based on their outputs. These outputs are readily subjected either to formal and official merits or demerits.
