Transactional leadership vs. transformational leadership
In the workplace, there are many different leadership styles. The transactional leadership style relies on workers who perform their tasks accordingly in order to run as smoothly as possible. But another type of leadership approach that has become increasingly popular throughout many workplaces includes transformational leadership.
With transformational leadership, the workplace is much more open and receptive to new ideas and "out of the box" thinking. Transactional leaders, however, are not so agreeable to employees stepping out of line or conducting their own experiments on company time and will likely react and respond accordingly.
While both transactional and transformational leadership have their roles in the workplace, it's important to understand the difference between them before choosing a workplace that is suitable for you.
Some transactional leadership examples in the workplace might include:
- An internal rating system that monitors the level of quality that is submitted by each individual employee.
- A timing system to keep track of employees and their individual tasks (as well as how long it requires them to complete each task).
- A contingent reward tier system with rankings incentivizes employees to work harder and more efficiently in exchange for a reward.
History of transactional leadership theory
The history of transactional leadership can be traced all the way back to the 20th century when a German sociologist named Max Weber determined that there were three main styles of leadership. The three main styles of leadership Weber studied and described included bureaucratic, charismatic, and traditional.
The bureaucratic leadership style, also commonly referred to as the rational-legal style of leadership, would later be defined as "transactional leadership".
Ultimately, the leadership style became the status quo in many industries that thrive in a stakeholder economy. Today, transactional leadership is known as the "exercise of control on the basis of knowledge", which is a fitting summary for those curious about how transactional leadership works.
Pros of transactional leadership
Before deciding whether or not transactional leadership is right for your business, consider the advantages of what transactional leadership has to offer.
Implementing a structure in the workplace is extremely important for productivity and overall efficiency. Having a set routine in place will help employees to stick to their designated tasks while minimizing disruptions and distractions, especially with a reward and/or tier system in place.
Transactional leadership focuses on establishing clear expectations of your employees. Defining the performance standards you have of your employees upfront can go a long way. When employees know what is expected of them day in and day out, they are less likely to slack on delivering their assigned tasks.
Creating a reward system is a great way to get your employees engaged and motivated. By integrating a reward system with tiered rewards, you can also incentivize your employees to go above and beyond each day on the job.
Reward systems can include promotional opportunities, raises, bonuses, and even vacations or other prizes, depending on the structure of your business.
Utilizing a transactional leadership style is extremely beneficial for those who favor accountability in the workplace. With a fully integrated tracking system to monitor the productivity of the individual, keeping an eye on accountability among peers and employees has never been easier.
Motivating your employees is also extremely important in maintaining the status quo at the workplace, especially when productivity and workplace efficiency matter to you most.
To keep your employees working hard, a tier system with rewards can keep them motivated and excited about their work. The use of a reward and tier system can help employees to better stay on track with their goals at work while also providing the guidance and incentives they may need to pass the finish line during their next project.
Cons of transactional leadership
As with any leadership style, there are also drawbacks. When it comes to transactional leadership, there are a few cons that may interfere with the overall happiness and satisfaction of the workplace.
Lack of innovation
Unfortunately, while there is plenty to offer regarding accountability and motivation when it comes to transactional leadership, the system itself is a rigid structure that's not open to innovation.
If you are an innovative leader and prefer to lead with an open mind and out-of-the-box ideas, working as a transformational leader may be better suited for you and your personal style.
Those who prefer a transactional style of leadership are typically left-brained and prefer to have everything in order at all times.
While this can be extremely advantageous to those pushing for maximum productivity, it can also leave you with limited flexibility altogether. Keeping an open mind will allow for more flexibility, but it may not align with traditional transactional leadership moves.
With transactional leadership, leaders are typically less concerned with the long-term future and more focused on the short-term. While this is optimal for those seeking results as quickly as possible, the immediate demand for results can leave leaders blind to the possibilities and potential risks of the future.
Dependence on the leader
Depending on your leader at all times will often lead to the demise of a particular job, task, or company as a whole.
Using transactional leadership requires all employees in the workforce to pay attention to those who are in charge at all times. This means listening to a hierarchy of those who are in control, even if the employee is not satisfied with the job or task at hand.
Depending on leaders without the ability to share input can ultimately become detrimental to any type of business, big or small.
Doesn't always work in complex situations
For larger companies and those that work in creative sectors, a transactional approach to leadership may not be the best path. Implementing transactional leadership in complex situations can ultimately deter from obtaining specific goals or meeting the needs of a particular client or consumer.
Whenever you are evaluating the type of leadership style that's right for your workplace, it's important to envision the long-term use of that leadership style and how it's likely to impact you and your employees.