Transactional leadership is a common form of leadership most often found in the middle management level. Transactional leaders are usually directive; they tell their reports what exactly to do and set out expectations and key performance indexes for their reports to meet.
They practice this concept the academics call management-by-exception, where they set work objectives and standards but wait for problems to arise before reacting to them. In other words, transactional leaders are there to maintain the status quo, helping an organization to continue running and fulfilling its mission.
Also, they reward their followers according to their performance and motivating them through these rewards, a concept called contingent reward.
These leaders garner more compliance from their followers; people would do as they’re told because its part of their job to do so.
Although this is not a high form of leadership, it is still a necessary form of leadership to help carry on the mission of an organization.
Unfortunately, the reality is that some organizations are so large that no single worker feels that they are contributing much to the overall mission of the organization, and hence transactional leadership is far more effective to lead these people.
This is not type of leadership that gathers a group of wild and passionate people to do something together, so generally you don’t find this leadership style at the top of volunteer organizations like church leadership or in social service organizations.
Moving from Transactional Leadership
Transactional leaders often do not get the best from their subordinates. A transactional leader simply exchanges their services for wages and salary with a promise of a bigger bonus.
Most people can be transactional leaders because all they need to do is to work within the policies and procedures of an organization and ensure that their direct reports are producing what is required of them.
It is a lower form of leadership, but a necessary one. If you want to become a better leader, you can learn to change your style and learn how you can inspire people and get them to follow you through passion and not because they have to.
You can purchase my book Everyday Leadership; it will teach you habits you can practice daily to cultivate leadership.
Generally, I would say it is ideal to have a visionary leader or a transfomational leader at the helm of an organization, while having several managers with the transactional style managing the employees at the middle levels of an organization.
The New Leadership Model
» Transformational leadership
Transformational leaders have the ability to inspire and motivate their followers beyond their job description. They seek to bring change in their environment or community by improving on the current situation, whatever it may be. They tend to anticipate problems before they come and act accordingly.
» Charismatic leadership
Charismatic leaders have a natural ability to attract people and inspire commitment to their cause.
» Visionary leadership
Visionary leaders have the ability to see what things could be in the future, rather than what things are. Through the attractive visions that they give, they are able to draw followers to themselves.