Transactional Leadership

Let’s take a look at transactional and task oriented leadership. When it comes to transactional leadership, there’s an implied agreement between the team members that they will obey their leader when they start working at that company. This means if the leader or manager tells you to do something, you do it. Or there could be consequences for the employee through a form of punishment, such as loss of fringe benefits or formal disciplinary action.

The transaction in this instance is that the team member is paid in return for their compliance. Transactional leadership may sound like a very stark contrast from what we’ve just described as a servant leadership. Which is much more about doing everything you can to help the team. So you might feel like you need to pick either that or transactional leadership, but they do both have their place. The benefit of transactional leadership is that this style helps to clarify everyone’s roles and responsibilities in the team. It helps everyone understand their position in the hierarchy. Which actually can be a positive benefit for many people, as it helps give them an idea of their progression through a company.

Another benefit of transactional leadership is that generally, leaders who default to this style, would judge their teams on their performance. So that means people who are ambitious and thrive on being rewarded for good work, will thrive from progressing in the organization. Of course, if a leader’s style was to only be a transactional leader and nothing else, then this cannot help with people’s overall job satisfaction. As people can feel stifled in that position, and this can, in turn, lead to higher staff turnover. When we think back to our discussion on leadership versus management, you could argue that transactional leadership is more of a management style as opposed to a leadership style.

If you are a manager or supervisor who’s charged with getting the team to produce a series of tasks, and you’re being judged on the completion of those tasks, then it’s very likely you’re going to be a transactional leader. People on your team know their place in the organization, and they know they have to get specific work completed. If you work in a factory or a production line, then this style of leadership is most likely what you’ll default to majority of the time. If you are leading knowledge workers like software developers or other creative professionals, the default to this style might cause you more problems than it solves, because creative people don’t like being told what to do all of the time. They want creative freedom to do what they do best.

When we talk about transactional leadership in terms of a management style as opposed to a leadership style. There can also use the term task oriented leadership. As here leaders are mainly focused on getting the job done through the completion of assigned tasks to their team members. They will define tasks, roles, and a team structure specifically to plan and execute on those tasks. There’s a clear benefit for the organization as it helps to ensure deadlines are met. And it’s also useful for team members who might not be good at managing their own time. When leaders use a transactional style, there’s usually an emphasis on discipline as well as rewards. The key emphasis overall is employee performance and productivity.

A technique that could be adopted to motivate a team instead of self motivation and self development, might be through external rewards to staff. I’ve seen this in a few organizations I’ve worked for that have service desks supporting products of the public, where physical rewards are often based on performance for taking payments or the speed of closing calls. Cash incentives or prizes will often offer things like the first agent to clear 10, 000 pounds worth of debts in a day, for example. In this kind of environment, that may well work as it fosters much competition. But for knowledge workers like software developers, this may not be as successful.

I had one leader once who tried to instigate a software developer of the month scheme to increase productivity. This came with a small cash prize, and your picture on the wall. It was not very popular at all at our department with mostly introverted technical staff. This leader was from the services background so you’re trying out something that worked very well in different environments, but it didn’t work at all in this environment. While on an agile team, my leadership style tended to default more to servant leadership, there are times when I had to go towards more transactional and task based leadership with team members who fall behind on their work, or who were struggling. In these cases, while I’ve had more freedom to self organize, I’ve had to resort to doing the organization for them and assign them specific tasks to help them get their work completed in line with the rest of the team. More often than not this has been with more junior and less experienced members of staff. But there have been a few occasions where I’ve had to help organize and be more transactional with experienced members of staff. In these occasions, I consider my switch to a transaction or task based leadership style a positive step for these individuals.

The overall goal is they need to get their work completed in line with the rest of the team. But they needed some help in doing so. Sometimes, you just want to be told what to do to get the job done. So let’s summarize with some advantages and disadvantages of transactional leadership. A big advantage is that if you need short term increase in performance, then being more transactional in nature and giving clear instructions to your team can lead to short term productivity increases. This is because your commands are clear and everyone knows what they have to do and what work needs to be completed as a team.

No one wants to be the one to fall behind. This works in a short term situation, but may not be suitable for longer term. Especially in teams that need to be encouraging more creative and innovative solutions. This will work better though for services-based organizations such as health desks or service centers. As we discussed, external rewards could be used as motivators for performance. But I think this needs to be used carefully as it could be a disadvantage, and it could feel a bit cold and uncaring by leadership. A disadvantage to transactional leadership is that it can come across as very insensitive to some teams. Transactional leadership works well when you have teams of workers here to implement predetermined tasks, like support desks or production lines, for example. But if you use this style all the time with developers, who are more creative and innovative, then the continued use of this style can feel cold and insensitive, which lowers morale. Transactional leadership doesn’t lend itself well to flexibility, and its lack of flexibility can impact innovation on a team.