Transactional Leadership - Are Your People Motivated?

Maslow's Hierarchy of Needs demonstrates that most people are more likely to act when they expect rewards or fear punishment. Any social system is more effective when a hierarchy clearly exists. People who are hired to work, implicitly agree to heed all of their manager's instructions, and that is the main reason that subordinates are employed.

Transactional leaders operate by constructing clear algorithms by which they indicate clearly the expectations of subordinates, as well as the rewards received for meeting those expectations. Although punishment is not always explicated, the concept is implicitly understood, and systematic structures for discipline are usually extant.

In transactional leadership, negotiation of the contract defines the relationship. The contract needs to spell out salary and benefits, as well as what claim the company has on the employee and his work.

When an employee is assigned work by an transactional leader, the employee is fully responsible for the work, even if they do not have the competency or resources to do so. The employee is thought to be at fault when things do not work correctly, and must suffer the consequences of their failure. Likewise, success is rewarded.
The transactional leader often manages by exception. They work on the idea that if something is working as it should be, then it does not need attention. An exception to this is going beyond expectations, which require praise and reward. The opposite applies for not meeting expectations, where instead of a reward, some kind of corrective action is taken.

Transformational leadership is more sales-oriented, but transactional leadership is more performance-oriented. The difference is sometimes stated 'selling versus telling'. Transactional leadership means that positive or negative consequences all depend on good or bad workplace performance.

Transactional Leadership leans more towards the management side when put on a Leadership vs. Management scale. Even though there is a lot of research that points out its flaws, Transactional Leadership is still used widely among many managers.

The main limitation is the assumption of 'rational man', a person who is largely motivated by money and simple reward, and hence whose behavior is predictable. The underlying psychology is Behaviorism, including the Classical Conditioning of Pavlov and Skinner's Operant Conditioning. These theories are largely based on controlled laboratory experiments (often with animals) and ignore complex emotional factors and social values.

Practically speaking, Behaviorism sounds quite reasonable to keep up methodologies involving transactions, which in turn is armored by the supply-and-demand situation of much employment, chained with the results of greater demands, as the theory of Maslow's Hierarchy of needs suggests. When the demand for a skill outruns the supply, transaction leadership becomes insufficient, making other such approaches highly recommended.

People are motivated through reward as well as reprimand. This was one such result of the Abraham Maslow theory. Group systems operate best through an unambiguous hierarchy. As soon as individuals have arranged to do a task, One aspect of the arrangement is that they give up complete authority to their boss. The main function of a underling is to do what their boss tells them to do.

Daiv Russell is a management and marketing consultant with Envision Web Promotion. Read more Articles about Small Business Management, learn about Abraham H. Maslow and the Maslow pyramid of needs.

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