Transactional Leadership Style

The transactional leadership style stems from the notion that employment and specific tasks or projects are like a transaction.  This leader has a clear understanding of their role within an organization or team and has a focused mandate for the team. When the team accepts a job, they make an agreement with the leader to complete the tasks and duties as assigned.  With the transactional leadership style, the team is appropriately compensated in exchange for their efforts. This means workers may be rewarded or punished based on their performance. This leader is skilled at driving the team towards a goal or outcome and often encourage a high-performance culture within a team.

Do You Actually Know Your Leadership Style? Take the 2 Minute Quiz

The transactional style of leadership was first introduced by the 20th-century German sociologist, Max Weber in 1947. Weber originally introduced the concept of “rational-legal leadership”. This style would come to be known as transactional leadership, “the exercise of control on the basis of knowledge.”

Sociologist, Max Weber first described the Transactional Leadership Style in 1947.

The transactional leader is the type of leadership style where leaders focus on performance, supervision, and organization. In this style, the leader promotes or motivates group members with rewards and punishments, and typically keeps them motivated for short periods of time. Today, we find this style used most commonly in consulting services, architecture, technology outsourcing, and construction work. Project managers and those involved in project delivery for an organization would be familiar with this leadership style.

Advantages and Disadvantages of the Transactional Leadership Style

This style is most effective in a situation where the issues are simple and clear but it can be difficult where the goals are evolving or yet to be defined. Transactional leadership also works well in time or cost-constrained situations where the team has to complete assigned tasks within a specific timeframe or within a budget. The transactional leader feels less at home when the team structure is less defined or when flexibility and creativity are required.

How does this leadership style compare with your own style? How does it compare to your manager? Whether you are a transactional leader, another style, or a combination of styles below are some advantages and disadvantages to the transactional leadership style to consider:

Pros:

  • Rewards those who are motivated by self-interest
  • Achieves short-term goals quickly
  • Rewards and penalties are clearly defined for teams
  • Encourages high-performance within a team

Cons:

  • Generally rewards the worker on a practical level only, such as money or perks
  • Creativity can be limited since the goals and objectives are already set
  • Does not reward personal initiative
  • individual career or personal growth within the team may be limited

Yes, there are pros and cons to each of the leadership styles, but understanding the balance is key to being a successful leader. Still unsure about your own style? To learn more about your style as a leader or an aspiring leader, take our short quiz that will give you a sense of your own style. To start the 2-minute leadership style quiz, click here.

Famous Leaders with Transactional Leadership Style

  •   Gen. Norman Schwarzkopf
  •   Howard Schultz founder of Starbucks
  •   Bill Gates
Icon White in Circle@0.75

RECAP: Transactional Leadership Style

This leader uses a “carrot and stick” approach, which is a combination of reward and punishment to get the desired result. The transactional leader has found a practical approach to getting things done for a team or organization.
Want to understand more about your own leadership style? Take our quick leadership style quiz now.

Want to know more about other leadership styles? Select one of these links for more comprehensive information about each style: Situational Leadership | Servant Leadership | Democratic Leadership | Supportive Leadership | Laissez-fair Leadership | Transformational Leadership | Charismatic Leadership | Autocratic Leadership

5 Leadership Habits for New Leaders
Articles

5 Leadership Habits for New Leaders

The Best Way to Give Feedback—SBI Model
Articles

The Best Way to Give Feedback—SBI Model

Learn 8 Memory Techniques that Work
Personal Growth Articles

Learn 8 Memory Techniques that Work

9 Must-Have Job Skills You Can Use Anywhere
Articles Personal Growth

9 Must-Have Job Skills You Can Use Anywhere

10 Leadership Styles You Should Know
Leadership Style Articles

10 Leadership Styles You Should Know

The 17 Most Inspirational Videos to Inspire Better Leadership
Articles Video

The 17 Most Inspirational Videos to Inspire Better Leadership

Are the Best Leaders Born or Made?
Career Articles

Are the Best Leaders Born or Made?

The 12 Podcasts Every Good Leader Should Subscribe To
Articles Podcast Research

The 12 Podcasts Every Good Leader Should Subscribe To

5 Character Traits of Great Leaders?
Personal Growth Articles

5 Character Traits of Great Leaders?

11 Books Every Great Leader Should Read (or Return To)
Research Articles Books

11 Books Every Great Leader Should Read (or Return To)

What is the Situational Leadership Style?
Leadership Style

What is the Situational Leadership Style?

What is the Servant Leadership Style?
Leadership Style

What is the Servant Leadership Style?

What is the Democratic Leadership Style?
Leadership Style

What is the Democratic Leadership Style?

What is the Supportive Leadership Style?
Leadership Style

What is the Supportive Leadership Style?

What is the Transactional Leadership Style?
Leadership Style

What is the Transactional Leadership Style?

What is the Laissez-faire Leadership Style?
Leadership Style

What is the Laissez-faire Leadership Style?

What is the Transformational Leadership Style?
Leadership Style

What is the Transformational Leadership Style?

What is the Charismatic Leadership Style?
Leadership Style

What is the Charismatic Leadership Style?

What is the Autocratic Leadership Style?
Leadership Style

What is the Autocratic Leadership Style?

The 20 Best Quotes from Maya Angelou
Quotes

The 20 Best Quotes from Maya Angelou

29 of the Best Sports Quotes for Leaders
Quotes

29 of the Best Sports Quotes for Leaders

The 40 Best Innovation Quotes for Leaders
Quotes

The 40 Best Innovation Quotes for Leaders

The 40 Best Leadership Quotes
Quotes

The 40 Best Leadership Quotes

POC Principle: The 3 Words that will Change Your Life for the Better
Personal Growth Articles Inspiration

POC Principle: The 3 Words that will Change Your Life for the Better

Your 2020 To-Do List: 10 Things You Can Do to Make This Year Great
Articles Personal Growth

Your 2020 To-Do List: 10 Things You Can Do to Make This Year Great

5 Useful Lessons From History’s Greatest Leaders
Articles

5 Useful Lessons From History’s Greatest Leaders

GOAT: The 10 Greatest Leaders Ever ― Let the Debate Begin
Articles

GOAT: The 10 Greatest Leaders Ever ― Let the Debate Begin