Transactional leadership style: meaning, characteristics, advantages and disadvantages

This article highlights on the meaning of transactional leadership, its characteristics, its impacts to a team (advantages and disadvantages), but also when to use it as well as its difference from transformational leadership.

What is transactional leadership?

Transactional leadership is a leadership approach that relies much on using rewards and punishment to motivate the employees to accomplish the tasks. The employees whose performance reach or exceed the set standards or expectations are rewarded, while employees who underperform are punished. Transactional leadership style is more effective when a team is pursuing short term goals. However, this style of leadership is more likely to discourages creativity and self-motivation in a team as employees often tend to focus on accomplish ing work in order to be rewarded or to avoid punishment. 

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Characteristics of transactional leadership

The transactional leadership always characterized by:

• Focuses on short-term goals achievement: Transactional leadership based on motivating employees (by using rewards, perks and punishment) toward archiving short term goals. 
• Based on using rewards and punishment to motivate: This style of leadership involves rewards and punishment to boost follower's motivation and raise performance.
• Members are not self motivated: The team members led by transactional leaders are usually not self-motivated, the members work hard only to get rewards or avoid punishment.
• Aims to follow rules precisely: Followers obey the orders of their leaders.

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Advantages of transactional leadership

When transactional leadership style is used in a right situation can bring positive results to a team. Below are the advantages of transactional leadership style when used effectively.

1. Quick achievement of short-term goals

Since transactional leaders tend to offer rewards to those who perform well and reach the set standards, the members always work hard to be rewarded. This can help teams to finish tasks and achieve the short-term goals very quickly.

2. Clearly defined structure and responsibilities

Transactional leadership provides a clear chain of command and clear expectations concerning roles of each team member. This can help to reduce ambiguity in a team.

3. Raise motivation and productivity

The rewards, incentives and perks given to employees can boost their working morale and motivation which can also raise their working performance and increase productivity in a team.

4. Clear expectations

In transactional leadership employees or team members knows what is expected since rewards and penalties are clearly defined for workers.

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Disadvantages of transactional leadership

Though transactional leadership is beneficial to teams, it may also have some drawbacks if not effectively used. The following are the disadvantages of transformational leadership style.

1. May destruct intrinsic motivation

The rewards offered to employees may destruct intrinsic motivation to self-motivated employees, then they may start working for the rewards. In this case, a leaders must know the right time to reward their teams.

2. Discourages creativity

Transactional leaders focuses on motivating their employees to accomplish tasks through rewards and punishment rather than creating working environment that foster creativity.

3. Focuses on short-term goals

Transactional leadership usually based on motivating employees toward achieving short-term goals. It is not good option to teams that working for long-term goals.

4. Can't work to all employees

Not every employee is motivated by rewards or punishments, thus this leadership approach can't work to all employees or members in a group.

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When to use transactional leadership?

Each leadership approach can be effective according to situation or group. Thus as an effective leader or manager is very important to have knowledge of different leadership styles and know in which situations they can work effectively.

Transactional leadership style can work better and give out positive results when used to teams that perform repeatedly tasks that are monotony in nature. The repeatedly tasks always make employees feel bored, in this case rewarding them can boot their working morale and raise their performance. But also transactional leadership is good when a team is pursuing short term goals especially when time is limited. In this situation, promising employees the rewards can make them put much efforts to finish the task or project on time.

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What is the difference between transactional and transformational leadership style

Transactional leadership style based on motivating employees to accomplish tasks through rewards and punishments. It is more effective when a team needs to accomplish short term projects. However, transactional leadership always discourages creativity and the members under this leadership style are usually not self motivated. Thus this style is not good when team members perform tasks or projects that require them to think innovatively to come up with creative ideas. 

While, Transformational leadership based on inspiring employees to work in order to achieve the common goals. Unlike transactional style which focus on extrinsic motivation, transformational leadership focus much on motivating followers intrinsically, this makes it suitable to teams with longterm goals to accomplish.

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