One of the leadership styles applied by leaders and top echelons of management is transactional leadership, also referred to as managerial leadership. First described in 1947 by Max Weber, this practice is centered on the management process that involves controlling, organizing and short-term planning. This style follows the principle of reward and punishment in which an act that is good will merit a reward while the opposite can result to a disciplinary action. Still popular among managers, this type of leadership includes clear structures that subordinates need to follow. It also makes the followers responsible for their actions despite the instructions being fed or handed down to them. Although this management or leadership style has its benefits, it does not come without drawbacks. Here are the two sides of transactional leadership.
List of Advantages of Transactional Leadership
1. Employee Motivation
Based on reward and punishment, this leadership style is effective in motivating employees in becoming productive and efficient members of the team. These are because of two reasons. First, the incentive that awaits the employee if he or she contributes to the organization serves as the motivation for him or her to work doubly hard to meet deadlines, reach or even exceed quota because the employee knows that his efforts will not be left unrecognized. Second, this leadership technique also serves as a reminder to a member of the workforce that the management keeps an eye on them and is serious with its drive to expect maximum performance from its employees that mistakes committed and under-performance would mean demerit and punishment.
2. Achievable Goals
With short-term planning as part of this leadership style, management ensures that its visions for the company or organization will be realized. This is for that reason that goals and objectives only require a shorter time table to materialize. Consequently, these are easier to fulfill and less demoralizing for employees. By making achievements more accessible in a short period of time, members of the team are more motivated to perform and at the same time be more self-confident. This is partly because of the autonomy given to subordinates makes them able to carry out their tasks without having to be conscious that eyes are directly on them.
3. Clear Structure
Transactional leadership is also composed of a structure that is clear and concise. Employees of an organization with this kind of management style are informed before-hand of what the company expects from them. They are also provided with clear instructions and expected to follow a chain of command which makes it easier for them to know what proper channels to go to. This also makes them aware from day one that they will be rewarded for following objectives and completing their tasks with flying colors while they will also be punished if they go against the policies of the organization.
4. Productivity and Costs
A transactional leadership is effective when it comes to increase in production and cutting down costs. These are due to the fact that this leadership style has short-term goals that make it easy for employees to get things done. Also, the rewards promised with this kind of leadership serve as motivators for members of the team to do their tasks at the shortest time possible for incentives, whether monetary or psychological.
List of Disadvantages of Transactional Leadership
1. Unyielding Leadership
Transactional leadership is a style of leadership that not only has a clear structure. It also has unbendable policies and rules. Despite the rewards members of organizations can expect and the kind of autonomy or independence they have in doing their tasks, they have to work within the rules of the management. Going against these policies or instructions from superiors can lead to negative implications like suspension and even termination. This is because a transactional leader tells his or her subordinates what to do and is in no way accepting complaints or insubordination of any kind. Because of this inflexibility, the leader will find it difficult to adjust to certain situations and somehow limits creativity.
2. Does not Encourage Creativity
Since this leadership style is rigid and not into bending principles and rules as well as listening to suggestions from people under the management, this hampers creativity from members of the team who might have sound and effective recommendations for the betterment of the organization. The short-term goals and structured policies make it hard for transactional leaders to make changes and be open to ideas from others that do not go with their existing goals. And since the company or organization relies on a transactional leader, if this person leaves, it can affect the business because most of the employees are have not been given the opportunity to become leaders but merely followers.
3. Accountability of Employees
Another disadvantage of transactional leadership is its practice of providing the tasks to employees, along with their policies and principles to be strictly followed. If and when something goes wrong in the process, employees are the ones to be blamed and who are responsible for the outcome. Critics find this to be a reason for the dissatisfaction and unhappiness of employees. This is because these people know that the organization does not really put their welfare first. Also, this type of management makes them feel like they are not really members of the organization but merely people paid to do their jobs.
Since transactional leaders operate within rules that cannot be changed, managers with this style of leadership do not really put the emotions of employees in consideration so long as tasks are done. Employees are given clear and detailed instructions but they are also expected to perform these tasks efficiently and on time. What transactional managers have with their subordinates are more of transitory working relationships than emotional ones. As a result, employees also become insensitive to demonstrating concern for the company but merely performers who are motivated by rewards.
Transactional leadership still remains to be popular among the leadership styles because of its reward and punishment principle that motivate employees to be productive. However, it also has its share of criticisms because of the way it controls its employees’ performance and hampers the leadership and creativity skills of the workforce.
Keith Miller has over 25 years of experience as a CEO and serial entrepreneur. As an entrepreneur, he has founded several multi-million dollar companies. As a writer, Keith's work has been mentioned in CIO Magazine, Workable, BizTech, and The Charlotte Observer. If you have any questions about the content of this blog post, then please send our content editing team a message here.