Is Transactional Leadership as Harmful as it is Touted to Be?

. 4 min read

US President Donald Trump is the perfect example of a transactional leader. He is controlling, manipulates his followers into thinking in a certain way, works on the reward and punishment method, and discourages independent and creative thinking. Judging from all these characteristics of a transactional leader, one might come to the conclusion that this type of leadership can do more harm to a team or community, rather than uniting them. But, is transactional leadership really only a long list of disadvantages?

First conceptualized by famous German sociologist, Max Weber in 1947 in his theory of transaction, transactional leadership is often less preferred than other styles of leadership like transformational and authoritative. A lot of experts agree that it is more of a management style than it is leadership; hence it is also known as managerial leadership. It works primarily on the leader’s ability to appeal to the self-interest of employees, members of a team or community. If they follow orders and work as they are expected, they will be given rewards. If they disobey, they are punished, accordingly. This leaves very little space for embracing change and out of the box thinking.

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Let us take a look at the characteristics of a transactional leadership that are contributing factors to reach the above conclusion.

Four components of transactional leadership

1. Transactional leadership has a rigid structure

Transactional style of leadership has an extremely rigid and clearly laid out structure of how the organization is supposed to work. Unquestionably, rules and regulations are strict and anyone breaking them is dealt with in a serious manner.

A transactional leadership, as the name suggests, relies heavily on transactions between the leader and members. In simple words, it is a give and take process. The leader clearly lays down his or her goals and how he or she wants to get things done, and the team members are expected to comply with these set routines and methods. As mentioned earlier, once the work is done and the leader gets what he or she wants, the employees are compensated. This is the universal structure of transactional leadership that has been followed since its inception.

2. Transactional leadership curbs creativity

Consequently, an unyielding set of rules and work culture curbs individual thinking and creativity. Members of the group are expected to blindly follow the system without allowing them to question it or even suggest changes. As a result, there is very little space for change, even if it may be for the overall good.

Only the leader has power and authority to manage the organization. Employees are only seen as tools to carry out tasks that are delegated to them. In case things go wrong, they are held fully accountable for a mistake, and they are made to pay for it. Punishment is inevitable. This is not surprising given the stern structure and uncompromising organizational culture.

3. Transactional leadership is purely professional

Max Weber’s fascination with elements of authority and bureaucracy is clearly visible in his conceptualization of transactional style of leadership. In this system, there is no personal relationship of any kind between the leader and employees or even among employees themselves. They should only see each other as co-workers. Their relationship is purely professional.

As a result, there is very little sensitivity among members involved. Emotions and feelings of employees are not given importance; the only aim is to get the work done. This is in stark contrast to transformational leadership.

4. Transactional leadership motivates only on a basic level

Since transactional leadership works on a reward and punishment method, workers are motivated only by the want for reward, and the fear of punishment. So, more often than not, there is no real passion and dedication for the work they do or for the organization itself.

There is no room for personal growth and development as people are only extrinsically motivated. They carry out their work assigned to them without having any sort of connection to it. As you can see, transactional leadership is only good for getting things done and meeting targets and deadlines. This is not viable for team building and cultivating a healthy work culture.

Does transactional leadership only cause harm? The final verdict

So, is transactional leadership good or bad? A huge number of industrial psychologists believe that transactional leadership is among the least favorable styles of leadership. This is not surprising given the characteristics like the ones mentioned above. But, does it really have no advantage? After all, there have been many famous leaders who have adopted this leadership style successfully.

Microsoft founder, Bill Gates is an example of an effective transactional leader. He is said to be very firm with his employees. He does not go easy on them until and unless he receives a performance that satisfies him and is up to his high standards. Despite this stern structure, he is well respected and his company is one of the most popular in the world. This proves that with the right amount of control and authority and in the right space, transactional leadership also has advantages an organization can benefit from.

Transactional leadership has a lot of characteristics that are not so desirable for companies that stress on a creative and free work culture. But in the right space, these very cons can work as an advantage for another company that has different values and priorities.

It all comes down to what type of company you are, your goals and aspirations, the image you want to put out, and what kind of culture and environment you wish to cultivate. For an organization that places importance on efficiency, high professionalism, strict structure, and short-term goals that are high on the achievability spectrum, adoption of transactional leadership can work very well in their favor.