When compared with a transformational leader who focuses on creating a vision, promoting collaboration, and spearheading change, a transactional leader is someone whose primary focus revolves around maintaining the status quo, utilizing performance management strategies, and providing rewards in exchange for tasks performance.
Take note that transactional leadership is both a theory and style of leading and managing people. The primary aim is to ensure compliance among the people through the development and implementation of standards and performance metrics, thereby making it suitable or applicable in certain leadership situations and specific organizations.
But how does a transactional leader differs from other leaders who use other leadership styles? What are his or her characteristics and qualities that define his or her leadership style, as well as his or her motivation behind leading people and a group or an entire organization? What are the skills and competencies needed to be one?
The Characteristics of a Transactional Leader
1. Uses Rewards and Punishment
One of the defining characteristics of a transactional leader is his or her familiarity in utilizing a system of rewards and punishment to promote compliance among his or her people, especially to ensure that these individuals are able to perform the tasks given to them.
Examples of rewards include compensation raise, performance bonus, public recognition, and positive feedback. Examples of punishments are demotion, negative feedback, reprimands and suspension, public humiliation, and termination.
Researchers A. Steel et al. explained that reward and punishment are important motivators for humans and other animals. Their study showed that punishment can specifically improve serial reaction time task performance, thereby impacting skill behavior.
2. Highly Organized and Structured
A leader who adheres to a transactional style of leadership believes in the need to follow a set of rules and adhere to an established system. He or she is fundamentally organized and structured when it comes to organizing people and assigning tasks.
The need to adhere to rules and systems ensures the promotion of norms within an existing organizational culture and the maintenance of the status quo. Upholding norms and status quo are important to some time-honored groups or organizations.
3. Strong Focus on Basic Needs
To motivate people, another notable characteristic of a transactional leader is his or her recognition that motivation can be achieved by satisfying basic human needs. This leader focuses on the lower levels of the Hierarchy of Needs of A. Maslow.
Note that these basic needs defined in the Hierarchy of Needs proposed by A. Maslow include physiological needs such as food and shelter, as well as safety needs such as personal security, health and wellbeing, and financial security.
Leaders reference the lower levels of the hierarchy to design and implement a standardized model for managing the performance of their people and motivating them, including the delivery of rewards and punishments to ensure compliance.
4. Passive Approach to Leadership
Unlike transactional leaders who engage their people to instill participation and collaboration, another defining trait of transactional leaders is that their approach to leading and managing their people is generally passive and somewhat distant.
They do not actively engage their people as long as they are performing the assigned tasks. The established performance management system, including the systems of rewards and punishment, automates the overall process of overseeing the people.
5. Exhibits Some Level of Authoritarianism
A transactional style of leadership is suitable for certain situations. One of its primary goals is to keep things the same simply by ensuring compliance to the established set of rules and continues adherence to tried and tested systems.
Hence, by default, leaders who follow this style exhibit some level of authoritarianism. They uphold the chain of command to reduce decision-making time, create consistent results, promote efficiency in accomplishing tasks, and streamline communication.
A more specific trait is that this leader commands respect. Of course, in some situations, doing so requires taking advantage of his or her formal authority and demonstrating some semblance of an authoritarian approach to leadership and management.
FURTHER READINGS AND REFERENCES
- Hussain, S. T., Abbas, J., Lei, S., Jamal Haider, M., and Akram, T. 2017. “Transactional Leadership and Organizational Creativity: Examining the Mediating Role of Knowledge Sharing Behavior.” Cogent Business & Management. 4(1): 1361663. DOI: 1080/23311975.2017.1361663
- Steel, A., Silson, E. H., Stagg, C. J., and Baker, C. I. 2016. “The Impact of Reward and Punishment on Skill Learning Depends on Task Demands.” Scientific Reports. 6: 36056. DOI: 1038/srep36056