Presenters:Harsha Kewlani Amita Pandey Praveen Srivastava Ranpratap Parihar Karishma Gupta Ratnesh Kumar Mishra

Topics Covered
Meaning of Transactional Leadership Dimensions Assumptions

Implications
Distinction between Transformational & Transactional Leadership Conclusion

The transactional style of leadership was first described by Max Weber in 1947 and then by Bernard Bass in 1981. This style is most often used by the managers. It focuses on the basic management process of controlling, organizing, and short-term planning. It is based on the assumption that subordinates and systems work better under a clear chain of command. It is most often explained as a cost-benefit exchange between leaders and their followers.

Transactional leadership involves motivating and directing followers. The power of transactional leaders comes from their formal authority and responsibility in the organization.
The main goal of the follower is to obey the instructions of the leader. The style can also be mentioned as a telling style. The leader believes in motivating through a system of rewards and punishment.

If a subordinate does what is desired, a reward will follow, and if he does not go as per the wishes of the leader, a punishment will follow. Here, the exchange between leader and follower takes place to achieve routine performance goals.
The transaction or exchange involves something of value between what the leader possesses or controls and what the follower wants in return for his/her services. Transactional leadership involves leaders clarifying goals and objectives, communicating to organize tasks and activities with the co-operation of their employees to ensure that wider organizational goals are met.

This includes 4 types of dimensions-

Contingent Rewards (S.M.A.R.T goals)

Passive Management

Dimension

Active Management by exception

Laissez Faire

Assumptions of Transactional Theory

Motivational Factor Rewards & Punishment

Lack of Self Motivation

obey the orders

Implications of Transactional Theory

The transactional leaders overemphasize detailed and shortterm goals, and standard rules and procedures. They do not make an effort to enhance followers creativity and generation of new ideas.

This kind of a leadership style may work well where the organizational problems are simple and clearly defined.
Such leaders tend to not reward or ignore ideas that do not fit with existing plans and goals.

The transactional leaders are Found to be quite effective in guiding efficiency decisions Aimed at cutting costs and improving productivity. The transactional leaders tend to be Highly directive Action oriented Relationship are not based on emotional bonds. It assumes that subordinates can be motivated by simple rewards.

The only transaction between the leader and the followers is the money which the followers receive for their compliance and effort.

Transactional leadership may operate successfully in a work environment where leaders and workers personalities are compatible, but it could result in conflict between task-oriented and person-oriented personalities. Transactional leadership works well in a supply-anddemand situation of much employment, coupled with the effects of deeper needs, but it may be insufficient when the demand for a skill outstrips the supply.

Transactional leadership behavior is used by one degree or another by most leaders.

Difference between Transactional and Transformational Leaders

Transactional leadership
Leadership is responsive Works within the organizational culture

Transformational Leadership
Leadership is proactive Work to change the organizational culture by implementing new ideas

Transactional leaders make employees achieve organizational objectives through rewards and punishment
Motivates followers by appealing to their own self-interest

Transformational leaders motivate and empower employees to achieve companys objectives by appealing to higher ideals and moral values
Motivates followers by encouraging them to transcend their own interests for those of the group or unit

Conclusion

The transactional style of leadership is viewed as insufficient, but not bad, in developing the maximum leadership potential. It forms as the basis for more mature interactions but care should be taken by leaders not to practice it exclusively, otherwise it will lead to the creation of an environment spoiled by position, power, perks, and politics. However, it can be quite limiting if it is the only leadership style used. As the old saying goes, if the only tool in your workbox is a hammeryou will perceive every problem as a nail.