Leadership Theory Overview: Transactional Leadership
Leadership Theory Overview: Transactional Leadership
In a continuation of our series on the most popular models of Leadership, Victor Reis, Chartered Occupational Psychologist and Senior Consultant at Alumni looks at the principles of Transactional Leadership.
This is the fourth part of the Leadership Theory Overview series, and by now you know the drill: brief descriptions of influential leadership theories and their scientific backing. If by any chance this is your first encounter with the series, please do check out previous posts on transformational leadership , servant leadership and sustainable leadership.
Making a post on transactional leadership might come as a bit of a surprise for some of you. Why would we spend time on a concept that is not exactly the buzz right now, dates back quite a bit, and – as we will come back to later in this post – might not quite reach as strong results as some of the other theories out there?
The main reason is that that if we understand how things fit together, we can use our knowledge better. The concepts of TrL are present and used in organizations almost everywhere, and by understanding them better you gain a better ability to understand the mechanisms of other leadership approaches as well. It is perhaps similar to a chef getting familiar with basic types of seasoning – perhaps you will not knock your guests off their chairs with simple salt and pepper, but you will be challenged to reach higher levels of cuisine if you do not get the foundation right.
And TrL certainly does have several interesting connections to other focus areas. For those of you who have read the post on transformational leadership, you might recall that this theory, whose efficiency and benefits are very well proven, actually builds on a foundation of parts of transactional leadership. That in itself justifies understanding TrL better, and in addition TrL also gives us important bits that help us understand destructive leadership (which we will focus on specifically in a future post) better. So here we go.
Transactional Leadership
As a psychologist, I am tempted to think of TrL as what you would get if you asked an early behaviorist psychologist to design a system for how to get employees to perform. The behaviorist school of psychology focuses, as the name suggests, on observable behaviors. One central concept is operant conditioning: put simply, operant conditioning means that when a person does something and that behavior is given a positive consequence – a reward – the person will do more of that behavior in the future. If that same behavior is given a negative consequence – a punishment – the person will do less of it.
Now, TrL was not invented by a psychologist - German sociologist Max Weber is considered the originator. But here is why I make the association: the main way the transactional leader motivates followers is through consequences of behaviors. This takes two main forms:
Management-by-exception (MBE) – this is the part that regulates consequences of unwanted behaviors. There are two sub-types:
Passive – reacting to negative results or behaviors, for example when the manager gives negative feedback after noticing that quarterly results were below expectations.
Active – working to prevent negative events or behaviors, for example by making sure that information on how to follow data security protocols are readily accessible.
Contingent reward – this is the part that rewards wanted behaviors.
Proactive – clarifying goals, roles, targets and subsequent consequences, for example formulating clear incentive plans, where it is clear what types and levels of behaviors result in certain rewards (such as bonuses or promotion).
Reactive – reinforcements/rewards after performance, for example noticing that an employee did something really well, and giving her/him recognition for it.
Transactional leadership can be seen as one of the most fundamental ways to fulfil the functions of leadership: clarifying what needs to be done, and motivating people to do it. The approach connects with followers in quite a straight-forward way – we all like getting salary and cake and dislike warnings from our managers, right?
What does the science say?
Transactional leadership is particularly effective in situations where the goals and objectives are well-defined, and there is a clear set of procedures and guidelines that must be followed. One of the primary advantages is that it provides clear expectations and guidelines which ensures that followers understand what is expected of them and how they will be rewarded or punished based on their performance. This can lead to improved performance and productivity, as followers are motivated to meet or exceed expectations to receive rewards. Transactional leadership can also be effective in situations where quick decisions are necessary, such as in times of crisis or emergencies.
Some of the main criticisms of this style of leadership are that it can be too focused on short-term goals and may not encourage individual development, innovation or creativity. Another risk of transactional leadership is that it can create a culture of fear and punishment - followers may be motivated to meet expectations to avoid punishment rather than to achieve their full potential. This can lead to a culture of compliance rather than one of innovation and growth, and be less effective when it comes to motivating people intrinsically.
It should be noted, that even though transactional leadership has its limitations and disadvantages, many of its elements also seem to be of vital importance for effective leadership when done right (as the previously mentioned connection to transformational leadership). In essence, if a leader is inspiring and attentive but lacks the ability to set clear expectations and neglects paying attention to performance, results will likely suffer.
Did you know that Alumni, in addition to being one of the top Executive Search, Interim and Recruitment firms in the Nordic market, are also experts in the field of Leadership Assessment and Development? Victor Reis is an Occupational Psychologist with extensive experience of leadership and talent management, and is happy to help if you are looking for ways to select and grow the leaders that will boost the success of your organisation.
Senior Consultant and Chartered Occupational Psychologist
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Perspectives
Leadership Theory Overview: Part I, Transformational Leadership
Perspectives
Leadership Theory Overview: Part II, Servant Leadership
Perspectives
Leadership Theory Overview: Part III, Sustainable Leadership