What Is Transactional Leadership

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Many of the top leaders use a style known transactional leadership or managerial leadership. This style is focused on the management method and involves directing, arranging and short-term planning. This style mainly works on the system of reward and punishment. This style is popular among managers, and includes clear structures that employees need to follow. Those working for these types of leaders are held accountable for their actions even though they have clear instructions provided to them on an ongoing basis.

Transactional leadership is a reward and punishment style which is good at encouraging employees into becoming constructive and resourceful team members. The reward that is available if the employee becomes productive is a great incentive. Additionally, this style of management allows employees to realize that management is watching how they work and that they are intent on reaching certain goals and expecting maximum performance. Failure to maintain proper performance could result in punishment. This style also provides for short-term planning helping to ensure that the company’s vision is met.

Transactional leadership is also comprised of a makeup that is clear and succinct. Employees of a company with this kind of style of leadership are conversant in what the company expects from them. They are also provided with obvious instructions and are required to follow a chain of command which makes it simpler for them to know which channel to follow. This also makes them aware that they will be rewarded for following directives and completing their tasks and punished if they do not.


Transactional leadership is useful in helping to increase production and to reduce costs. Transactional leadership is a style that has a clear structure with unchangeable policies and rules.

Even though employees have a certain amount of freedom and independence for performing their jobs, they do have to work within the parameters set out by management. Complaints or insubordination is not tolerated due to the inflexibility of the expectations. These leaders generally find it hard to adjust to certain situations and they do limit creativity.

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This leadership style prevents managers from accepting creativity from employees who might have a better way to perform a job and does not accept suggestions for the betterment of the company. Since this leadership style is rigid and not conducive to suggestions from people under the management, this hinder creativity from employees who might have high-quality and effective suggestions for the improvement of the organization.

Transactional leaders must operate within the boundaries set out for them and managers cannot react to emotions of employees so long as tasks are completed properly. These leaders can be effective at achieving goals within a specific time-frame but are unable to allow for emotional ties to employees. Employees then become insensitive to showing concern for the company and merely become performers to tasks. Although this leadership style is still prevalent, one will rarely if ever see a level 4 or 5 leader practicing this style.

Source by David G Komatz

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