During the Industrial Revolution, transactional management became a competitive advantage for businesses. Transactional leadership is a type of leadership that is part of the Full Range Leadership Model. This approach involves a give-and-take approach that is effective in times of crisis.
Employee motivational rewards can be lacking.
Using rewards to motivate employees can be effective. It can encourage employees to reach their goals faster and boost morale. In addition, a reward system is easy to understand and can be automated with HR software. However, there are some downsides to using this type of leadership style.
Employees who don’t meet their goals are often penalized or forced to do additional work. This can lead to burnout and higher turnover.
In addition, employees may not receive the recognition or monetary rewards they deserve. This can create cutthroat competition among the team. Similarly, employees may not be appreciated for innovative work.
While rewards can motivate employees, balancing this approach with another style is crucial. Transformational leadership is a style of leadership that inspires subordinates to reach beyond their expectations. It can also encourage employees to work harder and better.
Effective in times of crisis
During a crisis, effective transactional leadership helps organizations get back on track. It allows leaders to act quickly on a problem while limiting employee bias and maintaining a sense of harmony in the organization. This approach also enables organizations to achieve short-term goals and boost employee engagement.
Transactional leadership is a theory developed by Max Weber in 1947. It focuses on organizational structure, process, and day-to-day progress toward goals. Transactional leaders are responsible for maintaining the form of an organization while setting clear rules, regulations, and expectations. They also make sure that people adhere to those rules and regulations.
Transactional leaders do not encourage employees to be creative or develop their solutions. Instead, they only intervene when someone doesn’t follow an organization’s rules and regulations.
Give-and-take approach
Regardless of how well it’s rolled out, any leadership style is only as effective as its ability to set clear expectations and punish poor performance. The give and take of the transactional leadership style is its ability to provide clear direction to subordinates while rewarding the appropriate behavior.
The transactional leadership style focuses on three primary tasks: setting objectives, establishing boundaries, and monitoring the performance of subordinates. In addition, transactional leadership is helpful in situations such as cybersecurity crises where a leader must be able to respond effectively and quickly to solve problems.
In the transactional leadership style, the rewards are based on the agreement of the leader and the follower. The prize is given for meeting a specific goal. However, the compensation may not be monetary. The bonus could be a promotion or better pay.
Traditional roles and allocations of responsibilities
Depending on your needs, a transactional leadership style can be an excellent choice. Transactional leadership emphasizes structure, organization, and performance. It is also effective in a crisis environment. In addition, the transactional leadership approach can help you achieve daily targets quickly.
Transactional leaders are direct and practical. They place emphasis on structure, performance, and performance rewards. They are also loyal to the company’s policies and procedures. They do not encourage creative solutions. This makes them ideal for routine affairs.
Transactional leadership is often considered a poor fit for entrepreneurial environments. It is also lacking in problem-solving skills. In addition, it does not encourage employee engagement. It can be frustrating for employees who enjoy individual thought and innovative ideas.
Transactional leaders can be influential in crises, though they do not encourage innovation. This focus on a set of rules and regulations can also affect communication. When employees are unclear on the organization’s expectations, they can feel confused and may not be as committed to the work. This can also lead to low morale.
Transformative leadership vs. transactional leadership
Choosing between transformational leadership and transactional leadership can be a challenge. However, combining the two can improve organizational outcomes.
Transformational leadership is a leadership style that promotes innovation and encourages employees to make new, creative ideas. It also focuses on employee development, creating a culture of change and innovation, and giving employees a sense of purpose. It also helps motivate employees to do more and work toward a unified vision.
Transactional leadership, on the other hand, focuses on getting things done and monitoring progress. The leader sets goals for employees and rewards them accordingly. This is a more practical approach to leadership. It also appeals to employees’ self-interest, making it better suited for certain kinds of organizations. However, it can fall short of employee development and long-term strategy.