What is Transactional Leadership? Learn All About It

Leadership is the process by which a leader influences a group of followers to commit towards a common goal. An organization can choose from different leadership styles, and each of them follows its own way of achieving the desired objectives by leveraging the available workforce. In the words of a PenMyPaper researcher, the choice of the right leadership style largely depends on the organization itself and the nature of business that it deals in. A leadership approach might be suitable for one firm, may not be a good fit for another.In this article we have discussed about the transactional leadership, among all the other leadership styles.Transactional leadership is one of the most popular leadership styles to study about and can prove to be quite helpful for your leadership essay.

Transactional Leadership

Transactional leadership is focused on establishing order and structure in the organization. This leadership approach is highly mechanized in nature and follows strict regulation and policies that have been designed to meet the performance goals of the company. Unlike transformational leadership, the objective of transactional leadership is to maintain the status quo of the firm, instead of fostering long term growth and bringing significant changes. One such example can be seen while reading the SWOT analysis of Walmart. Moreover, transactional leadership is highly result oriented. It seeks to achieve the desired result in any means, without considering the interests of the employees.

This leadership style relies on motivating the employees through extrinsic rewards and penalization. The employees are rewarded with incentives when they perform well, and penalized when they perform poorly. The leader does not interact with the employees to receive feedback or to offer guidance to better performance. It should also be noted that the employees are not allowed to apply their own creativity or to offer innovative ideas. This is mostly because of the fact, that organizational with transactional leadership style tend to avoid changes to the existing operational model.

Let us now look at some of the key characteristics oftransactional leadership. This can help to identify this leadership style while writing a dissertation conclusion for a college paper assignment. Some of the notable characters are as follows:

  • Strictly focused on short term objectives
  • Rigid structures and policies
  • Expects employees to follow the rule and abide by the regulations
  • Lack of flexibility in operational activities
  • Avoid changes in the organization

Traits of a Transactional Leade

Now that we have a clear idea of what transactional leadership is, let us now dig deeper into the key traits of a transactional leader. Our expert essay writing help says that learning about

Extrinsic Motivator: A transactional leader is an extrinsic motivator, who seeks to reward employees with tangible rewards such as monetary incentives when they behave in the expected manner. The leader also penalizes the employees, who deviate from their tasks. The leader builds a transactional relationship with the employees, where the employees offer their working hours and the leader provides the tangible rewards. It is important to note that there is no emotional attachment for the employees, they follow the set rules and regulations only for the monetary rewards.

Pragmatism: The transactional leaders are highly practical in their decision making. They consider all the realistic opportunities and constraints while taking any decision. They decisions are based on the current situations, rather than future potentials. They are not visionaries who are recognize potential opportunities in the industry, but they are focused on leveraging the current industrial trends that are right in front of them.

Resistant to Change: Transactional leaders are highly resistant to change. They do not look for growth or transformation in the organization, rather they are concerned about how the company is performing in the present time. These leaders do not entertain any innovative ideas proposed by the employees, as it might change the current operational practices of the company.

Performance Centric: Transactional leaders are high performance oriented. Instead of looking after the interests of the employees, these leaders are focused more on taking care of the organizational performance and its status quo.

Dimensions of Transactional Leadership

In order for you to dig deeper in the theories of transactional leadership, you need to learn about the key dimensions of this leadership style. According to a research paper abstract, it can help you present more detailed information on transactional leadership. These dimensionshighlight the fundamental practices in transactional leadership. They are as follows:

Contingent Reward

The contingent allows the leader to motivate the employees by extrinsic rewards. Whenever an employee performs well, he/she is given rewarded with incentives. However, for poor performance, the employees are penalized or reprimanded. The contingent reward showcases the transactional relationship between the leader and the employees. The reward and the punishment are used to keep the employees in line with the organizational regulations. It also drives an employee to work harder, so that they can earn more rewards.

Active Management by Exception

The active management by exception allows the leader to actively search for any issues or problems in the business operation. The leader takes a proactive approach to fix the potential issues in the firm, by constant monitoring of the activities of the employees. Necessary corrective approaches are taken whenever the leader finds any area of business which is lagging behind the desired goals.

Passive Management by Exception

In passive management by exception, the leader takes a reactive approach to problem solving. The leader does not take any initiatives unless the problem surfaces and make a disruptive impact on the operational activities. Corrective measures are taken only when the problem threatens the current business operation of the firm. Unlike the active management by exception, the leader is not constantly monitoring the activities of the employees, and only take action when it is needed.

Advantages and Disadvantages of Transactional Leadership

The discussion on transactional leadership is not complete without highlighting its advantages and disadvantages.


  • Helps in maintaining the performance of the organization at a steady pace.
  • The job roles are clearly defined along with the hierarchical structure of the firm.
  • Low operational risks, as the firm do not seek to implement new changes.
  • Short term goals are achieved quickly.
  • Higher management has more control over the business operation and the performance of the firm.


  • Very poor job satisfaction among the employees, leading to poor retention in the organization.
  • Limited creativity in the organization, which in turn can lead to lack of differentiation in the market.
  • Due to lack of innovation, the organization may face higher threats of competition.
  • Low retention can lead to lower efficiency in business.

By now you should be able to figure out which competitors of McDonalds implement this leadership style. Just remember that transactional leadership do not want growth or change in the organization. They are focused on achieving its daily goals as efficiently as possible. These types of organizations are happy with their current state and do not want to bring new changes. The leaders drive the employees through strict regulations and policies, and by extrinsic rewards, which are intended to motivate them to work harder. This type of leadership is suitable for organizations where the growth is saturated and there are no room for further improvement. Moreover, it also helps in standardizing the overall business process of the firm.

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