Action Wheel Leadership
Transactional leadership is one of the styles of leadership that is based on the theory that organizations work best with a clear chain of command.
This leadership model is based on the belief that people are most successfully motivated by rewards and punishments. This is considered an authoritarian model of leadership since it presupposes that once workers have agreed to a job, they have then tacitly agreed to cede all authority another person in management. As most managers do not depend solely on one type of leadership, most leaders are not strict or absolute transactional leaders; rather they fall somewhere along a spectrum.
This style of leadership has its roots in the psychological philosophy of behaviorism. In behavioral experiments, subjects are given tasks and then they are either rewarded for producing desired outcomes or punished for mistakes or failures. In this vein, transactional leaders base their interactions with their subordinates on contingency, as any form of punishment or reward is contingent on the employee's performance.
When used on its own, this leadership model can be flawed in that it assumes a worker's behavior is consistently predictable because most workers are largely motivated by money and/or other basic rewards.
Transactional leadership depends on a one-way communication style. These leaders tell their employees what to do and then often leave them to do it. These types of managers are generally firm but fair, and there is often little doubt about what is expected or who is in charge.
Workers who prefer clear expectations followed by a fair amount of independence will most likely do well in this environment. This type of leadership also works in organizations where there isn't the time or the resources to allow for group decision-making and it can be necessary when the employees are untrained, poorly motivated, or when a manager's authority is challenged.
At times, transactional leadership can create a competitive environment that some find invigorating, while others may find it stifling or intimidating. There is little collaboration and not much room for creativity under a transactional leader, because they are not interested in transforming the work environment. They are more interested in keeping things constant, except where problems occur.
As a result, this model can be particularly problematic in organizations that require rapid changes or continuous innovation. This type of leadership can also cause issues of morale, absenteeism, and higher turnover rates, because this type of leadership does not generally result in any sort of emotional investment in the company.
These days, in some companies and industries, transactional leadership is giving way to transformational leadership. Transformational leaders focus more on creating a team and then inspiring and empowering the members of that team. Transactions are not based on contingency so much as they are based on the workers internal motivations or emotional needs; therefore, rather than providing tangible rewards, these leaders provide moral rewards for compliance and success.
Though the transactional brand of leadership continues to have its place, more and more managers are using it sparingly and only when necessary.